How to know a good deal with Merchant Services

What fees should you or should you not be paying?

In short, your merchant services bills will typically be broken down in 3 ways:

1. Monthly Terminal Rental or Online Portal Fee

Terminal rental would typically be between €25-€35 per terminal but this can be reduced if there is high volume of transactions (or if compensated with higher rates which can actually benefit those with a low monthly card payment turnover).

2. Monthly PCI Admin fee

Typically this is around €5-€6 and set as a fixed fee by the payment gateway provider.

3. Rates per transaction, managed by the acquiring bank

Debit card fees should be around 0.35% to 0.45%
Credit card fees should be around 0.8%
Business card fees should be around 1.8%
Authorisation fees should be around 3c-5c per transaction

Usually there is a minimal monthly transaction charge of around €20.

So, for example if in a month you only take in 1 payment and it is €2000 at 0.4%, for which you would be liable to only €8 fees, it would be increased to €20 for that month because of the minimum fee.  But if you take in 1 payment of €6000 at 0.4% it would be €24 for that month (plus the authorisation fee of around 5c for that transaction).

What are authorisation fees?  
When you try to take a payment, the information is sent to confirm the money is actually in the cardholder’s account for the money to be withdrawn.  An authorisation guarantees that you will actually receive the money.

What other fees are there to be aware of?

1. Cardholder Not Present (CNP)
If you take payments online or over the phone, it is deemed riskier and as a result there are additional fees per transaction. This charge varies between acquiring banks and card types but it is definitely something to take into consideration if you take some or all of your payments over the phone.  At New Payment Innovation, the charge is 14c per debit card transaction, 0.3% per credit card transaction. For European cards there is a 0.25% fee and for Non-European cards a 1.25% fee.

2. Chargebacks
A chargeback is when the payment is taken back because of a complaint from the customer, eg: if a customer said they did not pay for something charged to them or it was not delivered.  The banks may not even warn you about this and you may see a fee and have to then prove that your payment was valid to be able to receive the money.  This usually occurs if someone tries to pay for something from your website with a stolen card. The risk can be reduced if you use a system to take payments with 3D Secure, or text them a link to pay (where you send someone an sms with so they pay and you have a verified phone number).

Fees-only Payment providers

When starting out, it’s easy to get options that require no contract such as Sum-Up, Paypal and Stripe among others and these can work out great until you start earning a certain amount of income. It also depends on your typical items for sale.  These typically charge around 2.75 – 2.9% and usually with a 30c – 35c transaction fee. 

This means, if you take in €10, you’ll be charged up to around 70c, which is actually up to a 7% fee.  If your item costs €100, it would be around €3.20 working out around 3.2%.  Let’s say you take in €2000 over 10 orders of €100, and 100 orders of €10.  You’re looking at paying out over €100 in fees for getting paid.

Because of this, if you take in over €1000/month via card payments, it is worthwhile looking at options for merchant services.

Beware of sales reps with bad morals!

Some reps will say anything to make a quick buck.  Here are some common lies I have heard were told to business owners:

“All you’ll pay is €10 per month and 1c per transaction”: 
This sounds like you will be in for some serious hidden charges!

Promising very low rates, eg: 0.16%:
Small businesses fall for this because they set it up in a way where the acquiring bank may charge 15c per transactions at source.  There is one company in notorious for this in Ireland and it also drives accountants mad because the numbers don’t match between your till and your merchant service payments.

“You can get out of your contract early by just stopping to pay”: 
You could end up with a debt collector landing on your doorstep or court order. Likewise bad credit. Be careful!

“Rolling contract”: this is highly unlikely to be true.  The contract you sign will likely have something in it that ties you in for at least 18months.

“You’ll have a terminal setup this week”: Normally it takes about 1 week to get set up. With Covid restrictions, the paperwork going through takes a couple of extra days so it is more likely to take about 10-14 days.  I have heard of some companies taking much longer than this after promising less than a week.

Customer Service

You may need assistance if your terminal has issues. Some banks and providers are extremely slow to respond, and they may leave you in the lurch, so make sure the company you choose has good technical support!

Would you like to know more or get a quote?

I partner with New Payment Innovation because they have excellent company ethics, top quality customer service, and aim to offer the most competitive rates possible with the view to always keep customers satisfied.

I am a Certified NPI Reseller and I would be happy to have a chat with you about the best setup for your business, answer any questions, and provide a quote to get you started. 

If you have a merchant services contract already, I can evaluate the fees you are currently paying, draw up a price comparison chart, and see where I can help save you money. 

To find out more, feel free to reach out on 085 130 3259, email john.rownan@npi.ie 

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