Retail Payment Processing

Retail Payment Processing is for business owners that have physical businesses (brick and mortar).  This is where you will want to use a Point-of-Sale Terminal (POS Terminal) to accept Debit (also known in Canada as Interac), Visa, Master Card, and American Express cards.

It is recommended that all businesses offer all debit and credit cards as a method of payment for their customers/clients to use, however, it is up to the Business Owner to decide which cards they would like to have the ability to process.  We can help you assess your needs and give you a Free Quotation tailored to your situation.

The reason it is important for retail businesses to offer as many methods of payment as possible is that if a Customer does not have the option of paying the way that they want to, then they will either not purchase from your business, and if they do they will not ever return again.  There is simply too much choice these days for the potential Customer.

There are rate and fee differences for each type of card a retailer chooses to carry.  Typically rates are based on 3 major factors:

1. Average Ticket Price
2. Annual Business Volume
3. Type of Business Model

The basic formula is: the lower your average sale price and the higher your company’s annual sales volume, then the lower your payment processing rates will be.

Business model matters too, because some types of businesses are considered higher risks for fraud & chargebacks over others.

Businesses pay a percentage of their credit card sales volume to their Credit Card Processor because the Credit Card Processor funds the business money within just a few days while they wait 30, 60, 90 days – if ever to collect on those sales from the Customer’s Card Company.  This percentage is known in the industry as a ‘discount rate’.

And, let’s face it, without credit cards how many LESS Sales would your business make?  Offering credit cards increases profits, increases the average sale price of purchases because of impulse buying, and helps smooth out slow business months.  Impulse buying is rampant when there is no physicality attached to personal monies.

Retail Credit Card Discount Rates

Typical retail credit card discount rates in Canada range from 1.59% to 2.75% for basic consumer credit card transactions.  If you are paying any higher than 2% these days, then you will want to look at getting a Rate Review of your current situation.

How this works:

Example: If you qualified for a rate of 1.85% and you processed $1000 worth of sales through your credit cards one month, then your fees from your discount rate portion would be $18.50 for that month.

Retail Debit Card Discount Rates

Typical retail debit card transaction fees in Canada range from as low as 7 cents to as high as 25 cents per transaction.  However the norm is around 10-12 cents.  If your debit transaction fee is any higher you will want to get a Rate Review of your current situation.

It usually does not matter what the amount of the transaction is for (whether is is $5 or $5000) it is just a flat transaction fee.  It is also common that there is a transaction fee for whatever type of transaction that takes place on your point of sale terminal, regardless of whether it is a debit transaction, credit card transaction, void transaction, refund transaction, etc.

Regardless of all the associated fees involved for payment processing/ acceptance, if you have a retail business it is almost impossible these days to survive without having payment processing services.  Just get a good accountant who can tell you which fees you can deduct against your income, so that even though you are losing some monthly cashflow for your processing system, at least you are not losing all that cash.