by Trisha Echols
If you think that credit card processors alone dictate the amount of your processing fees , you are wrong. Almost 75% of the fees and charges depends on you and your business. Yes, you heard it right. It is you and your business that largely determines your fees. There are things which you have full control that can give you a higher or lower processing charges.
Listed below are some factors which can cost you extra credit card processing charges:
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YOUR CREDIT RATING
If you have a high credit rating, chances are that you will get some pretty competitive credit card processing deals. On the other hand, poor credit rating does the opposite. It jacks up your fees and charges. Worse, it can even be the deciding factor for processors to turn down your processing application. So if you have a low credit rating, it’s a good idea to fix it up first. . Pay your debts. Settle your unpaid balances. Strive to gain a high credit rating so you can negotiate for low credit card processing charges for your business.
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NATURE OF BUSINESS
What you sell have a direct impact on your fees. If you sell books, garments, computers, etc… , you will have lower credit card processing fees. But if your business is about adult entertainment, gambling or any other high risk endeavors, you will incur a higher processing charges.
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BUSINESS YEARS
If your have been established for a long time, then you will get a competitive pricing from your processor.This is because your business has already established itself and hence it is considered stable. Those who are new or just starting in the market incur a different and a much higher charges.
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YOUR MONTHLY SALES VOLUME
Your expected gross receipts for a month will affect your credit card processing fees. The higher your sales volume, the lower will be the processing charges you pay. Low monthly sales volume gets stiffer processing fees. The good news is, you can still negotiate for a lower amount if you get the right type of credit card processing service from your processor. Contact your prospective processor if you want to learn more about this topic.
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NUMBER OF CHARGEBACKS
Merchants get chargebacks from time to time. As you might have read from other articles, a chargeback occurs when a customer disputes your charges on his/her credit card. A few chargebacks will not hurt you, especially if you can positively show proofs and validity of these credit card charge disputes and gain a ruling in your favor. On the other hand, credit card processing companies collect chargeback fees for each chargeback incident against your favor. Too many chargebacks can cost you money. Your processor can even terminate your credit card processing service if you incur a lot of chargebacks for a given period.
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NOT ADHERING TO CREDIT CARD PROCESSING SECURITY PROTOCOL
You should carefully follow the security protocol for each credit card transaction. This means that, as a merchant, you should ensure that these cards are legitimate in the first place. Also, you must always implement AVS or Address Verification Service. If you authorize a card transaction without the AVS, then you would incur penalty charges for such infraction. Continued neglect could lead to a significant amount which can financially affect your business.
There are still other ways where you will incur extra credit card processing charges. These include not batching up your transaction at a given time period, incurring downgrades, not receiving card authorization signatures, etc.. Knowing these negative factors and avoiding them could go a long way in reducing your credit card processing fees and charges.
( Trisha Echols currently is a long-time financial consultant with established consultancy offices in Amsterdam, Halifax, Malaysia and other key cities. Her clients belong to the top 500 companies in England and in the United States. Miss Echols serves as business consultant for a number of credit card processing companies, among them www.creditcardprocessingexperts.com. She does lectures on strategic business practices and also writes for various magazines on business matters.)
