There are scores of sales people calling on retailers, service providers and Internet sellers to either open a new or switch their existing merchant account. Before you switch or even select a new credit card processor there are options you need to compare in order to select the best fit for your company.
Most decisions will come down to dollars and cents. Who provides the service you need at the best possible price? No matter what anyone tells you, Visa and MasterCard charge everyone the same interchange rate. This rate is dependent on type of establishment and potential risk factors. It also depends on whether a rewards card is being used. If you look at the Interchange Rates that are posted on the Internet for all to see, you will realize that it is the merchant who is really paying for these rewards with a higher Interchange Rate.
Anything over and above the Interchange Rate and Association Fees go directly to the Credit Card Processor. Some processors charge flat rates; some bundle rates; some have even more complicated rates. Your job is to run your business or service not to figure out rates that may be meant to confuse you further.
Tip: If you want to compare raw rates, give each sales person a mathematical problem. Tell each of them that you process $5,000 per month. You have 50 transactions that are $100 each. There are no rewards cards being used. In this exercise 95% of all transactions are considered “card present.” This means you have the ability to see the customer face-to-face and you are swiping the card as he stand there. The other 5% of the transactions are telephone orders that have to be keyed in. Remember, you want the cost of the transactions only.
In the example above, you will be able to determine who has the best rate per transaction. Some processors will charge you cost plus $.15 a transaction. This is great if you do not have over 50 transactions a month. But if you have 100 smaller transactions, look at the difference in your monthly rates: 50 transactions equal cost plus $7.50 – 100 transactions equal cost plus $15 per month. The more transactions you ring up, the higher your monthly fees.
This article was submitted by Mary Branca, she has a Bachelors of Journalism from the University of Georgia and spent 20 years in marketing management with national companies in the Southeast, Northeast and Midwest. She has combined her marketing experience with her passion for writing.