With service providers charging an interchange rate just to use their card, plus the swiping fee markup that merchant service providers charge, and the additional fees charged to fund credit card rewards programs, it is important to understand how these rates and fees work so you can properly manage them.
For instance, if your customers like to pay with reward cards, here are some things you need to know when considering a payment processing provider.
Reward cards may not be very rewarding for you
Many card issuers offer cards that pay points and cash back rewards to seduce consumers to apply for their cards with incentives. However, most veterinary businesses don’t know that any points or cash back rewards that are paid to the consumer for purchases within their business are actually paid by the vendor, not the major credit card companies. This means that you are not only paying the interchange rate and the per-swipe charges, but also 1% to 3% in additional fees to ensure points and cash back to those customers that pay for veterinary visits using a rewards card. This can equate to large fees if you have clients that use reward cards often.
Ask if rewards rates are included in quote
When credit card service providers ask you for a statement so they can compare rates and save you money, they are counting on you not being educated on how the credit card processing system works with fees, rewards, and points. They will do a cost comparison that doesn’t figure in the rewards rate, so it appears they can save you a lot of money. That is, until you get your first statement and realise that the savings just aren’t there. By then, you’re locked into years of contractual agreements.
Find ways to cut fees
For the best cost savings when processing transactions, debit cards are the way to go. They are the most secure and cost the least to process. These rates are low and there are no reward points or percentages figured in. It never hurts to encourage debit payments when you are looking at ways to cut the fees. Many competitors will let you believe they can give you free equipment and hundreds and even thousands of dollars in savings by their calculated cost comparison, but that is normally because they fudge the numbers when it comes to reward card processing.