Payment Processing: How To Save Money as a Small Business

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Welcome to Eric Stauffer, today’s guest writer on Websites for Small Biz.

Talk to any small business owner about their merchant service provider and you will probably get an earful of complaints ranging from contracts to excess fees. It is no secret that merchants have not been happy with the strong-arming techniques the industry uses, but with consumer buying behavior switching rapidly towards cashless payments, business owners have little choice but to play the processor’s game.

The good news is there are some techniques that merchants can utilize to find not only a reputable credit card processor, but also limit the overall cost of accepting plastic. With a little due diligence and the tips below, any business owner can negotiate a fair contract and limit their frustration.

Research – This may seem obvious to many, but some people sign up with the first smooth-talking sales agent that walks through their business doors. Hit the Internet and start researching company reviews and find at least three that have limited complaints online. Read what other merchants say about them, because this is the best window into how they will treat new clients.

No Annual Commitment
– When you first contact a potential company to work with, find out if they offer contracts with no annual commitments. There are plenty of firms out there that do, so this should be automatic. Some companies will try and explain how their costs will be lower with a commitment, but there is no excuse.

Business needs change, and sometimes a small business must shut down temporarily or permanently. Being tied into a long-term merchant service contract can become very frustrating, especially is they carry a “liquidated damage” clause. This very dangerous clause basically entitles the merchant provider to all of the revenue they would have generated if the entire contract term had been fulfilled.

Interchange Pass-Through – Until recently, this was a little-known secret in the processing world that was only shared with companies that did very large transaction volumes each month. It is basically wholesale pricing that allows a merchant to get the cheapest rates possible for each type of card that is accepted. If this is how Best Buy and Wal-Mart are setup, it should be how a small business wants to pay as well.

More and more credit card processors are offering this to their small business clients, and this has to be a requirement to work with them. If a company will not offer interchange pass-through or tries to explain why it is not the best option, they are lying and should not be dealt with any further.

Fees are Negotiable – Almost every fee on a merchant service contract is negotiable. In fact, there should only be a handful of fees in the first place, but sales agents are often given the power to add random fees as a way to earn more commission. The best approach is to negotiate each fee individually and challenge the validity on all of them. There will be a few that are required, but make the sales agent explain every one in detail and push back on whatever price is initially offered.

Explore Mobile Payments – For the business owner that takes limited credit card transactions or wants to try their hand at accepting plastic for the first time, look into mobile payment systems like GoPayment and PayPal Here. These devices plug into the headphone jack on almost any smartphone and allow a person to accept credit card payments with minimal costs. There are no commitments, monthly fees or expensive hardware to buy. There is only a small transaction cost for each purchase made.

About the Author

Eric Stauffer is a payment solutions expert who helps small businesses find the most reputable companies to work with. His firm,, reviews payment processing services while helping merchants negotiate the best rates possible.

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2 thoughts on “Payment Processing: How To Save Money as a Small Business

  1. This is a great article Eric! I have not done any research on merchant services yet. For now, my needs are relatively simple and although I think PayPal’s rates are unfair, I admit that I do use them for some transactions. Having said that, my needs may change. So, I’m bookmarking this for the future. I’ve been blissfully unaware of things like “liquidated damage” clauses up until now.
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  2. Hi Sherryl,

    If you are interested in trying mobile processing, I would recommend GoPayment. They are catered more towards business than Square, and PayPal Here is brand new, so its hard to tell what it will be like.

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