Many of our customers ask us about flat pricing. A good idea or bad idea? Yes and No. This isn’t a black or white decision.

Right now, flat pricing vendors are changing their services to become more and more like traditional merchant service processing. This means that they are realizing what the rest of the industry has always known. You will lose a customer if you over charge them, and, you will go out of business if you don’t charge enough to cover the costs.

Makes sense right?

To clarify, this may help. The way credit card companies assess fees is based on the type of card, such as a bank card, a rewards card or a branded card. All in all, it is complicated. While a flat rate provider wants to make it appear simple, they can’t control the assessed charges any more than any other provider can. So, they charge as much as they think will be needed to cover their costs, which in some cases can be too much.

As soon as a business owner takes their flat rate business to a traditional merchant service provider, they can immediately understand how much they will save…and how they were paying too much, probably for too long.

To be fair, we must look at whether or not there really is a financial advantage to a flat rate price. Short answer?

Yes. There is.

But, also…No, there isn’t.

Let’s cover the both scenarios when the answer is a resounding “Yes!” and when it is a solid “No!”

Depending on your business type, or certain situations you might fall into any of these scenarios at some time or another in your business life cycle.

Yes! – You process infrequent transactions.
No! – You have to find your own PCI compliance vendor. This adds cost and increases risk to your business if you don’t hire one to perform your annual scans – even if you have infrequent transactions each year.
Yes! – Your business annual sales is typically less than $10,000 per year.
No! – As your sales grow over the $10,000 threshold, the additional revenue volume decreases your profitability due to the higher than necessary rate being assessed. (You would be able to obtain a lower rate once you cross this barrier.)
Yes! – Flat rate systems tend to offer low barrier to entry and simple hardware with lower costs than more sophisticated Point-of-Sale systems.
No! – If your business is more complicated, and you want better systems, the POS equipment and software benefits from better reporting, data analysis and scheduling tools or inventory management (just to name a few) will outweigh the discounts offered for flat rate processing equipment.
No! – Typically, Flat Rate suppliers do not offer live help desk support. (If there is an issue, it can take a long time to resolve and while this is happening, your funds are tied up and inaccessible to you.)
No! – You want the control of your customer information and the ability to analyze your sales to improve your business each year.
No! – If you want the ability to defend your business in the event of an unfair charge back.

All in all, the “No!”s outweigh the “Yes!”s, but only you can determine this for your business.

See, we told you it wasn’t a simple black or white decision. There are nuances to each scenario and each business is unique and should be treated that way.

Remember, at any time, our team is here to answer your specific questions and help you through this process. We know it is complicated, we can help make it simpler by being there for you as your guide, your advisor and your trusted supplier. Just let us know when you are ready to talk.