Credit Card Fees: What Are You Really Paying?

Profits are the lifeblood of your business — and predictable, sustainable revenue is the key to growth. If you run a business that offers recurring, monthly services, such as a health club or wellness clinic, you should be offering your customers hassle-free, EFT billing. If you aren’t, you’re doing a disservice to both your business and your clients.

EFT, or electronic fund transfer, provides your business with guaranteed income and alleviates concerns about covering overhead. When new customers sign up for your services, you simply ask for banking or credit card information, set them up in your program or software, and their monthly billing can become an afterthought (if you’ve chosen a good billing company, that is).

There are a number of companies to choose from to handle your recurring billing needs, but as with most things, they aren’t all created equal. The major differences between credit card processing companies are customer service, back-office support, and processing fees. It’s a good idea to shop around and review different companies, but make sure you understand discrepancies between providers. Often, business owners will choose the provider with the lowest rates, but in the end, those may end up costing substantially more than providers with slightly higher rates. The reason for this is the quality of support offered by a provider.

Consider this: 60% of credit card numbers change each year. Cards expire, are lost, or are cancelled all the time. Many people prefer to use a credit card when they sign up for EFT, and if they forget to give notification when a card number changes, that account is bad debt waiting to happen. The majority of billing companies will sit back and wait for cards to decline before attempting to obtain updated information — but this reactive approach is inefficient and costly to business owners. A provider with back-office support will spot potential problems before they occur. For example, Covenant Business Solution regularly audits all of their member accounts to identify credit cards with upcoming expiration dates. This allows them to update records proactively and avoid any disruptions in their clients’ monthly drafts.

Another expensive problem is the failure to collect bad debts. If a billing company does not aggressively pursue debts, businesses are left to absorb the losses. A solid billing company will do their best to collect on bad accounts so their clients don’t suffer the financial burden of uncollected debts. Effective, systematic debt collection is incredibly valuable.

Covenant Business Solutions provides their clients with the service and support one would expect of a trusted business partner. In the end, their full-service receivables management and extremely effective collections techniques makes their solutions less costly than competitors with lower percentage rates. Because Covenant is a smaller company, they’re able to provide their clients with individualized attention, helping identify areas where businesses can make improvements and increase profits.

The key to remember here is to avoid getting hung up on the processing fees or percentages that a billing company charges. Look at the big picture and identify all of the services that are being offered in conjunction with the billing company’s fees. The cheapest company could end up costing your business significantly more if their support is sub-par.

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