Traditionally, credit card processing has been the domain of banks. Most merchants already have accounts with banks, and banks have never had trouble finding takers for their credit card processing services. The point-of-sale machines at the merchant's end are easily linked to merchant bank accounts. The bank then processes the credit card transaction for a fee.
Innovative technology and the internet have enabled the rise of third party credit card processing agencies. These agencies offer competitive prices and faster processing time. Banks are now facing heavy competition with many merchants moving their accounts to the more economical third party credit card processing firms.
Third party agencies are being preferred over banks for many reasons. Some of these are discussed below.
Businesses prefer multiple service providers
Banks made the mistake of getting too complacent with their market share in credit card processing services. They wrongly assumed that businesses would prefer the bank as its credit card processor solely because they have accounts with them.
Businesses may not prefer one provider for all their financial solutions. However, as banks monopolized the credit card processing market, businesses had no choice. The arrival of third party credit card processors changes things. Third party agencies offer better services at lesser cost.
Faster service at lower cost
The internet has been the root cause of changing market scenarios. Third party credit card processing agencies offer faster service because the internet allows fast, inexpensive and accurate processing of credit cards. Most businesses can afford to install internet credit card payment gateways. This allows businesses to process credit cards at very low cost.
Third party agencies have hi-tech equipment, secure technology and high quality internet connections to process large volumes of credit card transactions effectively. They can offer the same or better services as banks at compelling prices.
Why look around when you are satisfied with the bank?
There is no harm in continuing with the credit card processing services of banks. In fact, many businesses may not want to change from banks to third party credit card processing agencies because of the longevity and comfort of the business relationship. Some businesses prefer to keep things simple by having one provider service all their financial needs. But, they may be missing out on more economical options.
Take time out to get price quotes from third party credit card processing agencies. Check out the kind of services that are offered such as internet processing and signature-less processing. If nothing else, you will get a better idea of the services you pay the bank. If an agency offers the same services at lower costs, you can at least ask the banks to explain why their charges are higher. This also pushes banks into a more competitive mode.
It is always good to have an idea of the going market rates for any service. Surveying the services and rates of third party credit card processing agencies helps business owners understand and question the rates charged by banks. Saving on credit card processing fees is bound to improve the profit margin if a business has high credit card sales.