Simpler Smarter Savings

When searching for a credit card processing company, new business owners need to be aware of the category that describes the business. For credit card processing, businesses fall into groups such as retail sales, Internet commerce, service companies and so forth. The per-transaction fee and discount fee charged to each merchant is highly dependent on its business structure. For example, a dollar store has hundreds or thousands of transactions every day, while a company providing legal representation may only have a few. In the latter example, the law firm would need to find a credit card processing company that charged a low amount percentage per transaction.

There is a variety of fees the new business owners need to become educated about prior to signing up for credit card processing for the first time. Before the gateway payment is established, the merchant must pay a set-up fee. Some credit card processing companies wave this fee in an attempt to attract new merchants to their services. It is up to the merchant to analyze the rest of the fees to make sure they do not offset the initial savings.

Companies that are providing services to their clients instead of merchandise require a different type of payment gateway account and need to pay special attention to the per-transaction fee and the discount rate. The per-transaction fee is an amount charged by the credit card processing company that is in addition to taking a percentage of each sale. A typical per-transaction fee is around 30 cents. That is going to be far less significant to a company selling $1,000 in legal service than one selling a pen for a dollar.

The discount rate is the fee that is of most concern to service providers. This is a percentage of the total sale paid to the credit card processing company in order for the merchant to accept payment from the customer. If the discount rate were three percent, the law firm would pay a $30.30 swipe fee on a $1,000 transaction while the dollar store would pay 33 cents for a purchase of $1.00.

In order to determine if their company is getting the best possible rate, the business owners needs to have three figures available. These include the company’s average ticket price, the per-fee transaction and the discount rate. If the average ticket price is $50, the business owner takes that figure and divides it by the per-transaction fee. With the sum of that transaction, the business owner should add the discount rate percentage to arrive at the total. By experimenting with different amounts, the business owner can compare the overall rates of several different companies and make an informed decision.