How to Reduce Your Credit Card Processing Fees

April 10, 2012 by  Filed under: Credit 

A recent news report disclosed that small businesses across Canada are reporting hidden charges and misleading sales practices in their dealings with some of the contractors who supply them with credit and debit card machines. Merchants can pay up to five per cent of the value of a credit card transaction in discount fees, plus flat transaction fees, monthly minimum fees, and chargeback fees, in addition to making expensive monthly payments on leased terminal equipment.

Electronic Payment Processing in Canada

Electronic payments in Canada consist of debit cards, credit cards, gift/prepaid cards and other electronic media. In recent years, this market has evolved to the point where the complexities and nuances of accepting and processing electronic payments requires a level of expertise and understanding that is typically beyond most people’s comprehension. This situation is further exacerbated by the entry of new layers of sales organizations whose practices could be deemed as questionable or confusing.

In today’s market, a business no longer simply deals with its bank for electronic payments. Now, electronic payment services are sold by Independent Sales Organizations (ISOs) who sell multiple products including point of sale terminals, software and services to clients. ISOs then route transactions to processors such as Moneris, Chase Paymentech, Global Payments, First Data Merchant Processing and Elavon. In many cases, ISOs do not properly disclose the real cost of doing business or provide the levels of service required to properly support the client.

Point of Sale Machines – Lease vs. Buy

ISOs will try to talk you into leasing low-cost point of sale machines – the hardware and software needed to read and process credit card transactions. These leases are typically far more costly than purchasing the equipment outright, and lock you into making payments for the full term of the contract, whether or not you continue to use the machines. Equipment and software can often be purchased for less than $500 – and even less if used equipment is purchased.

Discount Rates Vary

A single discount rate for all transactions no longer exists. Discount rates could include both a percentage and a flat per-transaction rate. While there may be a single base rate, surcharges as high as 100 basis points per transaction are applied to the base rate, depending on whether the card is swiped or keyed or captured on line. A further surcharge is applied on loyalty cards (for example CIBC Aerogold) and business cards. In addition, there may be monthly, quarterly or annual fees, and monthly minimum fees.

Read the Fine Print!

Carefully read the written contracts and ensure that they accurately reflect fees, rates and terms quoted on the telephone or in person. Determine if there penalties for cancelling the contract early, for changing terminal equipment or changing the method of payment you choose to accept. In case of disputes, the terms and conditions contained in the written contract will be binding, rather than what the salesperson told you. Most of all, KNOW WHO YOU ARE DEALING WITH!

Level of Support

You will undoubtedly have occasions when you need to contact your merchant provider to obtain technical support or ask about a particular transaction. It is important that you choose a provider that provides the level of support that meets your needs, be it telephone, email or web-based live-chat.

Processing Times

When a transaction is processed, you will want to know how long it takes for the funds to be deposited to your bank account. Processing times vary depending on the provider and on the type of transaction being processed. Mail order / telephone order (MOTO) or internet transactions can take much longer to clear.

Getting the Best Rates

How do you get the best available rates on processing electronic payments? The reality is that without the help of an industry “insider” who has knowledge of the pricing structures, products and services available, you are at a significant disadvantage when attempting to negotiate fees.

Recognizing the challenge this presents to businesses, OTUS Group has acquired the expertise to assist clients in determining the best electronic payment programs, and obtaining the lowest possible processing fees. We bypass the ISOs and negotiate directly with the processors to obtain the most favorable rates.
The advantage that OTUS brings is that we act on behalf of the client and we are not affiliated with any party with a vested interest (such as processors, software/hardware vendors, ISOs, etc.). Our loyalty is to our clients, and our goal is to obtain the best electronic payment card service for our clients at the lowest possible cost.
For more information on steps you can take to reduce your card processing fees, please contact Richard MacNeill at 613-727-1230 ext 212 or rmacneill@otusgroup.com

Richard MacNeill, CMA, CMC is a partner at OTUS Group, a team of business advisors to business and not-for-profit organizations.

Article Source:
http://EzineArticles.com/?expert=Richard_MacNeill

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