Learning how to Save on Credit Card Processing Fees

Let's say that you run a retail business selling computers. One day, you get a call from a salesman; he wants you to switch credit card processors. Go with it, he says, and you will have a free credit card processing terminal, a low discount rate, and very low administrative fees. You really hate those credit card processing fees; so you think to yourself that this could be a great offer. You sign up, and you watch closely to see how all the savings add up. Usually, the discount rate, which is what you have to pay the credit card company and credit card processing fees for each swipe, is officially 2%. But there are all kinds of complexities involved in the matter; usually, retailers find that their actual fees come to 5%. After about two months, the jig is up - the new people charge no less than the old people. You know that you've been had.

The problem is that understanding a contract for credit card processing fees can be a terrible task. It's like asking you to read your health care plan and understand the fine print. Any vendor can quote you very encouraging-sounding prices; but those will be special case prices that you can never take advantage of in real life. For instance, if a customer actually takes out an ordinary credit card and swipes it, that could qualify for the low rate. If there is no physical card and someone has to key in the number, or if a customer shows up with the government or business credit card, your processing fees go up.

And that isn't even it. For a credit card sale that you get to make, you need to pay something called transaction fees to the processor. It's about 30 cents for every sale. And of course, you have to have an Internet presence and credit card processing ability over the Internet. The payment gateway fee is another monthly drain on your resources. And then for debit card sales, there is the debit transaction fee, there are chargeback fees, address verification service transaction fees, termination fees and monthly fees. It's enough to put anyone off the whole thought of starting a business in the first place. Some processors are transparent upfront about all of this; others try to make their money by getting you completely confused. Basically, unless you have the mind of a corporate lawyer, there is really no way you can compare one offer with another.

The best way to make your way through all of this is as usual to learn enough about everything. You need to read up enough about the whole business so that you understand the terminology the business uses. Ask to see the fee schedule and sit down and evaluate it properly. Make sure that you don't sign a long-term contract; and be sure that whatever you do, you don't go with an unreliable operator just a pinch a few pennies.