Businesses exist to create a profit.
Profits are generated when a merchant sells a product or service at a price that is higher than their actual cost.
While that sounds quite simple, it really isn’t that easy. Many merchants are not fully aware of all the costs involved with selling their goods or services.
Obviously, fixed costs like rents or mortgages are easy to determine, but other costs tend to be variable, which makes it difficult for merchants to know when they’re actually enjoying a profit.
One of the many areas for issues to develop occurs when credit or debit cards are accepted as payment.
That’s where the role of merchant services comes into play.
What Impact Do Credit and Debit Card Processing Fees Have on a Merchant Services?
While accepting a credit card or debit card for payment is a virtual necessity today, the actual costs of doing so should be carefully understood, as they impact the potential profit generated by the sale.
Having a terminal on-site allows merchants to accept the cards, but the fees for those terminals plus other fees can be significant.
That means it’s incumbent on merchants to review all charges levied for merchant services prior to establishing a relationship with a processor.
Since not every card processor levies the same, or even similar, fees for services costs between providers will vary.
Hidden or excessive fees can significantly reduce a merchant’s profit margins.
How Can Merchant Services Control Fees?
In reality, there is little an individual can do to actually control the processing fees of a provider.
However, every merchant can, and should, carefully review all the costs involved before establishing a relationship with a specific service provider.
Rather than simply agreeing to a contract with a provider because it appears expedient to do so, explore other options first.
Doing so can make a huge difference in the total paid for the services over the contract period.
One major issue that arises is leasing credit card machines.
In the majority of cases, the processor will promote leasing a machine as a convenient way to quickly get started accepting credit and debit cards.
However, the costs of leasing a machine add up over the term of a contract.
Industry experts recommend merchants consider purchasing a credit card machine rather than leasing. While the upfront cost is higher, the long-term advantages are significant.
Monitoring Monthly Fees Pays
While the majority of merchant services are honest, there is always a potential for errors to occur. That means merchants are strongly encouraged to monitor their sales continually to ensure there are no errors occurring in the posting of sales.
In addition, reviewing the fees charged every month is recommended, as processors will make mistakes or make changes without providing adequate notice.
The use of credit and debit cards to make purchases is far more likely to increase rather than decrease in the future.
That suggests merchants must be fully aware of all the fees charged by their provider and be prepared to make changes, when necessary, to protect their profit margins.
When questions arise related to credit card services, review the current services with your bank or other involved parties to ensure you’re not paying more than necessary for the services provided.