Why It’s Impossible to Calculate the Cost of Payment Processing

Right here at Lucid Funds, we get lots of people who name us demanding to know precisely how a lot they’re going to pay for his or her fee processing.

One instance of that is when our VP of Operations, Steven, had a dialog with a man who sells furnishings, who demanded to know precisely how a lot his month-to-month invoice could be if he selected to go together with us.

“Why can’t you inform me what I’m going to pay?” he requested.

Steven, who’s getting bored with these sorts of discussions, responded by saying, “Are you able to inform me what the price of lumber goes to be subsequent 12 months?”

The furnishings salesman wasn’t too happy with this reply and checked out Steven like he was an fool.

Nonetheless, Steven defined to him that simply as he can’t management the value of lumber, we’re not answerable for what it’s going to price to simply accept funds with bank cards.

There are simply far too many variables, and in contrast to different corporations, we don’t need to mislead clients with inaccurate estimates or rip them off with flat charges that may probably find yourself costing them extra.

Certain, there are many fee processing corporations on the market that may make bogus claims concerning the accuracy of their estimates, or inform you precisely what your invoice will likely be every month by charging an inflated flat price.

However right here at Lucid Funds, we’re not going to do this, as a result of it goes in opposition to the perfect pursuits of enterprise homeowners and makes our total trade seem like a bunch of crooks.

So, should you’re nonetheless questioning why it’s unattainable to find out the price of fee processing, then maintain studying.

As a result of on this article, we’re going to have a look at why it’s so tough to find out the precise price, discover how different fee processors are exploiting the state of affairs, and clarify why our method is healthier for enterprise homeowners such as you.

Variables That Have an effect on the Price of Fee Processing

As we talked about above, the price of fee processing varies, identical to all the things else.

The fee processing trade is a market no completely different from the lumber market, or the oil and fuel market, and there are going to be value fluctuations.

There are many completely different variables that have an effect on the price, together with issues just like the types of fee a enterprise tends to simply accept, the sorts of playing cards its clients use, the quantity of threat related to every transaction, and the markup charged by card issuers and/or fee processing suppliers.

To place issues in perspective, let’s contemplate a hypothetical state of affairs.

Let’s say inside one hour, that furnishings salesman we talked about above serves 5 clients.

Three might pay with a Visa, two might pay with a Mastercard, and each single card, whatever the model title, might price a totally completely different quantity.

You see, there’s a quite common false impression that folks have in the case of bank cards, the place they consider {that a} Visa is a Visa, and a Mastercard is a Mastercard, however that’s simply not the case.

Visa, as an example, gives tons of distinctive bank cards, with vastly completely different charges hooked up to them.

On the similar time, virtually each massive company now has its personal bank card, together with Canadian Tire, Dwelling Depot, and Walmart, simply to call just a few.

As well as, many of those playing cards, together with playing cards like Air Miles, have factors applications that permit cardholders to obtain cashback, or different rewards, corresponding to reductions on airline tickets. And with a purpose to pay for the factors applications, these playing cards have considerably larger bank card processing charges.

Generally, if we’re speaking about interchange charges alone, that are the charges charged by the cardboard issuers, bank cards carry a price that’s wherever between one and three per cent of the price of the transaction.

Debit playing cards, then again, are likely to have a lot decrease charges, costing wherever between 4 and ten cents per transaction on common, plus any relevant evaluation/Interac Flash prices.

As well as, each debit and bank cards can also cost a small flat price on high of that proportion.

That being stated, this doesn’t even think about the entire different charges retailers must pay for his or her fee processing, corresponding to charges for fee terminals, month-to-month assertion charges, and any markup charged by card issuers and/or fee processing suppliers, which additionally varies.

Concurrently, the character of every transaction can have a significant influence on how a lot it’s going to price the service provider.

As an illustration, when a buyer pays in individual, the interchange charges will likely be decrease, because it’s thought of a much less dangerous transaction, however when somebody makes a purchase order over the telephone or on-line, the interchange charges are usually larger, as these transactions are thought of riskier.

Usually, there are additionally particular interchange charges charged on recurring funds, and funds accepted by non-profits and charities, as nicely, and every card could have barely completely different charges for every form of transaction.

It’s additionally vital to level out that no person can predict the long run. New banks, fee processors, and playing cards are continuously being created, and nobody can predict how that may play out when it comes to the prices retailers will likely be anticipated to incur.

If you wish to study extra about interchange charges, you must learn our article on What You Have to Know About Interchange Charges in Canada.

So, as you may see, until you may predict precisely what sort of playing cards your clients are going to make use of, and in what context they’re going to make use of them, it’s principally unattainable to know the way a lot you’re going to pay.

That is true, no less than in the case of our pricing mannequin, however many different fee processors like to assert in any other case, and that is the form of stuff you really want to be careful for.

Bogus Claims In regards to the Price of Fee Processing

As you may inform, these items could be extremely convoluted, and sadly, many fee processors prefer to prey on folks’s ignorance.

For instance, loads of these corporations prefer to make assertions concerning the accuracy of the estimates they will present, however, as I stated above, it is a completely bogus declare as a result of there’s actually no strategy to decide what the precise price will likely be.

There are far too many corporations on the market that aren’t correctly explaining this, they usually’re simply pumping out inaccurate estimates like there’s no tomorrow.

That is very deceptive for retailers, and it does a disservice to the fee processing trade as a complete as a result of it exhibits an absence of honesty and transparency.

Now, some corporations will inform you precisely what they’re going to cost you for fee processing, when it comes to what proportion you’re going to be paying on every transaction.

Sounds nice, proper?

However while you actually dig into what they’re doing, it’s fairly disingenuous.

As an illustration, Sq. gives flat-rate pricing for its fee processing, charging 2.65 per cent per card-present transaction, no matter what sort of card a buyer makes use of or any of those different variables.

However the issue with that’s there are playing cards on the market that price lower than one per cent per transaction.

So, when you may need a greater concept of what you’ll be paying per thirty days, for some playing cards, you might find yourself paying greater than twice what you’d with out flat-rate pricing.

Doesn’t sound like such a fantastic deal anymore, does it?

On high of all this, some corporations will even play methods on their clients by doing issues like reducing a service provider’s most irrelevant charges, making them assume they’re getting a deal, whereas concurrently elevating the charges on the transactions which are costing them essentially the most cash.

Frankly, this type of manipulative, dishonest behaviour is nothing in need of disgusting, and right here at Lucid Funds, we’ll by no means mislead our clients like this.

Quite the opposite, we’re working laborious to attempt to expose these items, and do what’s in the perfect pursuits of enterprise homeowners.

Why Our Method is Higher

Whereas the massive banks and different massive card issuers like to color everybody with the identical brush, right here at Lucid Funds, we have now a way more customized, versatile method, and we attempt to do all the things on a case-by-case foundation.

That being stated, whereas we will’t inform you precisely what your invoice’s going to seem like each month, for about 90 per cent of the individuals who name us, we’re capable of finding methods to avoid wasting them cash.

Now, given the truth that there are dozens of various bank card classes, and actually hundreds of various playing cards, when a buyer calls the very first thing we love to do is overview the final assertion they obtained from their present fee processing supplier.

We’ll undergo the assertion with them, pay attention to what sorts of playing cards they’re accepting, run the related numbers, and attempt to discover methods to avoid wasting them cash based mostly on the character of the transactions.

For instance, if an organization is primarily doing enterprise on-line, then we’ll take a look at how we will decrease our markup on these transactions. In the event that they primarily settle for debit funds, then we’ll attempt to cut back our markup on these.

Sadly, some clients get a bit perturbed after we ask to have a look at their assertion, and plenty of of them will ask, “Why do you need to take a look at my assertion to know what you’re going to cost me?”

Our response to that might go one thing like, “Effectively, why do you go to see the physician in individual while you’re sick as an alternative of simply calling him, telling him what’s flawed, and demanding he diagnoses you on the spot?”

Admittedly, their apprehension is comprehensible, as nobody on this trade is taking the time to do that kind of factor.

However while you select Lucid Funds, we’ll take the time to dissect your assertion, contemplate what you are promoting mannequin, after which create a personalised plan that will help you cut back prices the place it issues most to what you are promoting.

Sounds higher than what the opposite guys are providing, doesn’t it?

Need to learn how we can assist you get monetary savings in your fee processing? We go above and past to make sure you get the absolute best value. Give us a name at this time to study extra about what we will do for you.