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.

Signs that you are paying too much for Merchant Services

  • You are locked into a Merchant Account Contract
  • You are paying the same rates for both MasterCard and Visa
  • You have only one Qualified Rate
  • You pay Mid & Non Qualified Rates
  • You don't get Interchange fees returned to you on cardholder credits
  • You “Leased” credit card terminal equipment

Does your Merchant Contract have an Early Termination Fee?
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.  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.

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-as-low-as quote; 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 change to a direct Interchange pass through price structure where pricing is independent for each card brand.

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 automatically qualify for reduced Interchange rates on some rewards card transactions less than $60.  Also, signature debit card transactions that qualify for two different Interchange categories automatically receive the lower of the two. These are just two of many examples that illustrate 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
Merchants today must pay even closer attention to their rate structure than to their rate. Vantage focuses on your bottom line cost of service and helps your organization qualify of the lowest possible Interchange rates available. Transparent Interchange pricing plans eliminate Mid-qualified and Non-qualified tiered rate surcharges. 

A good way to manage your bottom line costs of service and easily track your costs over time is to Learn how to calculate your "Real Rate" (total fees deducted from your business checking account divided by your bankcard sales).

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.

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