Updated: Pay Pad is now called Control, and is free! I have been using Stripe + Control for over a year and am very happy. I do not have to carry any gizmo – the Control app just scans the card and reads the numbers (does not store the number).
As a small business, accepting credit cards is a necessary evil. However, there are ways to minimize this expense. Have you checked how much you are paying? I had a merchant account I have been using for years, and just did an analysis due to a friend asking for advice. I was surprised to see how much more I was paying! Visa and MC recently added extra fees to their merchants, plus I had to deal with PCI charges etc. In the end, I was paying over 4.5% and it was not an elegant solution. So this is what I came up with, hope it helps someone else as well. Feel free to let me know if you have any other input!
I was surprised to find that my vendor was charging me $10/mo for being able to key in transactions on the web, and also charging me $23.95 per year for something called PCI compliance fee, and then also $7/mo for every month I accepted even a single Visa card and a similar fee I believe for even a single Mastercard acceptance. There is also extra charges for Rewards cards (like mileage or points cards like most are now) and if it is over the phone, you do not even know it was a Mileage card etc. until you see your statement.
So for accepting, say, $1100, I was paying:
Monthly Gateway Fee: $10
REGULATORY PRODUCT FEE $2.95/mo
VISA FIXED ACQUIRER NETWORK FEE AUG $5.00
BATCH SETTLEMENT FEE @ 0.20c
1.55% fee$17.05
Visa Mid-Qual (rewards card) $8.80
Also I got dinged $23.95 for the PCI fee.So to accept one payment, I paid 6.18% rate for a total fees of $67.95, or if you take the PCI out, $44 (4%). Ridicilous. If you do tons of transactions etc, this might even out, but as a photographer, I do not.
There are two types of transactions I collect. In person, card present, and keyed in (over the phone etc).
1) For keyed in transactions (over the phone, etc) I signed up for Stripe – it is free. You pay 2.9% + 30c for each transaction. Cheaper than Paypal or Square or my merchant account (after the fees). Square is for example 3.5% + 15c.
You add your bank account, and activate. Stripe gives you special keys to use on your website or on an app so it knows who you are when they process the transaction. These keys are unique to you, and can be found here:
https://manage.stripe.com/account/apikeys
Then you use your keys in a program or the web page created for you by a programmer. I am taking the easy way and using one of these:
Pay Pad Free!
or
TigerPay $2 (very basic accepts payments only but it is very cheap as well)
You will need one of these apps as Stripe.com is a processor, and does not have a front end. And if you want to get fancy, as an added bonus for Stripe, you can also have someone write you a web page for your website so your clients can pay you directly from your site.
2) For swipe (card present): Since 2.9%+30c is pretty cheap you can either key in using Pay Pad or Tiger Pay, or use Pay Pad to take a photo of the credit card (instead of a card reader, it uses the camera!) OR to save even more, use Square which is what I am doing and use their free card reader.
It is a flat 2.75% per transaction with Square for cards that you swipe. I personally do not use Paypal because I had bad experience with them in the past. YMMV.
Hope this helps. Let me know if you have any other things I can add to this article.
ps. here is more info about PCI Compliance – An Expensive Reminder
and also what those Mid-Qual etc means. Credit Card Rates Explained
Thanks so much for this comprehensive article Ev, it has helped out a lot!