How to understand bankcard cost of your business

watch your credit card payment cost

I visited merchants and business people everyday as a merchant service sales consultant. Only perhaps 10% of the business owners understand how their credit card terminal work and what should be the reasonable cost of taking credit card payment for their business.

Terminal: Do I need one or many? How much it should cost me? If you are a e-business or internet based business you real don't need one as a retail shop in a mall does. Even a retail store or a restaurant today does not necessary need one if you have a POS or PC that equips with a modern or IP connection.

I saw shops have more than one: for credit card, for food stamp, for age verification, for check service, for gift card. Actually they only need one for all the above functions.

I saw merchants pays a terminal ranges from $0 to $1,660. If you did not pay for it, there are usually strings attached, e.g., 5 years contract, high monthly fee, and/or high rate. If you pay more than $1,000 for a credit card terminal, you are a sucker. The cost between $500 to $800 will be a good one.

Processing Cost: a merchant pays 1) discount rate, 2) transaction fee, and 3) monthly fee for processing bank cards (Visa/Mastercard). So don’t just ask the sales “what your rate?” which is a question without good answer. Because transaction fee is as important part of cost, as to discount rates. I knew many cafe owners only know the rate and telling me that “you can’t beat my rate”. Later found out, they pay 30c per transaction which equal to 1.5% if their average ticket is $20.

Feel free to drop me a mail or fax me your statement and I can analyze it for you, free of charge.

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