BY EVAN WYNN KOSINER
I couldn’t believe how expensive and crazy credit card processing was when I started out. To process credit and debit cards, you need what’s called a merchant account. The account costs a monthly fee, a sales percentage (usually three to five per cent with new businesses) and a per transaction charge (typically 25 to 35 cents). Some companies even have batch charges.
What is a batch? If you’ve ever had a serving job, at the end of your shift you process your batch. Essentially all the single payments get put through at once and show up in your bank account as one payment. You can process a batch whenever you like, you could even do it for every transaction, but it starts adding up quickly if your payment processor charges for this service.
Credit card processing companies negotiate your sale percentage rate based on your sector and how much volume you’ll be doing. Grocery stores are rumoured to have the lowest rate at 1.39 per cent per transaction. I pay 1.89 per cent and most people pay from three to five per cent. The rate is also calculated on taxes in your transactions.
Which leads me to my favourite payment company: Elavon with a Costco Executive Membership. An executive membership at Costco costs about $100. Through Costco’s partnership with Elavon, it will cost a few hundred dollars for an “online terminal.” Their online terminal is a website that allows you to process payments and easily integrates for online payments and e-commerce. They typically offer around a 2.2 per cent interest rate with a $10 monthly minimum, $13 monthly fee and no per transaction or batch charges. Best of all, when you process a batch, payment is sent to you instantly. When I put through a batch of transactions in the morning, I receive the cash in my bank account by the afternoon. Other companies hold your money for two to three weeks. Elavon can also set your account up as being a seasonal business, saving you some, if not all, of that monthly fee when you’re not using the account.
Next time you’re shopping, check out the logo on the keypad of the debit machine. Those are the merchant companies. Call and get pricing and look for yourself. If you have any questions about running your own business or have feedback for Evan, send an email to ekosiner@ryerson.ca
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