Kitchens by Riland

When setting up a business in anticipation of success, you have to ensure that you have flexible methods of payment. Having cash-only policies does not suffice since, and it will only get you so far- that is why many businesses accept credit cards. Sure it’s all easy since you only give your card to the retailer who later returns it to you with your goods. But is it that simple? The unfortunate thing is that its not. For a business to accept credit card payments, there are so many complexities involved. The whole procedure of credit card processing is sadly very detailed. In this context however, only the discount part is covered.

The discount fee in credit card processing is not charged to the buyer but the seller. See, for the seller to have the credit card payment processed, there has to be a percentage fee paid, in this case to the merchant bank. The discount figures are not constant, and differences arise depending on the kind of merchant sought. The fee is charged per transaction, and in most cases, it usually varies from 1.5% to about 2%. If it’s a new business, there is the aspect of uncertainty, which usually warrants a higher interest rate, or about 2% to 3%.

Those merchants that usually swipe credit cards usually get better discount rates than those who key in the credit cards. Though there are many theories in support of either, it is generally thought that swiping credit cards is associated with lesser risk. One would wonder why the discount credit card processing fee is not charged to the customers. Basically it’s because they are protected by the credit card companies. Besides, if you knew you were going to pay an additional charge on your credit card for doing your shopping, you would be hesitant to use it in the first place.

There is the probability of a business owner paying a lot to the processing agency if customers almost always pay using their credit cards. For this reason, many sellers usually price their goods higher when it comes to paying with credit cards, while offering discounts (a few bucks off the selling price for the customers that pay in cash.) With that, the additional fee collected from the sales paid using credit cards is used to pay the credit card processing fee, or at least part of it.