Spending more than $100,000 to open a store is common, according to retail consultants. But depending on your industry and location, your initial costs could be much, much higher. That's why it's important not to overlook credit card processing apps to save as much as possible on your expenses.What can you do to ensure you take home more of your revenue? Well, you could consider abandoning large, clunky point-of-sale (POS) systems. Experts estimate the average initial cost of a POS system at around $1,200, and that doesn’t include ongoing fees you pay for each transaction. By comparison, credit card processing apps are more nimble, affordable ways to accept payments. They can put your business in a better position. To optimize the value a credit card processing app delivers to your company, you must choose the right solution and implement wise payment processing strategies.
Looking for options beyond a traditional card reader? Explore our guide to accepting credit card payments without a machine.
Point-of-sale systems can get expensive and don’t offer the simplicity that mobile credit card processing apps do. With the ability to function on a smartphone or tablet, credit card processing apps bring mobile payments to physical stores and mobile businesses, such as food trucks, tutoring services, and cleaning companies. The convenience of having a small, lightweight mobile card reader can’t be understated. Many of your customers pay with a credit card, so you should have the latest, most convenient processor. According to a NerdWallet survey, credit cards are preferred for 34% of purchases. Add in debit cards (44%), and you’ll see that 78% of consumers prefer to pay with plastic.
The percentage of credit card transactions at your business could be more or less. But note that larger purchases are more likely to be paid with a credit card. Federal Reserve data shows the average non-cash transaction value exceeds the average cash transaction by $90 ($112 vs $22).
Even in only 34% of your transactions involve a credit card, 60-70% of your revenue could come via credit card transactions. Clearly, how you accept payments is vital to your success. Because you don’t want to lose money to hardware costs, transaction fees, and monthly subscription plans. Enter the credit card processing app—a mobile point-of-sale (mPOS) system that offers a more affordable and efficient alternative to legacy POS systems. Offer your customers payment convenience, and save on operating expenses.
For a dental practice example, see our guide to tap-to-pay for dental offices and how it fits into patient payment collection.
Also called mobile credit card readers, a credit card processing app can initiate a transaction by:
Note: Most mobile credit card processing apps have the ability to accept all three types of payment. Check before signing up. Once the merchant collects the customer’s data, the customer’s credit card network contacts the card-issuing bank. For instance, Visa would contact Chase Bank if the client swipes with a Chase Visa card. The issuing bank authorizes the transaction (or declines it if it appears fraudulent or funds aren’t available). Once approved, the credit card network notifies the payment processor.
Credit card processing app costs depend on your provider, equipment, subscription, and payment method. Compare the total monthly cost rather than the advertised transaction rate alone.
Check these costs before choosing a provider:
• Hardware: upfront purchase, rental, and replacement costs.
• Subscription: monthly software, service, or equipment fees.
• Transactions: percentage and fixed fees for each payment method.
• Additional charges: refunds, disputes, and optional services.
Ask each provider for a current quote based on your transaction volume and payment methods. Keyed-in, online, and in-person payments may have different rates.
When shopping for a mobile point-of-sale system (mPOS), see what credit card networks the system supports and what types of payment it accepts (swipe, chip, and/or contactless). Additionally, compare:
Finally, look at what other tools you can integrate with the credit card processing app. For instance, if your mPOS integrates with Salesforce, you can have a single, connected view of your customers. This will enable you to make CRM processes more relevant and personalized.
Due to heavy competition and high costs, net margins for physical retailers and restaurants are already slim. According to New York University research, net margins in retail range from 1.9% (general) to 12.11% (restaurants). With such margins in mind, consider the 2.75% transaction fee you pay to use a credit card processing app. Those fees are directly hurting your bottom line! Think about this scenario:
In this hypothetical example, eliminating the entire $38,500 processing expense would increase profit from $80,000 to $118,500—a 48.1% increase. Actual savings would be lower if processing, subscription, equipment, or other costs remain. Compare your current statement with a complete provider quote to estimate your potential savings.
Before choosing a pricing approach, compare credit card surcharging vs cash discount to understand how each affects your advertised prices and customer payments.
Ask your payment provider which pricing options it supports and how each option affects your customers and business costs.
Nadapayments offers credit card surcharging. Debit processing costs the business 1.5% + $0.25 per transaction, with no surcharge to the customer. The Nadapayments Terminal costs $35 per month, while the standalone virtual terminal costs $29 per month.
Review the current pricing and confirm the terms for your business before signing up.
