Why Searching for the Lowest Credit Card Processing Rates is a Mistake

In sales training, new sales professionals are taught to stress the difference between price and value. Though one product might be less expensive, it can also be so much less useful that it is simply not worth the money you would be saving. As a business owner, you understand that quality is more important than quantity and that finding a good value is better than finding the best price.

When it comes to credit card processing, many business owners forget this reality and find that they have gotten themselves in trouble. More importantly, credit card processing can be tricky for the unwary business owner, because the price you see on the surface may not be what you actually end up paying. To better understand this, a business owner needs to consider the different fees associated with a merchant account.


The Different Credit Card Processing Fees

One prominent reason that low processing rates can be misleading is because there are so many fees associated with credit card processing.

Some of these fees include:

  • Monthly Service Fee – Every month a credit card processing company charges a fee for using its service.
  • Transaction Fee – Each transaction you make with a credit card incurs a transaction fee. This is one of the most important fees to pay attention to.
  • Batch Handler Fee – When information is submitted to the credit company in batches, many merchant service providers charge this fee. It is important to remember that not all companies do charge this fee.
  • Interchange Fee – This refers to a fee paid from the merchant account provider to your business bank account when money is exchanged.

For many companies, there are a variety of other fees to consider as well. It is important to remember that different companies may have different fees, so you should look for the business that gives you the most flexibility and the most competitive fees across the board. This makes it very important that you consider every option before assuming that a lower price on the surface makes for a better deal.

Getting the Right Balance

The real secret to credit card processing is finding the right balance in fees. Though you cannot hope to perfectly predict your sales each month, you can use software and prediction models to help establish general ideas of what to expect. For most business owners, a higher monthly service fee is not necessarily a bad agreement. After all, if you are making a large enough volume of credit card sales, you will probably be spending much more on the transaction fees. With this in mind, the initial price is not nearly as much of a concern as the transaction cost.

Finally, always remember that the real value of credit card processing expands beyond simply providing you with a method to accept cards. A good processing company will supply you with tools and resources to help track all of your sales. This can be used to improve your systems and ensure that you can get more efficient each month.

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