How your Business Profile Impacts your Merchant Rates
Your business profile has a direct impact on your merchant Interchange rate proposal and quote. This is information is not specific to Vantage Card Services but instead is how the card payment industry in general operates. Here are a few of the leading factors:
- Interchange rates and regulations vary by industry. Similar to an SIC (standard industry code), merchant accounts are categorized by the MCC (merchant category code). Having the right MCC is important in order to qualify for incentive Interchange rates established by the card companies as well as benefit from specific merchant chargeback rights for select industries. Some MCCs specific Interchange rates require registration with the card companies.
- Your customer mix will play a large role in determining your Merchant Rates. Do you primarily sell to consumers (and do they use debit cards or reward cards most frequently) or are your customers using business, corporate, purchasing and government purchasing cards. The types of card payment your customers use will influence your merchant rates a great deal.
- Your method of acceptance or mix of card acceptance methods will impact your merchant rates. For example the same MCC for restaurants will qualify for different Interchange if one is dine in (swipe cards) and the other is delivery only (card not present).
- Your transaction size will also play a role in determining your merchant services costs. In our restaurant example, selling $50 steaks vs. $10 hamburgers will qualify for different Interchange rates with the $10 hamburger getting a fast food rate that is lower. In other examples, B2B industries accepting purchasing cards can qualify for incentive large ticket Interchange rates.
- Your sales volume will also impact your merchant rates, but not as much as you might think. Unlike other industries where volume discounts are the norm, in the regulated world of merchant Interchange it doesn’t play a major factor for most businesses because Interchange is billed on a per transaction basis. One area where this does play a role is if your business profile is considered high risk merchant account where the more volume you do the greater the risk of loss. Examples of high-risk merchant accounts are businesses that have any type of future delivery, especially large tickets. High-risk accounts are priced at a premium.
- Using dial up is a slightly more expensive transaction processing method than processing over an Internet (IP) Ethernet connection. However, you will want to balance faster speed and the slightly lower per transaction cost with IP scanning and the added PCI compliance requirements.
Your business profile will ultimately determine the payment technology you should use and the data you should collect and pass with each transaction.
Use the Merchant Rates calculator to generate an instant quote and proposal (view a sample business proposal here). Then speak with a Vantage Card Services Payment Analyst for a more in depth consultation who can answer your questions and help you establish the best payment acceptance policies for your business.