A merchant’s mindset always revolves around how much profit they can gain with a venture. That’s just how business is. So, it makes a lot of sense that you want to save as much money in overhead costs, including credit or debit card processing fees.
You may think that you’re all set just because you already have a supplier for this service. However, there’s still a chance for you to gain a higher profit margin with your merchandise by checking other potential providers and the features they offer at no additional cost.
If you’re apprehensive about switching card processing suppliers, here are the ways that doing so can save you money:
1. Possible Processing Fee Reduction
As a business owner, you know that competition is stiff these days. This fact is also true for the card processing service industry. Companies that are relatively new to the business are more likely to customize their package according to your specific needs and preferences, including their processing fees.
By consulting with another potential card processor, you allow yourself to save money on processing fees and other rates that entail this payment method. Of course, you should still be wary of offers that seem too good to be true because, more often than not, you may be imposed with hidden charges.
It’s crucial that you know the market price through research. Stephen Hart, the founder of CardSwitcher UK, has made this task more straightforward by collecting supplier quotes and presenting them according to the needs of your business.
2. Negotiable Pricing Structures
The pricing model you have with your current card processor may have worked while your business was still in its early stages. However, it may not be as efficient now that your enterprise has grown, along with your customer base and transaction volume.
By looking at the rates of other suppliers, you get a more extensive view of the advantages and disadvantages of a particular pricing structure. Moreover, you also give yourself the chance to negotiate the best deal for your company.
These are the four major types of pricing models:
- Interchange-Plus – With this, the processor charges you with a fixed per-transaction fee as well as takes a percentage of each sale. Often, this pricing structure provides the most value for entrepreneurs.
- Flat-Rate – For flat-rate pricing, the interchange or wholesale fees, which come from the issuing bank and the card association, are bundled together with the markup fees, which are set by the card processor as well as payment gateway and can be negotiated.
- Subscription – This model entails a separate charge for the wholesale or interchange cost while you pay another fee per transaction, which serves as the markup rate for taking advantage of the service.
- Tiered – Tiered pricing is the most confusing and least transparent type because the wholesale and markup fees are combined. Plus, the charges vary depending on the kind of debit or credit card used by the customer. This model typically has several additional rates that are easily overlooked by merchants, which makes it an expensive and impractical pricing structure.
3. More Transparent Service
Starting a business can be overwhelming with all the paperwork and decisions you have to make. You’re also bombarded with calls from suppliers and pressed to sign up for their services that you don’t take the time to review the terms and conditions. With this, you end up with a lower profit margin because of high processing fees and other hidden charges.
By switching to a new card processor, you have more control over your decision since you’re not pressed for time. Plus, you’ve also had the experience in working with your current supplier so you know what features or services you need and which ones you can forego.
4. Updated Equipment without Extra Cost
Another advantage of signing up with another card processing supplier is that you get updated equipment without paying extra for an upgrade. As a new account for your future provider, they’ll make sure that you get the best service so that you continue working with them and refer them to your entrepreneur friends.
Credit cards are an inevitable part of any business because of the convenience they offer to customers. As a merchant, you must keep up with the times and accept this payment method.
To ensure that you still get profit from your merchandise, you should opt for the best card processor by researching the market and finding a company that you can negotiate the terms with, even if it means that you have to switch suppliers.