The amount of money you withdraw via your payment system will directly impact the success of your business.
Due to payment processing, small businesses face numerous challenges, but dealing with that challenge helps turn a profit. Any time you can decrease expenses or increase revenue, it’s good for your bottom line. Here are seven ways you can do both:
1. Do Your Research
Before selecting a payment system, do some research on your options and what will work best for your business. The Federal Reserve Payment Study offers an incredible amount of information, including details on the average costs merchants pay to accept debit and credit cards.
This will help you gain a better understanding of the industry standard for merchant fees.
2. Know Your Federal Reserve Rules
The Federal Reserve mandates which merchants can be charged, how much they can be taxed and when they can charge those prices. Merchants who disregard these rules could find themselves severely constrained or completely cut off from payment processing services. For instance, if your business accepts credit cards and you charge more than what the Federal Reserve requires, your processors will likely cut you off. However, even if merchants do follow these rules, they may still be charged higher prices by their processing banks.
Consumer protection laws also protect cardholders who plan to make purchases with a debit or credit card. If a merchant is charging an excessive fee, the cardholder can dispute it.
3. Shop Around For The Best Rates
Once you’ve decided which payment system(s) is best for your business, you can begin shopping around for the best rates. Most processing companies have a long history of working with businesses just like yours and will offer competitive rates. Getting quotes from two or three different processors should be more than enough to find a deal that’s right for you.
4. Make The Most Of Fees
The fees a processing bank charges a merchant can be expensive, but there are ways you can save money. If your business accepts checks, for example, have the customer pay with a company check. This cuts down on costs associated with processing paper checks and cuts out any risk of bounced payments. Most processors will pass these savings onto their customers.
5. Offer Discounts For Fast Payment
Your customers typically have 30 days to pay their bills after purchase, so you can set up your payment system to offer discounts for faster payments. This will encourage customers to get the bill delivered sooner and help you get paid faster to collect more revenue on time.
6. Encourage Customers To Pay With Debit
Not all customers carry a credit card, but virtually everyone has a debit card. Encourage your customers to pay with their own money by offering incentives for quick payment or discounts for debit payments. When funds are pulled from a customer’s bank account, it saves processing fees and ensures greater control.
7. Offer A Monthly Payment Plan
Accepting credit cards is difficult for some business owners because their customers can’t pay until they’ve received their monthly statement. Offering a monthly payment plan may be the solution you’re looking for. Processing banks can set up automatic payments that are deducted from your customer’s bank account every month, which will save you time and allow you to receive funds more quickly. If your customer struggles to pay their bill in full, offering a monthly payment plan may be the solution.
The payment processing industry is competitive, and rates can change daily, so business owners must shop around and compare rates regularly. Letting customers know they will receive discounts for faster payments or offering incentives to pay with debit cards instead of credit cards will help keep costs low and maximize your profits.