Why High-Risk Credit Card Processing Fees can Ruin Your Bussiness

The vast majority of your clients today will make payments with a debit or credit card. It’s so much easier than carrying around cash, not to mention safer. As a merchant, you want to accept as many forms of payment as possible, including credit cards.

Most credit card processing companies will charge you a fee for the service. They’re providing a way to connect your credit card terminal with your bank account, as well as the software required to process the payments. It’s expected that there will be a fee for the service.

But what you may not know is that ALL credit card processing companies also charge you a per-payment fee. It’s usually a pretty low fee: 1-2% of the transaction. Some will charge lower rates, which means you’ll lose less on every transaction. However, in some cases, the credit card processing fees can be a lot higher—as much as 4 to 6%.

If the fees are high, you could end up in serious financial trouble. You’re charging a fair price for a good quality product, but you have to make sure it’s a price your customers are willing to pay. But, if you’re being charged transaction fees on each credit card payment, you may have to do one of two things:

  • Raise the price on the product. This may lead to customer dissatisfaction. After all, your customers are expecting to pay a price comparable to other similar products on the market. Not everyone will pay the higher price.
  • Accept the loss. This can affect your bottom line in a very serious way. You can’t raise the price, so you have to absorb the 4-6% fee. This leads to a reduced profit on each payment made, which reduces your total income. After a few months/years, you may end up losing money because of overhead costs.

The truth is that NEITHER is the desirable outcome. You don’t want to drive away customers by raising the prices, nor do you want to settle for the higher fees.

Instead, your goal should be to find the credit card processing company that charges you the lowest possible rate for the best possible service. Sometimes it’s worth paying a slightly higher fee for greater software and processing capabilities. However, you should always work with a credit card processing company that charges low, reasonable fees for the service.

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