Merchant services

Payment processing: Why merchant fees aren’t everything

When it comes to payment processing, the rate you get is important, no doubt. Some unscrupulous merchant services providers (MSPs) have been known to take advantage of customers by offering a great rate and then adding a bunch of unexplained, confusing fees to their statements. 

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Since merchant statements are already hard enough to read as it is, they figure these extra fees will go unnoticed. They make it seem like you’re getting a good deal by switching to them. In reality, though, they're just sneaking fees in other areas. 

Of course, you don’t want to be paying more in unnecessary merchant fees than you have to. But that doesn’t mean you should be solely focused on lowering fees. In fact, there are way more important factors to consider.  

What are merchant fees? 

Business owners must pay merchant fees per transaction every time a card is swiped, inserted, or tapped. The fees you pay can range depending on whether the merchant services provider is charging you a flat fee, a fixed percentage, or a mix of both. Further, some card types and payment types will cost you more than others. Some fees are mandatory and others are marked up. All payment processing fees are detailed on your merchant statement.  

It’s a whole new world in payment processing 

One might argue that in the past, merchant fees were the top issue to pay attention to when switching MSPs.  

After all, the offering was more or less the same. Maybe one provider offered better customer service and support, but, otherwise, you were getting the same thing from one provider to another—a way to process credit and debit cards. In this case, fees really were the differentiator. 

Flash forward to today, though, and the situation has drastically changed.  

So, when you’re considering switching merchant services providers, keep in mind that fees aren’t everything anymore. Some providers have so much more to offer than others.  

Smart terminals have hit the market 

Take a moment to consider your credit card terminals, and ask yourself a few questions: 

  • How long have you had the same model? 
  • Can the terminal do more than accept cards?  
  • Is the terminal up to date on PCI compliance?  
  • How fast is the machine?  
  • How does it connect?  

If you haven’t updated your payment terminals in years, there are many good reasons to consider doing so.  

First, the models that are on the market today are unlike the credit card machines of the past. They’re faster, sleeker, and smarter than ever before. They use smart technology to enhance their capabilities and functionality, so you can do more than accept credit and debit. In fact, you can download a wealth of different apps that enable you to manage your business more effectively 

Second, today’s terminals are more secure thanks to EMV technology. 

Third, today’s terminals use a variety of different connectivity options besides Ethernet, such as Wi-Fi, Bluetooth, and 3G, so you can process payments from anywhere with more uptime.  

While you may pay nominally more for these smart terminals, don’t you think the higher price is worth the value you’ll receive?  

Offer your customers more payment options 

What if we told you that you could accept more than just credit and debit?  

Offering your customers more ways to pay is more important than you might think. Today’s consumers are more debt-averse than ever before, so they’ll less likely to use credit cards. They’re also more tech-savvy, so they’re more likely to use digital payments, like mobile wallets, to pay for goods in store.  

If your payment terminals can’t accept alternative payment options, you could be alienating consumers – and sending them straight to your competitor. 

What alternative payment options should you be able to accept at the terminal? 

  • Apple Pay 
  • Google Pay 
  • Samsung Pay 
  • Alipay 
  • WeChat Pay 
  • PayPal 

Working with an MSP that allows you to accept more payment options directly on the terminal can help you future-proof your business and boost customer loyalty.  

Of course, there are transaction fees attached to these alternative payment options, but it’s worth paying these merchant fees to attract loyal shoppers.  

Can you get better fraud protection? 

When it comes to online payment processing, fraud is a serious issue that needs to take top priority. You could be losing out on thousands – if not millions – of dollars to fraud.  

If you’re considering switching MSPs, ask about the provider’s fraud protection instead of its fees. Can the merchant services provider offer better protection than you’re currently receiving? Do they check more user information than the industry standard when processing credit cards, for example? Do they offer optional fraud scrubbing services depending on your unique fraud risks and needs?  

Greater fraud protection is worth paying for.  

Work with a provider that’ll help you increase sales and cash flow 

Saving money on merchant fees is good. Partnering with a provider that can help you boost sales and increase cash flow is even better. 

You might be thinking that all an MSP can do is set you up to accept credit and debit, but some providers can help you do a lot more than that. 

For example, a provider that can set you up to accept alternative payments can help you attract shoppers who use these payment methods and shoppers who don’t use credit cards. 

A provider that can help you process payments not just in store but online, on the phone, and on your mobile app too can open you up to more selling opportunities 

A provider that can set you up with instant customer financing at the terminal and online can help you increase your average order value, so you get more money with every sale. Plus, the lender gives you the purchase value upfront, which boosts your cash flow.  

Saving a few bucks on fees simply doesn’t compare. 

What’s your priority? 

As you can see, while cutting merchant fees might be beneficial to your business, there are equally important factors to consider when comparing merchant services providers. An MSP that offers smart terminals, more payment options, a way to boost sales, and greater fraud protection offers more value than one that offers bottom-of-the-barrel rates. 




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James Newman

James brings over 30 years of experience in the telecommunications and merchant services industry to his role as Client Relations Specialist for BNA Smart Payment Systems. With a focus on sales, marketing and client services, the last 10 years have been spent with BNA. He has completed over 2,000 hours of professional business training, including professional sales, solution selling, conflict resolution, appraisal workshop, strategic marketing, and financial analysis. Outside of work, James is almost constantly reading fiction. In direct contradiction to this rather silent interest, he took up the guitar six years ago and regularly, happily, and shamelessly destroys the peace and quiet of his family home.

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