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Is your business paying too much in credit card processing/merchant fees?

Most of our clients accept credit cards.  Few accept payment via electronic checks, or ACH.  And more should. The cost savings is huge.

We took a close look this month at the pricing difference between accepting credit cards versus accepting checks electronically, also known as ACH (short for automated clearing house).

It works like this: one of our clients generated around $10,500 in ACH billing last month and the total fees charged were $21.94.

If that client had accepted that $10,500 with credit cards, they would have paid approximately $315 in fees instead of $22.  Substantial savings,  right?

Companies pay on average 3.0{6c82cbbeab4aafd377cd90bd984eb42785371aed28b8b97837e7129c28ed1264} in fees to accept credit cards, which is 93{6c82cbbeab4aafd377cd90bd984eb42785371aed28b8b97837e7129c28ed1264} too much.

Dividing 21.94 by 10,500 gives us the fees as a percentage of the volume of business, which is about 0.002 (is 0.20{6c82cbbeab4aafd377cd90bd984eb42785371aed28b8b97837e7129c28ed1264}).

With ACH, this client saved 93{6c82cbbeab4aafd377cd90bd984eb42785371aed28b8b97837e7129c28ed1264} over credit card processing fees.

Instead of paying 3{6c82cbbeab4aafd377cd90bd984eb42785371aed28b8b97837e7129c28ed1264} in fees, this client  paid 0.20{6c82cbbeab4aafd377cd90bd984eb42785371aed28b8b97837e7129c28ed1264} (that is 2/10ths of 1 percent) to accept payments via ACH – a 93{6c82cbbeab4aafd377cd90bd984eb42785371aed28b8b97837e7129c28ed1264} cost savings. Like our client, we encourage every one of our own clients to pay our invoices by ACH rather than credit card.  The cost savings to us is substantial, and our clients are glad to allow us to bill their bank account rather than credit card.  This allows us to save hundreds of dollars a month, which we earmark for a savings and giving fund for special community projects we decide to support.

Accepting payment by ACH vs credit cards

Service companies ( think plumbers, photographers, accountants, bookkeepers, attorneys, technology support) can benefit the most from ACH versus credit cards. We recently helped a technology service company open an ACH account.  Instead of waiting for paper checks to arrive, they are billing their clients electronically.  This doesn’t translate into a cost savings for our client – it actually is a cost increase.  For every $10,000 in checks received, their company will pay $20 or so in fees.  The benefit is in cash flow and time savings.  They are setting-up their monthly service clients to pay by recurring ACH on an agreed-upon date each month.  This stabilizes cash flow, reduces trips to the post office and the bank, and eliminates the 5-10 days of transit time before the money is deposited in the bank.  Well worth the 1/20th of 1 percent fee.

Here is a customizeable ACH Form for you to download for your business.

Contact us if you want to talk about how we can help your  start saving money by accepting ACH from your clients.

Call us now!