Do you find yourself scratching your head every time you receive your monthly statement from your credit card processor? Are you wondering why your fees seem to fluctuate even though you’re not changing your sales volume? Well, the answer may lie in the number of transactions you process each month.
It’s a common misconception that processing fees are solely based on the total dollar amount of sales. While that is a significant factor, the volume of transactions also plays a crucial role in determining how much you pay in fees. Let’s break it down.
Imagine you run a small boutique that sells handmade jewelry. On a typical month, you make $10,000 in sales with an average ticket size of $50. Now, let’s say you process these sales with an interchange-plus pricing model, where your processor charges you a flat fee plus a percentage of each transaction.
If you have 200 transactions in a month, each transaction will incur its own processing fee. However, if you have 100 transactions that total $10,000, your processing fees will be significantly lower because you’re paying fewer per-transaction fees.
The more transactions you have, the more fees you’ll pay. This is because every time you swipe a card or key in a transaction, your processor incurs costs to authorize and settle that payment. These costs add up, and processors pass them on to you in the form of transaction fees.
But fear not! There are ways to mitigate the impact of transaction volume on your processing fees. For starters, try to bundle transactions together whenever possible. Instead of processing multiple small transactions, consider combining them into larger transactions to reduce the number of per-transaction fees you pay.
Additionally, you can negotiate with your processor to see if you can get a better deal based on your transaction volume. Some processors offer volume discounts for businesses that process a high volume of transactions each month.
In conclusion, transaction volume can have a significant impact on your card processing fees. By understanding how this works and taking strategic steps to manage your transaction volume, you can save money and streamline your payment processing. So next time you review your statement, you’ll have a better grasp of why your fees are what they are.