Are you a small independent business struggling with decreasing profit margins? Is you credit card processing bill each month taking a bigger percentage of your profits? Today, debit transactions have far surpassed credit transactions for most small businesses. Maybe you are one of the few small independent businesses that has resisted credit card service due to the expense. What I am about to share with you will cause you to look differently at merchant services.
A reliable credit card processing service can help businesses increase sales by enabling the merchant to accept all forms of payment. However, merchant services service comes with a price tag attached to it. Just to name a few of those monthly fees that come with comprehensive service:
- Statement Fees
- Gateway Fees
- Monthly Minimum Fees
- Discount Rate Fees
- Transaction Fees
- Address Verification Fees
- Charge Back Fees
Then, there is also the expense of buying or leasing the credit card terminal. Also some companies charge a fee for setup costs. The total cost of credit card service can be a major expense for small businesses. In fact, in a small business where profit margins are small, a credit card transaction can take a large part of their net profit on the transaction.
Most merchants are often lured into a merchant service contract by a low discount rate being quoted. And most of the time that is all they remember about the cost of the service. However, the list of fees above clearly shows that there are many fees that are calculated into their monthly merchant service bill.
Of course all the fees mentioned above are for both credit and debit transactions. There are a lot of small businesses that are incurring mostly debit transactions. With the popularity of debit cards today replacing cash as the preferred method of payment, most small businesses are finding that their credit card processing statement is more of a debit card processing statement.
Recent statistics show that 90% of U.S. households now use debit cards and bank cards. In fact, the banking industry is now saying that consumers are making more purchases using their debit cards than they are using their credit cards. And the trend is growing as more and merchant services agent more people prefer to pay straight from their banks account with their debit card rather than carry cash.
An alternative to traditional credit card processing is a service called “Point of Banking”. This service allows the retail merchant to accept debit cards from their paying customers without the expense of traditional credit card processing fees.
“Point of Banking” machines looks like a credit card processing terminal, in fact, they are the same terminal. They are just programmed to accept debit cards. Unlike a credit card machine which costs the merchant a percentage of each sale, the “Point of Banking” terminal has a convenience fee that the customer pays so the merchant does not have to pay for any processing costs. The convenience fee is typically low enough that the customer does not complain about being charged a fee.
So, in essence, the “Point of Banking” service reverses the processing fee from the merchant to the customer. After all, it is the customer who wants the convenience of using their plastic card. The “Point of Banking” service from the merchants point of view simply gives the customer the option to be able to pay with their debit card.
Often times with a traditional credit card service, small businesses will set a minimum purchase amount or even charge a fee for small transactions. Of course, the problem with this practice is that, the major card companies have certain regulations that all their merchant customers must follow. One of those rules is that merchant are not permitted to establish minimum transaction amounts or charge a fee for accepting their cards.
On small ticket purchases the merchant can actually lose money on the transaction as a result of the processing fee they are charged by the credit card company. “Point of Banking” eliminates this problem for the merchant. The processing fee is passed on to the consumer. Of course the consumer is made aware of the fee before their card can be processed.