Offering contactless payment taking, or at least card payment facilities, is essential for the modern business with over 90% of all retail sales now conducted using card instead of cash.
The Covid-19 pandemic that began in 2020, changed our world in so many ways, and nowhere was this more evident than in the behaviour of consumers and the economy.
Many businesses have felt the pinch in recent times, particularly those with physical premises, as energy bills and the cost of goods has skyrocketed at a devastating rate.
Adapt or die is the name of the game and saving money wherever possible is essential to the success of the modern business. Not only must you offer as many payment methods as is realistic and suitable for your business, you must keep processing and hosting fees to an absolute minimum.
At albapay, we specialise in helping businesses across Scotland to do exactly that, providing them with everything from payment taking mobile card terminals to integrated EPOS systems from which they can manage their entire operation.
One of the biggest concerns we hear from our new clients is that their credit card processing fees are going up, cutting into their profit margins and limiting their potential for growth.
This was compounded in recent times by repeated increases in card payment transaction fees from companies such as Dojo who once offered some of the best value deals on the market.
Once upon a time, smaller shops often had a minimum transaction fee of £5 or so to ensure that they remained profitable but with consumers increasingly expectant of being able to pay for everything with card this is no longer a realistic option.
To help you minimise the impact of credit card processing fees on your business, we have put together this guide to the best way to keep them to an absolute minimum.
Types of Processing Fees
There are actually several different types of card processing fees to be aware of. Understanding exactly why you are being charged, and what for, is the key to reducing their impact.
Payment Gateway Fees
If you take online card payments, and you should, you need a payment gateway, acting as a third party between your account and the cardholder’s bank to process online sales.
The exact fee will depend on your agreement with the Gateway provider, with most agreements being fixed rates dependant on the number of transactions made.
PCI Compliance
Many of the fees on this list may seem unnecessary and simply a way for card companies to make money. PCI compliance fees are not one of them and provide an important role in protecting customer data, ensuring that it is safely transmitted.
Chargeback
If a transaction is reversed, customers can request a chargeback from their bank for any transactions they do not recognise, you can lose some, or all of the money from a sale. Unfortunately, the bank tends to often come down on the side of the customer in these situations.
MMSC
A Minimum Monthly Service Charge (MMSC) is a fee that is charged by card processing companies to cover themselves in the event of a low number of transactions. If you fail to meet an agreed threshold for sales in a month you will be charged this fee.
Set Up Fees
The cost of installation, setting up your transaction processing account, etc.
5 Ways to Keep Fees to a Minimum
Tip #1 Do Your Research
Many card processing companies are sneaky about the way their charges are structured, including extortionate MMSC fees that can be a pretty nasty surprise on a month when business has been difficult to come by in the first place.
Before agreeing to anything, or signing any contract, make sure to go over the fine print of the providers services to understand exactly what it is that you getting yourself into.
Tip #2 Back Your Business
If you are confident that your business is going to thrive and grow in the coming months, you might wish to opt for bulk processing agreement where you are able to achieve lower transaction fees as long as you achieve a certain number of sales.
Rates of under 1% are available, but only for certain businesses with a large number of transactions made.
Tip #3 Build a Custom Deal
Every business is different, so why would their card processing agreements be the same? Always choose an account provider that offers bespoke packages designed for your business type and that can expand as your business does. At albapay we specialise in creating these bespoke packages for all different sorts of businesses and would be delighted to hear from you.
Tip #4 Minimise risk
This might seem a bit contradictory given one of the other tips on this list is to bet on your business but this doesn’t mean you have to put the future of your company at risk. Try to avoid ‘risky’ transactions such as mail orders wherever possible, and look for agreements that have sufficient cover in place should your company go through a period of low sales, for whatever reason.
Tip #5 Use albapay
At albapay we specialise in providing our clients with low cost high quality payment gateway and payment taking solutions, with some of the cheapest installation and processing costs anywhere on the market.