More than 3 billion people around the world own and use credit cards, with each person having at least 3 cards to their name. Without a doubt, credit cards are vital elements in every individual’s daily life, whether shopping for clothes or paying the bills How to start a credit card processing company. If you want your business to cover more ground and attract more clients or customers, then you should consider credit card processing.
Technically speaking, credit card processing is a financial transaction that involves electronic access to the client’s account. Currently, there are four big names in credit cards and processing any one of them can help boost your business. First is Visa, with 261 million users as of last year. At 176 million strong is Mastercard. At the third spot is American Express, which is used by more than 50 million clients in the us alone.
Cash payment is good, but accepting credit card payments also has a lot of benefits. For one, it makes your company credible in the eyes of clients. If you accept cards, customers will think that your company is safe and reliable to deal with. Trust is a big aspect in business, and if a client trusts you, chances are he’ll make a purchase from your store.
Retrieval fees, chargeback fees, ACH rejection fees are charged per event, and many times those events can be avoided. Retrieval fees occur when a customer disputes a transaction. Upon complaint a retrieval request is initiated by the card issuing bank. This retrieval request letter demands all sales invoices and documentation of the transaction. This retrieval request is the initiation of the chargeback process. The merchant is charged for the request usually $15. 00. Chargeback fees are charged to a merchant by the acquiring bank. The $35 fee is normally charged to the merchant in the case when a chargeback claim by a purchaser is successful. The ACH rejection fees are much like a bounced check fee. They are charged to a merchant when there are non-sufficient funds to cover monthly expenses.
Top credit card processing companies do not charge annual fees, reprogramming, or set-up fees. Many sub-contracting salespeople will tack on these fees, but offer lower interchange rates. Cancellation fee are an acceptable demand by processors, however they should be low and fixed fees, typically $250 to $350. The merchant should be aware of cancellation fees prior to signing a contract with a processor. Avoid acquirers who charge variable cancellation fees. Top credit card processing companies will do everything in their power to satisfy merchants, and avoid cancellation of the merchant service contract.
Be aware of the hidden costs. A salesperson may offer unbelievably low rates, all the while charging unnecessary monthly charges. Many merchants seem to be paying far too much for debit services, which is simply due to the fact that it is becoming very popular and the merchant does not understand the real costs of debit payment due to the low associated risk. Another profit generating tactic by salespeople that can be avoided is the leasing of terminals. Merchant can and should avoid leasing equipment, as the cost of terminals has decreased so much in recent years.
Based on experience, too many merchants have limited or almost no understanding of the merchant service industry and associated costs of processing credit cards. Merchants armed with information can increase revenues and decrease costs by accepting credit cards properly. Training employees in appropriate payment acceptance can decrease the costs of transactions through lower interchange rate qualification.
There are several variables that can dramatically impact a business’s average processing costs, so these general numbers should be taken with a grain of salt. If you’re interested in calculating a more accurate cost average for your business, consider the following variables in your calculation.
Businesses generally process credit cards as card-present or card-not-present. As the names imply, card-present refers to the act of physically swiping a customer’s credit card through an electronic reader, and card-not-present refers to the act of processing a card when it’s not physically present.
As you can see from the previously linked interchange schedules, the average base cost for a card-present business is generally 1. 60% – 1. 90% depending on the mix of debit cards versus credit cards, and standard credit cards versus reward cards.
Online shoppers want to get the same benefits from your ecommerce store that they get from brick and mortar retailers. Offering a wide range of payment methods will make your customers feel safe and comfortable and they will increase their online shopping. Accepting credit/debit cards in your online store increases your sales. The problem that many online business owners face is that they are confused by the many choices available and they don’t know where to start.