Almost every business recognizes the benefits of allowing customers to pay with plastic. However, most people go through their bank for credit card payment processing, which could be costing them a fortune. Instead, there are other options and tips to help you get the best choices without paying too much.
Who’s Involved With Transactions
When customers pay with plastic, there are multiple parties involved. The merchant receives the payment (you), the bank you use to provide their merchant services (the acquiring bank), the bank who issued the cards to the customer (issuing bank) and your client.
The issuing bank lends the money to the customer, and they go to your store to make a purchase (or online). They swipe their plastic and your bank loans you the money. Your bank puts in a request for payment from the customer’s bank, and the customer’s bank pays your bank.
In the explanation above, there are costs for everything. While the customer’s bank may not charge them extra, they might. However, both the issuing and acquiring bank charge fees for the lending of money and the movement of the money. While these costs are small, they are still present.
However, banks are notorious for marking up the costs, so they make money, as well as the credit card company. Therefore, paying processing fees can be higher when dealing with banks directly. By choosing merchants (a third-party company), you can save money by having lower fees. However, you may already be getting the lowest rate possible and may not need or want to change your bank.
The fees can also be different depending on the type of transaction, how much is spent and more. For example, internet and phone transactions are riskier, so you may be charged higher fees when people purchase using those means. Therefore, merchant services could be helpful in lowering those costs.
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