Credit card processing for business owners
Credit Cards are one of the most revolutionary innovations the finance world has witnessed in the past few decades. The age of ‘plastic money’ that was ushered in with the introduction of credit cards has found takers in all parts of the world. But how many of us know what happens behind the swipe-and-pay services? More importantly, as a business owner, how do you know which Credit card processing service to use?
There are numerous jargons associated with credit cards and their financial implications and it is not easy for the average person to discern all the key information. In this article, we will try to pull the veil off the seemingly mysterious credit card industry.
If you are a business owner, the chances are that you have already received numerous calls from various credit card processing merchants telling you howthey provide the best service. You are bombarded with so much technical informationin a short span of time that you have no other option but to nod and pretend you are on the same page. But, agreeing to subscribe to their services without fully understanding the financial nuances can hurt you badly in the long run.
Things you need to know
Let us take a look at some of the common terms associated with credit card processing.
Interchange Plus Pricing (IC Plus): By switching to IC Plus, you can be assured that all your sales transactions will attract the lowest rates. This way, you can always keep a track of the charges acquired. (US)
Assessment fee: This is what Visa/MasterCard/Discover will charge you everytime you use their service.
Processor fee: This is what your card processing company will charge you for their services. The lower the processor fee, lower will be your overall transaction costs.
Discounts rate:This is the fee that a bank charges the merchant for using their service.
How to get the best out of your merchant?
One of the key factors in maximizing your benefit out of a card merchant is to identify the categories under which your transactions need to be processed. Discuss with your processor about the ideal business type you need to operate.
There are numerous cards out there and the transaction fee associated with each may be different. For instance, some card processing merchants have a low transaction fee for debit cards, whereas the charges are high for credit card transactions. Therefore, to save your credit card processing charges, you can incentivise your customers to use a debit card or pass on credit card fees to them.
As with all financial products and services, there are a few charges that the salesperson is not going to tell you upfront. They are going to sugar-coat it and make it sound like it’s unavoidable. As a matter of fact, such hidden charges vary from company to company and by doing the right research, you may find one that has the standout lowest charges in the market.
Choosing the right credit card processing merchant can do wonders for your business credibility and bottom line.