How to Lower Payment Processing Fees
How to Lower Payment Processing Fees
Payment processing fees can initially seem reasonable. But, millions of small and medium-sized merchants have found that the aggregate amount of fees charged on each transaction they process can quickly become overwhelming. A transaction that first appears profitable can become far less so once the various fees are paid for processing the credit card. Discount rates, authorization fees, batch fees and statement fees can add up to siphon the profit from a transaction.
Though small merchants have few options and little leverage in demanding lower fees, understanding how the charges accrue can open the door to alternatives. In this article, we’ll clear the confusion about the major fees involved in a credit card transaction. After reading, you should have a few ideas regarding how you can save money on your payment processing fees.
Clearing The Confusion
Each credit card transaction that you process carries a host of various fees. The most significant can be summarized into 2 different camps: Interchange fees and merchant service provider fees. The Interchange fee is levied by the customer’s credit card company. It includes a small percentage of the purchase amount as well as a smaller flat fee. The merchant service provider fee works similarly (percentage of the transaction and a smaller flat fee).
Most small business people are coaxed into a merchant account contract with a competitive “discount rate.” This rate includes both the Interchange fees and the merchant service provider fees. The problem with this is the merchant doesn’t actually know how much the merchant service provider is charging. Without knowing the amount, you can’t shop for a better deal.
Understanding Why Fees Vary
There’s another problem that adds to the confusion (and thereby prevents the merchant from finding a better deal). The fees levied on each transaction can vary based upon how the transaction has been categorized. There are more than 100 different categories. The end result is that the same item purchased at different merchants can have different fees attached. The categories are lumped into 3 levels, averaged and a margin is applied. This process causes payment processing fees to fluctuate for each transaction. The variance muddies the waters and makes it difficult to shop for lower fees.
Can You Negotiate?
The size of your monthly transaction volume will largely determine how much you can negotiate your fee arrangement. If your business consistently processes over ,000 each month, you may be able to qualify for the Interchange fee (and pay an additional small transactional fee). If you don’t process that volume, you likely won’t have the option. That said, it’s important to remember that much of the confusion lies in the combining of the Interchange fees with the merchant service provider fees (i.e. the discount rate). There’s little you can do about the Interchange fees. But, if you can identify the fees charged merchant service providers, you can shop for the lowest rate.
Knowing Your Options
Unfortunately, most merchants don’t have a clear understanding of how much they’re paying for each type of fee. Worse, many don’t attempt to find out. As a result, their transactions are loaded down with fees they could likely lower. If you’re looking for a merchant account for a payment processing solution, identify how much of the discount rate is distributed to the merchant service provider. As a small business owner with a light monthly transaction volume, that will probably be your best chance to lower your payment processing fees.
This article is brought to you by PaySimple, a leading provider of echeck services.
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Business process outsourcing and its needs
Business process outsourcing and its needs
BPO or Business Process Outsourcing is the worldwide phenomen hitting Australia right now.
BPO is the process of hiring third parties to provide non core administrative type services, for a contracted fixed duration and for a agreed price.
Generally the outsourced services fall may include finance, accounting, human resources, Information Technology, typing, personal assisting, sales administration and training.
Business Process Outsourcing Services allows businesses to concentrate on their core activities thus increasing their turnover at a reduced operating cost and with less management time.
The fee charged, may be either fixed thorough out the contract period or variable based on the services provided or a combination of both.
Service level expectancies may fail, contractual issues may not be clear, charges may be more than projected, dependencies on the BPO services increases, thus ceasing the flexibility of internal process.
Medical and Legal BPO’s are very big reliefs, but at the same time, caution should be taken to choose the right service provider as the information is more sensitive in both the industries. The software industry also was required to develop many tools for the purpose of automating the Legal and Medical Services. More competition among tools helped the service being offered for nominal cost.
The outsourcing of subsidiary services provdes the firm with more options for expansion, as capital and resources are freed, allowing more opportunities for further growth. As more resources, time and capital are freed from non-core or administrative activities, the speed of business process increases, thus improving client, customer and staff satisfaction, which is a key for business success.
Kristen Stewart is an author for business process outsourcing. She has written various articles on salary packaging. For information visit our site business process reengineering
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Business Process Outsourcing is a Subset of Outsourcing
Business Process Outsourcing is a Subset of Outsourcing
Business process outsourcing (BPO) is a subset of outsourcing that involves the contracting of the operations and responsibilities of specific business functions (or processes) to a third-party service provider. Originally, this was associated with manufacturing firms, such as Coca Cola that outsourced large segments of its supply chain. In the contemporary context, it is primarily used to refer to the bpo outsourcing of services.
BPO is typically categorized into back office outsourcing – which includes internal business functions such as human resources or finance and accounting, and front office outsourcing – which includes customer-related services such as contact center services.
BPO that is contracted outside a company’s country is called offshore outsourcing. BPO that is contracted to a company’s neighboring (or nearby) country is called nearshore outsourcing.
Given the proximity of BPO to the information technology industry, it is also categorized as an information technology enabled service or ITES. Knowledge process outsourcing (KPO) and legal process outsourcing (LPO) are some of the sub-segments of business process outsourcing industry.
India has revenues of 10.9 billion USD from offshore BPO and 30 billion USD from IT and total BPO (expected in FY 2008). India thus has some 5-6% share of the total BPO Industry, but a commanding 63% share of the offshore component. This 63% is a drop from the 70% offshore share that India enjoyed last year, despite the industry growing 38% in India last year, other locations like Eastern Europe, Philippines, Morocco, Kenya, Egypt and South Africa have emerged to take a share of the market[citation needed]. China is also trying to grow from a very small base in this industry. However, while the BPO industry is expected to continue to grow in India, its market share of the offshore piece is expected to decline. Important centers in India are Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, Pune and New Delhi.
The top five Indian BPO exporters for 2006-2007 according to NASSCOM are Genpact, WNS Global Services, Transworks Information Services, IBM Daksh, and TCS BPO.
According to McKinsey, the global “addressable” BPO market is worth 2 – 4 billion, of which: 35-40 retail banking, 25-35 insurance, 10-12 travel/hospitality, 10-12 auto, 8-10 telecoms, 8 pharma, 10-15 others and 20-25 is finance, accounting and HR. Moreover, they estimate that 8% of that capacity was utilized as of 2006
An advantage of BPO is the way in which it helps to increase a company’s flexibility. However, several sources[which?] have different ways in which they perceive organizational flexibility. Therefore business process outsourcing enhances the flexibility of an organization in different ways.
Most services provided by BPO vendors are offered on a fee-for-service basis[citation needed]. This can help a company becoming more flexible by transforming fixed into variable costs. A variable cost structure helps a company responding to changes in required capacity and does not require a company to invest in assets, thereby making the company more flexible. Outsourcing may provide a firm with increased flexibility in its resource management and may reduce response times to major environmental changes[citation needed].
Another way in which BPO contributes to a company’s flexibility is that a company is able to focus on its core competencies, without being burdened by the demands of bureaucratic restraints.Key employees are herewith released from performing non-core or administrative processes and can invest more time and energy in building the firm’s core businesses.The key lies in knowing which of the main value drivers to focus on – customer intimacy, product leadership, or operational excellence. Focusing more on one of these drivers may help a company create a competitive edge.
A third way in which BPO increases organizational flexibility is by increasing the speed of business processes. Using techniques such as linear programming can reduce cycle time and inventory levels, which can increase efficiency and cut costs[citation needed]. Supply chain management with the effective use of supply chain partners and business process outsourcing increases the speed of several business processes, such as the throughput in the case of a manufacturing company.
Finally, flexibility is seen[who?]as a stage in the organizational life cycle. BPO helped to transform Nortel from a bureaucratic organization into a very agile competitor[citation needed]. A company can maintain growth goals while avoiding standard business bottlenecks. BPO therefore allows firms to retain their entrepreneurial speed and agility, which they would otherwise sacrifice in order to become efficient as they expanded. It avoids a premature internal transition from its informal entrepreneurial phase to a more bureaucratic mode of operation.
A company may be able to grow at a faster pace as it will be less constrained by large capital expenditures for people or equipment that may take years to amortize, may become outdated or turn out to be a poor match for the company over time.
Although the above-mentioned arguments favor the view that BPO increases the flexibility of organizations, management needs to be careful with the implementation of it as there are a issues, which work against these advantages. Among problems, which arise in practice are: A failure to meet service levels, unclear contractual issues, changing requirements and unforeseen charges, and a dependence on the BPO which reduces flexibility. Consequently, these challenges need to be considered before a company decides to engage in business process outsourcing.
A further issue is that in many cases there is little that differentiates the BPO providers other than size. They often provide similar services, have similar geographic footprints, leverage similar technology stacks, and have similar Quality Improvement approaches.
Risk is the major drawback with Business Process Outsourcing. Outsourcing of an Information System, for example, can cause security risks both from a communication and from a privacy perspective. For example, security of North American or European company data is more difficult to maintain when accessed or controlled in the Sub-Continent. From a knowledge perspective, a changing attitude in employees, underestimation of running costs and the major risk of losing independence, outsourcing leads to a different relationship between an organization and its contractor.
Risks and threats of bpo outsourcing must therefore be managed, to achieve any benefits. In order to manage outsourcing in a structured way, maximizing positive outcome, minimizing risks and avoiding any threats, a Business continuity management (BCM) model is setup. BCM consists of a set of steps, to successfully identify, manage and control the business processes that are, or can be outsourced.
Another framework, more focused on the identification process of potential outsourceable Information Systems, identified as AHP, is explained.
L. Willcocks, M. Lacity and G. Fitzgerald identify several contracting problems companies face, ranging from unclear contract formatting, to a lack of understanding of technical IT- processes.
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How Can Business Process Mapping Help You?
How Can Business Process Mapping Help You?
Effective business process mapping can be one of the most important and useful tools that you have in your pre-sales arsenal. The reason for this simple, yet it is often overlooked by many managers.
The purpose of business process mapping is to allow you to identify the most crucial issues and answers that your buying client needs in order to make a solid buying decision. When your sales force meets with the client they are often faced with questions that they cannot answer. This is due primarily to a lack of advance knowledge. But it does not have to be this way.
If you had a reliable tool to use that could show you, in advance, the possible questions and objections that your buying client might present to your sales teams, wouldn’t you be interested in that? If you had a system of research that allowed you to anticipate the various concerns your buying client might have when he or she meets with your sales team, wouldn’t that be something of interest to you?
Of course it would. But we are not talking about crystal balls or Tarot cards here. There truly is a way to begin an effective business process mapping system within your company to help your sales team identify and then prepare for these forthcoming buying issues.
This can be accomplished through the use of efficient research into your client’s company and his or her needs. The trick, of course, is learning how to best conduct that research in a timely and accurate fashion. While there are many analysis tools available, there are few concise and dedicated tools that show you step-by-step the best methods for getting this important information and for using it to your advantage.
It is entirely possible in this day and age to simply have too much information on a company. When that happens, it becomes difficult to ferret out the most important information, the information that you really need, and ignore the rest. This is why having a system in place that helps you identify and collect only the data that you need is so crucial. It is also possible to spend far too much money in the collecting process by using only fee-based services. This does not have to always be the case. There are free databases available for those who know how to find them and use them.
A very good place to begin your business process mapping is with Jack Howe’s eBook and website. His book, “30 Minutes to Prepare for the C-Suite Meeting,” is literally a masterpiece on how to best plan and conduct the research that you need in order to best serve your buying clients. With over three decades of real life experience in this field, he knows what he is talking about and his method of sharing can be followed by any size company, from big to small.
A visit to http://www.30minsto.com will help you decide if this practical, yet powerful, system of researching is right for you and your company.
Qigong For Business, Inc. is the successor to Performance Enablers LLC and Howe & Associates at http://www.30minsto.com. Since 1981, Howe and company have been providing business process mapping and coaching.
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Business Process Outsourcing (bpo)
Business Process Outsourcing (bpo)
Outsourcing is subcontracting a process or piece or work, to a third-party company. A firm’s decision to outsource is based on several factors such as lowering operational costs, resources, feasibility of competencies and global market dynamics.
Outsourcing and off shoring are used interchangeably. Outsourcing involves contracting with a supplier, whereas off shoring is the transfer of an organizational function to another country.
With emerging times and market dynamics there is now a very thin line drawn between outsourcing and off shoring.
Buisness Process Outsourcing (BPO) is a part of the outsourcing industry and is dependent on information technology. This is referred to as Information Technology Enabled Services or ITES. Knowledge Process Outsourcing (KPO) and Legal Process
Outsourcing (LPO) are some of the subsets of business process outsourcing to name a few.
BPO is also an extension of the Service Industry. A Service Level Agreement (SLA) measures the quality of service and contractual agreements. However a more iron clad contract is drawn out to weed out any contractual loop holes. This is referred to as the Service Delivery SLA.
An integral part of quality is CSAT scores. These are end user experiences measured through customer satisfaction questionnaires (CSAT). This function allows quality to be tracked over time and to tweak and fix any corrective action that has been identified and seek closure.
BPO vendors offer their services on a fee-for-service basis. This is either on a Full Time Employee (FTE) or Pay For Performance (PFP) model. A healthy BPO unit will invest in the time and tested variable cost structure function as it does not require investing in assets thus making the unit flexible in its scalability. This revenue generation model is rapidly increasing as it allows for optimal utilization of funds and resources to run day to day businesses.
In India, The National Association of Software and Services Companies (NASSCOM) mediates as a watch dog to the Indian software industry and Indian BPO industry.
A significant concern for the BPO industry is Information Security and Data Intellectual Property. An outsourcing unit uses internal measures to minimize if not eradicate security issues besides seeking assistance from local law enforcement agencies. Such measures include but are not limited to:
1. Mobile phones and cameras are prohibited on the production floor as well as in data sensitive areas.
2. Ban on the usage of any recording devices on the production floor including paper and pens. This means creating a paperless environment wherein employees are restricted from recording any information and removing it where it can be accessed by unauthorized personnel.
3. Restricted or no usage of internet on the production floor for employees.
In India data security is governed under the Information Technology Act, 2000.
An Author of this article Peter korte is working for Gaia Ites. Gaia ITES Provides excellent Business Process Outsourcing (BPO) services, Call Center Outsourcing Services, Telemarketing Services and Transaction Processing Services.
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