Last updated on December 5th, 2023 at 06:44 pm
The first question asked by a merchant is usually – what are your credit card processing rates? As former e-commerce business owners, the concern is understood and valid. While merchant services fees are a very important, and costly part of the decision-making process, other questions should also be asked. Making sure that the payment processor is the correct fit for your company will usually take a little investigation and asking of questions to start but will pay off in the future.
Merchants should understand the extent of support offered by their processors. While most merchants might only need assistance once or twice a year, those instances usually occur at the most inopportune times.
Many companies charge for support, especially for after-hours servicing of errors; whether it’s the store terminals not connecting or daily transactions not batching out. Understanding the type of support you will receive from a processor before contracting services can save you hundreds a dollars a year by using someone that includes support within their package.
Other factors besides pricing should be of importance when choosing a merchant services company. Having a credit card processor that can provide you with the services to help you grow as a company can be very beneficial in the future. Merchants should consider checking to make sure that their processor can provide services or equipment, such as;
- Point of Sale systems
- Payment Gateway Services with a Virtual Terminal
- ACH and eCheck services
- Next Day Funding
The flexibility of the merchant account is also an important factor in determining the right payment processor. All merchants should make sure that their merchant services provider can offer the 4 major credit cards;
- American Express
- JCB (if desired to accept)
Since the fees are primarily the main concern of business, let’s start there. In the merchant services industry, there are 2 popular methods of charging customers – tiered or interchange-plus pricing. Historically, tiered pricing was the most commonly used program to set merchants up with. Though tiered pricing is still in use, it has been replaced by a more cost-effective method – interchange plus. Merchants can expect to pay about 2% to 2.5% per transaction plus about $0.10-$0.15 per swipe when using a reasonable interchange-plus pricing model.
Another fee that is common for most merchant accounts are the monthly statement fees. Merchant services companies generally charge between $8-$10 per month to manage the merchant account. With recent changes to security guidelines by the card associations, many merchants now pay a PCI Compliance fee. These fees can be charged monthly, quarterly or annually – but generally cost about $100/year. Fees might not be listed on a statement so it is important to pay attention to all monthly fees and determine what each line item includes.
E-commerce merchants shopping for payment processing services should also be aware of the fees charged for the payment processor’s gateway services. Monthly gateway fees generally run $10-$25/month. Every merchant services company charges these fees differently in a different way. It’s worth confirming that monthly fees are not costing more than about $25 for the gateway and merchant account combined.
There are a number of factors besides budget that can determine the best credit card processing company for your business’ needs. Sometimes saving on the fees might not provide the best solution for a merchant. It is important to make sure that the payment processor can provide you the services and functionality needed to grow your business long term.