What is the rate?
This is the most common question I hear from both existing and prospective clients. The better questions to ask are “What pricing model do you use?” and “What are the markups over cost?” Here is why…..if you are set up on the correct pricing model (interchange plus pricing), the overwhelming majority of your total fees will be interchange and assessments. In the credit card processing industry, this is known as cost. These fees are non negotiable and they are set by the card brands and the banks that issue credit and debit cards. As of 11/2016, there are over 900 interchange categories; each with their own rate and transaction fee. The interchange fee charged to the merchant is based on three primary criteria:
1-the specific type of card that is being presented for payment
2-the SIC / MCC of the merchant processing the sale
3-how the card is being processed (swipe, dip, keyed, etc)
The reason why being on the interchange plus pricing model is so critical is that these costs are exactly the same for EVERY processing company. It doesn’t matter if you are dealing with a processing company that has millions of merchant accounts or one that has 100 merchant accounts.
So now that you know all processing companies have the same cost and that the overwhelming majority of processing fees are based on things you cannot control, all you need to do is make sure you are set up on the correct pricing model and that the markups are fair. With interchange plus pricing, there are two markups. One is on the processing volume and the other is per transaction. Like most other industries, markups are directly related to volume. The business that processes $10,000 per month will have a higher markup than the one that processes $100,000 per month.
No matter how you slice it, the only rate that matters is what is known as the net effective rate. This is your bottom line cost of accepting card payments. To calculate this rate, simply divide the TOTAL FEES PAID into the TOTAL VOLUME PROCESSED. If you processed $16,000 and your total fees were $500, your net effective rate was 3.125%.
I go through my entire client base every 6-12 months and year after year, I have found the following to be the case…
|If your total processing volume is…||you can expect your net effective rate to be…|
|Over $50,000||about 2%|
|Between $20,000 and $50,000||between 2% and 2.5%|
|Between $5,000 and $20,000||between 2.5% and 3.5%|
|Under $5,000**||Over 3.5%|
** if you typically process under $5,000 per month, you may want to consider a pay as you go mobile processing solution
Are there any cancellation fees?
No. Regardless of the company I place your merchant account with, a non-negotiable requirement is that the merchant agreement is on month to month terms and has no cancellation fees of any kind. Most importantly, this is documented on the paperwork. Why? In my experience, when a new client is required to sign a contract that includes a cancellation fee, accountability tends to disappear. Think about it…If the processing company knows that you will have to pay a cancellation fee should you decide to leave (for whatever reason), what is their motivation for providing great client service?
Is there really a difference working with a local agency owner?
Yes. While the payment networks where transaction processing happens all basically operate the same way, having a relationship with an independent agent is a far superior experience to just getting a monthly statement and an 800 number to call should you have any questions or concerns. Think about it, if you were able to deal directly with the owner of the businesses where you spend your own money, do you think it would be better than just dealing with a rank and file employee? Of course! If you value your time and want to experience outstanding client service that you don’t have to pay extra for, you really are doing yourself a disservice by not working with a local agent for your credit card processing. Don’t take my word for it; read the testimonials on this website to better understand the details that make it so much better.
Do you offer interchange plus / pass through pricing?
Yes. Every single client is set up on the interchange plus pricing platform regardless of the processing volume. There is a reason why all the big box companies have been on this pricing model for decades; it is because the overall cost to the client is always lower. Lower profit to the processing company = more savings to you.
If I need to upgrade my equipment, how much will that cost?
Nothing. I only place accounts with processing companies that offer “free equipment placement” programs. What this means is that you will be provided a terminal and/or Pin Pad to use with no upfront investment. Should you ever decide to stop processing with the company that gave you the equipment, you will need to ship the equipment back.
How long do I have to wait before I see deposits in my bank account?
In most cases, a retail or restaurant merchant account will be approved for next day funding*. What this means is that if you settle before the cutoff time (depending on the company I place the account with, this is usually between 7PM EST and 10PM EST), all funds will be in your account the next business day*. The only exception is on the weekends. Assuming Monday is not a bank holiday, weekend sales will be in your account Tuesday morning.
*Next day funding requires approval from the underwriting department of the registered ISO/MSP
Can you program my terminal so that it settles automatically?
Yes. There are two reasons why I recommend doing this. First, to make sure you receive funding for your card processing sales ASAP. Second, interchange rates usually increase for transactions that do not settle within 24 hours after being approved so settling out every day also guarantees you are paying the lowest possible processing fees.
What happens if I need assistance and you are not available?
Great question…Although the owner of the agency is the primary source of contact for client service, it is not the only source. All of the companies that I place merchant accounts with have their own customer service and technical support call centers that my clients can call if I am not available.
What about American Express sales?
Since 2015, all new retail merchant accounts have been automatically set up so that American Express cards settle and fund at the same time through the acquiring bank instead of separately through American Express. Not only are the fees lower, but it also means that settlement of all sales happens in a single deposit (if you process 10 sales and 3 of them are American Express, all 10 sales will hit your bank account at the same time). If you are under the old program ( you receive a separate statement and separate funding directly from American Express Merchant Services), this is an easy way to improve what you have now. Your rates will almost certainly be lower, you will receive deposits in your account faster, and all transactions will appear in a single deposit.
Will you help me close my current merchant account?
Once your new merchant account has been set up and you are processing transactions with the new company, you will need to close your old merchant account in order to avoid having your account debited each month. While I have a generic account closure form that I encourage all clients to complete, sign and send back to your old processing company, I have found that most processing companies require their own form to be completed and returned. Without exception, it is always your responsibility to contact your old processing company to close that account. If the equipment you are currently using to process sales is owned by the processing company, it is also your responsibility to ship back this equipment.
How can you offer all of this but my current company cannot?
The business model of Credit Card Processing For Less is very different than the industry standard. Most processing companies (known as ISO’s or acquiring banks) are looking to pick up thousands (or tens of thousands) of new merchant accounts per year. The focus is on acquisition, not retention. Most acquiring banks hire salespeople that have very little training, they require merchant agreements that are quite restrictive (ie. 3-4 year contract periods with cancellation fees) and they outsource call centers to minimum wage employees.
Since 100% of my client base is on Long Island and my main competitive edge is unprecedented customer service, this cannot be touched by a company that employs the big business model. On top of that, a large percentage of my new clients come from client referrals so my advertising costs are very low. This is one of the ways I can charge such low markups and save my customers money on the processing fees. In my opinion, everybody wins with this model.
Can I contact some of your existing clients?
Yes! I encourage this because I firmly believe that the best advertisement for any business is to hear a stellar review from somebody else who is already experiencing the difference for themselves. This website has an entire page of testimonials and I am very proud of this. Some websites will display stock photos with fictitious business names. You won’t find that here. These are REAL testimonials from actual clients.