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Slash Credit Card Fees by 80% and Gain More Customers

by Wayne Akey

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Published on this site: November 24th, 2009 - See more articles from this month

If you are a merchant that accepts credit cards then you know those fees ONLY seem to go up. Depending on the product and your customers you can easily be paying 3% or more in blended fees. Trying to figure out exactly what you are paying by examining your merchant statement can be an exercise in futility. These statements are at best confusing and at worst deliberately designed to make you not want to read (understand) them. Downgrades, surcharges etc. Certainly enough to give you a headache. So what can you do? Accepting credit cards seems to be a necessary evil BUT you do have options. At the top of the options list HAS to be accepting ACH payments. An ACH Payment or an electronic check debits the customers bank account. Why not look at taking their check payment by phone or web? Most consumers have a checking or savings account that you can debit electronically for payment. You will gain customers by offering an alternative payment option and save big dollars on processing fees. If you take recurring payments it is very easy to enable recurring plans that debit checking accounts.

Here's why you save so much. Typically an ACH/EFT check by phone/web might cost .35 or less with NO PERCENTAGE of the transaction. Look at the example of a $100 sale. For a credit card you will pay close to $3.00 for this transaction. Maybe 2.29% for QUALIFIED transactions but if this is a rewards card bump that to 2.6% plus a .30 transaction fee. In comparison the electronic check is a FLAT 0.30. You save 90%. If you have 1000 transactions per month that is a considerable sum.

Why is the credit card so much more? A credit card transaction "grabs" the $ and holds them for you-meaning you WILL get the money. Part of the credit card transaction is an authorization that checks that the credit card has the $100 available and also "grabs" it for you. An ACH one-time or recurring transaction has no "authorization" component and may be "rejected" because the customer did not have the requisite funds or the account has been closed or you typed the account number in incorrectly.

Typically the rejection rate may be 1-2% of the transactions you take in. In many cases you can automatically recollect these payments. In addition there are advanced check verification tools you can utilize to reduce payment risk. So you have a simple to implement tool to increase the number of customers you have AND save big dollars on processing fees. You may not do away with credit cards but if you can convince your customers to pay via ACH you are the winner.

Wayne Akey: Secure, Efficient Payment Processing Solutions Guaranteed to Save Time and Money. To learn more on how you can save 80-90% or more on fees visit www.ACH-Payments.com.

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