It Could be a Costly Step
Watch your step; there are plenty of new costs when starting a new business, and plenty of new costs for well-established businesses for that matter. In today’s online and mobile payment world, it’s becoming direr than ever to be able to accept payments other than cash. To do this you need a merchant account, and to get the best one you need to know your price. Credit card processing can get expensive quickly, but your new customers acquired by accepting cards will likely outweigh those costs! Let us show you how to sign up for quality and low rate merchant services …
How to Find the Lowest Rate
Every card processor has different rates, features, contract terms, and monthly fees. In truth, the lowest rate you’ll find will rely heavily on your type of business, transaction size, and payment type of most of your customers.
Garage Based Micro-Business
Most of the time we don’t advocate for payment facilitators that charge a high single rate with no monthly fees. However, for micro-merchants (those that process less than $2,000 per month) it is a favorable pricing plan because of their low volumes. If you go several months without sales, it’s OK because there are no monthly fees. A Flat pricing model makes the most sense for your extremely low-volume card table in your living room type of business. You will pay the exact same per-transaction fee no matter the transaction type, and typically you won’t have a monthly fee tacked on.
The Average Small Business
For businesses processing more than $2,000 per month, most businesses will look at the advanced features and lower rates of a merchant account rather than the flat-rate pricing of a payment facilitator. Remember, real businesses deserve real merchant accounts. The average small business in the US processes $17,000 per month in credit card sales.
Chances are that if you process between $2,000 and $50,000 per month, most merchant services providers will try to quote you on tiered pricing. The reason for this is that tiered pricing beats out flat-rate pricing. So when micro-merchants grow out of their garage and have enough revenue to have staff and a physical business location, they will actually save money going to tiered and away from flat pricing. The 2nd reason processors push tiered pricing is because there is still lots of profit in it for them, and you’ll never know how much they are making on you.
The tiers in tiered pricing are rather arbitrary: qualified, mid-qualified, and non-qualified. All processors could set their own definitions for these 3 price tier buckets. For example, one processor could say swiped debit and credit cards are qualified, while another could say only swiped debit is qualified. One processor could say all rewards cards are mid-qualified, while another could say all rewards cards are non-qualified. See an example of tiered pricing here:
Mid-sized Businesses to Enterprise Level
Almost all large businesses opt to use Interchange-Plus pricing. This is because they have been around a while and their accountants, controller, or CFO has analyzed merchant processing fees many times before and realized that it is the lowest cost of all merchant account pricing plans. Interchange-plus is the best bet for you, too. It essentially charges you the wholesale cost of processing a payment, plus a small percentage of the sale amount. That small percentage is what goes towards your card processor as transparent profit because they need to keep the lights on too!
Low Rate Merchant Services Made Easy
Although interchange-plus may seem the most complicated because there are so many different types of interchange rates, it is the cheapest form of processing for any business. If you’re still curious as to how it can help you out, whatever your business type is, check out our interchange-plus low rate merchant services!