Business owners must have a fair understanding of the way credit cards and debit cards work to work out their profitability. For every credit or debit card transaction, merchants or businesses must pay some fees to the credit card processing company which if not included in the cost and recovered from customers can eat into the profit. And the amount is not small because it can be as high as 3% of the transaction value which can have a substantial impact on how much businesses can earn. Credit card payments happen in a flash because it takes only about 2 seconds to complete a transaction and this is highly pleasing for customers who are relieved of handling cash which can often be inconvenient and sometimes unsafe.
Business owners have so many things to think about that seldom they would find time to look into the details of credit card usage and its impact on their business. Since the credit card fees are often quite insignificant, especially for small purchases, it escapes attention, but over time it adds up into sizeable amount that calls for attention. And transaction fees are just one kind of fees that people usually talk about. Also, there are other fees like authorization costs, assessment fees, and other monthly fees all of which when added can translate into a large sum that erodes your profits. To take home the revenue intact, companies like Nadapayments.com are helping businesses with solutions that can nullify the effect of credit card fees that businesses have to bear.
In this article, you will find tips about how you can protect your profits despite paying fees for credit card processing.
Negotiate for lower fees
Making your business attractive for credit card processors would give you an edge when you negotiate the fees with them. Credit card fees are flexible and the nature of your business, the volume of transactions and the associated risks in handling payments are some of the factors that influence it which varies from one business to another. The credit card processing company would be eager to handle high-value accounts, and when you can project that your business is capable of providing enough value, you are in a comfortable position to have your way during negotiations for the fees structure. Your transaction volume can be your best weapon when negotiating because higher is the volume more will be the cumulative fees, and in such cases, credit card processing companies would lower the fees to grab the big business.
High volumes allow credit card processing companies to reduce their overhead in different areas and pass on the reduction to businesses by lowering the fees.
Have a secure and safe system in place
A part of the fees charged by credit card processing companies include the cost of covering risks associated with businesses, and since the level of risk varies, the fees also vary. If your business is vulnerable to fraudulent use of credit card due to poor security of the systems used for payment processing you must bear higher credit card processing fees. A good way for merchants to minimize the risk of fraud is to provide security information that validates purchases and protects cardholders. By entering the security code and billing zip code when prompted, it is possible to reduce the risk of fraud. By taking this step, which might appear as extra work, you can save as much as 1% from every sale. Considering the overall saving, it is a step worth taking.
Use AVS (Address Verification Service)
The name of the card issuer and the card holder’s billing address are two important pieces of information that help to verify the card holder’s identity. To reduce the chances of credit card fraud, you can adopt an AVS that has turned out to be a handy tool to prevent frauds with credit cards especially for e-commerce transactions that are rapidly growing. When the customer enters the address at the time of the checkout process, the system will quickly verify it by comparing it with the address recorded in the file of the issuing bank. On completing the verification, the merchant receives a code for AVS from the issuing bank that they can use to authorize or decline the transaction. Mastercard and Visa support AVS worldwide and especially in the US, Visa is ready to offer lesser interchange rate for businesses that use AVS for checking transactions.
Proper account set up and terminal set up
Setting up the account and terminal correctly goes a long way in reducing the credit card processing charges because any deficiencies can result in higher fees for credit card processing. Right from the beginning, make sure to set up the account flawlessly, and the terminal set up must also be perfect so that no risks are arising from its use. Lower are the risks; lower is the credit card processing fees. In addition, the type of business and the frequency of transactions are also factors that impact the fees. The number of transactions affects the fees, and you must set up your terminal in such way so that you can process transactions during 24 hours as it lowers the transactions during that time and leads to lower fees. Processing batches every day is a more cost-effective option than doing is two or three times a week.
Talk to a credit card processing specialist
It is not surprising that most business owners, especially owners of small business are ignorant about how credit card processing happens. However, it makes sense to seek guidance from the right people to know the things correctly by putting myths aside so that there are no chances of making mistakes. It is important to do things right the first time. The professional knowledge of credit card processing experts and their relationships with credit card processors can show you the way for getting lower rates.
Since credit card processors buy their rates directly from credit card companies like Visa and Mastercard, they are in a position to offer the same rates to their clients.