What is Free Payment Processing?
Free payment processing; otherwise known as convenience fee payment processing certainly is a creative way for business owners and managers to eliminate the high cost of accepting credit cards and debit cards. In today’s fast paced world the majority of consumers and business-to business (B2B) decision makers prefer using plastic as opposed to cash when paying for products and services. This statement holds true in nearly all industries across the board. If your business does not accept credit or debit card payments than you are taking a huge risk of losing customers to another business that does.
For example, have you ever walked out of a store or other type of business without making a purchase only because the cashier informs you that they only accept cash, and you forgot to go to the bank machine? Most people have. That being said the merchant fees that most credit/debit payment processing companies charge your business for the right to accept credit and debit card payments certainly add up quickly. In the dog eat dog world of business, spending hard earned money on all of those excessive fees is like wearing milk bone underwear to work everyday.
Why is Free Debit and Credit Card Processing Important?
We are taught from a young age that saving money is equal to making money. If you did not learn that lesson as a child you quickly figure it out as an adult, especially when you are running a business. That is exactly why you shop around for the best prices on equipment, office supplies, and pretty much anything you need in order to run the business. As a smart business owner or manager you realize that each and every dollar you save equals more money in the bank at the end of the day.
How Much Are Merchant Fees Costing Me?
So the question that remains is why do you sit back and pay those excessive credit card and debit card-processing fees when they are hurting your bottom line? Is it because you believe it is the cost of doing business in the current economic environment, or is it because you do not believe that there are other options available to you? Either way the good news is that Free Payment Processing is a solution that allows you to accept credit and debit card payments without having to pay the merchant fees out of pocket.
At this point you must be asking yourself what exactly is free payment processing, and how does it work? However, it is extremely important that you first have a clear understanding on the tremendous impact that paying for credit and debit card processing fees actually has on your business. Companies of all sizes from the smallest to the largest are required to pay a processing fee in order to accept credit cards and debit cards as a form of payment from their customers/clients. The fees typically range anywhere from 1.95-percent of the purchase price all the way up to five-percent of the purchase price.
Some credit and debit card processing companies actually charge small businesses higher merchant fees due to the fact that they produce less business than their larger counter-parts. Since the vast majority of customers/clients pay for your products and or services with credit or debit cards the fees add up extremely quickly whether your company is small or large. At this point we should put some figures together to show you how much the merchant fees are actually costing you.
In the following example assume that your business grosses $25,000 per week, ninety five-percent of your customers/clients pay with credit or debit cards, and you are charged a five-percent merchant fee.
$25,000 gross x 95% = $23,750 in credit and debit card transactions per week.
$23,750 x 0.05% merchant process fee = $1,187.50 per week in unnecessary fees.
That equals $5,145.83 per Month or a whopping $61,750 per year.
Although five-percent may seem like a small sum at first, it certainly adds up quickly. It is also important for you to know how the merchant fees are broken down. Your customer’s bank charges your company an interchange fee. The credit card company charges your business an assessment fee, and your credit card processing company charges you a transaction fee as well. There certainly are a lot of other companies charging your business for the right to accept credit cards and debit cards. This area is exactly where free payment processing comes into play.
The assessment, interchange, and transaction fees do not go away, it simply becomes a matter of who is paying for them. With free payment processing the cost of doing business is passed on to your customers/clients. In concept they are the ones that decided to use credit cards and debit cards in order to pay for the goods and or services that your business has provided. So why should your company have to pay the price for that right. There are certain restrictions that you need to be aware of.
The major credit card companies, such as Visa and MasterCard have set up a strict guideline of acceptable practices. In addition recent Federal and State laws have limited the types of transactions and businesses that are allowed to incorporate the use of free payment processing and pass on the fees to their customers/clients. Convenience fee credit and debit card processing is currently available to the following industries.
- Billing and Collection Companies
- Medical Based Offices such as Doctors
- Telecommunication Companies
- Utility Companies
All of the industries listed above are allowed to incorporate free payment processing, convenience fee processing and utility payment processing fees into credit card and debit card transactions. For example, if a doctor’s office visit is $100 and the merchant fee is 5% the bill can be a total of $105. Since there is so much involved with the process, it is crucial to only work with an experienced free payment-processing specialist such as Payment Savvy. Our team of experts will guide you through the process each and every step of the way. Please contact us at www.MyPaymentSavvy.com for further information. We look forward to working with you.