The Real Cost of Payment Processing (And Where Gyms Overpay)

Do you know just how much your billing processing fees are impacting your bottom line?

Payment processing fees are one of the most misunderstood costs in a gym's operation. Many operators pay a blended rate without knowing exactly how it breaks down — or whether they are being marked up. 

This article uncovers what's actually happening with your processing fees, and where your gym may be leaking profit.

What are payment processing fees?

In today’s digital world, electronic payments have become the norm. While the convenience factor is evident, these transactions come with a cost. When a gym accepts a digital payment, they typically incur payment processing fees to move the money from the customer’s account to their business account.

What are different types of payment processing fees, and how much do they cost?

The total payment processing fees for each transaction are typically comprised of:
-an interchange fee from the customer’s bank
-an assessment fee from the credit card company
-a processing fee from the service provider

Businesses often incur processing fees between 1.5-3.5%, plus a flat rate, per transaction.

An easy way to calculate processing fees is by taking the total fees charged divided by the dollars processed in order to get the effective rate. In the fitness industry, the effective rate is sometimes inflated due to low dollar transactions for in-house purchases, such as bottles of water or energy bars. Most interchange levels for credit cards include a $0.10 fee per transaction, with debit card per transaction fees varying from $0.04 to $0.22. This makes a $1.00 transaction much more expensive on a percentage basis.

How are payment processing fees impacting your bottom line?

Since every digital transaction will incur a processing fee, this has a direct impact on net profit. The gym space is widely regarded as a low margin industry, so these fees play an important role on an already slim profit margin.

What are other items worth considering when it comes to payment processing?

Reliable and secure payment processing is critical. When considering providers, look for a provider with:
-direct control over ACH processing for faster, more reliable payments. (If a system relies on third-party vendors for ACH processing, you may experience disruptions in accessing your funds if there are delays or disputes.)-secure, PCI-compliant data handling to protect your business and members
-billing deposits made on the day members are billed

How can you reduce your payment processing costs?

The split between credit card and ACH transactions has a significant impact since ACH typically costs a fraction of credit card processing. A gym running high credit card volume without evaluating its mix is almost certainly leaving money on the table. Be sure to offer and encourage members to connect their payment via ACH when possible.

However, it’s important to note that some competitors charge additional fee to process ACH transactions on top of their software fees. With Twin Oaks, the transaction fee includes the use of the software and unlimited support, so there aren’t additional ACH processing fees added on top of that. 

Additionally, consider using a registered ISO. Twin Oaks offers true interchange pricing with transparent fees and revenue that goes straight to you without being held. This alone can have a significant impact on year-end profitability. We also offer flexible billing options, built-in returns management, and advanced automation tools.

Book a demo to learn how Twin Oaks can save you money where it matters most.

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