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May 24, 2022
Debit or credit?
The first time a cashier asked me that question, I was stumped. But the question matters to the person swiping the card, and when you run a self storage facility, it matters to you too.
As a self storage operator, you probably know more about how credit card processing works than the average person. You’re probably paying another company to process these charges, so you can make payment easier on your customer (and yourself). But what exactly are you paying to have this capability? And is there any other way?
We’ve compiled a list of self storage payment processing terms and concepts that will help you determine which option is best for your business.
Your point of sale system, or POS, is the software and equipment that enables you to accept payment from your customers. This includes your cash register, card scanner, and anything else you use to take payment.
Most can print, text, or email a receipt for your customers. If your point of sale is attached to a more comprehensive set of software, it will record the transaction for your accounting records.
Your point of sale system will vary depending on how much you pay for it and what payment types you plan to accept. For self storage operators, your Property Management System often has a point of sale system incorporated into it. Operators using SiteLink likely have SiteLink Merchant Services handling their point of sale transactions, while other PMSs have similar integrations.
This term refers to the company that provides Point of Sale services and other useful pieces of software. If you don’t have a point of sale integrated with your property management system, you likely have a deal with a Merchant Service Provider to help you process payments.
In addition to processing customers’ credit card payments, Merchant Service Providers also help your business meet the appropriate security standards.
Your merchant service provider and point of sale system must be able to communicate with each other, so if you’re considering changing either of them, be sure that your new stuff will work with your old stuff.
When choosing an MSP, consider:
Regardless of which MSP you choose, be sure they have a good record of fraud protection. Every time a customer swipes a card at your business, they’re trusting you to keep their information (and their bank accounts) safe.
This is one of the biggest services that these outside companies are providing you. The PCI Security Standards Council has created a security framework to protect electronic transactions, and all the major credit card companies are members of the PCI, or Payment Card Industry. Without adhering to these standards, you won’t be able to process credit card payments at all.
Sending large amounts of money to these merchant service providers can be frustrating, but it’s almost impossible to do business without one. So, when choosing a payment system, be sure you’re getting what you pay for and that the company has appropriate fraud protection guarantees.
Every time you accept a credit or debit payment, you pay interchange fees. These fees are paid to the card-issuing bank - that is, whomever your customer has gotten the card from. Often, your MSP will present you with a monthly bill that puts together all of your interchange fees for the month. The specifics of the transaction will cause your interchange fees to vary.
For example, card companies distinguish between transactions where the card is present and those where the card is not present. Online, over-the-phone, and by-mail transactions will cost you higher interchange fees because the card-issuing bank is at more risk with these types of payments. Rewards cards also tend to charge the merchant (you) higher fees in order to pay for the customers’ “perks.”
Interchange fees consist of a percentage of the transaction alongside a set fee for processing. Usually, the percentage charge is between 1 and 3 percent of the total transaction, with a few cents added on as a set fee. The interchange rates are presented as, for example, 1.6% + 8¢.
Since most of these fees come from the card-issuing bank, there’s not much you can do to alter them. Only the biggest companies have the clout to negotiate with the likes of VISA and MasterCard.
Still, we encourage you to get your customers to pay online. As much as the interchange fees cost, online payments are still key to offering a great customer experience, which will help your business grow.
While many cards can be run as credit or debit, there are important differences between the two.
Debit cards have lower interchange fees. This is because debit charges come straight from the bank and don’t present the same level of risk to the issuing entity as credit cards do. Credit cards are technically loans from the bank that must be repaid, so the banks and cards try to protect themselves by charging more for the use of credit cards.
You also won’t have much say in how this plays out, though. If your customers want to pay with credit, you should absolutely encourage them - the difference in interchange fees is not important enough to argue over.
Self storage software automates almost all of this, and you won’t have to get spend a lot of time managing this part of your business. You’ll just have to pay the accumulated interchange fees at the end. While it is frustrating to have someone take a cut of the profit you’ve worked so hard for, at the moment there isn’t much of a choice.
Customers prefer convenience. If they can’t pay online, they may well go elsewhere. They may also have a worse experience doing business with you, which then can hurt your reputation and your long-term business prospects.
Does your facility have what your customers are looking for? Check out our Top 9 Self Storage Amenities here!
Learn more about creating a great customer experience with these: