Shopping with a magic card (that’s what my mom calls her credit card) is very easy, but it can be a big pain for many businesses. Managing business finances is a huge job, and many companies often overlook credit card processing fees that are paid each month. It’s not uncommon for a new business to accept the first or second offer they receive for payment processing when they are setting up their business’ merchant account. And, it’s even more common for a business to stay with a payment processing company even when they know they could be saving money (sometimes thousands of dollars) each year. By checking out the market, shopping around and calling your provider, you can easily reduce the amount of money you fork over for credit card processing each year.
Here are five tips to help you save your business money on credit card processing each month.
1. Don’t Lease Equipment
Credit card processing equipment isn’t as expensive as most people think, so just buy the equipment outright. You will pay many times more money leasing the equipment for months, or even years, than you will for buying it. A basic terminal costs anywhere from $200 to $1,000 (that’s for a high-end wireless terminal.) Most businesses spend $250-$350 on their terminal. If your merchant provider bids your equipment at a much higher price, just know you are being scammed. Spend some time looking around the Internet for terminal prices and you will probably find a better deal (and a better provider too.)
2. Don’t Use Banks
I’m not saying banks are bad, but they just aren’t the best choice when it comes to credit card processing. Banks really don’t provide their own merchant services; instead they contract their work out to a third party, and you know the bank is going to mark up their fees so that they make money. Skip the middle man and you’ll save yourself a lot of money. Let your bank handle your online checking account, but keep your merchant account separate.
3. Investigate Before Signing
Odds are, when you first started your business up you were bombarded with calls from merchant service providers offering you a ‘great deal’ on credit card processing. If you just took one of these offers, you are probably paying way too much. Before you sign a contract with a provider, shop around. Look for the best deals possible. There are so many credit card processing companies out there; you can easily find several good companies with affordable rates.
If you didn’t shop around before signing a contract, give your provider a call and ask them to see if they can lower your rates; most of the time your provider will review your rates and do their best to help you out. If they won’t, then you should go find a new provider.
4. Know Your Accountant
It’s not uncommon for business accountants to have relationships with different merchant service providers, especially if your accountant has several business clients. So, if you ask your accountant for tips or advice when you are looking for a credit card processing company, be aware that accountants often get bonuses when they refer new merchants or keep their clients using a specific processing company. It’s possible your business is paying more because your accountant is getting a nice bonus from your provider.
5. Fixed Rates
Before you sign a contract, make sure that your provider isn’t going to raise your rates. There’s nothing worse than signing with a merchant provider and finding out six months later that the deal really was too good to be true. The only time you should see a rate change is when Visa or MasterCard raises the amount that they collect from each transaction. When that happens, your rate will increase because the entire industry (no company is excluded) has to pay this extra amount.
When it all comes down to it, trust your feelings. If you don’t feel like a company is being honest with you, keep shopping around. There are hundreds of merchant providers out there, so if you feel uneasy, find someone else.
Natalie Schnotz is a real technogeek and has been researching and writing about credit card processors and antivirus software for the past few years. In her spare time you can find her crafting, cooking and teaching her technotard husband how to work a computer.
Published or updated February 20, 2011.