Most small business owners would be happy to learn that one of their operating costs can be reduced by thousands of dollars
. There is at least one prominent example that represents a prime opportunity for significant cost savings. Interestingly enough this operating expense is often ignored as a practical candidate for saving money for a variety of reasons. In this situation and several other prominent expense areas, banks are frequently the current service provider.
The example just alluded to is credit card processing expenses. Virtually all small businesses accept credit cards as a primary method for customers buying their goods and services. Small business owners are frequently unfamiliar with what credit card processing services are actually costing them. Even for those who realize that these services might be too expensive are less sure what to do about it.
A major reason for the confusion and uncertainties revolve around the likelihood in most cases that credit card services are either provided directly by the bank for a small business or alternatively supplied by a company that was recommended by the bank. In such cases true costs are rarely emphasized. A small business owner probably continues an expensive business relationship out of some loyalty to their bank or simply because it is easier to keep an existing provider in place.
Because many traditional bank services such as commercial loans have become harder for small businesses everywhere to obtain, many commercial borrowers are increasingly questioning why they should maintain other bank services such as credit card processing. Ironically it turns out that small business loans are also often available at much lower costs from alternative providers, some of them banks and some not. Banking institutions usually hold a position of trust with a company because the banks provide financial services needed by a small business. However recent events have demonstrated that not only have many banks stopped supplying small business financing but they have also restructured and eliminated many other financial products. The inability of a bank to serve in a continuing position of trust is also related to the discovery that many were frequently overcharging for their loans and other services. In the economy and financial circumstances recently faced by small businesses, a company can no longer afford to overpay for any business expense. Credit card processing costs might turn out to be the proverbial tip of the iceberg when small business owners are examining strategies for reducing operating expenses.