So, you just booked a client. You’ve got the master plan for the dreamiest wedding or the most sensational event. The couple loves it and is ready to submit their down payment. But, hold on a sec! Ever heard of transaction fees? Yeah, those sneaky little numbers that can play quite the role in your event planning hustle. Let’s take a deep dive to find out how they work and why they can make a big difference for event planners.
Okay, let’s back up a bit. You’ve probably seen a transaction fee before — they’re those little charges that pop up when you’re dealing with card payments and purchases. You know the drill. But when it’s your business, those fees can feel like they’re nibbling at your profits. That’s where the eyebrow-raising starts – what exactly are they, and do they actually need to be a thing? Unfortunately, whether you’re swooning for a fancy credit card processor or dipping your toes in ACH waters, transaction fees are a constant — though the shape and size may vary. Different transactions, different fees – it’s like dating, but for finances.
Decoding Transaction Fees
We’re not huge fans of financial jargon, so let’s demystify the concept of ‘transaction fees.’ Investopedia aptly describes them as follows: “A per-transaction fee is an expense a business must pay each time it processes an electronic payment for a customer transaction. Per-transaction fees vary across service providers, typically costing merchants from 0.5% to 5% of the transaction amount plus certain fixed fees.”
Why Do Transaction Fees Exist?
Why, oh why, do they even exist? Simple – it’s how the payment processors keep the lights on. In exchange for handling your payment, they pocket a bit. Just like you charge for your event planning services, these processors need to cover their costs – think software, employees, and all that fun stuff. The good news is, if a processor is charging you a fee, it’s also their way of promising that they’ll try to keep service uninterrupted by staying in business to support you.
How Are Transaction Fees Calculated?
Let’s break down the math, shall we? Transaction fees are typically a combo of percentage-based and fixed fees. For instance, a processor might charge 2.9% + $0.30 per transaction. That would mean that for every $100 processed, the processor takes $2.90 in fees, along with an additional $0.30 for the transaction itself. Therefore, you’re only really taking home $96.80 on that transaction. Certain processors, like Rock Paper Coin, may opt for a fixed fee structure for each transaction — meaning it’s the same percentage every time.
Why Do Transaction Fees Vary?
Of course, just when you’d thought you had it figured out, a different type of transaction might have a different fee. First up, we’ve got ACH payments – smooth moves from bank account to bank account. These are low on fees but high on waiting time. On the flip side, credit card payments are faster, but with a slightly heftier fee tag. It’s like choosing between snail mail and express delivery – pick your poison.
Who’s Charging What?
Wanna know how prominent players in the field implement transaction fees? Here’s a glimpse into the practices of “the big three,” AKA Stripe, PayPal, and Square.
- Stripe employs a pay-as-you-go model, devoid of recurring fees, with a transaction fee of 2.9% + $0.30 per successful card charge.
- PayPal, a seasoned player, boasts a tiered fee structure based on transaction location and amount. Standard credit and debit card payments incur a fee of 2.99% + the fixed fee.
- Square’s standard processing fee stands at 2.9% + $0.30 per transaction for cardholder-entered payments.
Getting More Per Transaction on Rock Paper Coin
If you’re feeling daunted by the magnitude and complexity of transaction fees we’ve outlined, don’t fret. We’ve been in the event planning game a long time, and we get that these fees can be confusing and costly — that’s why we built Rock Paper Coin. Say hello to fixed 2.5% flat transaction fees, the very lowest in the industry. Invoices, contracts, and proposals all in one place so you can get paid faster and make more on every amazing event you plan.
When you’re spinning your event planning web, remember that those transaction fees are more than just numbers. They’re the pulse of your payment game. Understanding them can help you set prices that make sense and take control of your biz’s finances. Plus, if you’re looking for low costs and high organization, you can get a free trial of Rock Paper Coin’s business transaction management software when you sign up today.