Most small-business owners and managers tend to struggle quite a bit when it comes to keeping cash flowing through their organization and reducing outgoing expenditure, for example, on payment transactions. With a competitive business environment and volatile economy, after all, it’s often tough to make ends meet, let alone create a thriving venture.
To compensate, many entrepreneurs try to save money by reducing things such as marketing costs, employee wages, and property leasing or mortgage fees. However, it’s also important to remember that you can cut costs in other areas; those that may involve seemingly small numbers but which can add up significantly over the long run.
[pullquote]One business cost in particular that should be examined is payment processing.[/pullquote] The costs businesses bear to transact customer payments can eat into profits quite quickly, when it comes to both time and money. If you’re keen to find ways to cut costs over the coming months then this article should be exactly what you need. We’re examining a few ways that you can optimize your profits and by saving money on costs related to payment transactions. Read on for some tips you can follow today.
Accept EMV Cards To Decrease Fraudulent Payments
Until recently, when people paid with a credit or debit card their plastic had a magnetic strip on the back, and the banks that issued the cards were held liable for costs if fraudulent transactions happened. Since last year, though, when EMV chip technology was introduced in the U.S., credit, and debit cards have had microchips embedded in them that contain a unique code for transactions, and that incorporate pin numbers. The new cards are much harder to hack, copy, or counterfeit, which helps to fight fraud. Due to this, though, the banking industry has also changed.
Now, because the smart cards are more secure and the embedded chips store cryptograms that banks use to work out if a card has been modified or is invalid, liability falls on businesses. The onus is on organizations accepting payments to utilize the correct, more-secure point-of-sale (POS) machines, and to verify that all cards presented for payment possess a chip to authenticate the transaction.
If you want to protect your small business from unexpected transaction costs, then it is important to accept EMV cards and get rid of outdated POS machines and insecure swipe devices. Ensure that all card transactions are made using chip-enabled cards that require customers to input pin numbers. This will decrease the number of fraudulent payments run through your business and will mean that you’re not covering the costs of chargebacks to customers whose cards have been stolen or used incorrectly.
Use An Affordable Merchant Services Provider
Another good way to save on payment transactions is to utilize a more affordable merchant services provider. Firms offering these services are many and varied and have different pricing options as a result. To save yourself money, don’t opt for the first payment provider you speak to, and don’t continue to use the same provider without checking that their rates remain competitive.
Instead, compare options to find the most affordable provider for your needs. Examine merchant services companies to find out if they charge a setup fee to create an account for you and configure their processing system with your e-commerce cart or physical POS machine. Many companies do not, while some will agree to waive the fee if you request it. You can automatically save yourself some money if you cut back on these setup fees to start with.
As well, look at the various costs involved to process actual transactions. Some companies choose to charge a flat fee per payment put through the system, no matter how many transactions you have per period, while others have a variable fee structure instead. You will need to work out figures to determine which option is best for you, as it will depend on how many sales you make each month or year. Keep in mind though that as your business grows, and you have more transactions being finalized, you may be able to negotiate a cheaper rate.
It is also wise to check for other potential costs that you may be up for if you choose a certain provider. For example, find out if the companies on your shortlist charge a cancellation fee, if they make you pay extra for customer support, or if they charge a fee when you transfer money from your merchant account to your bank account.
Put Set Account Criteria In Place
Lastly, be aware that many businesses lose hundreds or even thousands of dollars each year because of unpaid client accounts. To save money on late payments, debt collector fees, and loss of funds from accounts which will never be settled, be very careful about whom you offer credit terms to in the first place. You might decide, for example, that customers must have purchased from you at least three, five, or ten times up front before they can enjoy credit, and/or that each customer must provide you with at least three credit reference checks to show that they have a good history of paying bills in full and on time.