17 Essential Questions A Massage Therapist Must Ask Before Choosing a Payment Processing Provider
by Matthew Hunt
(Canada)
Are you shopping for a Payment Processing Services? Most Canadian small business owners don't know what questions to ask Credit Card Processing Companies, resulting in many owners being shocked by the true costs when bills begin to arrive.
Fees and costs associated with debit card and credit card processing are somewhat negotiable. The best way to avoid being surprised is to ask the right questions. This article identifies 17 essential questions that every business owner will want to ask each merchant account provider.
Before you sign on the dotted line consider this:
1. What are the Credit Card Discount Rates?
Every Credit Card Processor will have this fee. Discount rates can vary on from as low as 1.59% right up to as high as 5.0%. The discount rate is really not a discount.
Discount Rates are a percentage of your sales that the Payment Processing Service Company charges the business owner to be able to offer their customers ability to pay with credit cards.
For example: If you sold $10,000 in Visa sales in one month and your discount rate was 2.5% then you would pay $250 in fees to your Credit Card Processor that month.
Merchant Account "Rates" vary and are dependent on:
* business model
* business volume (annual sales)
* average sale per customer
* type of product & service your business offers
* the way you process orders card present transactions or “card not present transactions
* how soon your customer receives a product/service after payment
All these factors above can all have a affect on what Discount Rates you and your business will qualify for.
Usually high-risk business will have higher discount rates (2.5%-5%). High risk businesses are ones that have:
* Higher ticket prices ($1000 plus per sale) * Businesses that process 40% or more of their sales through Internet/E-commerce or MO/TO * Businesses that take payment before delivering the product or providing the service
WARNING: Most payment processing companies agreements are for 3 years. Do not forget to ask: What would the termination costs be if you were to terminate your agreement early?
Most companies charge a $300 early termination fee that is retro-active from the time the agreement started. Also most agreements state that if you do not write them within a certain date of time at the end of your agreement the agreement will automatically renew itself for another 3 years.
2. Are "keyed in" Credit Card Discount Rates at a different rate then Swiped Credit Card Discount Rates?
The two questions you want to ask:
* What will the Qualified Rate be? Means card is present for the transaction Swiped
* What will the Non- Qualified Rate be? Means card is not present for the transaction Keyed in
Also, many Owners are not aware that Corporate Cards also are usually charge a higher rate then the Qualified Rate, usually 0.25% higher, but can be as high as a full 1%. Fortunately, most businesses have less then 5% of their credit card sales be made with Corporate Credit Cards.
3. What are the Transaction Rates?
Transactions fees are sometimes called IDP transactions. Every payment processing company has at least a transaction fee for debit and usually also for credit card transactions too.
It is become more common that any transaction that is made on your point-of-sale terminal will be considered a transaction and a fee will apply, whether is it is a void, debit, credit card, refund, batch close, etc.
Transaction fees can range from 0.05 cents up to 0.50 cents and can be different for each type of transaction, although typical Point-of-Sale Terminal transactions fees are between 0.08 cents to 0.15 cents.
Although, I have seen Payment Processing Companies charge as high as 0.17 cents to 0.25 cents, in which case, you may want to ask for a rate review or search for a new Payment Processing Provider.
Non Point-of-Sale card processing services like IVR, PC, & E-commerce processing transaction fees are usually much higher ranging from 0.35 cents to 0.50 cents.
4. What is the monthly cost for the Point-of-Sale Terminal?
Point-of-Sale Terminals are known as: Interac Terminals or Debit Card Machines or Credit Card Machines, but in the industry they are known as a Point-of-Sale Terminals and will be referred to from this point forward as POS Terminals.
Traditional Retail POS Terminals can hook up via a regular phone line (Dial-up POS Terminal) or a DSL High-speed Internet connection (IP POS Terminal) , and more recently to the Wireless Data Network making some POS Terminals wireless and mobile (Cellular POS Terminal).
Most Traditional Retail type businesss only need a regular Dial-up POS Terminal or an IP POS Terminal. Dial-up will work for the Merchant who does under 25 transactions a day. A Merchant who does a high volume of transactions and needs to move customers through a check-out line quickly should consider using an IP POS Terminal.
Most Bank related card processing companies offer a ‘rental ONLY program for POS Terminals. Rental costs can range from $20 right up to as high as $100 a month depending on the type of Point-of-Sale Terminal your business requires.
Private label card processing companies usually only offer a Lease-to-own or Buy option program on their POS Terminals. Lease-to-own usually run on 48 month leases with a 10% buy-out option at the end. Lease-to-own POS Terminal prices range from $30 - $80 dependent on type of POS terminal. Buy-out POS Terminal prices, typically run from $999 - $1800 (without taxes) dependent on type of POS Terminals.
Two very important questions to ask before buying a POS Terminal:
* What are the warranty conditions?
* Is the POS Terminal smart-card ready?
When renting a POS Terminal if you require a new POS Terminal is usually will be fixed or replaced at no cost to you. However, you pay rent forever. If you have been renting a POS Terminal for $40 a month for 5 years, then you just paid $2400. If you have been renting a POS Terminal for 10 years at $40/month then you just spent $4800 & no asset in your business. You can own a basic POS terminal for as little as $1000 and now have another asset in your business.
In terms of warranties, most private label companies will offer some type of warranty on the POS Terminal, sometimes at no extra cost, sometimes for an additional fee. There are even a few payment processing companies that offer a life-time warranty all inclusive in the original retail purchase price. Sometimes it is better to pay more for an all inclusive warranty on hardware with free software upgrades then to pay less with a limited warranty.
5. What are the Set-up Costs?
Every debit and credit card processing company will have set-up fees, some more then others. Set-up fees can range from $50 - $300. Usually the set-up fees are one-time only set-up fees for Visa, MasterCard, Amex, & Interac cards usually around $25 per card. Some companies also charge an initial set-up fee for programming the POS Terminal or a fee for initial training. Set-up fees can greatly vary from company to company.
6. Are there any Application fees?
Not all payment processing companies have an application fee, however, some companies do. This is usually a non-refundable fee, whether your business is approved or not. Applications fees can vary from non-existent to $300. To be continued at: http://www.canadian-merchant-account-services.com/payment-processing.html
http://www.Canadian-Merchant-Account-Services.com
