The only cost associated with SmartPay transactions is the standard credit card processing fee you negotiate with your credit card processor or bank. The total effective cost to you, the vendor, will usually end up between two and four percent of the total transaction.
Credit Card fees are made up of several components. Each processor, and the banks which resell their service, adjusts these fees to differentiate their services and maximize their profits. By understanding them, you can better maximize your profits.
Standard Credit Card processing fees consist of:
- Start up fees. This may be $0 or up to $1500 if a terminal is required.
- Re-occuring fees. This may be a monthly or annual fee.
- Cost per transaction. This may include refund as well as charge transactions.
- Cost as a percentage of the transaction.
- Downgrade costs. These are extra percentage points that may be added to transactions that are considered higher risk. These include:
- Accepting a commercial credit card as opposed to a personal credit card.
- Processing transactions over a certain amount.
- Keying in a credit card # as opposed to swiping it through a reader.
- Entering a transaction some time after the transaction occured.
Obviously, care must be taken to manage costs with SmartPay transactions. Some vendors have been dismayed to find that they are paying
30% or more for processing fees than what they expected!
Be sure to see "
How do I cut costs with SmartPay?" to learn how to reduce your costs to the lowest level possible.
With proper care, SmartPay can provide significant value to government vendors and merchants.
