When Choosing a Credit Card Service Provider -- Do the Math

Accepting credit and debit cards will significantly increase your spa or salon income, but choosing and using credit card services wisely can be a challenge. The following are points to remember when evaluating a merchant account processor or integrated credit card processing software:

  1. Avoid showing a prospective agent your current statement or sales figures. Instead have them give you a fixed rate above Interchange Rates, and an authorization fee amount. Interchange rates are the base rates that ALL card processors must pay equally.
  2. Ask for their surcharge rates for non-qualified transactions. Non-qualified transactions cost  more than qualified transactions because of added risk, but that additional cost should only be about 1 to 1.5 percent.
  3. If your spa has a high volume of sales transactions every month, look for a low authorization fee (around fifteen cents per transaction). Fifteen cents on a $100 ticket is a tiny fee versus 15 cents on a $25 ticket.
  4. Don't accept "free" terminals or lease equipment for card processing. Just like a "no-cost" mortgage, you'll pay for it in the end. How much more? Just multiply your lease payment times the length of your lease to see the true cost of the machine/software.
  5. Choose a vendor with a flat cancellation fee. Some companies will charge you a percentage of your average sales upon cancellation. Make sure your contract states a specific number, usually a maximum of $300 for canceling within three years, which covers the company's time and costs to approve and set up your account.
  6. Never fear cancellation fees! If you find a better deal, it is likely you'll make up the cancellation fee within just a few months in lower rates and fewer surcharges. If your current vendor, in desperation, miraculously matches your newly quoted rates, consider all the yacht payments you've been making for that agent over the past few years.
  7. Only take PIN debit cards if your ticket is over $50. PIN-based debit transactions are charged a flat fee and can save you hundreds of dollars a month versus credit cards.
  8. Train your staff. Avoid more expensive, non-qualifying transactions by limiting key-entered items and entering all of the information at any prompts. Don't immediately key in a card if the swipe doesn't work the first time; give it another try!  Also, read the card, if it says Check Card or Debit, run it through as a Debit and have your customer enter in their PIN.
  9. Definitely consider "integrated" card processing systems where payments are handled through your salon management software program. Integrated processing can save you thousands per year in additional rates, surcharges and wasted receptionist time by eliminating terminal entry mistakes. Many salon software companies offer integrated and/or stand-alone card processing. If you like the company that sold you your software, ask them if they offer the integrated option.
  10. The Golden Rule is to choose a processor you feel you can trust. Unfortunately, deceptive deals are rampant in the credit card industry. Just like shopping for a mortgage, the key is to dodge the "ole bait and switch."

Want more information? ClienTrak! is always happy to answer questions to help you better manage your business. Call Marc Mataya at 888-313-1308.

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