It’s Good to Check On Your Credit Card Processing Rates Before The Holidays!
The Holiday Season is around the corner. It’s a time of increased sales and for many retailers, “it’s their best time of year!”
Sales over the holiday season are crucial to the bottom line of most small to medium eCommerce merchants. This is a good time to check up on your credit card processing rates. Higher rates, fees or chargebacks can suddenly creep up and eat away your profits.
Let me explain how you can review your card processing statements before the holidays shopping season to ensure that you are receiving good processing rates.
Same Provider or New Provider?
Did you stick with the same provider as last shopping season or did you get a new provider? If you stuck with the same provider as last year, it is possible that your rates (and fees) may have increased without any notice. Check your merchant statements for the following:
- Rate increases
- New Fees or surcharges
- PCI Compliancy charges
If you do see any discrepancies or maybe you aren’t sure about the rates, give your merchant provider a call and they will be glad to explain it all to you.
If you recently changed providers or renegotiated your account with your existing provider, you need to verify that you are actually receiving the rates and fees you were promised. Accuracy in the payment processing industry does have a bad track record. You must verify your promised rates and fees at least once yearly as there are sometimes application and order-entry errors.
Legitimate Fee Increases?
Visa, MasterCard, American Express, and Discover have a habit of increasing certain rates from time to time. In the period September 2014 to September 2015, there were some changes in the Visa credit card assessment fee. Visa increased it from 0.11 percent to 0.13 percent. MasterCard also increased its assessment fee for transactions below $1,000 from 0.11 percent to 0.12 percent. Some Discover interchange rates were also increased on debit cards. These are just some of the changes.
Most likely, the increase in your effective rate from 2014 to 2015 will not be more than 0.03%. If you see increases higher than that in your merchant statements, then you need to check with your provider. Find out which were legitimate increases and which were errors, assuming that your average ticket amount and card mix or volume has not changed.
Calculating Your Effective Rate
Get your statements from the same months in the two years. For example, June and July 2014 and June and July 2015.
Divide the Processing Cost(PC) for each month by it’s Processing Volume(PV). For example, PC/PV or $1200/$10,000 = 0.12. So, your effective rate is about 0.12%
Calculate the effective rates for all 4 months and compare them. You could alsmo use 6 months for a better picture, but make sure you use the same months from each year. If you accept American Express, then don’t forget to leave out American Express processing volume as their rate will be different.
Found no increase:
If your processing rate remains almost the same, then your processing rates have not changed drastically. But this does not mean that youhave the best rates. Your merchant could still have given you hiher rates to start with. So, always compare rates to mae sure that you have the best rates being offered at the current time.
Found an increase:
If you found a significant increase, determine what rates and fees were changed. Or were new rates and fees introduced over the last year in your statements. Call your merchant account provider or sales representative to get exact details. They should be able to tell you what rates and fees have increased over the last year.
Also, get your merchant provider to identify and explain any AVS fees, per-transaction fees, virtual terminal fees, V/MC assessment and access fees, and the MC license fee. Don’t forget about any monthly fees such as statement fees, PCI Compliancy fees, service, and gateway fees.
If you find significant rate increases and fees on your detailed statements, renegotiate or find a new provider. There are many merchant account providers that can provide you with what you need based on your business risk evaluation.
Switch & Save
If you already have a Merchant Account with another provider where you are accepting Credit Cards, and/or ACH Processing, I may still be able to help you lower your costs. Read more about our Switch & Save Program. In addition to beating your Processing Rates and reducing your Transaction Costs, I will switch you over to our services Free of Charge!