The Trouble With Credit Cards
Except for a few holdouts, most businesses including small businesses feel obliged to accept credit cards. Customers are apt to find it peculiar and inconvenient if they don’t. The problem with this is that the processing fees on credit cards can really take a bite out of a small business’s profits. There are ways to limit the damage, though, and with that in mind, here are several possible solutions.
Don’t Enter Credit Card Information Manually
Your credit card company may be charging you more if you’re entering information manually. Their rationale for this practice is that manually entered credit or debit card data has a higher incidence of fraud. Be that as it may, if you move to a Point of Sale (POS) system employing a swipe and/or chip technology, you’ll knock those high fees down.
Find an Economical Credit Card Processing Company
The fees companies apply when processing credit card and debit card payments vary from one to the next. The interchange fee that goes to the institution that issued the card is always the same, but the processing company is free to set its own rates otherwise. Thus a smart small business owner compares fees and goes with a credit card processing company that charges a reasonable rate and not one that’s out to gouge him.
Negotiate with Your Credit Card Processing Company
Just as the fees to process debit card and credit card payments vary from one company to the next, they can vary within the same company depending on whether the small business owner negotiates. Whether you’re just establishing a relationship with a new company or have been with one for a while, such a discussion is worth a try. Only 25% of businesses ever make the effort, but of those, 80% come away paying lower fees.
Establish a Minimum Payment Amount for Credit Card Purchases
When a customer makes an extremely small purchase with a credit card or debit card, the processing fee erases the profit you might otherwise have made. Since from the small business owner’s point of view, the goal of any transaction large or small is to generate profit, that’s not good.
You can eliminate this problem by establishing a minimum amount for credit card purchases. $10 is often a good amount. Customers making smaller purchases can either pay cash or buy something else as well to make up the difference.
You should be aware, though, that some people just don’t carry cash, With this in mind, evaluate your clientele and make sure you don’t set the minimum payment amount at a figure that will incline them to patronize somebody else’s business.
Buy a Credit Card Terminal of Your Own
Finally, are you renting your credit card terminal from the credit card processing company? That saves you money in the short run, but over the long haul, you’ll save money by purchasing our own credit card terminal. You can get one at an office supply store for about $100 to $600.