Offering online ordering with payment processing is not only convenient but it also significantly increases your bottom line. It’s a must-have to compete in today’s foodservice landscape. So how can you reap the benefits without getting crushed by credit card processing fees? This article explains how to reduce transactional fees to help you optimize the benefits of this service for both you and your customer.
Card Card Processing Fees: Breakdown
First, let’s start with some background. Credit card processing fees are charges incurred for using a payment processor. Fees range in percentage and are based on your processor’s markup. In addition to the processing rate, there are several fees incurred, including transactional fees, scheduled flat fees, and incidental fees. Our focus is on transactional fees, as they typically incur the biggest cost.
Although transactions happen in a matter of seconds, they pass through several financial “middlemen” to get the payment from the customer to you. These “middlemen” include credit card associations, credit card issuing banks, credit card processors, and merchant account providers. Online transactions go through one more step, routing all credit card information through payment gateways which equates to a digital swipe or chip reader. CaterTrax supports PCI-Compliant payment gateway integrations that offer convenience and security to your customers.
Keyed transactions typically incur a higher processing fee because they’re at a higher risk for fraud and chargebacks. But, don’t be deterred from pursuing a secure payment processor for your website. Understanding these fees and being smart about how you accept payments will go a long way.
Average Transaction Size Matters
Transactional fees are charged every time a transaction is made. At large accounts especially, these fees will likely be your biggest operating cost. They can be charged as a percentage or per-item dollar amount, or often both.
Lower average transactions are more expensive. You pay more in transactional fees for 100 small transactions than for a handful of big transactions. For example, consider your provider has a fee of 3% plus $0.15. You pay nearly double what you pay in fees for 100 $5 transactions in comparison to 5 $100 transactions.
Group Orders in a Master Invoice to Reduce Payments and Increase Transaction Amount
When a single customer is placing multiple orders, it can be more cost-efficient to group these orders together into a single payment rather than processing them separately. For example, if you provide catering for a reoccurring weekly meeting, consider creating a monthly invoice instead of a weekly bill.
CaterTrax has a Master Invoice feature that simplifies this process and lets administrators group multiple orders together for a single customer, allowing for a single payment. It gives administrators the flexibility to group multiple orders together to manage billing in a more cost-effective way. If you don’t currently have a catering management software in place, like a CaterTrax solution, coordinate with frequent customers on bulk payment options to reduce credit card processing fees.
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