Credit card processing fees don’t look like much at a glance on a contract, but they add up fast. And they can be devastating to small businesses. Many small business owners take these fees for granted and don’t realize how much they impact their bottom line. Here’s why reducing these costs is essential for small businesses.
Streamlined Business Operations
Businesses of any size, in any industry, can benefit from streamlining processes. This simplifies work-related tasks to increase efficiency and productivity, which leads to higher profits in the long run. For example, a business that streamlines the process of shipping products to customers can reduce costs by cutting out the extra steps needed to track shipments. This will save time and money, which is a win for the company and its customers.
Another way to improve business operations is by implementing technology tools that make it easier for employees to do their jobs. Email signature managers, for example, can help cut redundant tasks and allow team members to return to their core duties in less time. Many small business owners may need to realize how much they pay for credit card processing fees. However, reviewing monthly merchant statements and calculating effective rates can help shed light on these often complicated fees. This can help merchants to avoid overpaying for this vital service.
Reduced Risk of Fraud
The risk of fraud can be costly for a small business, not only because of the cost of chargeback fees but also because customers lose trust in the company after being charged incorrectly. Lower overall credit card processing fees can help a business reduce the amount of fraud and keep its customers happy. Payment processing fees can include non-negotiable rates, such as interchange and assessment fees paid to the issuing banks and credit card networks. But processors can determine their markup, a percentage of the transaction amount. A business can keep processing fees low by reducing the number of transactions that go to chargeback, ensuring that all of its transactions are qualified, and ensuring that its account and terminal are set up correctly. Another way to lower credit card processing fees is to negotiate with the processor and show that you are a high-value merchant. That could mean demonstrating that you have a lot of transaction volume or showing that your business is PCI compliant, she added.
Increased Customer Satisfaction
Many small business owners need to realize the fees they pay to process credit cards. These fees consist of transaction and flat fees and are buried in merchant services bills and statements. By reviewing your account and negotiating lower prices, you can save thousands. Customers are more inclined to return to your brand if they have a positive experience. Satisfied consumers spread good word of mouth about your products and services, and their loyalty creates a barrier that discourages competition from luring away shoppers. Increasing er satisfaction is essential for every type of company. Whether you’re a mom-and-pop bakery or a global tech behemoth, customers are the lifeblood of your business. A high level of customer satisfaction can boost revenue and attract new customers. But it’s essential to remember that a negative customer experience can do just as much damage. Customers are more likely to share a bad experience than a positive one, and with the power of social media, a single dissatisfied customer can hurt your brand’s reputation. This is why focusing on customer happiness is so important.
The fees charged for accepting credit cards are unavoidable, but they don’t have to be expensive. Lowering processing rates and reducing costs can impact the bottom line, helping small businesses grow and increase profits.
The best way to understand and minimize these fees is by working with a merchant services provider that offers transparent pricing. Look for one that does not charge a recurring account fee, minimum monthly processing fee, or terminal lease fee. A reputable provider will also clearly communicate how their rates compare with competitors. They should also provide detailed information on estimating your effective rate – the ratio of total processing costs to transaction volume, expressed as a percentage. While many small business owners believe credit card fees are non-negotiable, they don’t have to be. By negotiating with processors and ensuring they get value for their payments, businesses can save up to thousands of dollars per month on fees. This can be particularly helpful for small companies that offer e-commerce or have a high volume of online sales.
Credit card processing fees are a decisive blow to small business profits. The good news is that they can be easily lowered with intelligent strategies.
The first step in lowering processing costs is understanding how fees are calculated. This will help you shop around for the best rates and avoid getting taken advantage of by your payment processor.
The significant components of processing fees include interchange, assessments, service charges, and markups by your payment processor. Most prices are non-negotiable and vary based on the card type, merchant, transaction environment, etc. However, the merchant markup is a common target for negotiations. Often, this fee can be reduced by showing your processor that you bring value to their business and are an ideal customer. For example, you could leverage high transaction volume for better pricing and lower card rates. This will lead to increased profits for your company.