Think you know everything you need to about accepting credit card payments?
It could be time to think again.
I asked 7 payments experts a simple question:
“What is one thing most UK business owners don’t know about credit card processing but should?”
I wanted to know the important things that business owners often overlook when it comes to credit card processing.
Read on to discover what each expert had to say…
Jonathan Jensen — Head of Core Products at Ukash
“Different acquirer fees apply to different card types, e.g. debit, credit, business, premium consumer and (importantly) contactless; so merchants have a financial interest in encouraging certain card types. However no one ever says to me ‘Why don’t you pay by contactless’.”
Jonathan makes a good point that processing fees can vary considerably, not just between debit and credit cards, but also between consumer and business credit cards and the way payments are made. For example, businesses often pay much higher fees to process payments made on premium credit cards than on regular ones.
James Olver — Director – Sales and Business Development at BlueSnap
“Owners do not know the best way to cater for their consumers in terms of the payment methods they should be allowing them to pay in — everything from ApplePay to local alternative payment methods per country…..an area that most businesses have a huge lack of knowledge as they know their domestic market and demographic but not the international counterpart.”
James highlights something that I think is particularly important for e-commerce businesses when they’re going international. Not every country is as keen on credit cards for online payments as we are in the UK!
Dave Birch — Director at Consult Hyperion
Here’s Dave’s answer to the question I asked of “What is one thing most UK business owners don’t know about credit card processing but should?”:
“That fees are about to change?”
Dave’s referring to the big changes this year to the so-called ‘interchange’ fees that Visa and MasterCard charge to payment processors. These changes are having big knock-on effects on the fees that payment processors, in turn, charge to merchants.
The first of these changes to come into effect is, as I’ve mentioned here on the blog recently, Visa debit card processing fee changes (in effect from 1st March 2015).
Nadja Sittler — Business Development Director at Credorax
“There are a lot of providers out there right now (including Credorax) offering solutions specifically aimed at small and medium sized businesses ranging from mobile payments on white-labelled apps to mPOS solutions, enabling them to take chip and pin payments on the go. Whether they accept payments face to face or online, the choice of affordable solutions has never been greater for small merchants.”
Nadja’s right — there has been a lot of innovation around payments in the last few years that can be useful for small merchants. Mobile phone POS solutions in particular are getting a lot of interest.
Geoff Barraclough — B2B Consultant, Barraclough & Co.
“Many business owners don’t know that they can shop around for card payments. Frequently, they take the service from their business bank and may well not be getting the best deal.
Often they also don’t know that they can negotiate the prices for card payments. It’s not like mobile phone tariffs where the operators sell off a published a price list. You can drive a hard bargain with payment providers. Threaten to take your business elsewhere and you can expect a tidy price reduction.
Finally, although the EU is driving down charges for most transactions, there’s one area where you need to be careful. Debit charging is moving from a fixed fee to a percentage of transaction value. This will hurt if you regularly take high value debit transactions. Your provider should be mitigating this by applying a cap. That is something like 0.X% up to a maximum of Yp, or similar. If you regularly take debit card transactions for high value (>£250) transactions call your provider now to check that they are capping the cost of these.”
These are great tips! There’s plenty of money to be saved by simply shopping around and comparing rates. Above all, don’t just accept whatever your bank is offering you!
Of course, an easy way to compare rates is to use a service like PaymentBrain.
Neira Jones — Independent Advisor and Public Speaker
Neira has a wealth of experience in the payments space and was previously Director of Payment Security & Fraud at Barclaycard. Her advice is about security:
“UK e-commerce business owners don’t realise that completely outsourcing their payment page to a secure PSP can make their life much easier and their customers more secure. I too often come across business owners that think that by outsourcing they would compromise their branding, but technology has moved on since that was the case…”
This is a really interesting point. Lots of e-commerce businesses prefer to keep customers on their own sites throughout the checkout process because they feel it will provide a smoother experience. But payment pages hosted by a payment processor are generally far more secure and these days can usually be customised extensively to fit well with the branding of the rest of your site.
Stuart Cronin — Manager of Risk and Fraud at CashFlows
Stuart had a number of answers to my question about what business owners don’t know about credit card processing but should. Here’s my favourite:
“They don’t know what a chargeback is – Chargebacks are the full reversal of transactions by the card issuer. A chargeback is generated when a cardholder disputes a transaction on their debit/credit card statement which you the merchant are liable to pay and these funds will be debited from your merchant account plus an additional chargeback fee.”
As Stuart points out, it’s important to understand what chargebacks are. It’s also worth understanding what fees your merchant account provider will charge you for them when they happen.
What Other Things Should Business Owners Know About Credit Card Processing but Don’t?
A HUGE thanks to each of the experts who contributed to this post. Please share if you think it was useful!
Is there something about credit card processing you only learnt recently and wished you’d know before?
What advice about credit card processing would you give other business owners?
Do leave a comment below to let me know.