What’s love got to do with it?
How to make the most of your payment processor relationship, despite how you feel about fees
By now you’ve probably realized that, despite what your mother told you about love, it’s actually payment processors that make the world go ‘round. Certainly there are many aspects of your company that qualify as essential, but the ability to move money from your customer’s pocket to your business’ bank account quickly, efficiently, and safely is truly what makes your online retail business a business.
Given the complexity of the payment system and the important part it plays in your business, it’s no wonder there are so many different fees associated with a simple transfer of money. When you add up a year’s worth of sales, these fees can be alarming. Some of the most common payment processor charges retailers find themselves responsible for are the start-up or annual fee, monthly statement fee, discount rate, transaction fee, batch processing fee, minimum monthly fee, gateway fee, chargeback fee, address verification fees, and termination fees.
What’s worse than this vast array of fees is the lack of clarity provided by most providers about their fee structure. Many retailers don’t realize that it’s possible to negotiate with payment providers to come up with a fee structure that works with their sales model. And when starting out, it’s almost impossible to know if you’re getting the best deal from a processor. To make a more informed decision, it’s wise to do some research on each company, compare prices and contracts, speak to other merchants, and read reviews about the best and worst features of each processor.
As if to add insult to injury, most processors collect their fees net and send you the results of a day’s sales as a single batch deposit, which makes even the most well-negotiated rates a reconciliation nightmare for you or your accountant. Imagine having to reverse-engineer the fees for dozens, hundreds, or even thousands of orders and match each to its unique sales entry into the accounting system for every deposit you receive. It’s enough to make even the most patient bookkeeper lose their cool.
So to avoid adding frustration to the pain of fees, a feature worth looking out for is whether your payment processor offers a way to integrate with your accounting system and help you reconcile the fees. This connection will allow you to easily keep track of what you pay in fees annually or monthly without getting stuck in the trap of manual data entry into QuickBooks or the never-ending reconciliation nightmare. By using a solution that automates all of this data for you, you gain perspective of these fees and more control of your profit margins, especially when it comes time to negotiate a new contract. What’s more, integrating fees and expenses directly into your accounting system allows for full financial reconciliation, and for that, your accountant will surely love you. Turns out Mom was right — love does make the world go ‘round.
