Should You Accept Small Credit-Card Charges?

Gone are the days when accepting credit cards was optional. With more than 600 million credit cards currently in use in the U.S., it’s a shrewd business move to accept plastic from customers no matter what kind of business you run. However, some businesses require a minimum purchase — often $10 or $20 — in exchange for the convenience of paying with credit.

Why do these policies exist? Should your business be doing the same thing?

To answer these questions, it’s important to understand how credit card processing works. Businesses contract with a merchant services provider that handles reading and authenticating customers’ credit cards, as well as transferring the funds to the business’s bank account. These services are not free. One way that merchant services providers earn money is by charging transaction fees. These fees typically run anywhere from 10 to 30 cents per transaction, which means that businesses are shelling out money every time a credit card is swiped.

Many businesses operate with narrow profit margins, and these margins can be eroded by credit card transaction fees. For instance, let’s say that a merchant makes 20 cents in profit on a $3 item. If a customer buys that one item (and nothing else) with a credit card, and the merchant pays a fee of 22 cents per transaction, then the business loses money on the sale. To combat this problem, many businesses require a minimum purchase amount for credit card transactions.

Here’s the dirty little secret: Merchants can now accept credit cards without having to pay transaction fees.

With GoPayment’s mobile payment services, businesses pay a percentage of each transaction instead of a flat fee per card swipe. Depending on the pricing plan selected and whether the credit card is swiped or its number is keyed in manually, GoPayment charges between 1.75 and 3.75 percent of the transaction amount. In other words, whether a business processes a single payment of $300, 10 payments of $30 each, or 100 payments of $3 each, the cost for GoPayment’s services is exactly the same.

If you’re tired of paying transaction fees for credit card processing — and requiring customers to make a minimum purchase — sign up for GoPayment today.

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