In the past interchange rates were restricted to members of credit card associations and credit card processors. In easy speak; interchange is the major fuel that the merchants pay the credit machine to operate. In addition, credit card processing companies add basis points to interchange in order to keep their doors open. To see an example of interchange rates, you can do a simple search engine query for Visa USA Reimbursement Fees.
The good news is that merchants can negotiate from an informed platform their rates and fees. The bad news is that many merchants have no idea how and with whom.
Credit card processors and ISO’s make their money from the previously mentioned basis points, equipment, and fee charges. Many less honorable companies take advantage of unsuspecting merchants by overcharging on basis points, or not fully disclosing all the fees (thus the hidden fee heartache begins). Another method is be leasing or selling an antiquated piece of equipment (normally $20-$60 in value) and leasing it for say…$50.00 a month for four years. This does not include the application fees and set up fees that merchants are charged, just to be taken advantage of.
The question for you Mr. or Mrs. Merchant, is do you want free Merchant Services?
When searching for credit card equipment, it is very easy to do a search engine query for Free Credit Card Equipment. The problem, however, is not all equipment is free. For example, there may be a limited (or in many cases) a single older model selection for free equipment while the others are provided at a “discounted” rate. In other cases, you can receive free equipment if you agree to a higher interest rate. In both cases, this reminds me of the sugar with the castor oil selections I had as a child. I didn’t like it then, and I don’t like it now.
The two questions a merchant should ask a merchant service provider is (1) “Is all of your equipment free” and (2) “Do you have an approval rate above 95% for retail business?” Why question #2? This is because many companies that provide free equipment hope that the merchant has previous processing. Not only previous processing, but processing above $5,000 month. Those that are not in that category are put through more restrictive underwriting. Thus, making your chances of approval a rigorous process to say the least (if approved at all).
So far we have learned the “what’s and how’s” in regards to interchange and free equipment. In my next article, I will teach you the four basis platforms you can use to tailor your merchant account… Hope to see you soon.
Contact K.B. Biscoe at http://www.alegremerchantservices.com
