It may surprise many to know that one of the biggest costs of running a business are the fees for processing credit cards. Though accepting credit cards is vital to the success for any business, it doesn't come free. Merchants have been absorbing the costs for years, and, even though it can be possible to negotiate lower processing rates, more consumers are paying with credit cards rather than cash. This means more money out of the pockets of merchants.
At a loss of how to accept credit cards without feeling the financial pinch? Zero-Cost credit card transaction processing (known to some by the less accurate term "zero-fee") may be the answer.
In the simplest of terms, zero-cost transaction processing passes the fee for using a credit card on to the consumer. Instead of a percentage getting taken out of monies earned by the merchant at the end of the day, customers will see a fee added on to their bill when they pay. This fee is a small percentage of the purchase price - also known as a cash discount.
While this sounds great for the merchant, it can be unsettling to the customers who don't want to see more money added to their bill. Here are a few things to keep in mind to calm any anxiety around this new way of paying.
- Communicate, communicate, communicate - Conspicuous messaging throughout your location or ecommerce site about credit card fees is key, not only that, it's required. Reminding them as they swipe, tap, key in, or hand the card to a cashier is yet another opportunity to make them aware of the additional fee they are going to see on the charge. Customers should never be taken by surprise when they get their receipt.
- Paying additional fees is not a foreign concept even if credit card fees are relatively new - From ATMs, to concert tickets, to checking a bag on an airline, consumers have been paying additional fees for years. Businesses like gas stations have had different prices for cash and credit payments for quite some time, so asking customers to pay the cost of a credit card transaction isn't a radical notion.
- Technically, credit card fees have always been there, consumers just haven't seen them - When pricing products, payment fees have traditionally been built into the price the same as payroll, utilities, insurance, etc. By separating out the cost of using a credit card, only those who use the service will incur the cost.
- A few dollars on a payment slip may seem insignificant to a customer, but it quickly adds up for a business - Think of how many credit card transactions happen daily, weekly, monthly… While an unhappy customer may wonder what the big deal is about the business absorbing the cost of the transaction, it's not just one transaction. It's many credit card transactions and they add up quickly.
Think of it this way: Let's say the average fee Business A has to pay for credit cards is $1.50 per transaction. They have on average 20 credit card transactions per day. With zero-cost processing, that's a savings of $30 per day, $210 per week, $840 per month, $10,920 per year. Think of what improvements Business A could make with nearly an extra $11,000 annually.
Zero Cost per Transaction credit card processing is growing in popularity among businesses and shows no sign of stopping. Let one of Newtek's Payment Specialists help you determine if this is right for you by calling 1-800-277-6990 Ext. 13473
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