Using a payment processing company can lower overhead costs and generate positive cash flow. But many B2B consumers are unaware of the benefits of payment processing and may have misconceptions about it.
Here are four commonly held misconceptions and the truth behind these myths:
Myth No. 1: Payment processing companies provide credit cards.
Customers may have come under the mistaken impression that payment processing companies provide credit cards. Perhaps they have been asked by the company owner to find ways to reduce company costs and overhead and improve their margins when they’re shopping for a payment processing solution.
Since customers may not know a lot about what payment processing companies do — or even that it’s separate from credit card usage — and may not have had a lot of experience with credit in general, you can see how this misconception likely forms.
If a customer is a recent college graduate and they’re tasked with shopping for a payment processing company, they may associate “payment processing” with credit cards because the term was mentioned when they signed up for a card in college.
Regardless of how the misconception happened, payment processing companies do not offer credit cards to customers — and that’s not a bad thing.
Payment processing companies can still help you cut costs and improve profit margins. Look for a company that doesn’t charge monthly minimum fees, require long-term contracts or have early termination fees. Some payment processing companies offer a variety of services, and they also offer special deals, such as waiving termination fees in certain cases. Seek out payment processing companies that make you feel welcome as a merchant and offer great customer service.
Myth No. 2: Payment processing companies are expensive to buy into and use.
Despite the belief that payment processing companies are costly to buy into and use, they are actually not that expensive. Here’s a primer about payment processing for B2B consumers.
Credit card interchange is the underlying cost of processing credit cards. Fees are frequently bundled together and cover things such as:
- Authorization costs
- Fraud-related losses
- Banking operations costs
Credit card companies are the ones who set interchange rates, and most of the fees you pay go to them. Visa and Mastercard set their rates differently than Discover, American Express and other credit card companies.
Credit card processing fees will typically cost a business 1.5% to 3.5% of each transaction’s total. For a sale of $100, that means you could pay anywhere from $1.50 to $3.50 in credit card processing fees. Look for companies that have fees on the low side. (They’re out there!)
You can’t really avoid interchange rates if you want your business to have the ability to allow customers to charge purchases — but you can look for payment processing companies with the right qualities. This includes transparency, accountability and an upfront way of communicating their fee schedules and what the bottom line is for you. Look for companies that charge flat fees and don’t hide their fees by rounding up or charging other hidden payment processing fees.
Myth No. 3: Payment processing companies have no clear pricing model.
The best payment processing companies actually do have clear-cut pricing. But, because they’re committed to transparency, they will show prices for other companies who may offer rates less than they do for whatever you’re looking to do. For example, we offer a calculator you can use to find out how much you could save. That’s one example of how payment processing companies that do have a clear pricing model work.
Myth No. 4: Payment processing companies are hard to integrate.
There are many payment processing options available that are easy to integrate into your existing systems. Look for payment processing companies that can be integrated with most systems easily, with guidance and support and within a reasonable amount of time.
One example of a payment processing product that is actually easy to use is National Processing’s credit card gateway integrations. They have multiple APIs to integrate credit card gateways, ACH payments and more. Whatever customer payment processing integration your needs require, National Processing has an integration that will make it easy for you to start accepting payments fast.
Whew! We’ve dispelled a lot of myths today. Now it’s time for you to start seeing better results. Contact us now to learn how we do payment processing better.