Accepting credit cards offers a number of benefits to merchants and consumers alike, and can provide a dramatic boost to merchants’ sales and cash flow. But that boost can be diluted somewhat if the merchant doesn’t pay attention to the various factors that influence the fees associated with accepting electronic payments, or rushes into the market without carefully researching the many available options and choosing the best partner.
Fortunately, a little research and paying attention to how payments are accepted and processed can provide tremendous benefits to merchants hoping to reduce their payment-related expenses:
Be Wary of Bargains – As you’re shopping for payment processing services, it’s cheaper in the long run to choose an established industry leader than a cut-rate provider who may not be able to meet your needs, or who compensates for low rates with a buffet of hidden fees. Check the fine print, and remember that the cost of payment processing affects your bottom line, and the quality of your payment provider reflects on your business. Your customers are going to blame you for shoddy service.
Understand Your Rate Structure – How you accept a payment can influence the associated fees, so understand how to take advantage of the most cost-effective options. For example, swiping a card directly through a POS terminal results in a lower rate than entering a transaction manually. Similarly, it’s important to settle transactions daily, to train employees how to close out daily transactions, and to use fraud-prevention measures such as the Address Verification Service (AVS) to significantly reduce chargebacks and other charges associated with fraudulent transactions.
Reduce Chargebacks – Chargebacks reverse completed transactions and carry fees that you want to avoid. Make sure you file and retain sales slips so you can respond quickly to chargeback requests, reconcile batches daily to avoid duplicate processing, make sure the business name on your receipt matches what your customers will see on their statement, and respond to customer service inquiries quickly to reduce the odds of a customer disputing the transaction.
Following these steps and paying careful attention to payment methods, procedures and security requirements will pay considerable dividends in improving your productivity and profitability, and reducing payment related fees.