Payment processors keep small businesses going as consumers embrace debit and credit cards instead of cash. The middlemen, however, exact a price that increases the cost of doing business online and in local stores. Traditional shops can try to accept only cash as a form of payment, but such an attempt may fail. Consumers like the convenience of paying with cards rather than cash because they create a transaction record that makes expenses easy to track.
Cards also give shoppers flexibility to spend as much as they want without worrying about having sufficient cash in their pocket. Online shoppers, of course, have little choice but to pay with a card or a related alternative.
Regardless of whether you want to deal with the hassle and expense of a payment processor, you must choose one to keep your business viable. When choosing a payment processor, always use a reputable and knowledgeable processor like Collective POS who is up to date with the latest regulations, trends, and security issues. The following tips will help you understand what to look for in a payment processing provider so that you can get the best solution for your company.
You will soon discover the high cost of payment processing. Most processing services require a merchant account and often require a reserve deposit to ensure that your company will cover refunds and chargebacks. Such services often charge a monthly fee based on sales volume along with a fee for every debit or credit card transaction.
Credit card processing services often charge more for transactions processed without the physical presence of the customer’s card. Similarly, transaction costs can vary depending on whether you use address verification to counter against fraud. Transaction processing costs and required reserve amounts can also vary based on the type of products you sell.
Before shopping for a service provider, create a budget and a list of your anticipated transactions. You often can reduce the per-transaction charge if you pay a higher monthly service fee. Similarly, if you pay little to nothing in the form of months service fees, you should expect to pay a higher transaction fee for every sale. Look for the service that gives you the lowest overall monthly cost based on your current sales estimates.
Some payment processors offer low rates but require you to buy or lease in-store point of sale devices. Online retailers often don’t need a physical terminal, but processors can impose a fee for the use of their virtual terminals. Find out what equipment you must buy and how much it will cost before signing a deal with a processing service.
You must also determine whether the hardware and software used by your payment processor integrate with your accounting software. Manual bookkeeping and accounting labor can easily offset a low price on payment processing services that don’t work with your software. Of course, you could choose to buy new software that works with your new service and equipment, but a substantial cost could also accompany that option.
Pay attention to all the requirements and options that come with each payment processor. Choose the service that offers the best combination of reserve funds and monthly charges. Calculate the overall benefits and costs of each service. Your business needs a payment processing provider, so choose the one that best fits your company.