Questions for your processor, and what to expect.

What is is my contract length? Can I cancel my service without penalty?

Every merchant is under a contract with their processing bank, whether there is a penalty to cancel service is another aspect. It is also possible that your processor has helped supply your business with equipment, which in this case you will have to work out a repayment or return of that equipment. Contracts vary depending on which processor you choose, it is important to go over the terms and conditions prior to signing and being aware of any penalty for canceling the service. Some aggressive contracts may include liquidated damages provisions which basically make the cost of terminating, what the processor believes they would have profited on the account for the entirety of the contract. For higher volume merchants this can be tens or even hundreds of thousands of dollars.

What are my monthly fees and processing rates?

Processing Rates

Depending on your business, these fees will vary. For instance, if the business is eCommerce, or keyed entry, the fees will differ from a retail business. Each merchant is charged a standard interchange fee from the card issuer, this fee cannot be waived. Your actual cost will depend on what the processor marks up above interchange. It is important to note that interchange will vary depending on the type of card and how you are accepting it.

There are over 800 interchange categories and each can have a different cost. Its easy to get caught up in all of the minutia and miss something seemingly small that ends up costing you later. A potential processor can perform rate reviews and show you an apples to apples comparison between your current rates and what they can offer.

In order to have a processor to provide you a real comparison they will most likely need a copy of your processing statement. That said before you send your statement to a processor its important that you ask them what fees they are quoting you. You have a real advantage over the processor when you ask them to quote you rates, and then ask them to do a comparison to show you how those numbers work out. This way they don’t see what your paying now and just slightly undercut it.

Monthly Fees

Standard monthly fees apply for all business. Typically, merchants will be charged a statement fee, but depending on the services being provided and the specific processor, there may be other fixed fees. Each processor writes accounts differently based on the type of business and processing history. Some of the fees can be waived, but it is important to note that some of these fees are being charged directly from Visa and MasterCard are are typically passed through to the merchant.

Make sure to ask each processor what each monthly fee is for. If you are reviewing multiple processors you will find that many of the fees are the same. Any fees that are outside of the norm should be questioned.

General rules of thumb:
Retail – Monthly fees should run $20 or less even if you don’t process in a given month.

eCommerce and phone order – You should expect your monthly fees to be the same as retail, however keep in mind you may have an additional monthly fee for a payment gateway or virtual terminal. Generally these run between $5.00 and $15.00 per month in addition to the merchant fees.

What kind of Equipment do you suggest for my business, and what are the costs?

Using the right equipment tailored for your business, is not only important for your customers convenience, but also for the business’s fees and costs. It can be a burden for any business getting caught in an expensive lease for an extended term, especially if that equipment is unnecessary.

See future Newsletter: “Leasing, the Little Upside with Major Pitfalls.” 

Equipment costs vary depending on the processor, some will provide free equipment for the use of the business, while some mark prices up to turn a profit. If your processor suggests a piece of equipment at a specific price, it can be beneficial to do research and learn precisely what that piece of equipment costs on the open market. You would be surprised how much some processors will attempt to charge for equipment.

Can you perform a rate review for my account?

If you feel you are paying too much for your credit card processing service, simply ask your sales agent or processor to perform a rate review for your business. Sometimes there are minor changes that your processor can do, and they can make a major impact.

For example, if you are using a terminal that is out of compliance, you may see additional charges on your monthly bill. Simply by upgrading your equipment, could reduce your overall effective rate drastically.

Another example is perhaps your account was initially written with the wrong fee schedule for your specific business, and by switching to a new rate structure you can reduce and prevent additional fees.

It is not out of the realm of possibility that your processor or agent would refuse this service, or simply tell you that your fees cannot be lowered. If this is the case your processor should be able to explain in detail your fees and why they’re not able to be lowered. That said don’t take their word for it. Call around and ask other companies what their rates are, and then ask them for a side by side comparison of current statement.

Some times you find that the deal you have with your processor is really good. Some times you find that you can save a lot by switching. Either way its worth contacting a couple companies.

How much am I paying for my PCI compliance?

As mandated by higher authorities that make up this industry, every merchant must be certified PCI compliant in accordance with the Payment Card Industry Security Standards. Quite a mouthful. Each processor is responsible for making sure their merchants are secure and the fees for this service will vary depending on the processor. Some charge monthly, some charge annually, and some processors may charge you both an annual fee with a nice monthly fee as well. It is important to be compliant and certified and it is probably more important to you to not be overcharged for taking a simple survey or having a scan performed. Your processor should be able to easily explain how much and when they will charge you.

While this fee is generally not negotiable with any given processor, they each have their own deal with PCI security assessors and so the pricing to the merchant will vary from one to another. Generally speaking this fee should come out to between $90 and $120 per year while compliant. Non Compliant accounts are generally assessed around an additional $20 per month until they become compliant.

Who handles customer service after business hours or on holidays?

Hopefully you process with a company that has excellent customer support. That said, sometimes that support is not available at all hours of everyday. It can be imperative to the business owner, to know how their processor provides support after normal business hours, and on holidays in case any issues arise. The last thing a business needs on a weekend or holiday when their terminal goes down is to get an answering service when they need to be processing cards.

Also a help desk is testable. Feel free to call into your processors help desk and see how long it takes them to answer, how they act on the phone, and how knowledgeable they are. You can also ask them about specific fees on your quote. While the help desk probably wont have access to your quote you can ask them what their company typically charges for X, Y, or Z. You can compare that information to the quote that was provided. This wont always work as some support people don’t handle the rate side of the business, however its worth asking a question or two.

Lets boil this down.

We have gone over a lot of information here so lets simplify it. If you are looking at changing processors ask them what their rates are, then ask them to breakdown your statement. Keep your monthly fees at or below $20 per month if your retail and $30 per for other businesses. Ask for no early termination fee and never lease processing equipment. Most importantly reach out and ask for help. People in this industry will bend over backward to lend their knowledge to those who ask.

If you have any questions we are always willing to lend whatever knowledge we have. Feel free to reach out to us at 800-937-3850.