What You Need To Know About eCommerce Credit Card ProcessingPosted: December 4, 2019
If you run your own e-commerce site, you know the importance of working with a trusted credit card processing partner. In a recent survey by Deloitte, 83 percent of respondents expressed concern over how their payment data is stored by online retailers. Protecting your customers’ personal information has never been more important. Credit and debit card scams now account for nearly 32% of all reported incidents of online fraud. Additionally, PCI compliance changes, pricing structures and platform flexibility must be considered before selecting a payment processor for your business.
What does it cost to work with a credit card processing company?
When choosing a credit card processing company, pay attention to their fee schedule. Some of the most common processing fees include:
Setup Fees – Most processing companies will charge you a small one-time setup fee.
Interchange Fees – These fees are charged by the processor on every transaction. They typically range from 2 to 4 percent. Many processors will charge 2 percent for purchases made in-person and up to 4 percent for purchases made online.
Gateway Fees – This monthly fee is applied exclusively to e-commerce businesses. Some processors have in-house payment gateways that are free of charge, however, the majority of gateways usually come with a nominal monthly fee.
Statement Fees – Many processors charge a fee to send monthly statements to you. Always opt for the electronic option if it’s available.
Monthly Minimum Fees – If you fail to meet the minimum monthly requirement, usually between $10 and $25, you’ll be charged this fee.
Early Termination Fees – Canceling your contract early is never a good idea because it could incur a large early termination fee amounting to thousands of dollars. To avoid this, look for processors that offer flexible month-to-month service options rather than long-term contracts.
Each credit card processing company will have its own unique fee structure. For this reason, the amount of money you’ll be charged to accept credit card payments will depend on how the payment was processed, Visa and Mastercard fee increases, changing international regulations and the processor’s pricing model. Some processing companies charge a flat rate plus a percentage of the sale, while others only charge a percentage of the sale.
What are the most common credit card processing pricing models?
The payment processing industry relies on four popular pricing models. The primary difference between each model is what happens to interchange fees. Sometimes they are itemized and charged separately from the processor’s markup. Other times, they are combined with the rate markup.
Interchange-Plus Model – This is the ideal pricing model if you’re looking for transparency. The interchange-plus model itemizes fees and markups and clearly lists them on your monthly statement. Rate markups will typically consist of both a percentage markup and a per-transaction fee markup.
Subscription or Membership Model – This model is similar to the interchange-plus model in that the wholesale cost of each transaction is charged separately from the markup. However, instead of paying a percentage markup on your transactions, you’ll only be charged a small per-transaction fee.
Tiered Model – Increasingly, payment processors are adopting tiered processing plans. This model categorizes credit card transactions into three categories: qualified, mid-qualified and non-qualified. Transaction rates vary according to their classification, with qualified rates being the lowest. If you fail to meet your processor’s standards, your transactions may be downgraded to a lesser classification.
Flat-Rate Model – In this model, all transactions are subject to the same percentage and transaction fee. These costs are then blended together to create one consistent rate. On the downside, this can make the transaction cost very high, especially for debit transactions.
How do you ensure your customers’ payment information is kept safe and secure?
When we think of security breaches, we often picture attacks on large, multi-national corporations impacting millions of customer accounts. In reality, small and medium-sized enterprises are equally at risk, mostly because they are easy targets. One study found that 46% of small businesses surveyed had been victims of a data breach, and only 33% had purchased adequate security software.
Payment card industry (PCI) compliance standards require merchants and intermediaries to handle credit card information in a secure manner that reduces the likelihood that cardholders could have their sensitive financial data stolen. When working with a credit card processor, make sure that they are PCI compliant. This will ensure that you’ll meet the industry standards for security.
Why you should never overlook the importance of flexibility
When choosing a credit card processor you must consider how their services will integrate with your existing equipment and software. With hundreds of online POS systems to choose from, your payment processor should be able to easily integrate with your preferred shopping cart. In addition, look for payment processors that offer technical support on your terms. Complimentary programming assistance and dedicated account representatives can help keep your business running smoothly should any unforeseen circumstances arise.
Additionally, the last thing you want to be locked into is a long-term contract, especially if it comes with a hefty cancellation fee. Your relationship with your credit card processor can change over time, especially as your business grows. When signing a contract make sure to review its terms and always ask about the contract’s cancellation fee. Alternative, you may also choose to shop around for a processor that offers their services on a month-to-month basis with the flexibility of no long-term commitments.
SolidTrust Pay can take care of all your credit card processing needs
Since 2006, SolidTrust Pay has been providing e-wallet and payment processing services for individuals, entrepreneurs and small businesses in over 190 countries. With fully customizable solutions and easy site integration, SolidTrust Pay is quickly becoming the most flexible and user-friendly payment processor online today. Guided by our commitment to service, we recognize our corporate responsibility in the world and donate significantly to recognized charities.
Canadian owned and operated, we consistently strive to exceed our member’s expectations by delivering uncompromising service at affordable rates. Contact us today at [email protected] to speak to a specialist about your unique business needs. We will strongly compete to be your provider of choice!