What You’re Really Paying For Payment Processing
Guest post by Chase Paymentech, providing thousands of Verizon customers’ best-in-class debit and credit card processing through Verizon Merchant Services. Get the insight you need into how payment processing really works and how to use it to your advantage with our series: The Skinny Behind the Swipe.
Now that you know the types of equipment required to process payments, and exactly what you need to process payments, you are ready to find out more.
What exactly will accepting more than cash and check cost you? You already know that accepting debit and credit is much more convenient for your customers, but is it worth it? The answer is yes. In 2011, roughly 60% of the total share of retail point-of-sale dollarvolume was purchased with a credit or debit card* and that percentage is steadily rising. So you know you need to accept credit and debit cards, but, how do you know if you’re paying too much to accept them? Below you’ll find some basics of what makes up payment processing pricing.
Total Cost Of Acceptance
What you’re really paying – your total cost of acceptance – is a combination of the rates you are charged to accept credit cards and access the various payment networks, which are regulated by the payment brands (Visa, MasterCard, AMEX, JCB) and the fees you pay your credit card processor. Here’s a high-level breakdown:
Interchange rate: Interchange rates make up by far the largest portion of your total cost of acceptance. The rate, which is based on many factors, including the type of card used, whether the card is present or not present at the time of the transaction, and the merchant’s overall type of business, covers the cost incurred by issuing banks for offering lines of credit and fraud mitigation. You will pay interchange rates regardless of which payment processor you choose.
Assessment fees: In addition to interchange rates, the individual payment brands, such as Visa and MasterCard, may charge separate assessment fees which cover the operating costs of managing their payment network. These are also mandated by the individual payment brands and not your payment processor.
The Processor fees: These are the fees you pay to your particular processor for accepting and processing credit and debit cards. Each processor is different and many factors go into calculating their fees: number of locations, equipment, connectivity, third-party gateways, reporting needs, etc. Processor fees may also include any monthly minimums, annual, start up fees and more.
The total cost of accepting cards includes all of your monthly fees and how they apply to the number of transactions and types of transactions your business processes. This is the amount that you really need to know.
A Payment Processor With Nothing To Hide
It is critical to work with a company that you know will disclose all fees and patiently explain the fee structure so you know what to expect. A properly trained merchant services professional will calculate your anticipated effective rate and help you understand everything. It is most important to know your overall cost of acceptance and not be drawn in by seemingly low teaser rates that may not pertain to the types of payments that your customers will be using. So, arm yourself with this knowledge when a payment processor throws a really low rate out there. Don’t bite until you have a clear understanding of all the details.
But How Do I Know If I’m Really Getting A Good Deal?
Ask your payment processor to do a comparison! If you already accept payments, ask your prospective processor to compare statements. They should be able to show you what you’re paying with your current processor and what the difference could be with them.
To get insights on how new research, technologies and regulations in debit and credit card payment processing can help grow any small business in this sluggish economy, watch this free webinar, presented by Verizon.
*2012‐2017: RETAIL POINT OF SALE FORECAST by Javelin Strategy and Research
Go For The Gold: Get Financially Fit To Grow Your Business
Guest post by Barbara Hernandez-Taylor, senior marketing manager at Intuit.
As this summer’s Olympic Games begin to wind down, there’s a way for highly competitive small business owners around the country to participate in ‘the games” without having to buy a ticket to London. We here at Intuit have devised a fun game for small business owners called Intuit Small Business Games. It’s fast. It’s fun. And, you can win your very own Gold, Silver or Bronze medal. In addition to winning bragging rights for your business, you’ll also be helping other small businesses to get their ideas off the ground.
This competition tests financial fitness – no muscles needed. Enter by answering six small business trivia questions. Correct answers win gold, silver, and bronze medals. Your reward: Boasting rights on social networks, and scoring donations from Intuit to Kiva.org on your behalf, up to $10,000. That money will help entrepreneurs secure micro-loans for their businesses all over the world.
So, if you’re game click here. Then, just pick your small business Olympian hopeful, and get started.
Intuit supports America’s small businesses in all sorts of ways. In fact, we’re also working with Verizon Small Business this week and conducting a free, live webinar aimed at helping small business owners with their web presence.
One of the best ways to grow your business is to have a web presence. Join Gary Kaber, Intuit’s website specialist, as he provides tips and industry best practices on how to build or improve your company’s website. Gary will also share tips and insights on how to get your website found by new customers once you’re on the web. You can get more information and register for this Wednesday’s live webinar starting at 2 p.m. ET by clicking here or go to http://bit.ly/OL4PG7.
The Skinny Behind the Swipe: What You Need to Accept Credit and Debit
Guest post by Chase Paymentech, providing thousands of Verizon customers with best-in-class debit and credit card processing through Verizon Merchant Services. Get the insight you need into how payment processing really works and how to use it to your advantage with our series: The Skinny Behind the Swipe.
Nearly 1 in every 3 consumer purchases in the U.S. is made with a credit card payment.*
Being able to accept payments whenever and wherever you are, and more importantly wherever your customers are, is key to making the sale and growing your business. Oh, and accepting those payments quickly, simply and securely? That’s key, too. But how do you get started or what’s the latest in debit and credit card processing solutions? Surely you need some type of equipment, but how do you know what’s right for your business?
Here’s a breakdown of some different payment processing solutions and the businesses that use them. This will help you know what you’re looking for or what you may need to grow your business.
Choosing equipment – find the perfect fit for your business.
Are you a start-up retail operation or small restaurant? Try sticking with the basics and considering a simple terminal. This is basically a stand-alone piece of equipment that resides where your customers checkout. It’s easy to set up, and most are compatible with high-speed Internet and have dial-up (landline connections) as back up. Some terminals even accept contactless and chip card payments.
Have a business that goes with you? If you make sales away from your store or office and need to process at your customer’s door or anywhere in between, you can collect payments by staying nimble with a wireless terminal or mobile solution.
Equipment is often available for purchase, rent or lease. If you already own equipment, some processors may allow you to continue using it on their system. Whatever you select for a point-of-sale solution, ensure that it is PCI compliant. If you are unsure if your existing point-of-sale solution is compliant, simply check with your processor. You may even receive a letter stating that your existing terminal will need to be upgraded.
Maybe you don’t need a debit and credit card processing terminal at all. If you have a laptop or PC and a broadband (Internet) connection, you can utilize a web-based solution. Whether you accept payments from your customers in person or if they purchase your products and services online or via the telephone – there are various low-cost, secure, web-based solutions available to fit the needs of your business. No matter which option you choose, having a phone line or Internet connection is a necessity to process any credit or debit card transactions.
Three things to keep in mind:
1. Think about when and where you currently do business and if accepting debit and credit cards would help to expand your business.
2. The right payment processor should provide a customized payment processing solution that suits your business’s individual needs.
3. Make sure whatever payment processing solution you select that it is compliant and you access to 24/7 support.
Chase Paymentech has been processing payments for over 30 years and has powered Verizon Merchant Services for five years. To learn more about the special programs and benefits offered to Verizon customers, please call Chase Paymentech at 800.600.8351 or click here.
*Source: Visa, Inc.