Comparing credit card processors before signing up helps small business owners make the right decisions regarding an essential service the business relies on daily. A cost comparison of credit card processors can help your company streamline its fees while enjoying more of a profit from each sale. The cost comparison is vital information to know because, any way you look at it, accepting credit cards takes a bite out of your bottom line. Because consumers demand the convenience of using credit cards during their business transactions, though, you stand to lose out on valuable business and profits if you do not accept them. The best course of action, then, is to compare the rates of various providers.
Comparing Credit Card Processors: Major parameters for comparison
Before choosing a provider, it is important to understand that there are different factors that you should consider.
- Transaction fees: In nearly all cases, a provider will charge you a transaction fee each time you access their gateway to process a sale. While many providers charge a flat fee for each transaction you process, there are also ones that charge a percentage of each purchase or even a combination of the two.
- Card types: A processing provider might accept only specific debit or credit cards. Some providers add another requirement for doing business with them by mandating that companies link to a bank account instead of directly entering a credit card.
- Recurring billing options: The ability to set up recurring billing provides a measure of convenience and flexibility. Being able to perform this action automatically saves you time and effort from having to initiate the process each month manually. If your business structure supports this type of payment, it is essential to look for a provider that offers this feature.
- Payment forms: Using a payment form that is already built and integrated into your payment gateway provides a seamless method of completing payment. Or does it? Some providers allow you to complete the transaction right within the form. Others, though, will link to another form instead that allows for completion of the purchase.
- Equipment fees: Some processors charge businesses for the credit card processing equipment while others do not. There are also some processors that allow companies to rent the machine for a monthly fee. Renting often offers a measure of protection against malfunction but requires the payment of a recurring fee. Another cost that some processors charge businesses is when canceling a contract or returning equipment.
Comparing Credit Card Processors: A Primer on the Fees
As a major factor when it comes to deciding on which provider to use, delving more deeply into the credit card transaction fees associated with accepting credit cards makes good business sense. Comparing these fees can make it easier to obtain a clearer picture of which provider is right for your business. In addition to the transaction fees noted above, there are several primary categories in which companies charge fees:
- Setup fees: Nearly all processing providers charge setup fees to those businesses that they deal with. These fees are designed to cover any costs the provider might incur when setting up your payment account. This fee is charged to your account only once.
- Monthly fee: Some processing providers charge businesses a monthly subscription fee that allows you to use their app. Depending on the terms of your subscription, this fee could vary and be based on the number of bank accounts that you funnel payments into, your payments volume or any number of other factors.
- Interchange fees: This markup fee is charged by the bank that issues the credit card to the consumer. Each time you swipe or key in a card, the bank calculates this fee based on a transaction volume percentage and a flat fee per transaction. The issuing banks work together and agree collectively on rates that they’ll charge for accepting Visa and Mastercard, so the interchange fees are the same.
- Network assessment fee: This is another fee that is not negotiable for businesses. Each of the credit card brands charges an assessment fee each time one of their cards is used. Also, Visa also charges a company a monthly fee. These assessment fees are currently comprised of 0.11 percent of the transaction volume. Visa charges a separate transaction fee of $0.0195 while Mastercard’s transaction fee is $0.0185. Discover’s prices tend to be slightly lower at 0.105 percent of the transaction and a transaction fee of $0.0185.
Comparing Credit Card Processors – Comparing specific fees
A general comparison of processing providers is useful to note the different options available. However, it is important to note that any fees and percentages mentioned can change without notice as companies continually revamped their payment schedules to maximize their profits better and provide more streamlined services to their customers.
- Monthly fees: Several processing providers do not charge a monthly fee including WePay, PayPal, Stripe, and Bambora. Dwolla charges a monthly fee ranging from $0 to $1,500. PayPal offers several different applications as well as plans that change the monthly fees they charge. They range from $0 to $30 a month.
- Transaction fees: Most providers charge within the same range when it comes to transaction fees. Authorize.net, for example, charges a setup fee of $99, a monthly fee of $25 and a transaction fee of 2.9 percent plus 30 cents per transaction. Stripe and WePay offer similar payment structures but don’t charge a monthly fee. Chargify does not charge any transaction fees but does charge monthly fees starting at $129. Dwolla also does not charge their clients any transaction fees.
- Credit card types: Most providers accept the major credit cards while others allow transactions from others.
- Currencies: With the continuation of the global economy, many businesses might want to consider the currencies they can deal in. Providers such as Dwolla and Bambora limit the currencies they accept to US and US and Canadian currencies, respectively.
As you can see, the costs of doing business with different credit card providers can vary greatly. Also, it depends on variable factors that must also be considered. Knowing which fees are negotiable can help you keep costs for your business low.
If you need help comparing credit card processors, there are a lot of service providers and consultants who can help in the process of evaluating and selecting the right provider.