Fact, your merchant account services are probably overpriced, you are probably over paying for your merchant account services each and every month. There are certain fees that are customary and will always apply for your credit card processing transactions, but most small business owners are overpaying each and every month, reducing your profit and directly affecting your bottom line.
Let’s look at the typical costs associated with providing payment processing with a merchant account and discover the areas you can save money. The major credit card issuers, including, VISA, MasterCard, American Express, and Discover each have a traditional set of fees that your credit card processing company will pass along to you for the privilege of transaction processing, your base rate is some amount in addition to these costs, the difference being the charge for the merchant accounts services.
Your fee structure will vary depending on a variety of determining factors based on usage, such as:
- Are your typical payments from a debt card or a credit card.
- Which credit card company does your average customer use for payment
- Was the credit card used for payment a corporate business card or a personal credit card
- What type of business do you own and what products or services do you provide
- At what point did you submit the purchase for processing from the moment the customer completed purchase
- What is your average purchase amount, and monthly purchase volume
These variables all directly affect the rates you are being charged by your merchant account service. The opportunity to save money on your transaction charges has to do with how these fees are passed along to you by your credit card processing provider. Let us take a look at how you can save with your merchant account.
Your merchant account service will pass on these costs and work in their profit using these fees that you are probably used to seeing on your statement. You typically are charged a discount rate, which is the percentage per sale charge, monthly minimum transaction fees, annual fees, charge back and dispute penalties, supply fees for terminals and products, and rental fees for terminals, as well as statement fees each month.
Examine each of your fees individually and make sure that your contract specifically details what you are to be charged for each of these services. Merchant account services have been known to advertise a highly discounted fee in one area only to make up the loss with an increase on another. Be very aware of what fees and charges your contract burdens your account with. The lowest discount rate does not always equal the lowest transaction costs when all fees are taken into consideration.
Finally, keep a close eye on your statements from month to month, and look for opportunities to to remove services and charges that your customers do not use. Also, be sure to consult your merchant account service as to what transaction downgrade situations apply, where they increase the discount rate based on the circumstances of the purchase.