Introducing credit card processing systems into your business is inevitable. The fact that an ever-growing number of customers tend to order online spurs the trend forward. Also, out of various reasons, shoppers prefer contactless payments for in-store purchases.
With the massive transfer to cashless transactions, credit card processing fees have grown exponentially. The expenses for a merchant account can be a heavy burden for your company. However, cheap credit card processing for small business can significantly lower the costs.
Based on the selected payment methods and your business volume, the right provider can help you overcome financial strains. Below, we outline the background of credit card systems, their fee structure, and how to find top affordable providers without sacrificing value.
Credit Card System Structure
When we say credit card companies, the term encompasses issuers and networks. Other vital players involved in each transaction are cardholders, merchants, acquiring banks, and payment processors.
- Issuers (banks and credit unions) issue credit and debit cards to cardholders through networks.
- Networks (Visa, MasterCard, American Express, and Discover) process credit card transactions. These card associations set interchange rates and act as intermediaries between issuing and acquiring banks.
- Cardholders obtain debit or credit cards from issuers. Then, the account allows them to buy goods and services.
- Merchants are various business types that sell goods or services and take credit card payments.
- Acquiring banks open and maintain the accounts of merchants. As a result, businesses can accept deposits from cardholders.
- Payment processors are in charge of processing bankcard transactions. These entities connect merchants, acquiring banks, and networks to enable card payments.
The process involves many parties, so fees start to accumulate. Hence, you may consider cheap credit card processing for small business that enables streamlined transactions. Options exist, but before that, let’s look at the expenses related to electronic money transfers.
Standard Fee Structure
The costs of credit card processing can add up quickly, depending on your provider. How your business takes payments and what services you use will also impact the ultimate card processing cost. Here are the three main types of fees you’ll pay to accept bank card payments from customers.
Each card transaction comprises the interchange rate, an assessment fee, and the payment processor mark-up. As a business owner, you pay this cost, and each entity above gains a specific portion.
Interchange: The merchant pays a percentage of the total sales to the issuing bank. The interchange is non-negotiable and fixed regardless of the processor you use. However, this swipe fee depends on the card, business type, and purchase size.
Assessment Fees: Proceeds from assessment fees go-to credit card networks for the purchase to happen. Note that these charges are on a transaction basis, whether approved or declined, plus batches and returns.
Payment Processor Mark-up: The company that manages the logistics of card payments processing also takes a chunk of your profits. Most payment processors charge a flat commission matching the interchange structure.
Flat charges ensure payment processors or gateways get paid for enabling you their services. These costs need settling on a monthly or one-off basis.
Recurring Flat Charges
Your processing company will charge you some or all the flat fees below to maintain your merchant account.
- Monthly or annual charges to keep your account open and run your processing.
- Monthly minimum processing fee if you don’t reach the minimum charges for the month.
- Terminal lease or rental costs for the credit card terminal.
- Withdrawal fee for moving funds from the payment processor into your business bank account.
- Statement fees for providing paper or online statements.
- IRS reporting fee to report your transactions and procure tax reporting forms.
One-Time Flat Charges
Open to negotiation, some payment processors decide to waive one-off costs entirely. Hence, the following flat fees always depend on providers and individual plans.
- Account setup fee for a technician to install the necessary hardware or provide customer support.
- Terminal purchase or leasing fee if your contract doesn’t include a terminal.
- Penalty charged by the payment processor if you terminate the contract earlier.
You might get to pay incidental charges due to specific circumstances. Most common occurrences include chargebacks, non-sufficient funds, or verification services.
Is Your Business Losing More And More Money On Credit Card Fees?
Every time customers use their bank cards; you pay all or most of the costs outlined above. The portion of the profits you’re losing can often reach exorbitant figures. In some cases, the percentages come down to 5% of each transaction.
Of course, all fees depend on your provider, the sales volume, and the value of transactions. Besides, equipment leases and junk or hidden charges burden your business to the point of forcing you to renounce cashless payments.
Is There A Better Way To Accept Credit Card Payments?
Resorting to bank card transactions doesn’t have to mean you give your profit to banks and processors. Instead, consider cheap credit card processing for small businesses. Check these suggestions and find a high-quality solution for your enterprise:
- Using a merchant services provider over banks enables processing payments online without redirecting customers to third-party websites.
- Integrate your payments by processing transactions within your accounting software.
- Arrange personalized service with a provider who offers all-in-one solutions with in-house customer support. This way, you’ll avoid third-party fees.
- Opt for flat rate rather than tiered pricing to get the same monthly rate for all card types.
- Steer away from mandatory contracts and hidden fees. Your provider should be transparent and offer free setup, maintenance, and upgrades.
Elly Offers Cheapest Credit Card Processing For Small Business
Elly will ensure your company accepts all payment methods, including digital, crypto, and bank cards. Our advanced solutions take pride in a payment platform that includes merchant services, a secure payment gateway, and zero hidden costs.
With an affordable transaction fee, free setup, all our solutions are PCI-compliant. Other features include a dashboard overview, 24/7 in-house support, and recurring billing. Let your small business grow by letting Elly take control over your card payments.