Mobile Payments: Before you Buy Into the Hype- Do Your Homework
Swiping a credit card on your smart phone - do costs fit your business
there is such a thing as a ‘trend’ in the payment processing world, mobile
payments just might be the latest craze. Having the ability to accept
payments via your mobile device can certainly be convenient, but it may not
always be the best fit for your business. More so, don’t just go for the
first device you find.
If I told you, “ Flat rate! No set up fee! No monthly fee! No annual fee! No compliance fees!” Might you think, “It’s too good to be true?”. That is the pitch for the industry’s leading mobile payment company. And ‘too good to be true’ is a situational response.
By that I mean, if you’re a small business, accepting payments infrequently, perhaps at a trade show or festival here and there; a seasonal business; or selling books at a conference, than this fee structure may be best for you. What you’re getting with this deal is a great no set up, no fixed cost structure. But certainly money is being made somewhere and it’s in a high flat transaction fee.
If you’re a business who has no need to take payments wirelessly (but is simply succumbing to the hype) and/or is doing a consistent dollar volume monthly (as a rule of thumb I say about $1,500/month), I highly recommend looking into a traditional merchant account provider who may also offer a free swiper for your mobile device, but perhaps has some monthly fees associated. In exchange, you’ll get significantly reduced transaction fees. In this case, it is ‘too good to be true’ in that the over-simplification of the costs really works against you from an overall fee perspective. Whereas you may pay about 2.75% flat with no fixed costs with the leading provider, you can pay as low as about 0.21% and $0.30/transaction with a traditional merchant account, averaging closer to about 1.5% across the board with different card types and rates.
At the end of the day, payment processing fees are not simple. To go with the simplest offer is oftentimes just a way take advantage of that fact. Bottom line: if you’re a business in need of accepting mobile payments and you do more than $1,500/month in transactions, look into traditional merchant account providers to let them do a price comprehensive price comparison for you.