With the cost of processing credit card transactions on the rise (and expected to continue to increase), Cash Flow Plus wants you to know that there are alternatives available that will save you quite a bit of money!
While credit cards are widely used by consumers, debit cards are very popular as well. The benefits of accepting debit cards are two-fold: First, as a merchant, you are charged a flat fee of .49, plus network fees, which brings the fee to an average of .79 per transaction. Let’s compare that, using numbers, to a credit card transaction and the fees associated with it:
Suppose your customer makes a purchase totaling $100.00. Processing this as a credit card transaction with a discount rate of roughly 1.79% (if it is a face-to-face transaction and NOT a rewards card), the cost of the sale is $1.79. Add the transaction fee of .25 and the total cost that you, the merchant, pay out to Visa/MC for this sale is $2.04. You only have to do the math to see that by processing this same transaction as a debit, you will be saving $1.25! The higher the ticket, the more the savings! On a $1,000.00 transaction, the calculations are $1,000.00 X 1.79% = $17.90 + .25 transaction fee = $18.15 vs .79 = a savings of $17.36!
While the savings are substantial, possibly the greatest benefit to taking debit cards is that the funds are in your account the next day! With credit cards, it can take anywhere from 24 to 72 hours, depending on how the transaction occurs (swiped vs. keyed-in).
Another way to save on credit card fees is to accept checks electronically. While electronic check transactions are conducted much in the same manner as credit card transactions, the cost is considerably less, making the savings to you considerably more! Keep in mind that as credit card processing rates increase, so do the downgrades (when transactions are keyed in or government, corporate, or rewards cards are used). This can drive the discount fee up to over 3.00%! If you accept electronic checks, you can eliminate that fee and save money. Let’s turn again to the example:
Your customer makes a $100.00 purchase. If they present you with a credit card, the cost to you as a merchant could be anywhere from $1.79 to $3.00 or more for that transaction (don’t forget the .25 transaction fee). If this same transaction was in the form of a check, the fee would be 1.69%, plus a .25 transaction fee. And just like a debit card, regardless of the amount of the check, the cost factor does not change – it remains at 1.69%. This transaction by check would cost you, the merchant, $1.94!
What it all comes down to is this: in these difficult economic times, saving money is critical. By accepting a debit or electronic check transaction for $1,000.00, you will save almost $20.00 over processing that transaction through a credit card. Call us for details!