Low cost credit card processing solutions to increase small company’s profitability
It must be difficult to spend money on card payment processing fees. Card processing charges must be a burden for Irish SME owners, almost half of SME’S fail at the initial stage of their existence.This blog will help you find out Top 10 Payment Trends that Irish SMEs Need to Know
By 2024, card payment volume is forecast to increase by more than 33%, while cash payment volume is projected to fall to roughly 27% of all transactions. Without the capacity to accept credit cards, the company’s future might be affected. Businesses must take credit cards and make a profit at the same time.
Choosing the lowest credit card processing provider can help you save money on credit card processing costs and boost the company’s profits. For low-cost credit card processing, weigh your alternatives carefully before choosing a payment processor, and pick one that offers the best value for the services you want.
Consider the size and volume of your sales while deciding on the most cost-effective pricing structure. There are ways small businesses can get low cost credit card processing.
Price comparison of payment processing services models to see which one is suitable for business
Amount of fees are charged by payment processors for using one of these three pricing models. Let’s compare and evaluate which one is best for the profitability of small businesses.
Tiered Pricing
Many companies adopt tiered pricing, which divides credit card transactions into three categories:
Qualified
The “swipe rate” is another term for qualified transactions. When a credit card is physically present and swiped through a credit card terminal, this fee is applied. This usage model is an “ideal” case for both the merchant and the issuing bank, as it provides the least risk.
Mid-Qualified Transaction
Transaction that do not need the physical presence of the card. The transaction must be manually entered and the Address Verification Service must be used (AVS). The following information must match in order for the transaction to proceed:
• The number on the back of the credit card.
• Expiry date.
• Address / zip code of the consumer.
Mid-qualified transactions are somewhat more expensive than qualified transactions.
Non-Qualified Transaction
Non-qualified transactions can happen in a variety of situations
• The card data was manually input rather than using the AVS
• The card is a business or commercial card
• The transaction is a batch transmitted more than one day after authorization.
When compared to the other types of qualifying sales mentioned above, these transactions are more expensive for the merchant.
Flat-Rate Pricing
When using interchange-plus pricing, business owners will pay two types of processing fees:
• The interchange cost for the card category used.
• A portion of the credit card processing service’s markup.
Advantage: Interchange pricing makes the process transparent and easy to understand that there’s no confusion about fees going to each party.
Disadvantage: is that these costs may rapidly build up, and an increase in each party’s expenses might eat into your profits.
Furthermore, credit card processors’ mark-ups can vary significantly, so company owners will need to examine these prices when deciding which credit card processor to use.
Interchange-Plus Pricing
Business owners who use interchange-plus pricing will pay two different types of processing fees:
- The interchange fee for the category of card used.
- Percentage mark-up from the credit card processing service.
Advantage: this makes the process transparent and easy to understand since there’s no question about which fees are going to each party.
Disadvantage: these fees can add up quickly, and a spike in fees for each party can put a significant dent in your profits. Plus, the mark-up assigned by credit card processors can vary considerably, and business owners will have to compare these fees when evaluating their choice of credit card processor.
Membership-Based Pricing
A fixed cost is charged on a monthly or annual basis for membership-based pricing. There will be a fee per transaction and a markup charge in the form of a set membership cost, similar to interchange pricing. Advantage: Fees are generally straightforward to include into their operational budget on a monthly or annual basis. Restaurants and other companies that swipe cards frequently and for little amounts of money may be able to save money by paying membership fees rather than paying for each individual sale.
Membership prices vary widely amongst processing firms, as they do with other models, and you may be bound into a contract depending on the provider. This lock-in demonstrates the need of thoroughly comparing firms before making a decision.
Of course, the best way to save on credit card processing fees is to not pay them at all! How is this possible? Hire best service provider who offered to compare different costs and decide which processing method is suitable for the business.
