If you own a business and accept credit cards you are
probably paying a lot more than you should for your merchant
account. You're probably overpaying without knowing that you
are or really even caring that much. But when you find out
by how much you're overpaying, you'll be much more likely to
switch to a new merchant account.
The discount rate is the rate that banks charge each other
to process transactions and is used to manage the risk
associated with transactions as well. There are three
different discount rates, there's the qualified discount
rate, the mid-qualified discount rate and the non-qualified
rates. These rates vary depending on the type of credit card
and some other components of the transaction.
Getting your per transaction low will affect merchants who
process a lot of transactions more than those that process
only a few transactions per month. In addition to the
regular per transaction fee, there is usually an AVS fee
which is also per transaction any time the address
verification system is accessed which happens on internet or
card-not-present transactions. This can add to the overall
per transaction amount. If you process cards on a physical
terminal where the transaction is swiped, you won't have an
AVS fee.
For merchants processing smaller ticket items, such as fast
food restaurants or convenience stores, the per transaction
fee usually represents a larger percentage of the overall
transaction and can significantly increase the overall
percentage you're paying for accepting credit cards.
If you process large transactions, the discount rate will
affect your fees much more than your per transaction fee.
For those processing retail transactions where the card is
physically present at the time of the transaction, an
important note to remember is that if you process Visa and
MasterCard check cards, they should process at a lower rate
than your "regular" credit cards. This is where most of the
savings occur for the majority of business owners that
choose to switch their merchant account.
Switching merchant accounts is not difficult and should
come with an option to make sure that you can back out if
the new contract doesn't lower your overall effective rate.
The point of switching your merchant account is to lower
your rate and get better services. Find a provider that has
a good rates, can lower your rates and has exceptional
service.
Most merchant accounts have an early termination fee, so
the process of switching accounts may have costs associated
with terminating your existing agreement. There are a few
options here, depending on how much your early termination
fee is and the duration of your contract. Some merchants can
save $100 or more per month and keeping the existing account
open for $25 per month may make sense. You should check with
the provider you're considering to also see if they offer a
reimbursement for switching by paying off your early
termination fee for you. Some providers will do this, others
will not, but it's worth asking.
Getting new equipment can also be a benefit of switching
your merchant account. Competition for new merchant accounts
is fierce so some of the incentives that processing
companies are offering include new equipment. So, if your
equipment is older or if you just want new equipment, make
sure to ask about that and make that a part of your
switching strategy.
My name is Brian Armstrong and I've been setting up merchant
accounts for the last 7 years. I have extensive experience
with ecommerce
merchant accounts and internet
merchant accounts. I have done retail accounts as well
and find that much of the revenue I can save a merchant are
with the retail accounts, but internet accounts are my
specialty.
