Given that sorting out a payment provider can be a complex process, companies often bamboozle customers with extra charges – and manage to get away with it. Until now.
Here are our top tips to help you pay less for payment services.
1. Shop Around
Researching the market before you buy means you are less likely to get fleeced by commission-hungry salespeople.
Services like Expert Market allow you to type in your business details and easily compare payment providers.
Top Ten Reviews has a list of the ten processors with the best customer ratings for 2012.
Then, when you have narrowed down your search and understood who does what and for how much, don’t be afraid to play one provider off against another to get the best deal you can.
2. Deal hunting
Many sites dedicated to small businesses collate special offers for payment processors.
Huddlebuy has regular popular payment processing deals and you can use the site to request new deals. The Federation of Small Businesses offers a £100 cash back deal if you sign up with Streamline.
3. An alternative strategy
Paypal is an established alternative to expensive transaction fees from big brand payment processers.
Fees range from 3.4 per cent plus 20p per transaction for smaller volumes down to 1.4 per cent plus 20p per transaction for larger businesses.
Another alternative is Go Cardless, which uses direct debit to process payments cheaply.
4. Get mobile
Mobile payment systems such as iZettle offer a new new alternative to traditional card payment facilities and are taking off in the UK.
New suppliers such as GoPayment and PayPal Here are North America based at the moment, but could launch in the UK soon.
These devices are accessible by plugging into the headphone jack on a range of smart phones and allow your business to accept credit card payments at a relatively low cost.
You also have the advantage of not having to buy any hardware or committing to any monthly fees – you just pay a small transaction fee for each purchase.
5. Avoid commitment
Making rash commitments to payment processors can cost you a lot of money in the long run.
Avoid cancellation fees at all costs. They effectively bind you to a processor regardless of the quality of service you are receiving. Paying the cancellation fees can range from hundreds to thousands of pounds.
They are easy to avoid. Most sales people have the authority to waive them, but you need to make sure to ask them. If they do waive them make sure this is in writing either within the contract or as an amendment.
6. Know what you are paying for
To save money you need to know what you shouldn’t be paying for. The simplest way to do this is to make sure you have “interchange plus pricing”.
This tends to be the least expensive and most transparent cost structure. You pay the credit card processing rates set by the likes of Visa and Mastercard plus a fixed rate mark-up applied by your processor. And because it’s based on wholesale pricing it can provide cheap rates possible for each type of card.
Most major retailers use this model to save money, so there is no reason why small and mid-sized businesses shouldn’t.
And remember: always check your statement for payment costs and extra charges. Words like “qualified”, “non-qualified” and “surcharge” can indicate you are paying too much!
Andy Yates, entrepreneur and director of Huddlebuy.co.uk gives Real Business readers regular top money saving tips to help business owners save thousands of pounds.
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