merchant accounts - what’s a good rate?
Aug 01, 2009
in
Small Business Merchant Accounts
I’m currently looking to start accepting credit card transactions for my business sales, and there are PLENTY of options available. I’d rather use either Peachtree’s services (which integrate w/ my accounting software, and work with my bank), or… my bank. Peachtree’s rates are 2.43% of the sale, + .25 cents per transaction, plus a montly rate of 24.95. (they have lower rates for processing credit cards using a swiper, but I imagine most of my sales will be over the phone or online).
My question is… is this considered a good rate? Average? Poor? I have no frame of reference, so I haven’t a clue whether this is a good price or not.
Thanks in advance!
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4 comments
Flyboy on August 1, 2009 at 3:59 am
I concur with Jen (above). $24.95 per month is high. A more usual rate is about $10 per month. You need to do some analysis based on what you think your average sale will be and the number of transactions you’ll be doing each month. For example, suppose you figure on 20 sales per month at an average of $50 per sale. The math works out to a cost of about $2.70 per sale or 5.4% of each sale. If your cost per item is $30, the credit card charge amounts to 13.5% of your gross profit - a hugely expensive way to collect money!
Credit card companies usually have a policy against tacking on an extra charge for using a credit card but have no problem with offering cash discounts. The smart business person considers the $2.70 per sale to be like any other cost and would sell the item for $52.70 +/- and offer a discount for cash or check. This is fair because only those using a credit card should pay for the cost of using it.
Jen C. on August 1, 2009 at 3:59 am
The percentage part of the rate is close to average. The .25 cents per is very standard. The $24.95 is high, but the difference is only $14.95 per month. The approximately $180 a year you may save going with another company may not be worth it to you if the other companies do not integrate as easily for you. There are many providers that charge $10 a month statement fee.
Ron San on August 1, 2009 at 3:59 am
This is a poor rate. I have been using a very competitive company, with great support. Go to the wininbiz.com home page and look for the orange colored tab to Get A Merchant Account, and then choose the Internet Merchant Account. The information is laid out clearly.
Cliff P on August 1, 2009 at 3:59 am
Those rates are not bad, however you can get better ones.
There are a couple of things to consider first. No need to worry about your bank! All processors will electronically deposit the funds into your account no matter where you bank.
You can get a better rate of 2.25%. That is a great rate if you are selling to individuals as opposed to businesses. The difference being that the 2.25% is for credit card transactions made by consumers, not businesses. If you accept business cards as well, you will be charged an additional rate of 1-2%. That would make your business card rates over 3.25%.
If you are planning on accepting business cards, you need to make sure you get special "interchange" pricing. This pricing structure will keep your business card rates at 3% and lower.
If cost and rate savings are the most important factors in your decision, then look elsewhere.
If integrating your payment processing with your accounting software is the most important factor, then there is no other choice. Most accounting softwares require you to use their merchant account services.
There are other ways to drive down cost as well. Services such as:
Accepting Checks by phone
Accepting Checks via your website
These products along with credit card processing services can be integrated into a shopping cart for your website, and include an online virtual terminal through a internet payment gateway. This will cost you an additional $15 per month, but will eliminate the need for credit card machines. It will also provide your customers the option of paying by check. This will not only save you money, but it will also provide an additional benefit to your prospective customers to buy from you.
I hope this helps you make this important decision. If you need more information and help getting the right pricing for your type of business visit OmniTranz.com:
http://www.omnitranz.com
Business Success to you in the New Year!