Small Businesses Looking to Save Money by Shopping for Lower Merchant Processing Rates

*When Yvonne Chu launched Kimera, her Brooklyn, N.Y.-based dress retailer, five years ago, setting up a system to accept her customers' credit cards was an afterthought. Already armed with a small business card from Capital One, she figured why not use the bank's credit card-processing services, too? "I needed it in a hurry," says Chu.

It took a few years, but Chu eventually realized she was leaving real money on the table. Today she uses a New York-based Merchant Processing Service, which charges her a base rate of 1.61% on each bill, plus 20 cents per card swipe. That's down from roughly 2% and 23 cents at Capital One. Says Chu: "Every little bit counts."*

Of all the demands of running a business, shopping for a competitive credit card processor might seem trivial. Yet a healthy dose of due diligence can go a long way.

Take, for instance, a 120-seat restaurant that does roughly $2 million a year in sales--80% of that on credit or debit cards. Shaving just 1.5 points off of those processing fees equates to savings of $24,000 a year.

In the case of Visa and Mastercard, when a credit card is swiped, the transaction gets relayed--via an intermediary--to the credit card company, which then sluices the funds to the merchant's bank account. That middleman charges the merchant a fee--2% to 5% of the sale--for the hookup; meanwhile, the processor pays a fee to the credit card company. (American Express puts the money right into merchants' accounts, charging them fees directly.)

Letting your bank handle credit card processing may seem convenient--but that convenience comes at a price. Using a the third-party service provider--such as Swipe-Rite, of Cedar Rapids, IA, is the cheapest way to go.

Rates are not the only thing to shop for when looking for the best credit card processing, however. Speed and service matter too. Swipe-Rite’s exceptional customer service and around the clock assistance on Twitter ensure that your questions will be answered immediately.

For small businesses, it is imperative that their credit card processor see them as a valuable customer, not just a series of numbers. Since Swipe-Rite is founded and run by a group of small business owners, we value the relationship we establish with our clients more than our own bottom line. We are committed to working with small businesses to create a solution that works.

For more information on how Swipe-Rite can help your business in the Cedar Rapids Metro area or beyond, Tweet us at www.twitter.com/swiperite, or call 877-465-8033.

*Partial Credit to Forbes Magazine Online Journal, Maureen Farrell, 2007