There are many situations in life where a special offer or a price tag can seem way too good to be true. While this is not always case, you can bet that when it comes to online credit card processing fees, you are going to pay more than you bargained for. To accept payments directly through your website you need two things: a payment gateway and a merchant account. In this article, we will be going over tips on how to avoid unnecessary costs on both fronts.
1. Don’t Be fooled By "Free" Offers When Choosing Your Payments Provider
Many payment gateways and merchant accounts will entice you with free offers like:
- Free support
- Free reporting
- Free fraud protection
- Free payment seals
What many businesses don't know is that these things should be included no matter what you sign up for. The more important task at hand is to learn the list of items that are NOT free.
2. Be Aware Of Qualified vs. Non-Qualified Transactions
Payment gateways will always advertise the lowest possible rate for a qualified transaction. The issue there is that in many cases, especially with international credit cards, transactions can easily be “non-qualified”.
Credit cards that grant the customer discounts, air miles, or rewards, including business credit cards, can generate many kinds of non-qualified transactions. If a customer incorrectly enters their mailing address or CVV they are also deemed as non-qualified. In effect, you could be paying double the amount in fees for these non-qualified transactions.
3. Payment Gateways & Merchant Account Contracts Can be Mutually Exclusive
Many of the sneaky fees come from things you never considered. Consider these examples:
- Payment gateway fees (recurring monthly fees for the payment gateway itself.
- Monthly minimum fees (e.g. if you don’t meet the minimum $30 for example, you still get charged the full amount.
- Address verification fees (verification charges incurred when confirming that the address entered matches the address associated to a credit card.
- Transaction fees (unavoidable and usually a combination of a percentage and a dollar amount.
4. Always Read The Fine Print.
If you take a moment to read the terms of service for well-known payment gateways like Intuit Merchant Services, you will see the following:
- ...Most rewards, corporate and special card types are considered non-qualified transactions and you will be charged the non-qualified rate.
- ...Transactions that do not meet the requirements for card-swiped and or key entered rates will be charged a non-qualified rate of 3.96%. Non-qualified transactions are charged an additional $.37 each.
- ...The PCI Compliance fee... will be charged annually... $35 for 1-24 transactions, $50 for 25-99 transactions, or $100 for 100+ transactions.
In short, if you are using Intuits' payment gateway, you will be paying a non-qualified rate of 3.96% + $.37 per transaction that come through your website. You will also be paying an additional $35 -$100 per year for compliance fees.
Takeaways: What Can You Do?
Some companies bundle a payment gateway with a merchant account to ensure that you always pay the same amount, with no hidden fees. These are called Bundled Merchant Services. Two examples of Bundled Merchant Services are Braintree Payments (A Paypal company) and Stripe.
At Adventure Bucket List, we have Stripe integrated directly into our Agenda booking software and offer a commutative rate of 2.25% per transaction (regardless of traditional transaction qualifications). To take advantage of a bundled merchant service with transparent fees while maximizing your operational output, sign up for a one-on-one demo with one of our product experts and learn what Adventure Bucket List can do for your business.