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Why Online Credit Card Processing Can Be Expensive

Every online business needs a way to accept credit card payments, as many customers prefer to use credit and debit cards when shopping online as opposed to personal checks or payment services like PayPal. Online credit card sales can also be a great addition to an offline business’ cash flow but, when taking bank cards, it’s important to note that credit card processing rates can be very high. In some cases, online credit card processing costs are more expensive than offline processing costs. There are several reasons for this, and understanding them can allow an online business to improve its processing tools and cut down on its monthly costs.

The main reason that online credit card processing rates can be expensive is that there’s a large demand for specialized online processing services. Many processing companies can simply get away with charging their customers higher rates. Merchants often make the mistake of not checking around for rates before entering into a processing agreement, and this leads to lost profits and unnecessary expenses. There are also quite a few different types of credit card processing costs. Merchants are charged a per-transaction rate, but other expenses are often part of their monthly bills, including gateway fees and maintenance fees charged by the credit card processing companies for regular service. These costs can quickly add up.

However, this is not to say that there aren’t legitimate costs involved in online credit card sales. There are several challenges that are unique to online payment processing, and processing companies certainly have to use specialized technology and tools when handling each transaction. Security, for example, is incredibly important in online sales. To protect sensitive customer credit card data, processing companies have to use complex encryption tools. Encryption prevents data from being read, even if it’s intercepted by a malicious third party, but staying one step ahead of hackers can be difficult. Processing companies are often on the forefront of encryption technology, but developing and implementing this technology means higher costs for merchants.

There are several ways for an online business to bring down its credit card processing costs. The best is to carefully research options before entering into a processing agreement and to insist on a transparent schedule of costs. This can be easier for businesses who are already working with a regular payment processor, but business owners should remember that a processing company with a low per-transaction rate for physical sales might not necessarily offer lower-than-average rates for online credit card sales. By understanding all of the costs involved with payment processing, merchants can find an acceptable option and lower overall costs.


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