Retailing Strategy and Credit Cards

Merchant Warehouse |

December 7, 2010

Retailing strategy with credit cards is strongly linked to the selections of the best credit card processing rates that are possible with each card. Making the right choice of credit card processing strategies will have a direct impact on the ability to increase revenues for your business. Surveying the various options, pricing and incentives offered by the issuing bank will help you determine the right credit card options.

The rates for various credit card processing “packages” range from having one overall, all-inclusive fee with other services included for free, to other credit card providers charging a set amount for the fees included with the card. Credit card processing deals also offer discount rates that range widely. At times the transaction fees in the credit card processing rates can range as high as 25¢ each.

There are certain criteria for choosing the best credit card processing rates. Merchants need to take the time to research each card and the most cost-effective and viable terms or conditions. This will help a merchant choose the best card for their business in terms of predictable, foreseeable costs for cash management and planning. However, the credit card processing company needs to be reliable and customer friendly as well. Just simply having good rates is not enough to stake a business plan on.

Cost Strategies

The key points any merchant needs to keep in mind when choosing a credit card, for a cost-control consideration at least, are the number of transactions expected every month, the growth plans in terms of profit margin, the average size of the orders and the frequency of accepting payments from customers.

Besides costs to you, you should consider the well-known consumer advantages that are important to your buyers. It is already well understood that a business must take payments by credit cards, so making sure consumers know you take credit cards is an old, basic lesson. The new things to remember in this regard are the many different ways that you can lower your cost of offering this convenience to your customers.

For examples, lowering risk will always lower your cost. The more security you have for your online orders, for instance, the lower your assessed costs. If you are able to increase your brick-and-mortar, “card present” sales as a percentage of overall sales, then you will save money over a situation where you have mostly online sales, which cost more per transaction and as a group because of the risk.

All Things Considered

When these variables are considered in terms of their impact on overall operations, it is a direct indication that companies are planning to reach high volumes and want to reduce their discounted rates and transaction fees towards every transaction rather than their monthly fees. Likewise, small companies which have high order size, but lower transaction volume, can afford to be more flexible in terms of their discounted rates and in turn their monthly fees may be lower.

There are other kinds of rates that vary from one merchant account type to another. The merchants need to be careful and should review and analyze the pros and cons prior to choosing the best credit card processing rates, the best package deals and the most flexible service terms. Choosing the right credit card rates, and tracking the impact on overall company strategy, just might make or break the plan that you are trying to institute for your business.