When running a business, money matters. Every business needs money to operate, most of which come from customer purchases. Today, there are lots of options for accepting payment.
Cash is great but, it is becoming a thing of the past. Nowadays, more people are turning to cards, as a safer and more convenient option.
To keep up with the times, companies must adapt. Accepting credit card payments is easy but, comes at a cost. It is always the goal of a company to keep as much money as possible.
To keep money in their hands, they have to think, what are the cheapest merchant services for small business?
There are several options out there. Understanding the way that transactions work is crucial. It saves companies from unaccounted fees that dip into profits.
The goal is to find the cheapest merchant services for small business that offers all options that companies need.
Before going into the cheapest merchant services for small business, we’ll introduce credit card transactions and typical fees attached.
Understanding Credit Card Transactions for Small Business
When deciding to accept credit cards, there is a cost involved. Businesses must think about both the cost of a credit card machine for small business and the fees.
Credit card machines alone are not very expensive, the average falling around $100. What could add up are merchant fees, which banks charge differently depending on a few factors.
Who decides these fees?
First of all, who decides these fees anyway?
Fees are calculated by the issuer of the card used. This means names like Chase or Capital One.
These issuers partner with the most popular credit cards services like Visa and Mastercard. From there, negotiations happen and these issuers work up a fee taken from each transaction.
Why fees and how do they work?
The fees are, in part, due to secure processing. During a transaction, the money involved passes between institutions and businesses.
This passing of money takes time and fees to process, something that issuers are not going to take the hit for.
For this reason, the fee goes directly toward the purchase amount, taking it away from the merchant.
This is not unfair, as each of these transactions happens in an instant and, secures money for both business and banks.
The fees charged for each transaction varies. There are a number of factors involved in calculation including the type of business, the amount charged, and the method of purchase.
For an idea of the average in the U.S, businesses that receive payments between the range of $10,000 and $250,000 see about 2.87% to 4.35% in fees.
As mentioned, several factors affect fees, even the type of card used. The averages for major credit cards are:
Visa – 1.43% to 2.4%
Mastercard – 1.55% to 2.6%
Discover – 1.56% to 2.3%
American Express – 2.5% to 3.5%
When looking for the cheapest merchant services for small business, these fees play an important role.
In addition to fees, some machines charge per month or purchase outright. This is an additional cost that merchants have to eat up.
Because these fees add up, finding the best deal that keeps money in the merchant’s pocket is crucial.
The Cheapest Merchant Services for Small Business
So, what are some of the cheapest merchant services for small businesses?
Well, that all depends. An online merchant account or high-risk payment processors come with higher fees.
These higher fees are a direct fault of the higher risk that banks face when processing money. In-person purchasing and cards with PINs like debit rack up the least fees. Before diving in, an in-depth analysis of business transactions will do some good.
Things like the types of payments businesses most frequently accept and the amount charged per product will help in decision making.
Then, the choice for the cheapest merchant services for small business becomes clearer. These services that provide the cheapest credit card processing for small business include:
- First Data
This system offers options for both in-store and on-the-go pay. Its global technology accepts payments of all types from all around the world.
While it is a great option, this one comes with the need to sign a contract, one that comes with fees if terminated early.
Worldpay made a splash in the business world. It’s powerful enough to accept global payments from all kinds of merchants. Fees are low and there is no signup or monthly cost involved.
Because they are newer in the game, they seem to be in the process of smoothing things out. Some fees are not clear, so be sure to read up and keep them clear.
Fees are not a worry with Handepay. There is zero minimum monthly fee with credit card acceptance
or PCI compliance. There are also zero fees for authorizations, something that is highly competitive. While it seems perfect, this payment system also requires a contract.
PayPal is well-known for a reason. Small to medium-sized businesses can benefit from their easy to use the system. Plus, there are very few costs involved in accepting payments.
The one thing that PayPal is not so great for is larger businesses. Once you reach over $10,000 per month in revenue, fees become much larger.
- Web-Merchant Services
What is best about this option is the transparency. All fees are put on the table and easy to understand. Options are seemingly endless, allowing businesses to choose the best for them.
Why Choosing the Cheapest Merchant Services for Small Business
The list above is a good place to start. Before signing contracts or getting into anything concrete, consider these few things.
Reputation speaks loudly for several reasons. It shows that service is trustworthy and is supported by users. When dealing with payment services, look for those that come with a solid reputation.
- Customer Care
It might slip your mind but, customer and technical support are important. Businesses need a service that is there for them at all times.
Giving both businesses and their clientele security and assurance that they will be there through anything.
- Compare Rates
We introduced you to the average rates earlier on. When searching for the cheapest merchant services for small business, always compare.
If rates seem high or far from average, move on. There are plenty of services out there and the best deal saves lots of money taken up by fees.
- Think About Needs
Overall, thinking about your business and its specific needs is key. Don’t choose services packed with things your business doesn’t need.
Go with services that provide all that is needed for the purpose of processing transactions and that’s it. Knowing your business is the best way to keep from losing unnecessary money from fees.
A Few Last Words
Fees are something that we cannot escape. Anytime money is at play, fees appear. Finding the cheapest merchant services for small businesses is a good way to avoid large fees. These fees add up and take profits directly from merchants. Fees and payments are not going anywhere.
They add security for both buy and seller. Plus, businesses need their profits to function. Providing customers convenient ways to do business is perhaps the most important investment.
Since credit cards remain the most popular payment method, every business needs to accept them, giving customers what they want.