By far, the most important part of owning a business is operating it well and using all of the knowledge you have to save money wherever possible, whether you have to count each penny or figure out where exactly all of your money is going and, whether you realize it or not, account fees are likely taking up a lot of that money.
Understanding Merchant Accounts
Merchant accounts can get complicated fast if you don’t know what they’re used for and why your business may be relying on them so much. The simplest way to explain this is that merchant fees encompass a lot of things, especially the credit card processing fees, and companies and banks charge these fees because they help to ensure that your rightful money ends up in the right account and is safe and sound at the end of the process. There are ways to get around these fees, but many of them are not reliable since processing fees are lower for some banks and incredibly high for others, and the cut you have to pay can vary depending on how big the payment you’ve received is.
Types of Fees
There are many different types of fees that you’ll have to pay if you want to keep receiving those regular digital payments, but the most important one you’ll have to worry about is the cut you pay for each transaction. These fees, as previously mentioned, can vary, and you can even negotiate them down in some cases, though not always. You might have to pay a monthly or annual fee, too, depending on your situation, since if the processor in charge of your account isn’t getting enough money from you in a whole month or year, they may charge you to make up the difference in return for keeping your account open.
Getting the Right Pricing Model
Getting pricing models is one of the most complicated parts of this process, but it’s something you can manage effectively if you have intimate knowledge about your business. If you’re interested in saving time and prefer efficiency over saving money, then a fixed rate model is the way to go and it’ll really save a lot of time but cost you some more money for the smaller transactions you’re getting since you’ll be paying the same fee for each transaction. The tiered pricing model is great, too, if you know exactly how your business works since it takes a long time to set up and maintain.
Saving Money
As previously mentioned, there are ways that you can save money on all of these fees if you try hard enough, especially if you’re a bigger business and you earn a ton of money for the processor handling your account. You can escape monthly, and annual fees through negotiations and by making sure you’re not violating industry guidelines for card payments since your payment processor may want to keep you on their good side, and figuring out the right pricing model could save thousands of dollars over time, too.
Other Options
There are always other options you can take advantage of if you’re trying to save as much money as you can since the best way to prevent these merchant fees is to not entirely rely upon them. If you have a business that sees customers with cash on hand, getting them to pay cash will be tougher to keep track of in your statements, but it will save a lot of money on merchant fees and, if you’re using the service of a company that you don’t need whether it’s an online portal or an extra payment protection service, cutting them out can be helpful, too.
Conclusion
Account fees and hidden costs are important to bring to light if you’re managing a business because spending too much money without realizing it is a one-way ticket to bankruptcy. However, if you use the information in this article, you’ll be able to deal with merchant account fees easily, which will make operating the rest of your business so much easier, as you’ll be able to focus on growth and profitability without needing to worry too much about money.
