ND Small Business Development Centers

Powering the creation, growth, and success of small business in North Dakota.

Are You Paying Too Much In Merchant Fees?

Over the last five years, point-of-sale technology has rapidly advanced. What once was a quarterly visit from multiple merchant companies trying to underbid each other’s rates has evolved into feature-rich integrated software solutions tied to your bank account.

Companies like Stripe and Square offer a plethora of services to assist business owners, like mobile swipe hardware that attaches to your phone, POS systems for retail stores, and turnkey websites with a shopping cart already set up. Of course, it all comes at a cost.

Stripe merchant fees are currently 2.9% + $.30 a transaction. Square merchant fees currently range from 2.6%-3.5% + $.10 -$.30, depending on the type of transaction. In addition, you can also be charged a monthly fee depending on the software features and options you are using. While both of these services work great, they may be too expensive for many small business owners who are looking for cheaper alternatives. If you think your merchant fees are too high, you may be inadvertently paying for services you don’t really need.

A quick glance at the interchange rates (the base rate Visa and Mastercard charge processing companies) puts most transaction fees in the 1%-2.5% per swipe range. The closer a business owner can negotiate fees near the interchange rates, the less is paid in fees.

Helcim recently became a competitor of both when they added a free monthly website with a shopping cart to their provided services. Helcim is currently advertising 1.8%-2.5% + $.08-$0.25 per transaction and has no monthly fees.

Business owners who are paying for solutions they are not taking advantage of or don’t need should consider switching to slim-down processing solutions that don’t charge you for all the extra features.

As we enter unknown economic waters, it’s vital to look for ways to lower expenses and keep more revenue. Start by making a list of the functionality your business needs to prosper. Talk to your existing processing company to understand what your merchant fees are paying for. If you think you’re overpaying fees, look for alternative solutions.

I’ve yet to have a credit card processing company inform me they were lowering my rates. The only way I have ever received better rates is by switching providers. Only you know if it’s the right time to switch.

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