A credit card is like a double-edged sword. It has its own advantages and disadvantages. For companies that are of smaller magnitude and which are not sound financially, a credit card can act as potent economic support. However, if not used wisely, the amount that has to be repaid back can skyrocket into a magnanimous account. One of the main reasons for this is because whenever you do a transaction, multiple fees are levied by them. A few of them include a transaction or processing fees, authorization fees, assessment fees, and sometimes a monthly or yearly charge as well. On the outset, the percentages of all of these fees may look minimal, but they can rapidly increase over a short period.
There have been situations where a person failed to clear their credit card due on time and had to pay back almost double the amount. It can become a very harrowing experience for you. Therefore, the decisions regarding using a credit card should be very well thought of. It does help you with big investments, especially when you are at the budding stage of your business without much financial backup. It is always better to consult an expert in this area and have everything cleared out before making that plunge. Only if you feel that you can repay the amount, then go for it.
There are some credit card charges, though, that you can manipulate to some extent. This is due to the reason that the agencies themselves levy the overhead charges, and you can bargain with them on lowering it, on the pretext of being their loyal customer who is keeping them in business. One such fee is the processing feed during credit card transactions. Details about this particular entity have been discussed below.
Complete guide to credit card processing rates
Whenever you open a business, you will have to create a merchant account pertaining to it. Whenever you do a transaction with that account through a credit card, a processing fee is taken for the same. It is a part of the transaction cost that also includes an inquiry fee and a safety fee etc. The rate of processing a credit card transaction depends on many factors. For example, when the card is swiped manually, the rate is less. However, when you don’t have the card with you physically, it is more. It includes transactions through the internet or keying the details in a credit card terminal.
The other two critical points (on which the processing rate depends) are the kind of card you are using and the time that is taken by the merchant to dispatch the amount. It is always recommended that you should pay your credit card fees within the stipulated period so that you don’t have to pay a significant amount as fees. As mentioned before, this amount is modifiable and can be negotiated to a certain extent. A few ways that you can do that with are the following:
Tips to reduce your credit card processing fees
Focus on fraud- fraudulent transactions are always a part of the credit card market. If your merchant amount poses a higher risk as far as security is concerned, you will be charged a more significant processing fee. Therefore, you should take proper precautions for the same. For example, always swipe a credit card as many times as possible instead of a keyed input. The processing fees are more for the latter as the risk of fraud is more. Therefore, they take a higher charge for it. You can even take steps like entering additional information while doing a transaction, so protect it. Some people include the zip code in the transaction input process. This poses a lesser threat to security, and the chances of fraudulent activities are reduced.
Use an Address Verification Service for credit cards
This is another method of ensuring that your transaction is secured when you are engaging in it. During the phase of emerging e-commerce business, the Address Verification Service or AVS has risen as an essential method of safe transactions. Whenever you are doing a transaction, you also mention your billing address. This is compared with the issuer of your card. Once it is done, and the AVS code is sent, which needs to be filled at the appropriate portal. It is like an OTP that is used in most other transactions, except that the verification process is more stringent and personal. This process helps to reduce the processing fee significantly. It might sound a little bit of a nuisance at first as it is slightly time-consuming, but once you come to know of the utility of it, you will look at it with a renewed acceptance.
Discuss with a credit card processing expert
Most small business owners do not know much about credit card transactions and associated fees. In fact, there are quite a few myths attached to it that might make you take the wrong decision. It is always better to take the opinion of a credit card processing expert for the same. They can not only help you debunk the misconceptions but also give you proper advice that can reduce the rates. You may be thinking that you need to keep changing your credit card for maximum savings. However, an expert will tell you otherwise. The rate is the same for almost all amounts of transactions, and it is hardly dependent on the company. They can also help you with procedures like job credit check that will increase the credibility of the transactions. Small guidance like these can prove to be very helpful in the long run.
For security purposes, don’t enter credit card details manually
This might sound like a repetition, but the importance of it cannot be stressed enough. When you enter the details of your credit card manually, you are prone to fraud and are also liable to be charged a higher rate for security reasons. Therefore, always carry the card with you and swipe it manually everywhere.
Use these procedures, and you can reduce the processing rates to a great extent. These small savings can prove to be very fruitful eventually, and you will end up saving quite a lot.
