Understanding Credit Card Processing Fees and Charges

Discover How to Finally understand Credit Card Processing

Fees and charges

Imagine being able to keep more of your hard-earned money and

pay less for the "privilege" of accepting plastic

In 2005, industry trade journals indicated for the first time ever "payment for goods and services with credit cards, has exceeded that of checks and cash" (Green Sheet). As a result, more of your bottom line is going out in fees to a Merchant Services Provider. It’s more crucial than ever to get a more thorough understanding of how your rates and fees are calculated. It’s likely that your current rep hasn’t, or won’t, enlighten you.

Credit card processing bills tend to be filled with cryptic codes and indecipherable information. It’s like trying to figure out logarithmic formulas, in many cases. Take a look at your current bill, for example. Are there charges that you don’t understand or feel are excessive?

Here’s an exercise for you. Take your total fees paid for the month and divide it by your total processing volume. Make sure you get "total" fees charged before doing this exercise. Some processors take some of their fees off each daily batch (referred to as Daily Discounting). Look for a line that says, "less discount paid" and add that to your month end fees. This will give your true Net Effective Rate. Is that number anywhere near what you were originally quoted as your "Discount Rate"?

Your Discount Rate (the rate they always lure you in with) is typically your Qualified or Tier 1 Rate. This will only be for your generic type Visa or MC credit or debit cards, swiped through a terminal. Most processors promote low discount rates but what they don’t tell you about is the host of surcharges and other miscellaneous fees. You could have Mid-Qualified, Non-Qualified, Tier 3 or Tier 4 rates. Do you have bundled or un-bundled rates? What about service, monthly statement, batch or annual fees? Have those been willingly explained to you? Keep in mind, every processor sets its own tiered pricing. One type of credit card transaction may be considered Mid-Qualified by one processor and Qualified by another. It’s extremely important to become better educated.

After many years in this industry, I am blessed with an extremely high customer retention rate. When you take time to educate and build relationships with your merchants, trust is earned. I’ve helped merchants save thousands in processing costs over the years. But, I can only touch and assist so many in my local market. So, in an effort to help thousands more, nationwide, I’ve developed an informative website and subsequent eBook on the topic of credit card processing. Take the time to come on by for a very profitable visit. You’ll find us at

http://www.creditcardprocessingknowledge.com/

Save Money on Debit Transactions

Did you know there can be a potentially substantial difference in costs to you, the merchant depending on how you process debit transactions? On-line is when you have the customer enter their pin # into the pinpad. Off-line is when you swipe the card as if it simply a credit card. To the customer, it doesn't matter how you run the card since they know it is simply coming out of their bank account. To you, however, the cost diffence could be significant. Let's look as some statistics.

National Averages of Debit Transactions based on Average Ticket Size

Retail Signature Debit

Ticket Range Est. % of Debit Trans

<$10.00 78.72%

$10.01-$25.00 75.55%

$25.01-$50.00 51.0%

$50.01-$100.00 40.2%

$100.01-$500.00 31.9%

$500.01-$1000.00 23.1%

>$1000.00 17.8%

Restaurant Signature Debit

Ticket Range Est. % of Debit Trans

<$9.99 83.5%

$10.00-$24.99 68.2%

$25.00-$49.99 55.16%

$50.00-$99.99 39.14%

>$100.00 26.84%

As you can see from the above chart, the larger the size of the transaction, the less likely the customer will use their debit card. They'll put larger transactions on their credit cards that pay them some form of reward and simply pay the bill at the end of the month.

Now let's look at some cost differences. For sake of this example we'll use the STAR debit network which tends to be one of the largest, nationwide. Let's say you're a retailer and your average ticket is $55.00 (nationally 40.1% of your sales will typically be debit). And, your processing rate for card present transactions is 1.59% + $.25 (an excellent rate, by the way and yours isn't likely this low). If you swipe that card for the $55 sale, your costs would be $1.12. If on the other hand, you had the customer input their pin number and it was processed thru the STAR network, your cost would be $.83. Now granted, it's only a $.29 savings but those can add up to HUGE money over the period of a year.

Post any questions or comments that you have here and I'll help you figure it out.

Thanks for reading

credit card processing on the internet

If you've got an on-line business, and you desire to accept payment for goods and services via credit and debit cards, there is a right way to do things and a costly way to do things....do you know which is which?

Not only are there various pricing models that can be offered by merchant service providers, but, there are also numerous ways the transactions can actually be run. Do you know the differences?

The purpose of this blog is to get your answers before you decide on a service provider. Maybe you feel like you don't know what questions to ask. That's okay too! All you need to do is tell me what it is you are trying to accomplish and I'll help steer you along the way.

• You won't get a "sales pitch" from me
• I won't recommend any service in particular
• If you want my assistance, and want me to set you up with services, I'll be happy to help to help but honestly, I really don't "need" your business
• My desire is to help educate the business owners regarding this complicate portion of their business.

So, jump on in and tell me, or ask me what's on your mind.

Maxx

Understand Credit Card Processing Fees & Rates

This is not a solicitation for your credit card processing business

This is an educational blog to answer your questions and guide you

to make more informed decisions regarding merchant services

Rates continue to increase so...

YOU NEED TO UNDERSTAND

Credit Card Processing Fees

And how the industry works

in order to

SAVE YOUR BUSINESS MONEY

I'm a seasoned, semi-retired, pro and I don't need your business so this is a safe place to get your questions answered about credit card processing

Okay, here's the deal....if you're in any kind of business, providing goods or services, you absolutely NEED TO ACCEPT CREDIT CARDS or you're leaving money on the table. There are many service providers that will gladly assist you with that service.....FOR A FEE OR MANY FEES (some of which aren't openly revealed to you). How thoroughly educated are you regarding this necessary service? Wouldn't it be beneficial to arm yourself with the proper knowledge in order to be able to make intelligent, informed decisions to improve on your bottom line?

THIS BLOG IS THE SAFE PLACE TO LEARN

Let me say, first of all here that I'm not here to solicit your credit card processing business. I've been in this business for many, many years and already earn a very comfortable living monthly, from hundreds of merchants that allow me to handle this service for them. I've developed long-term, mutually rewarding relationships with them because they know that I care about them, not just their business. It's a win/win situation.

This blog is specifically for the purpose of answering any questions that you may have regarding accepting credit and debit cards in your business. Whether you be brick and mortar or click and order, I'll be able to help guide you through the maze of information that you absolutely need to understand.

I AM NOT AND NEVER WILL BE SOLICITING YOUR

CREDIT CARD PROCESSING BUSINESS

There's many different ways to process credit/debit cards

• 3 Tier Pricing (Qualified, Mid-Qualified, Non Qualified Rates)
• 4 Tier Pricing (Includes lower pricing for debit cards)
• Bundled or Unbundled Rates
• On-line or Off-line debit card processing
• Cost-Plus Pricing
• Interchange rates, fees and assessments
• Card present or card not present
• Traditional credit card machine, payment gateway, shopping cart, etc

Which pricing model is best for you, your business and how you transact business?

Simply post your questions or comments here and I'll respond as quickly as possible. If at any point, you want me to analyze your current statements, I'll be happy to do that for you as well. If you'd rather not post here publicly, you can email me at infoskoop@comcast.net for a confidential response. Thanks for reading and I look forward to hearing from you.

Maxx