(Photo credit: Wikipedia)Business owners often face a double-edged sword when they decide to accept credit card payments. It's simply good business to offer the ability to use a credit card and it helps attract more customers and make more sales, but on the flip side, credit card processing fees can be very expensive and will whittle away your profit margin.Before you decide on a credit card processing company, there are a few things to do to make sure that you are saving the most money possible.
1. Comparison Shop. There are literally thousands of credit card processing companies and no two are alike. You'll need to comparison shop among several different types of companies and see which one will offer you the best deal. Don't forget to check with your local bank to see if they offer this ability, you may end up getting a better deal.
2. Get Help With Your Credit. If your personal credit is bad, this will affect your ability to get a credit card processing account and will raise the fees you'll need to pay for processing each card. Get a free copy of your credit report and make sure there are no errors or collections on there. If there are, get help with your credit to get these items removed. Give it about 6 months after fixing the issues on your report before you apply for a new processing account.
3. Try Third-Party Alternatives. In some cases, a third party processor, such as PayPal, may be your best alternative, especially if you don't expect to do a high volume of credit card sales. Again, you'll need to comparison shop with several different companies to ensure that you are getting the best deal out there.
4. Choose the Cards You Want to Accept Wisely. MasterCard and Visa are typically the most economical when it comes to processing fees. American Express on the other hand can be very expensive to accept. Keep this in mind when you decide which cards you want to accept in your store.
These steps can help you save a significant amount of money for processing each purchase. Remember, your personal credit will affect your business credit, especially if you are just starting out. Now is the time to get help with your credit so that it doesn't keep you from living your dream of starting your own company.
I heard that American Express card processing is the most expensive. But then again, owners of American Express cards buy on average 3 times as those of visa and mastercard owners, so I guess that's good for business owners.
ReplyDeleteThat's an interesting point. But for smaller shops a few percentage points makes all the difference. I often see shops not accepting Discover cards anymore. The bottom line is Visa and MC have the best balance of all credit card merchant advantages.
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