As a business owner, you have the ability to immediately reduce your current credit card processing rates by .65% and more. This can done by utilizing two very important processing methods called Straight Pass-Through Pricing and Level 2 Processing. With all the stresses and pressure on business owners caused by this current downturn in our economy, examining your monthly processing statement is usually one of the last things on your mind. But I would ask that as you are reading this article, that you would take the extra step of grabbing a recent processing statement for reference. This way you can truly see if the information provided here could help make a difference in your bottom line.
It is not uncommon for most people to become frustrated, confused or even angry when trying to read a monthly statement from your merchant services provider. Depending on your processor, some monthly statements are more detailed and may include charts and graphs, while others are only a single page and provide very little breakdown. While a less detailed statement is many times a red flag itself, for the purpose of this article, I am going to have you focus on a couple key terms. While it may vary as to where these terms are located on your statement, they are universal and used by all processors. So I would ask that you examine each page of your statement carefully, and see if you find any of the following “downgrades” and “surcharges” that I have listed below:
* Mid-Qualified or “Mid-Qual”
* Non-Qualified or “Non-Qual”
* NSQF
* EIRF
* Standard
* Commercial Electronic
* Corporate Data Rate 1
* Keyed Transaction
These keywords listed are what we call “downgrades” and “surcharges”. What these keywords signal is that those transactions were downgraded to higher processing rates by having additional surcharges tact on top of their original base rate. A good example would be a Visa Business Credit Card that when setup properly on Level 2 processing, carries a low rate of only 2.10%. But if your business is not taking advantage of Level 2 processing, that same card could be processed at rates as high as 3.5% to 5%. This means that you could easily be paying 1-2% higher on each and every commercial card you are accepting.
Another great example is if your merchant account is setup with “Tiered” or “Bill-Back” style pricing. This is when you will see the terms “Qualified”, “Mid-Qualified” and “Non-Qualified” listed on your statement. This style of pricing many times can cause your processing rates to more than double, causing you to be paying 1% – 3% higher on every credit card that you accept, even on consumer debit and credit cards.
The obvious next question is how to properly structure your merchant account to avoid these unneeded additional charges and fees. The answer lies within the following two processing methods that all of the largest retail giants in the world take full advantage of.
* Straight Pass-Through Pricing – A processing program that until recently was only provided to Fortune 500 companies. When set up on interchange pass-through, your processor will pass through every credit card and transaction type at its associated interchange rate. Interchange is its preset base rate by Visa, MC and Discover. A minimal flat processing fee is then added on top across the board.
* Level 2 Processing – Level II processing will automatically save you between .35% to .65% on every corporate, business, purchasing and government credit card that you accept. Many even within the payments industry are unaware that commercial cards have the ability to qualify at a preferred Commercial Data Rate 2.
Accepting credit card payments has become a requirement in today’s business world in order to compete, and not lose sales due to lack of payment options for your customers. The major hurdle that merchants face is achieving the peace of mind of knowing they are receiving the lowest possible rates and fees available. So with that mindset, I strongly encourage you to take the time to review your current merchant account set up. Don’t just take the word of your current processor or bank as the gospel truth. Probably only 10% of people selling payment processing services have a true understanding of proper interchange rate qualification. It’s a scary thought, but anyone today can sell payment processing services due to lack of regulation within our industry.
Warehouse clubs, internet companies, wireless providers and POS companies are really commercializing the payments industry and most have no idea how to setup a merchant account properly. This is why it is so very important to choose your merchant services provider carefully and to authenticate their experience and knowledge.
Remember, the payments industry would not exist without businesses such as your own. You have the right to know what you’re paying and why. Hopefully this information can help you make a more informed decision as to your merchant services provider. If changes need to be made, make them now instead of losing even more additional profit in the future.
Learn more about Credit Card Processing. Stop by Brooks Rohrer’s site where you can find out all about Accepting Credit Card Payments at your business for minimal costs.
