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In addition to the standard fees the credit card provider charges, you will need to consider costs for equipment purchased in order to do the credit card processing, along with additional hidden fees.
Equipment
Typically ranging from $150 to $700 for the most basic model, credit card processors could be much more. For example, if you desire a wireless system, you should expect to pay much more from $500 up to $1000. More sophisticated and advanced machines can be even more expensive. If you are not able to make this type of investment, your business can also lease a machine for a monthly payment as little as $20 a month. As with everything, the cost(s) really depend on how many additional features the machine has and how many services it offers. If you are looking for the right long-term approach, you should make the initial investment on the credit card processing machine and save money and resources in the long run. However, if you want to try out different models, leasing out credit card processing equipment may not be a bad idea either. If you are not sure about accepting credit card processing in the long term, you can lease a machine for a trial period and once you determine you want to accept credit cards permanently, then you will have the knowledge to make an informed purchase.
A package deal may also be an option and sometimes terminals are part of this progran when setting up a merchant credit card processing account and can save you money if you purchase the terminal at the same time. To administer credit card processing online, you just need a computer, a web merchant account, and a valid internet credit card processing company to verify transactions.
Make note that if you prefer to have a one-on-one transaction with customers via verification over the phone, this takes more time than electronic transactions. If you have limited resources, it may be a wise decision to conduct electronic transactions because it saves time. In addition to wasted time, you might also run the risk of insufficient funds if you wait and have your company process the charge.
Additional Fees
Along with equipment fees, you should also expect to pay a discount fee when using the services of a merchant account provider. A discount fee is the percentage each provider charges you for each customer transaction. Banks and large companies consider your credit history, amount of charges and type of transactions processed to determine this fee. Typically, credit card processes have two rates:
one for transactions in which the card is absent, such as Internet purchases, and one where the card is present and the transaction is instantaneous.
Difficulty arises when companies add in additional fees. Some credit card processing providers will charge fees on top of the discount fee, such as a non-refundable application fee or set-up fee. Depending on the provider, the application and set-up fee can range from $200 to $300. Most merchant account providers charge a discount rate between 1.5 and 2 percent for transactions in which the credit card is present. For those transactions where the card is not physically present (credit cards used online), the discount rate can range between 2.2 and 3 percent. Also keep in mind that some companies require a monthly minimum, usually around $20.
Before you start working with a credit card processing vendor, get all these additional fees and charges in writing in your contract agreement and review thoroughly before signing. Sometimes customer service fees and programming costs can be added to the agreement so pay close attention to the finite details in your agreement before signing. If you find that any part of the contract seems confusing and ambiguous, do not be afraid to ask for clarification.
Finding and signing with a reputable merchant account provider should be a priority to maintain the well-being of your business. You may have to agree to a higher transaction fee, but working with a reputable and legitimate vendor may be worth the extra costs.
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