Cutting the Cost of Credit Card Processing in Your Microbusiness

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A Federal Reserve’s 2018 press release on payments showed that US consumers made more than 120 billion card transactions in 2017. Card transactions refer to both credit and debit card payments. And as ecommerce becomes the order of the day, we expect to see more and more credit card purchases.

For micro-businesses, taking credit and debit card payments is not only an opportunity to sell to a new audience but also a challenge. The expensive cost of accepting credit card payments is a growing concern among merchants. 

So how can you start taking card payments without ruining your financial bottom-line?

 1. Learn More about Credit Card Transaction Fee Models

For transaction fees, there are three payment models

  • Tiered 
  • Flat-fee 
  • Interchange-plus 

It is important to understand each model before you choose. Comparing differences by card type and card brand is essential in making an informed decision.

Other fees that apply, and that you should pay once include account creation fees and hardware purchase expenses. 

Rented hardware (terminal) must be paid per month. Monthly or yearly fees may also apply depending on your service provider. Lastly, a PCI compliance fee as per the Payment Card Industry standards.

 2. Compare rates 

 After learning all about credit card processing fees, it’s a good idea to review your existing plan. How much are you paying? Go through fee models in detail. Some models may look enticing but could cost you more in the long run.

 If possible, discuss with your current service provider a better deal. Processing rates are flexible, and a fair processor will gladly offer a better deal if you ask for it— and make sense in whatever you are asking for.

 3. Shift to a low-risk merchant account (if possible)

High-risk credit card processing is expensive. So if your company is classified as high risk for reasons you can correct, then consider making the changes and shifting to low-risk classification.

In general, high-risks are companies that are prone to (1) chargebacks, (2) returns, (3) fraud, and (4) accept a lot of CNP (card not present) payments. 

But highly prohibited, regulated, and restricted sectors have a permanent high-risk classification and may never qualify for a low-risk account.

For high risk merchant account holders, the best option is to partner with a payment processor that offers services for high-risk businesses like eMerchantBroker.

 5. Add Digital Payment Avenues

 To save more on credit card processing, shift to newer payment technologies like allowing your shoppers to pay through mobile.

 And while these mobile payments are also subject to some charges, allowing shoppers to pay through digital wallets can cut down processing rates. Furthermore, these new ways to pay also improve the experience for your clients.

In conclusion

The magic is in the payment model. Go thoroughly through interchange-plus, tiered, and flat-fee models before making a decision. Seek further advice if you don’t understand anything because the wrong choice can make credit card processing expensive for you.

Author Bio: Blair Thomas has been a music producer, bouncer, screenwriter, and for over a decade has been the proud Co-Founder of eMerchantBroker, the highest-rated high risk merchant account processor in the country. He has climbed in the Himalayas, survived a hurricane, and lived on a gold mine in the Yukon. He currently calls Thailand his home with a lifetime collection of his favorite books.