Processing credit cards offers many benefits for businesses, including increased sales, improved cash flow, reduced risk of fraud, and enhanced customer satisfaction. However, the fees associated with credit card processing can also be a concern for businesses, as they can add up quickly and cut into profits. To mitigate these concerns, businesses should consider educating themselves as to what the fees are, how they can be reduced, and finding the best payment processor for their business:
What Fees Are Associated With Credit Card Processing?
Credit card processing fees are usually charged by payment processors for processing credit card transactions. These fees are typically a percentage of the transaction amount plus a flat fee per transaction. These fees are charged to the merchant accepting the credit card payment. Here are some common fees associated with credit card processing:
Interchange fees: These fees are charged by credit card networks, such as Visa and Mastercard, for processing credit card transactions. These fees are typically a percentage of the transaction amount, ranging from 1% to 3%. The percentage varies depending on the type of card used, issuing bank, and transaction volume.
Certain transactions require higher interchange fees than others.
Assessment fees: Assessment fees are the fees charged by credit card networks for providing their services to merchants. These fees are usually a percentage of the transaction amount and vary depending on the type of card used, the merchant’s industry, and other factors. These fees typically range from 0.11% to 0.15%. Merchants may also be charged additional fees for chargebacks or other disputes. Assessment fees are charged in addition to interchange fees.
Discount rate: The discount rate, also known as the markup, is the fee that covers the interchange and assessment fees and the amount that goes to the processor. Different processors can charge different rates, and merchants may be able to negotiate discounts.
While the merchant is paying for these fees, they may also have to pay for chargebacks, which occur when a customer disputes a transaction and requests a refund from their bank or credit card issuer. Chargebacks can be costly and time-consuming for merchants, so it is important to take the necessary steps to avoid them. Merchants can avoid being charged these fees in many ways, such as, having secure payment processing and using fraud detection tools to identify and prevent fraudulent transactions. Additionally, providing clear product descriptions and excellent customer service can also help reduce the likelihood of chargebacks.
How to Reduce Credit Card Processing Fees
Now that merchants know what fees they must pay when accepting credit cards, they must figure out how to reduce them. Even though they cannot be avoided, merchants can use various strategies to reduce the impact of credit card processing fees on their bottom line. The interchange and discount rates that merchants should pay attention to are the ones that will end up costing them the most. If you aren’t sure how to do so, here are some of the ways you can keep fees low and maximize your profits from processing credit card transactions:
1.Use a Credit Card Reader To Swipe or Dip, Instead of Keying In Card Numbers
When merchants check out customers, there are two different methods for processing credit card transactions. Customers can swipe their cards in a credit card reader or manually input their credit card number. The first method is more commonly used in physical stores, whereas the second method is often used for online purchases or phone transactions. A “card-not-present” transaction occurs when a customer manually enters their information. This process has many disadvantages for merchants compared to when customers swipe their card, such as more transaction errors, a slower checkout line, lack of security, and convenience. There are also higher interchange rates as well.
2. Make Sure Your Terminal is EMV-Compliant
That said, with credit and debit card fraud on the rise, merchants should consider purchasing a point-of-sale system that is EMV-compliant. EMV-compliant point-of-sale systems, such as those from National Retail Solutions (NRS), offer a more secure payment processing method that can help protect both the merchant and the customer from fraudulent activity. Additionally, it can protect merchants from liability in the case of fraudulent transactions. With NRS, your business can establish a reputation for being reliable and trustworthy. Ultimately, this will lead to increased revenue and customer loyalty. If you have a terminal that isn’t EMV compliant, the transaction cost may fall on you rather than the card issuer, resulting in significant financial losses. You may also have to face penalties and fines from card issuers and suffer potential damage to your business’ reputation. As of October 2015, the liability for this fraud scenario was shifted to merchants who haven’t adopted the more secure EMV process. Therefore, it is recommended that you upgrade your card reader to an EMV-enabled one to avoid paying higher interchange fees.
3. Settle Transactions Efficiently
Settling transactions quickly and efficiently is core to ensuring a smooth checkout experience for customers. It is important for patrons to be able to pay without delays or a long wait time. To do this properly, merchants should use a reliable payment processor for accepting electronic payments. When customers check out, it is best for merchants to offer electronic payment methods such as credit cards, debit cards, and mobile payments for faster and more efficient customer service. Choosing the right payment processor for accepting card payments and settling transitions requires researching pricing and getting one or more up-to-date, state-of-the-art credit card readers.
4. Compare Quotes from Processors
Make sure you research carefully before choosing a credit card processing company. Some companies charge extra for terminals, but a company such as NRS pay gives you a free terminal when you sign up for either their Clean Rate or Cash Discount program. Also, some credit card processors, including NRS Pay, may offer a custom rate for high volume processing, with lower pricing than the standard, advertised rates. Many credit card processors lure unknowing customers into long-term contracts with high early termination fees, so that is why it is crucial to look for a company that does not have long-term commitments with high penalties for exiting. Additionally, it is important to compare the features and benefits of different credit card processors to ensure you get the best value for your money. Make sure to do your research and compare different options before choosing a credit card processor.
5. Get Payment Processing from Your POS Provider
There are many benefits to having one provider for both your POS system and payment processing. By partnering with one company, you can enjoy a more integrated, streamlined process. You can also enjoy some possible financial savings. In some cases, you can qualify for lower processing fees. As Fit Small Business notes, working with the same provider for your POS and payment processing can simplify your payments and eliminate fees you may otherwise be expected to pay, such as a fraud prevention fee or an integration fee. For example, National Retail Solutions (NRS) provides a free EMV card reader to all merchants who sign up for NRS Pay credit card processing. This EMV reader integrates fully with the NRS POS to help you accept card payments securely and avoid penalties for being non-compliant with EMV technology. Our card reader is also capable of taking Apple and Android payments. While credit cards remain popular, these mobile wallet apps as payment methods are quickly gaining traction with consumers.
Get Discounts Through NRS Pay
When you partner with NRS Pay., you get fair credit card processing rates that your small business can afford. We offer a transparent fee model and do not pad fees. We offer two simple pricing models for small business payment processing fees. Our flat rate is 10¢ plus 2.49% of the sale with a $10/mo. account fee. If your business processes more than $10,000 in monthly credit card transactions, you may also qualify for a custom rate. NRS is committed to helping independent businesses succeed. NRS Pay also offers its Cash Discount program to offset credit card processing fees.;Request a free quoteto get started.
