Small business credit card processing is a necessary challenge to overcome. You need to be able to process payments, and some of the advanced features can be useful to the right business, but they do tend to take away from your bottom line profits. If you’re looking for an opportunity to save on some of those costs, these tips should be able to help you without putting too much of that burden on your customers.
Pay Attention to the Contract
Before you ever sign up for a merchant account, you should be aware of how transactions are processed and which methods offer the lowest rates. With an interchange plus account, the credit card swipe machine will usually offer a lower rate to you than keying in your account number. This is because the processing companies, or payment gateways, have to take extra precautions handling this information. Since you’re keying in the full card number, thieves can intercept that information over the Internet.
That extra security ends up costing you more per transaction, which is why swiping a card through the credit card machine is the best method for processing a payment.
Be aware of those kinds of contract speed bumps. Make sure you’re not signing onto any volume discounts you can’t meet, and make sure you take the time to understand the rate structure for the transactions you’ll process. It will help you more accurately forecast your costs moving forward.
Set a Minimum
One method to ensure you’ll be able to cover the costs of a transaction without raising prices on your customers is to set a minimum for credit card transactions. Most businesses set this limit fairly low, at $10, but that minimum may have to be higher if you’re a big ticket retailer. That’s because interchange rates are based on percentages.
In the best case scenario, your customer meets that threshold and your transaction is worth the cost. Another way of looking at it, is the customer will pay cash for an item worth less than the minimum. If not, you’ll lose money just processing the sale. Most customers understand this today, but a few may raise some objections. Kindly explain the costs of processing plastic, and remind them that respecting your rule is helping an American small business grow. You’re always going to lose grumpy customers, but as long as clearly place signs indicating your minimum charges, you’ll find most people are agreeable to your terms.
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