Payment Processing – Getting Your Money’s Worth (Part 1)
Next to the joy that comes from seeing your customers enriching their lives using the products you’ve sold them, seeing their cash in your bank account comes in a close second place! Everybody loves cold hard cash, but clearly other forms of payment have become increasingly popular for your customers. In fact, for many retailers physical currency is becoming an artifact.
Being able to accept non-cash payments seems great, until you see how much the credit card companies are taking from you before they actually make the deposit in your bank account. And, while they get to keep your money, they don’t seem to do a thing to earn the customer’s business. You do all the hard work and they sit back and rake in the bucks – what a deal for them! In this series, we’ll delve into the reasons why the credit card processors charge what they charge, and how you can make sure you’re paying a fair amount for the services they provide you.
At first glance, it appears that taking cash really doesn’t cost you anything – right? Your customer hands you the cash and you put it in the bank, without anybody else getting their stingy mitts on it. In reality, it does cost you to take cash. You have to maintain your tills, keep your change stocked, and travel to the bank (or hire an armored transport service) to make deposits and withdrawals to manage all of that cash. Further, you take on a number of risks when dealing with cash: robbery, employee theft, mistakes making change, and counterfeits to name a few. Finally, if you were to insist upon only taking cash in your business you would actually make your customers wait longer in check-out lines and subject them to the risks mentioned above – because then they’d have to deal with all of that cash themselves!
When you work with a payment processor to handle your non-cash payments (including credit and debit cards, gift cards, checks, EBT, and others), they provide a service that saves you money, reduces your risk, and increases customer demand and sales. Another service they provide that might not be obvious at first glance is that they are taking on the risk of establishing and maintaining a credit relationship with the customer (kind of like you granting “store credit” to your customers to help stimulate sales, but you don’t have to determine the customer’s credit worthiness, keep track of charges and payments, and decide how much credit to grant them – or decide when to cut them off!) We all agree that they deserve to be paid something for those things. The key, however, is making sure that you don’t pay them too much for their contribution to your business and that you keep as much of your cash as possible.
In the next segment, we’ll discuss the components of the payment processing system and how each of those translates into the charges you see on your monthly statement.
For more information, please see: http://www.retailpro.com/RequestMoreInformation.php
