Rates
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One of the first questions a merchant will ask is, "What's your rate?"
Obviously, rate is an important component, but what's really important is your bottom line. The real rate you pay is a variety of several factors including the Qualified Rate, Mid-Qualified, Non-Qualified, Rewards, Commercial Cards, Surcharges, Transactions Fees, Batch Fees, and Statement Fee.
Many processors lure merchants in with promises of low processing rates only to find out just a very small percentage of their sales actually qualify at the proposed rate. How or why can merchant service providers do this? It's called Surcharges. You may have a low rate, but when you look at your statement, notice only consumer or check/debit cards qualify at this rate. Rewards, Commercial, Business, Purchasing, Signature and keyed transactions have additional surcharges sometimes amounting to an additional 1.50% or higher. Now your rate is not so great!
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Try this exercise with one of your existing statements:
- Add up your total Visa and MasterCard fees. This includes everything you paid for processing from your statement.
- Divide that number by your total Visa and MasterCard sales volume from the statement.
- Multiply that number by 100.
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The result is your true rate or your overall effective rate. It includes all
fees you pay Visa and MasterCard, which are called interchange rates,
as well as the fees you pay your processor. By looking at your
effective rate, you will probably see that what you are really paying
is a lot higher than you thought!
Here are a few signs you may be paying to much:
- Your merchant service provider has not talked to you about the importance of a level II merchant account.
- You are paying the same rates for both MasterCard and Visa
- You have only one Qualified Rate
- You pay Mid & Non Qualified Rates
- You “Leased” credit card terminal equipment
- You don’t have a cost plus pricing structure
Quality processor relationships are important. Understanding the differences between merchant service providers is critical when choosing a processing partner. Truxx features the best value package of rate, service, equipment/software, terms and solutions available in the payments industry.
Regardless of your business size, type or how complex your processing needs, one of Truxx certified payment professionals will work with you to choose the best payment solution for your business. If you currently accept credit cards and have ever wondered if you're overpaying, let us do an analysis for you.
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Do you know the importance of a level II merchant account?
Commercial, business, purchasing, fleet and government transactions without a level II merchant account can be very expensive. These types of transactions have the ability to qualify at different rate/interchange levels. This can only be achieved by having a level II merchant account and your terminal or software programmed for level II prompts.
Do you have the same rate for both MasterCard and Visa transactions?
MasterCard and Visa are competing card associations and have different Interchange fee pricing and qualification schedules, if you pay the same rate for both MasterCard and Visa transactions, you will want to consider changing to a custom price structure, quoting independent rates for each.
Do you currently have only one qualified rate?
If you do, you are not able to qualify for all the reduced incentive Interchange pricing levels available to you. For example, the cost of a check/debit card ran through as a credit card has a rate roughly a half percent lower than a consumer card.
Do you currently have a tiered rate structure with a qualified, mid-qualified and non-qualified bucket pricing?
You will want to avoid this pricing structure since you will find that many of the transactions that once were consider qualified have moved to the mid or non qualified rate bucket over the years as more charge types like rewards cards have been introduced. Traditionally, most merchants only paid attention to the qualified rate; therefore merchant account providers have built expensive margins into their mid and non-qualified pricing. For the Best Merchant Rates Insist on a Detailed Interchange Rate Quote.
Cost Plus pricing structure.
The transparency of cost plus allows you to see exactly where your processing dollars are going. This pricing method is simple to understand and includes fully disclosed, competitive pricing. Cost plus eliminates or reduces most traditional processor fees, passes MasterCard and Visa interchange rates directly through to the merchant, and includes only a single monthly fee for processing based on processing volume. This is a program that until recently was generally reserved for large corporations.
ALL merchants large and small can get an Interchange rate price structure to lower their costs.
These rate structure examples illustrate the upside of having a professional payment systems consultant work with you to analyze your card processing activity to establish an Interchange rate structure for your specific industry.
Having more knowledge about what determines your discount rates and the fees that impact your bottom line cost will help you make an informed decision when selecting a credit card processing provider. Merchants today must pay even closer attention to their rate structure than to their rate. Truxx focuses on your bottom line cost of service and helps your organization qualify of the lowest possible Interchange rates available.
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