Like any other regular operating expense, your choice of credit card processor is an important one that will define your overhead costs and contribute to your business’s success. That’s why it’s important to understand exactly what your choices are, as well as how they’ll affect your bottom line. Like most other backbone services for businesses, credit card processing and merchant accounts are designed to a purpose. Depending on what services you need, the fees vary quite a bit. It helps to start by understanding what the choices look like, as well as what you get for the service. That will help you determine which merchant account solutions will work best for your business.
Types of Credit Card Processing
Most of the time, your merchant account costs and processing costs are bundled together, even if you don’t use the same company for both. You just see the deposit for your incoming money after costs. Even so, those costs depend on the billing model and processor type you choose:
- Third party processors do not require a merchant account of your own, but they cost more for the privilege of using the processor’s account
- High risk credit card processing typically costs more in fees, but these processors provide more resources for at-risk industries prone to chargebacks and credit card fraud
- International processors operate outside the borders of your home country, your domestic bank just receives the deposits
- Domestic processors offer standard in-country processing deals and sometimes take international cards as well
In addition to these general business models, there are different fee structures. If you’re looking for no monthly fee credit card processing where you are just charged for the transactions you perform, there are usually options from each type of provider above. Generally speaking, flat rate deals tend to be more expensive at volume, but sometimes they are cheaper for companies with a lower average sales volume because of waived fees and a relatively simple plan with no price breaks. By contrast, complex plans like interchange plus or tiered rate plans may cost more if you never leave the higher cost tiers, but less when processing large transactions or many of them. That’s why it’s so important to weigh the exact terms of any deal against your estimated sales volume before starting service with a provider.
Equipment Costs: Rental vs. Purchase
Most of the time, the same companies that offer you processing deals will also serve as credit card processing equipment vendors. It’s a natural fit, since they need to make sure their customers have all the right tools to get right down to business after setting up service. Often, you can find deals that help you get the right equipment for less when shopping for both a POS and the right processor. Whether you’re looking for a basic handheld terminal or an all-in one model like the new Clover, you’ll find great deals that could impact the total cost of your credit card processing over the first year. At the very least, you’ll find great options like the Clover Flex for sale. Sometimes, you’ll even get the opportunity to get the equipment at a discount when you sign up for service.