Month: July 2024

With the many ways to pay and receive online payments, your customers might prefer the convenience of payment links, the security of ACH, or the speed of digital wallets. As a business owner, staying ahead in the digital age means understanding and offering a variety of secure payment methods.

Key Takeaways

1. Multiple payment methods are key: Customers prefer different ways to pay online. Businesses should offer a variety of secure options including credit cards, digital wallets, ACH transfers, and payment links.
2. Each method has its advantages: Consider the pros and cons of each method. Credit cards are widely accepted but have higher fees. Digital wallets are convenient and secure. ACH transfers are cheaper but slower. Payment links streamline invoicing.
3. Choose based on your business: The best payment methods depend on your business model. E-commerce stores need credit cards. Subscription services might prefer ACH or digital wallets. Freelancers can benefit from payment links.

Ways to accept payments online

So, how can you make sure your business is set up to receive online payments? Let’s explore some popular methods:

1. Online Payment Service Providers (OPSPs)

OPSPs are like the middlemen of online transactions. They securely process payments made with credit cards, debit cards, and sometimes even digital wallets.

• How it works: You sign up with a service provider. They’ll provide you with a secure way to integrate their payment gateway into your website or app. Customers can then enter their card details seamlessly during checkout.
• Advantages: Easy to set up, widely accepted by customers, and offers fraud protection.
• Recommended for: Pretty much any business – from e-commerce stores to subscription services.

2. Digital Wallets and Mobile Payments

Mobile wallets are exploding in popularity. These handy apps store your card information securely, allowing for speedy checkouts with just a tap or a click.

• How it works: Customers with compatible devices can use their digital wallets during checkout. The payment information is securely transmitted without needing to manually enter card details.
• Advantages: Carry fewer cards by storing everything from credit cards to loyalty programs in one secure digital location on your phone. Enhanced security features like encryption and fingerprint recognition, reducing the risk of fraud compared to traditional wallets. Make faster purchases by simply tapping your phone to pay, eliminating the need to swipe cards or fumble for cash.
• Recommended for: Businesses with mobile apps or websites optimized for mobile payments.

3. ACH Payments (eChecks)

ACH, or Automated Clearing House, transfers are a way to move money electronically between bank accounts. They’re essentially electronic versions of checks.

• What are they?: An ACH transfer debits the customer’s bank account and credits yours, all done electronically. Check this blog to learn more: Automated Clearing House (ACH) – What is it and how does it work?
• Advantages: Typically come with lower transaction fees compared to credit cards.
• Recommended for: Businesses that deal in recurring payments or invoices, such as subscription services or B2B transactions.

4. Payment Links and Click-to-Pay Invoices

This method involves sending invoices to your customers electronically, with a handy “pay now” button linked directly to a secure payment gateway.

• How it works: You create and send an invoice through an invoicing platform or accounting software. These platforms often integrate with popular payment processors, allowing customers to pay instantly through the invoice itself.
• Advantages: Streamlines the payment process for service-based businesses and freelancers by eliminating the need for manually entering invoice information, saving both you and your customer time; allowing customers to pay from anywhere with an internet connection, increasing the flexibility and convenience of the payment process; automating reminders and notifications, ensuring faster invoice payments and improve your cash flow.
• Recommended for: Service-based businesses, freelancers, and anyone who sends invoices regularly.

The Perfect Fit: Choosing the Right Option for You

The best way to accept payments online depends on your specific business needs. Consider factors like the type of products or services you offer, and your target audience.

Conclusion

By offering a variety of secure and convenient online payment options, you’re not just making things easier for your customers – you’re opening doors to increased sales. Remember, a happy customer is a returning customer!

We are here to help

1. Schedule a Call: Book an Appointment
2. Send us an eMail: support@epayment.one
3. Speak to a Specialist: 801-931-0111

Sources

1. National Automated Clearing House Association (NACHA): https://www.nacha.org/
2. Forbes https://www.forbes.com/
3. NerdWallet https://www.nerdwallet.com/best/small-business/online-payment-processing-services
4. HubSpot https://knowledge.hubspot.com/payments/set-up-payments
5. Small Business Administration (SBA) https://www.sba.gov/

The average credit card processing fee for most businesses is between 1.5% and 3.5% of the total transaction. However, these fees can vary depending on the payment types the business accepts and the pricing model the business uses.

Key Takeaways

1.      Credit card processing fees may include interchange fees, network assessment fees, and your payment processor’s markup.

2.      Different pricing models (interchange-plus, tiered, blended) offer varying levels of transparency and cost-efficiency.

3.      Negotiate and explore alternatives: Don’t be afraid to negotiate with us, your processor for better rates. Consider offering ACH bank transfers as a lower-fee payment option for customers.

Understanding the Breakdown: What Goes into Credit Card Processing Fees?

Processing fees are more complex than they seem. Here’s an overview of the key players involved:

1. Interchange Fees: Major credit card networks such as Visa, Mastercard, etc. control the interchange rates. These fees are paid between the issuing bank (that provides the credit card) and the acquiring bank (yours, that receives the payment). Interchange fees are the biggest chunk of your processing costs, varying based on card type (rewards cards and business cards may cost more to process), transaction size, and even your industry [1]. Unfortunately, businesses have little control over interchange fees.

2. Assessment Fees: Think of these as credit card network taxes (Visa, Mastercard, etc.) levied on each transaction. While a smaller percentage than interchange fees, they can add up [2]. Just like interchange fees, these are non-negotiable.

3. Merchant Account Fees: On top of network fees, your payment processor will also charge their own fees to cover their services. Here’s a breakdown of some common ones:

a. Per-transaction fees: A flat fee assessed for each swipe, dip, or tap.

b. Monthly statement fees: A recurring charge for account maintenance and access to monthly statements.

c. PCI Non-Compliance Penalties: PCI compliance helps safeguard customer information. Failing to comply can result in hefty fines. [6] Learn more

d. Chargeback fees: Fees assessed when a customer disputes a transaction and their bank reverses the charges. These can be expensive, so it’s important to have a good fraud prevention system in place.

e. Early termination fees: A penalty for closing your merchant account before the contract ends.

While some fees are unavoidable, your choice of processor will have the greatest impact on the price you pay for accepting credit cards. Different processors offer varying pricing structures and fee rates.

Breakdown by major credit card networks (average interchange and assessment fees):

The actual fees you pay will depend on your specific business and the type of cards you accept.

We can help!

CONTACT US TODAY!

The Many Different Payment Processor Pricing Models

Payment processors offer various pricing models, each with its pros and cons:

1. Interchange-Plus Pricing: This transparent model shows you each fee component (interchange, assessment, processor markup). The advantage? You can negotiate lower per-transaction fees with your processor [4].

2. Tiered Pricing: This bundles fees into pre-determined categories (qualified, mid-qualified, non-qualified) based on factors like card type and acceptance method. While simpler, it can be difficult to predict total processing costs [3].

3. Blended Pricing (or Flat Rate pricing): This combines interchange fees, assessment fees, and processor markup into one simple percentage. It’s easy to understand, but often less transparent and can be more expensive for businesses with high transaction volume [5].

4. Membership-Based Pricing: Here, you pay a monthly subscription fee that covers a certain number of transactions. This can be cost-effective for businesses with predictable transaction volume, but exceeding the included transactions can result in additional fees.

In-person vs. Online Transaction Fees

Generally, online and manually keyed transactions have higher fees compared to in-person transactions. This is because online transactions carry a higher risk of fraud.

Here’s a comparison of in-person vs. online fees for major networks:

The actual fee difference between in-person and online transactions can vary depending on your processor.

Remember, every business is unique. The ideal pricing model depends on your industry, average transaction size, and transaction volume. What works for one business might not be the best fit for yours.

At EPAYMENT, We Tailor Solutions for Your Success

We understand that a one-size-fits-all approach doesn’t work for payment processing. We offer tailored merchant processing solutions to meet the unique needs of your business. Our expert team will analyze your business model and recommend the pricing model that ensures clarity, reliability, and cost-effectiveness in every transaction.

Finding the Right Credit Card Processing Company: Strategies for Savvy Businesses

Knowledge is power, especially when it comes to fees. Here’s how to be a credit card processing pro:

1.      Negotiate with your Payment Processor: You have value! Highlight your business’s strengths (high transaction volume, low chargeback rate) and negotiate lower per-transaction fees or monthly fees.

2.      Choose the Right Pricing Model: If your business processes many rewards cards, interchange-plus might be better for transparency in negotiation. For predictable transaction volume, tiered pricing could work.

3.      Consider Alternative Payment Methods: Explore offering options like ACH bank transfers (lower fees) alongside credit cards to give customers flexibility and potentially lower your overall processing costs.

The type of business you run, your sales volume and average transaction amount all affect costs. While other processors may seem transparent, hidden fees can eat into your profits. At EPAYMENT, we offer custom solutions designed for your business, giving you clear and reliable costs for every transaction.

Let EPAYMENT Help You Find the Perfect Fit and Slash Your Processing Costs!

Contact us today for a free consultation!

Sources

1. National Retail Federation  https://nrf.com/
2. Electronic Transactions Association  https://www.electran.org/
3. Federal Trade Commission  https://www.ftc.gov/
4.  U.S. Bank Account Services  https://usa.visa.com/
5. Small Business Administration  https://www.sba.gov/
6. PCI Security Standards Council  https://www.pcisecuritystandards.org/merchants/

When it comes to getting paid, businesses have lots of options! Credit cards, mobile wallets, peer-to-peer payments, you name it. But it’s not just about having choices, business owners need to consider what’s most cost-effective and customer friendly. That’s why we love ACH (Automated Clearing House) transactions. It stands out as essential for customer transactions, payroll, and more.

What is the Automated Clearing House (ACH)?

You might not know it, but you may have used ACH payments in the past. The ACH is an electronic system for transferring funds directly between banks and credit unions in the United States. It processes billions of transactions each year, silently powering things like:

• Direct deposit payroll
• Recurring bill payments (subscriptions)
• Large business-to-supplier transactions
• Tax payments

Key Takeaways

1. ACH payments are a cost-effective and secure alternative to traditional checks and credit cards. They are ideal for recurring payments and offer faster processing times than checks.
2. There are two main types of ACH transfers: debits (you pay someone) and credits (someone pays you). Both are generally completed within 1-3 business days.
3. Businesses can benefit from accepting ACH payments by reducing processing costs, improving customer convenience, and offering a wider range of payment options.

How Does an ACH Transfer Work?

ACH transfers work by moving funds from one bank account to another through the ACH network. There are two main types of ACH transfers:

• ACH Debit: This is when you authorize a business to take money directly from your checking or savings account, often used for bill payments or recurring charges.
• ACH Credit: This is when money is electronically deposited into your account, such as with direct deposit for payroll or government benefits.

Here’s a breakdown:

1. Initiating the Transfer: The transfer is initiated by either the sender (you) or the receiver (the business you are paying).
2. Network Involvement: The sender’s bank submits the transfer request to the ACH network.
3. Batching and Settlement: The ACH network batches transfers throughout the day and settles them four times daily.
4. Funds Movement: The receiver’s bank receives the transfer notification and deposits the funds into the recipient’s account.

ACH vs. Other Payment Methods

 Benefits of ACH Payments

• Cost-effective: Lower transaction fees compared to credit cards and wire transfers.
• Convenient: Ideal for recurring payments and eliminates the need for checks.
• Secure: Reduces the risk of lost or stolen checks and credit card fraud.
• Faster than checks: Funds transfer electronically in 1-3 business days.

ACH payments are a secure, convenient, and cost-efficient way to transfer funds electronically. Businesses can benefit by offering ACH as a payment option, enhancing customer convenience and potentially reducing processing costs.

Ready to Get Started Accepting ACH Payments?

 Our expert team can help:

• Evaluate your business needs. Is ACH the right payment strategy for your business?
• Choose as your payment provider. At EPAYENT we offer a one-stop solution for various payment methods, including ACH, with transparent pricing. We have solutions that integrates with your existing system(s).
• Set up ACH processing. We can guide you through the setup and integration process, allowing you to focus on what you do best: running your business.

We are here to help:

• Schedule a Call: Book an Appointment
• Send us an eMail: support@epayment.one
• Speak to a Specialist: 801-931-0111

Sources

1.      National Automated Clearing House Association (NACHA) https://www.nacha.org/

2.      Federal Reserve Payments Study https://www.federalreserve.gov/paymentsystems/fr-payments-study.htm

3.      The Electronic Payments Association https://www.epa.gov/financial/makepayment