Important Lessons:
Learn from our Industry Experience

Rates
» What's your Rate?
» Acquisition Pricing
» Price Structure
» What's Interchange

Service
» Service Savings
» Personal Service

Terms
» Read the Fine Print
» Application vs. Terms
» Termination Fees
» Equipment Leasing

Risk
» Convenience Payment
» Credit is Important

Merchant Account Rates

Better Rates Start with a Better Pricing Structure

Having consulted with thousands of merchants, the question we are most frequently asked is "What's your rate?" Ever wonder how this question became the starting point for all negotiations?

Obviously, rate is an important component, but what we have found is that merchants have actually been taught to ask this question by sales reps. Inexperienced and untrained sales reps rarely do more than sell on rate, using rate as the chief motivating factor to get merchants to sign contracts.

If you ask for rates, savvy marketers will only be too happy to entice you with below-market gimmick rates designed to lure your business into a contractual obligation. These contracts may be long-term terminal leases or multi-year processing agreements with stiff early-termination fees.

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. Understanding the importance of price structure and having a company that can help you manage Interchange qualification are very important.

We have been reporting important Interchange changes and publishing these on our web site since the fall of 2005. See the latest MasterCard and Visa Interchange revisions and scroll down for a sense of Interchange updates over the last few years.

Do you avoid signing contracts?
We find that most of the merchants that are locked into a “Contract” with early termination penalties are overpaying for processing service. The strange thing is that many merchants switch out of one merchant services contract into another only to discover that they are now paying even higher costs.

What you can do to make sure this doesn't happen:

1. Insist on a month-to-month contract without a termination penalty of any kind and read the fine print for yourself. Make sure not to lease any equipment or purchase a “proprietary” terminal that can only be programmed on a single network.
   
2. Learn how to calculate your "Real Rate" (total fees deducted from your business checking account divided by your bankcard sales). This is a good way to manage your bottom line costs of service and easily track your costs over time.
   
3. Look for providers that understand Interchange rates and lower your costs by reducing or eliminating “Other Fees” like monthly minimum fees, batch closing fees, compliance fees and annual service fees.

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.

Do you have the same rate for both MasterCard and Visa transactions?
Since Visa may account for as much as 70% of your transactions, 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, restaurants can qualify for reduced Interchange rates for credit and signature debit (check cards) transactions under $15. Also, signature debit card transactions that qualify for both Merit 3 Debit and Restaurant Debit will get a better rate with the Merit 3 Debit program if the amount is greater than $35.71 or the Restaurant Debit program if the amount is less than $35.71. This example illustrates the upside of having a professional payment systems consultant work with you to analyze your card processing activity to find the best rate structure for your specific business.

Do you get Interchange fees refunded when you issue a cardholder credit?
Most merchants are unaware that Interchange is refunded on credits. Your provider may be keeping these refunds and this is driving up your real rate. Make the change to an Interchange rate plan to take advantage of this benefit and lower your bottom line costs.

Talk to the payment consultants at Vantage
We trust that the topics in this price section will lead you to better vendor relations. Keep reading or contact Vantage for a personal consultation. We will provide a valuable analysis to show you a comparison of the Interchange pass through pricing model. It is by far your best option to insure you qualify for the best rates.

If you are currently accepting credit cards, let us run a detailed analysis for you. Simply fax your current merchant statement to us at (770) 928-9328. Please complete the request quote form to be contacted by a payment specialist who can answer your questions and provide a detailed quote for service. To have an instant quote emailed to you now, use the MerchantRates calculator. To see a Sample Business Proposal visit: http://merchantrates.com/business-proposal-sample. We look forward to working with you.

Links to learn more accepting Discover, American Express and PIN Debit