Many businesses overpay for their credit card processing, possibly without even realizing it. So how do you know if you are paying too much?
There are three major ways to tell if you’re overpaying. The first one is to look for the word “non-qualified” on your monthly billing statement. If you see that word, there’s a good chance you’ve been paying too much. “Non-qualified” is associated with the tiered pricing model, in which case processors can randomly choose which transactions they want to charge you more for, not based on any legitimate reasoning.
If you want to lower your costs, you should switch to a processing company that uses interchange plus pricing instead. This kind of pricing structure distinguishes between different components and allows for more transparency in the reporting. Compared with tiered pricing, it usually leads to lower costs for merchants.
If you are using a flat rate processor, such as Square or PayPal, there is a good chance that you’re overpaying. These types of processors charge you for the simplicity of their systems, so while they are straightforward and upfront about their pricing, there are still better options if you want to pay less.
If your charges are mostly over $10 each and you process more than $2,000 a month, Square, PayPal or other flat rate processors are no longer the best solutions. If you want to save money, it’s important to find a processor with more competitive rates, such as the companies that use the interchange plus pricing structure. With this system, rather than a flat rate, you’re charged the exact cost of the interchange and assessments, with a separate markup fee. By finding the most competitive markup fee, you can pay the lowest costs. The important thing to remember is that while the big name processors such as Square or PayPal may be simple and appealing, they are usually not the cheapest options.
Finally, if you chose your current credit card processor from a “best processors” list, there is a good chance that it may not actually be the best option. Processors often set rates based on individual cases. Reviews aren’t really that helpful in determining which one will be cheapest for your business. Also, sometimes review sites are incentivized to give good reviews to certain processors. Just because a processor is recommended, doesn’t mean that it’s actually the one you should go with.
This is important to keep in mind if you are searching for the best payment processing company. The best processor is not always the biggest one or the one that is most talked about. In fact, these are both warnings to consider when choosing a processor. It is much better to do your own research, consider your processing needs, and then find the company that meets those needs in the most cost-efficient way.