The global giant Visa makes its money by providing its customers with dependable and safe ways to pay for their goods and services. Yet, not many people question how this money is created.
Exactly how their money is made?
I take advantage of Visa as an example in this article simply because they are a significant name and it’s well known them. To be able to make their money Visa charge merchant service fees when a shopper uses a credit or debit card, and due to the fact just about all credit and debit cards make use of Visa or MasterCard there is little surprise that Visa are such a large, essential force in the financial world. Sadly these charges fall to the retailer who usually pays percentage price per transaction for their own credit payment processing.
As outlined by the British Retail Consortium (BRC), in the UK the regular debit card payment fees the retailer around 8.5 pence per exchange, and for credit cards it may be as much as 33 pence. Although measures are being created to make these prices more realistic, they’re sometimes thought to be being a little high.
Moving the rates.
However, its not necessarily all terrible news towards the retailer, and although merchant costs for debit and credit cards are larger than the processing fee for cash, there is also a way they can filter the minor aggravation of paying the service fees. Cash processing rates are low because cash has been an ever present preferred payment method for such a long time, and it is actually highly possible that as debit cards gain dominance in the retail market, they too will lower their merchant service fees in accordance with need.
For the time being stores are able to make their money back by transferring their fees to the consumer. Its not necessarily unheard of, and many organisations do this in order to keep ticking over and making a healthy income (including Visa). As outlined by the Payments Council, consumers’ disposable income for leisure is up by 9% since 1999, so the slight raise in prices is hardly hitting them with full force.
Not only does a retailer have to pay merchant prices, most of the time they also have to buy their debit card terminals and other payment processing hardware, and maintain them too. This is completely required to stay in advance of retail trends and provide the customer with the absolute best options in payment processing; so why must the consumer not pay a little for the privilege? There is frequently a lot of talk about stores being “crippled” by merchant service fees, but this is usually only when companies fail to pass the charges to the customer. Failing to take credit and debit cards is not a feasible option in the UKs current retail market, too much money business would be lost if this were the case. Those SMEs (small and medium enterprises) that are struggling with merchant fees must take a serious consider their account and transfer some rates to be able to continue making the sort of income they want.
This tactic may be optimised even further by choosing an independent payment processing organisation that doesn’t cost a lot and is more tailored to the size and operation of the individual business. There are payment processing organisations out there who cater solely for SMEs, and these companies can often offer you a much more competitive rate.
For the latest information on your Best Merchant Account visit our blog.
For cheap Accepting Credit Cards visit the blog
To find out how to Account Merchant visit the blog
For more information on Bank Merchant Accounts visit the blog
