Tips for Low Cost Credit Card Processing

Merchant Warehouse |

December 7, 2010

Low cost credit card processing is a broad term that can include low cost strategies for using a regular merchant account, or the use of companies that have established themselves as being lower in cost, overall. Lowering costs of business expenses is a very effective and very efficient means, among many others, for businesses to succeed in a competitive marketplace, so we will treat that issue first. Then we will discuss the specialty low cost processors.

Whether you have an online business or offline brick-and-mortar one, it’s essential that you never pay more than necessary for your credit card processing. This means that a low cost credit card method that works for you will have to be customized around the way you do business. Since credit card transactions are the key to a business’s success or failure in this non-cash-carrying day and age, it is not like this is an optional responsibility. Millions upon millions of credit cards are processed daily and 90% of American buyers use them. Businesses that don’t have the means to process credit card transactions are at a higher risk for failure.

Merchant Accounts Used Wisely

Credit card processing is indispensable. Smart cash management and knowledge of the way the systems work help many businesses obtain working capital through cash advances, short-term loans or receivables financing. All of these cash management methods rely on how many transactions a company processes on a regular basis. Before you lower your credit card processing costs, you need to research the impact that it might have on the number or average size of your transactions, and design your cost-saving moves in such a way as to minimize any adverse changes.

Using your standard merchant account wisely, tailoring the features to the way you do business, is the best overall way to handle processing costs for medium and large businesses. This is because there are some limitations on the special low cost accounts – low processing limit, account being frozen for large charges, etc. – that would not bode well for use by larger companies. Therefore, it is more likely to be smaller firms, and online ones in particular, that would turn to the specialty, low cost credit card processing firms.

The Best Low Cost Plan

Low cost processors can be directly linked up with a financial institution, or they can be “third-party” processors. The former kind will provide you your own, low cost-oriented merchant account, while the latter will let you “piggyback” on the relationship they have established with a bank. Both will handle all the details of the payment gateway, inform you about software and hardware options and school you in the ways you can best use the service that they provide.

You can sign up with such specialty firms as,, PayPal and LinkPoint. Monthly fees vary widely, from $10 to $60, as do per-transaction charges. Some companies charge 10¢ and some 20¢ each, while others may offer some free number of transactions (say, 1000) before assessing a fee on each additional one. When setting up this kind of account, it is important to forecast as accurately as possible, since sudden increases in volume or charge amounts can result in your account being frozen. Remember, too, that fairly or not, the terms “low cost” and “third party” will often be associated in people’s minds with “shady” and “questionable.” Again, fairly or not, these types of accounts are held to be greater risks than a standard, full-featured merchant account.

Many of the specialized, low cost credit card-processing firms offer you reliable, honest and comprehensive processing services. As with any other modern processor, you will benefit from modern encryption technology to ensure security, a customer support department to keep you on track, even package deals for terminals (if you need them) and other options like wireless mobile devices. Most anything you need from a regular, mainstream merchant account you can get through a low cost firm, but you may pay more for it, experience some waiting time, have account freezes due to unexpected changes in your business pattern and experience other negative side-effects.

The point is, if you are a small, but dynamic and growing company, you should think carefully about a low cost option. If you foresee adding a lot more business, or expanding the company beyond a single location, you should not waste time trying to save money on credit card processing that you will pay for in lost opportunities and possible account freezes. You will have less flexibility with a low cost account, along with lower processing limits and limited upgrade paths.

Bottom Line Recommendation

Low cost credit card processing can help a small company accept all forms of payment cards, online or off, and establish the business as both modern and capable. Whether you tailor a merchant account to your particular needs, use a third-party processor or find a provider that specializes in low cost credit card processing for small and home businesses, you still have to do your homework and make your decision. It is important to get it right.

So that you can change horses in midstream if necessary, avoid signing any contracts. Some firms want one, while others will service you month to month. If your home business has been doing $1,000 of charges per month for the last decade, and you have no plans to grow or expand, you may be the perfect candidate for a low cost credit card processing account. There are other suitable profiles, and yours could be one of them. If you are curious, start calling around, and see what kind of even better deal you might be able to negotiate. You never know until you try.