There are many situations in life where a special offer or a price tag may 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. I am going to give you tips on how to avoid unnecessary costs with both.
Tip 1. Don’t be fooled by free offerings when choosing your providers.
Many payment gateways and merchant accounts will entice you with free offers like these:
- Free Support
- Free Reporting
- Free fraud protection
- Free payment seal
These free things should be included no matter what you sign up for. The important thing is to learn the list of items that are NOT free.
Tip 2. Be aware of Qualified vs. Non-qualified transactions
Payment gateways will always advertise the lowest possible rate for a “qualified” transaction. The issue is that the majority of transactions are “non-qualified”.
Any credit card that grants the customer discounts, air miles, or rewards, including business credit cards, will generate “non-qualified” transactions. If a customer incorrectly enters their mailing address or CVV they are also deemed as non-qualified. You could be paying double the amount in fees for these non-qualified transactions.
Tip 3. Remember that payment gateways and a merchant accounts both have their own fees and their own contracts.
Many of the sneaky fees come from things you never considered. For example:
- Payment gateway fees: Recurring monthly fees for the payment gateway itself.
- Monthly minimum fees: If you don’t meet the minimum $30 for example, you still get charged the full amount.
- Address verification fees: Verifying that the address entered matches the address attached to the credit card.
- Transaction fees: These are unavoidable and usually a combination of a percentage and a dollar amount. Stripe charges 2.9% + $0.30 per transaction no matter what.
Tip 4. Always read the fine print.
If you take a moment to read the Terms of Service for a well known payment gateway 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.
SO what should you do?
Some companies bundle a payment gateway with a merchant account and 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 integrate Stripe directly with our Agenda booking software and offer a commutative rate of 2.25% per transaction (qualified or not). Tour companies using Agenda have seen their website sales increase by up to 150%. It also saves our clients an average of two hours a day thanks to it's ability to automate reservations, staff scheduling and customer management. If you want to increase your sales and decrease your workload 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.
Thanks for reading!