If your business is looking to cut costs, a good place to start is by looking at how you take payments. Accepting credit cards is a necessity for most businesses, but when you look at the fee structures, with the average discount rates between 1.5% for retail transactions and upwards of 2.25% for online transactions, plus a flat transaction fee somewhere around a quarter, the cost of doing so can add up. Offering other forms of payments, such as echecks, could save your business quite a bit of money.
Echeck transactions, also known as ACH (Automated Clearing House), convert a paper check into an electronic transfer by processing bank account information through a secure network, used by banks and the federal government. The designated payment amount is then transferred from one bank account to another. Depending on your echeck processor, you are usually charged a flat rate to process an echeck transaction up to a certain amount. Additional discount rates may be added on for larger transactions, but they rarely come close to those of credit card transactions. “Batch fees” may also be charged, typically at a flat per-day rate, regardless of how many transactions are processed.
Let’s say you need to run a payment for $200. With a credit card, assuming a transaction fee of 2.2% + $0.29 (flat), the total transaction fee would be roughly $4.69. Process that same transaction via echeck, and, with PaySimple for example, you’re looking at a flat 55¢ fee. That’s a savings of over $4 on a single transaction! Finally, to cover all the bases, according to www.electronicpayments.org, it costs an average of $1.22 to process a paper check – a much more comparable rate to echecks, but far less convenient.
Usually, cutting costs means making other sacrifices. But with echecks, you can save money while maintaining all of the conveniences associated with credit card transactions. It’s a win-win practice to incorporate into your business. Please visit our website for more information on echeck transactions.