As is true for any business decision, selecting a credit card merchant account services also involves cost considerations. The costs include the fees and charges as applied by the credit card processing service as well as the cost of equipment needed to process credit cards. Therefore, it makes immense sense to be familiar with all the costs involved to help make the right choice of the credit card processing company.
Credit Card Processing Equipment
Credit card terminal is the machine used for swiping cards. Installing this involves substantial expenditure on part of the business as the machines are payment system agent quite expensive. But several options are available. The cost varies based on models, starting at around $150 and going up to $1000 or even higher for high end equipment. So depending on requirement and budget, stores can choose the model accordingly. Financing option is available for purchasing machines or you may choose to lease one, try it out and then make the purchase if it is found suitable. Some machines can be leased for as little as $ 20 a month.
Often, terminals are provided as part of the package when setting up a new merchant account. This can be quite a saving than buying the machine separately. It is also possible to use computers to process cards online and verify transactions with virtual terminal software.
Another option available is to process the card manually and verify the information over the phone with the customer. However, this is time consuming and riskier as the funds may not be necessarily available at the time of processing the charge, though they may have been at the time of verifying.
Credit Card Processing Fees
The other important cost component for a business is the discount fee charged by the card processing company. It is the percentage of money the provider charges for each transaction. This fee is based on the risk the bank or company perceives it is taking by providing card processing service to the business. Fees is based on several factors including credit history of the business, number of transactions and the amount of receipts expected per month. Additionally, rates are different for transactions where the card is present and, transactions where the card is absent – internet transactions or accepting payment on the phone. Most companies charge a fee in addition to the discount fee of 2.2% to 3% for transactions where the card is absent. Fee for transactions where the card is physically checked is lower, in the range of 1.5 to 2 percent.
Besides these, there are several other types of fees and charges that a business may have to pay to avail such services. These include application fees, activation fees, setup fees, customer service fees and programming costs. You may or may not be charged all these fees and some of them could be refundable if you stick with your provider for a stipulated amount of time.
It is important to know all the applicable costs and fees before deciding on the service provider. Do adequate research and also ask for referrals from existing users. Do not fall only for low fees or rates. Good customer service is important too. You must be able to quickly reach customer service in case an issue arises else you risk losing the sale!