Shopping for a credit card processor can be a daunting task if your understanding of merchant account pricing is subpar. Here are a few tips to assist you in the process.
1) Interchange pass through pricing is the best pricing structure for businesses!
The pricing model known as interchange pass through (also called interchange plus pricing) is the least expensive, most transparent credit card processing pricing model, and it’s the one you want. Interchange plus separates interchange and assessments, which are the actual costs of processing, from the processor’s markup. As a result, you pay a lower markup and you can see where your money is going. This is the pricing structure we use for all merchant accounts with Remedy Payment Solutions.
2) Interchange pass through is just one piece of the puzzle.
Interchange pass through pricing has the potential to be the least expensive pricing model, but a processor can still overcharge. Don’t assume that a processor is offering a great deal based simply on the pricing model. Interchange pass through is just once piece of the puzzle, and you still need to ensure that the interchange markup and the other fees being charged are competitive.
3) Monthly discount is better than daily discount.
There are typically two ways that credit card processors collect fees owed by merchants. Daily discount is when credit card processors take charges throughout the month. If transactions are processed daily, fees are charged daily. Monthly discount is when processors take charges in one lump sum at the end of each month. Transactions are processed throughout the month, but fees are not charged until the month ends. Monthly discounting is less expensive, easier to reconcile, and better for cash flow.
4) The sum of interchange and assessments = “wholesale cost.”
Card-issuing banks charge interchange fees to you as a merchant when you accept their brand of credit cards. Visa, MasterCard, and Discover generate income by charging another fee known as an assessment. Interchange and assessment charges are the same for all credit card processors. For this reason, it’s easiest to think of the total sum of interchange and assessment fees as the “wholesale” cost of credit card processing. You will pay this fee no matter which processor you use and it may not be disclosed this way.
5) Never ask a sales representative “What’s your rate?”
It’s natural to ask a sales representative for rates when comparing offers. After all, it’s the rate that matters the most, right? Not with credit card processing. The pricing model used to calculate rates matters more than the actual rate. The first and most important question to ask is “What is your pricing model?” Once you know that pricing is based on interchange pass through (see tip #1), then you can inquire about rates with confidence. If you are offered “bill back” or “tiered” pricing, you will want to proceed with caution. Assuming you are on “interchange” plus, you will want to focus on the markup and fees billed above interchange. Keep in mind credit card processors are not created equal. Make sure to ask for references when comparing rates to also compare service and support.
6) Issuing banks collect all income generated from interchange fees.
Visa, MasterCard, Discover and your credit card processor do not receive any income from the interchange fees you are charged. Those fees go directly to the banks that issue credit and debit cards. Interchange fees make up over 90% of the fees most businesses pay to process credit/debit cards. Banks are the big winners in the credit card game. Banks charge businesses interchange fees to accept credit cards, and they charge cardholders interest on their purchases. They win both ways.
7) Remedy Payment Solutions will save you time, money and headaches.
Remedy Payment Solutions can provide a comparison quote in minutes. Once we assign a rate, it remains your rate for the lifetime of our relationship. If you experience a chargeback, an entire team will back you up and help attempt to win your money back. If you decide you want to leave us, we will make it easy for you to depart. However, it is unlikely you would ever want to leave. Each merchant account is assigned a dedicated Account Executive who knows your business and your industry.
8) Don’t worry about a cancellation fee.
There are plenty of credit card processors that are willing to waive cancellation fees and if you want to switch to Remedy Payment Solutions and have a cancellation fee, we will work it out with your current processor, even if we have to pay them off. If a processor tries to lock you into a long-term processing agreement that has a large cancellation fee, simply insist that it be waived off the contract. There is no reason for a credit card processor to force you to sign a lengthy contract unless they know their service and support is subpar. Lengthy contracts are no longer the industry standard.
9) Quality trumps quantity with credit card processing quotes.
You don’t need to get quotes from fifteen different credit card processors to find the best solution for your business. Instead of calling a ton or processors for quotes, focus on processors that are recommended and endorsed by your trade association and industry. Use a processor that supports your industry through sponsorship, advertising, education and support. Choose a processor that has knowledge and experience in your industry. Understanding your business and industry allows a processor to provide a personalized level of support. Every industry has different payment needs, so make sure yours are being met.
10) Be wary of affiliate “comparison” sites.
Avoid web sites like TopTenREVIEWS that claim to help you find the best credit card processor by using flashy comparison charts. Websites like this don’t hold processors to any sort of standard, they don’t offer you any support while you’re considering offers, and they don’t provide any support once you’re processing with them. They accept money from those processor to advertise for them and if you choose a processor through a website like this, you are likely to be overcharged and under-serviced.
An Account Executive at Remedy Payment Solutions would be happy to assist in answering any questions. Don’t hesitate to reach out to us at 714-461-2200 or info@remedypayments.com!
Remedy is powered by Chosen Payments whom is a registered ISO and FSP of Wells Fargo Bank, N.A., Concord, CA and BBVA USA, Birmingham, AL., and Elavon, Inc., N.A., Atlanta, Georgia, and Evolve Bank & Trust; Memphis, TN., and Merrick Bank, N.A., Draper, UT.