When it comes to accepting credit cards, cost is always a factor for merchants. After all, credit card processing costs often account for a good chunk of their monthly expenses. As with most business expenses, it’s understandable that merchants want to keep them as low as possible. How low depends on a number of variables, some of which the merchant can control and some that they cannot.
Merchant services providers consider a number of factors when calculating merchant account fees. One of the most important is the type of business that you operate. In other words, what do you sell, and to whom? Certain businesses are considered high risk, including those that are adult oriented. Some industries are more prone to fraud and chargebacks than others. Being high risk does not mean you can’t establish a merchant account, but you may end up paying higher processing fees to accept credit cards.
Another factor is the type of cards that you want to accept. Basic “plain vanilla” credit cards and debit cards typically accrue the lowest processing fees. Rewards cards that offer incentives like cash back, travel or airline miles cost more to process, and you’ll pay the most to accept business credit cards with rewards.
A related factor is the type of credit card transactions that you expect to do. If you run a traditional retail operation that generates mostly face-to-face transactions, congratulations! You’ll pay less for these card present transactions than you would for a card-no-present (CNP) transaction on your commercial website or a mail order/telephone order (MOTO) transaction. This is because the risk of fraud is greatest when neither the cardholder nor the credit card is present.
Merchant services providers may also take into consideration the amount of time between when a purchase is authorized and when it’s settled. For example, a transaction is typically authorized at the time the sale is made. Under some circumstances, however, there may be a delay in delivering the product to the customer. Credit card processors like it when the process unfolds as expected, and they may charge a premium if it does not.
These are just a few of the variables that go into determining how a merchant services provider will structure your credit card processing package. If you require more than one merchant account — and many diversified merchants do — your cost will also be affected. That’s why it’s important to be upfront with a potential provider when you are negotiating your deal.
TransFirst tries to make our credit card processing rates and fees as understandable as possible. We even offer a service called TransFreedom™ that uncomplicates payment processing by offering a flat-fee, flexible rate structure that’s based on your monthly processing volume and average ticket size. Talk with one of representatives today about TransFreedom or to compare your current credit card processing rates with ours.