Credit card payment processing can be tricky business for merchants, and oftentimes, payment processing is referred to as a necessary evil. Some payment providers often supply businesses with complex pricing models, as well as additional confusion in how processing fees are structured. As a result, many payment processors receive a bad rap.
Fortunately, for merchants that work with Payline, credit card payment processing is made easy by allowing businesses to select a plan that best fits their needs, not the needs of the provider.
In this post, our payments experts detail everything you need to understand about the payment processing solution you choose for your business. Between understanding all the options for your business and fee structures for certain business types, Payline aims to break down complexities and prove that credit card processing is more than just a necessity — it’s the solution your business deserves.
Understanding Your Options
As is the case with any major financial decision for your business, it’s a good idea to carefully consider all of your options before making a big change. When you choose to work with a card payment provider, look for a processor like Payline that offers a diverse, customizable payment experience that fits the needs of your business (not the other way around). No matter how big or small your processing needs are, your processor should have the solutions you need now and the solutions you will need in the future as you experience growth.
For starters, businesses should determine whether they need an in-store, mobile, or e-commerce solution to accept payments. Regardless of how you do business, you will need a solution (or several solutions) that fits your unique business needs.
Businesses with a storefront location will need a point-of-sale (POS) system along with a merchant account. A card reader will connect to a business’s POS system and submit the customer’s card information to the credit card company. The merchant receives confirmation if the transaction is approved or declined and money is processed by the credit card payment processing provider and sent to the merchant’s bank.
For a business that operates online, merchants require the following: a payment gateway, an online merchant account, and a shopping cart integration. Think of a gateway as the online version of a card reader — similar to brick-and-mortar businesses, money is processed by a merchant account provider once a transaction is approved and processed.
Businesses that are always on-the-go will need a mobile reader and an existing smartphone or tablet to take payments. Payments are processed similarly to the above, but merchants use a mobile reader to swipe or dip a card to take a payment from their device.
Pricing Plans to Fit A Merchant’s Needs
There are two different pricing structures that most payment processors use – tiered and interchange-plus; and, the best-fit pricing structure is one that is designed to help your business know how to accept credit cards. Our experts share below on why the benefits of interchange-plus outweigh the risks associated with tiered pricing models.
Tiered pricing describes a rate structure in which several hundred different processing rates are packaged into tiers that represent three different possible rates (referred to as qualified, mid-qualified, non-qualified). Most providers package the rates with varying markups. Unfortunately, there is no regulation behind how merchant account providers must package their tiers, which prevents merchants from knowing exactly how much their provider is making on each transaction. Although tiered pricing models seem prevalent among account providers, a more transparent pricing model is available in the form of interchange-plus pricing.
Interchange-Plus pricing is the most transparent pricing model (and the pricing model that Payline provides its customers). This model puts the power in the hands of the business owner by providing a clear, straightforward explanation of the charges in a merchant’s pricing model. The term “interchange” describes the rates that come directly from the card networks (companies like Visa, Mastercard, and American Express to name a few), and is split between the networks and the credit card issuing banks (institutions such as Wells Fargo and Citibank that issue credit cards to consumers. Note: some companies like Discover or American Express act as both bank and card issuer).
What business owners must realize is that no merchant or processing company has any control over these rates. Every merchant pays interchange, which varies based on the type of card your customer is using. The plus is what a credit card payment processing provider charges for their service. It appears as a very small percentage markup and a minimal transaction cost on a merchant’s statement.
Understanding Credit Card Payment Processing Fees
Depending on your business type, credit card payment processing fees will vary. Merchants who operate an in-store retail business require different equipment than merchants who only operate online, for example. We’ve outlined some of the most important fees merchants may face below.
Annual and Early Termination Fees
Some credit card payment processing providers may charge annual fees and termination fees. These fees can cost a business owner anywhere from a couple hundred to several thousand dollars before they notice they’re being charged. Many processors like to charge an annual flat fee, claiming that it goes to cover the services provided to the merchant, but this fee is usually included in the standard pricing structure. As for early termination fees, these are charged if a business breaks a contract agreement between themselves and their payment provider (tip: if there is a contract, it’s likely a merchant is paying for that, too). Business owners should avoid payment processors that assess these flat fees at all costs.
With businesses becoming increasingly reliant on digital payment solutions, it’s not too far-fetched to see why some payment processors will charge a business for sending a paper statement. Some processors, however, exaggerate these printing and mailing costs to reach (and in some cases exceed) $15 per month. We know that standard mail does not cost nearly that much to print and send, so this fee is usually a bogus fee that is greatly padded by certain processors.
PCI Compliance Fees
The Payment Card Industry Data Security Standards (PCI-DSS) are a set of requirements that all businesses must follow to protect consumer information in a secure data environment. Although becoming compliant is not a one-and-done task, the process of becoming compliant is far easier than the ramifications facing a business owner by not adhering to PCI security standards.
For businesses that are PCI compliant, the merchant account provider assesses a fee to help keep you compliant and provides opportunities in which you can become compliant if you are not meeting the necessary requirements. If your business is not compliant, however, a non-compliance fee will be assessed – a charge that may cost hundreds of dollars per year. Unfortunately, many credit card payment processing companies charge for PCI compliance or non-compliance without your full understanding of the charges.
The equipment or software required to accept credit card payments can typically be purchased for as little as $100 to $400. Some credit card payment processing providers will try to talk you into leasing the software or equipment, and while this may sound cost-effective, a lease on a $400 piece of equipment usually carries a high cancellation fee and can wind up costing a business owner thousands of dollars when they need new equipment — or need a new provider. Your terminals should be bought outright for a low, one-time cost, which can end up saving you thousands of dollars — especially if your business has multiple locations or requires more than one terminal.
So, When Can I Get Started?
Having the right credit card payment processing solution (or solutions) for your business matters to both merchants and consumers. While one solution might seem great for the business owner, ultimately the right choice will be the one that makes a customer’s buying experience frictionless.
Working with a payments partner like Payline will provide you with secure and flexible credit card payment processing solutions that can be tailored to the needs of you and your customers. We also offer merchant services solutions for medical practices as well as growing businesses with our enterprise business solutions. Recently, Payline also began offering a merchant cash advance solution called Payline Capital, designed for businesses who need a flexible funding option to see their business reach new heights.
Make sure that your business is receiving the best rates for credit card payment processing when you work with Payline. A dedicated representative can even walk you through your current processing statement and highlight the areas in which you could be saving significant amounts of money.
No matter the size of your business, Payline’s flexible, dynamic pricing options for better credit card payment processing can show you why it’s time to ditch cash-only or outdated operations and embrace the future of payments with solutions designed to fit your unique business needs.