Flat-rate credit card processing
Paying with credit or debit cards is, no doubt, more convenient than paying with cash. Card payments now account for up to 65% of sales or more for most businesses. Unfortunately, accepting card payments come with the extra burden of processing fees. Depending on the volume of transactions, these fees could significantly increase your overhead and make it more difficult to give your customers the best prices. Worse still, many business owners find it difficult to understand the intricacies of credit card processing fees and rates.
What is flat-rate card processing?
In a bid to make deductions more straightforward, many merchant account providers now offer their clients flat-rate credit card processing. Clients who subscribe to this model get charged a fixed percentage from their total transaction volume. This rate is usually between 2.75 to 2.9%. to better understand the concept of flat-rate credit card processing, we'll highlight the different kinds of transaction fees/rates deducted from credit card payments:
- Interchange fees: A non-negotiable fee set by card issuers.
- Assessment fees: Another non-negotiable cost determined by the card brand
- Processor's markup: A negotiable cost charged by your merchant account provider.
Rather than have each of these fees deducted separately, customers who subscribe to the flat-rate model will have everything deducted at once. The merchant account provider will then be responsible for settling the other parties. Usually, they will also charge an additional 20-30 cents per transaction.
What are the pros of flat-rate processing?
Often, a lot of marketers advertise flat-rate processing as the cheapest option for business owners. But this is hardly ever the case. Flat rate, by nature, is not meant to be cheap, but simple.
With flat-rate processing, business owners can easily forecast their card processing costs. All you have to do is calculate your gross sales and multiply it by your processor's charges. Simplicity is perhaps the most appealing feature of flat-rate credit card processing.
Businesses with low average tickets but high transaction volume also benefit from merchant account providers that offer flat rates without processing fees. However, these are becoming less uncommon because processors lose money when they partner with such businesses.
What are the cons of flat-rate processing?
Flat rate credit card processing is not as competitive as the proponents make it out to be. In fact, it is often the most expensive pricing model out there. Flat-rate credit card processing could cost you as much as 20% higher than other forms of pricing on a per-transaction basis! If your business has a high average ticket, adopting this pricing model will be ill-advised, except your survival depends on how well you can forecast your transaction costs.
Partner with Merchant Focus to enjoy the best pricing models
If you've been searching for the best merchant services provider for your business, you need not look beyond Merchant Focus. We are a preferred Authorize.Net reseller, and alongside our partners, we guarantee safe, secure, and affordable online payment processing. Our company offers different pricing models, and we have no doubt you'll find one that suits your business. Contact us on 800-895-4085 or visit our website to learn more.