When you’re moving to accept cards as a payment option, it’s important to ensure your financial management stays sound. Here’s are credit card tips to help go cashless.
Choose Wisely There’s never been a better time to embrace cashless payments in India. The government’s financial inclusion drive opened more than 210 million bank accounts and card spend grew 28% last financial year.
To ensure your move to cashless doesn’t impact your financial management goals, you need to choose your card processor wisely. Processing companies provide the merchant accounts that capture funds from card sales – you pay for this service, so you want to get the best deal.
To get a good deal, you need to know which fees can be negotiated for the credit card. There are two costs that can’t change: interchange and assessments. Interchange fees are what the card-issuing banks charge processing banks to accept cards – you can find these fees on card issuers’ websites. Assessment fees are charged by card companies, such as Visa, and are based on different factors, like the volume of transactions you process. You can negotiate a processor’s mark-up above assessment and interchange rates to get the best deal possible.
The first area to negotiate is the pricing model processors base their mark-ups on. There are two models: tiered and interchange pass through. With tiered pricing, processing companies bundle hundreds of different types of transactions into tiers. You’re charged a fixed amount for a transaction in a particular tier, regardless of the processor’s underlying costs. Interchange pass-through pricing is where processors add a fixed mark-up for every transaction, on top of the interchange rate.
The benefit of this model is you know how much mark-up you’re paying when you accept cards – with tiered pricing you never know. But companies that offer interchange pricing can get creative adding other charges, like monthly account fees. To find the best deal for your credit card, you need to add the different fees together and consider the total costs.
Look for Red Flags Next, look at the paperwork. The terms and conditions of the merchant agreement are particularly important – if anything concerns you, you need to flag it with the processing company. Remember, interchange fees vary depending on the type of card used. For example, corporate cards are often more expensive to process. When reading the terms, look for clauses about interchange rates, assessments and downgrades from card companies. You also want to watch for anything that looks like a surcharge.
If you’re quoted a price that seems too good to be true, it likely is. Ask your allocated sales representative to explain how the rates are charged, and about the different rates for premium, corporate and international cards. You also want to find out whether there are any cancellation or early termination fees, and what security and customer support services are available.
While there’s never been a better time for India’s small businesses to embrace cashless payments, you want the best deal. A little research and caution can help you go a long way in making sure you offer your customers convenient payment options while ensuring your financial management goals stay on track.