The Tip of the Day: If you think you’re overpaying for credit card processing, you probably are. Continue reading for more credit card processing advice.
Pricing is a type of poison.
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When it comes to credit card processing, ignorance is blissfully cheap. If you’re unfamiliar with the components of processing cost, such as interchange, assessments, and markup, it’s safe to conclude that you’re paying too much for processing. These credit card processing hints will assist you in avoiding common blunders.
1.) The best pricing is exchange pass-through.
The interchange pass-through price model (also known as interchange-plus pricing) is the most affordable and transparent credit card processing pricing model, and it’s the one you want. Interchange plus removes the processor’s markup from interchange and assessments, which are the true processing expenses. As a result, you’ll pay a smaller markup, you’ll be able to see where your money is going, and your processor won’t be able to tamper with your charges to drive up expenses.
2.) The passage through the interchange is only one part of the puzzle.
Although interchange pass-through pricing has the potential to be the most cost-effective solution, processors might still overcharge. Don’t base your decision on a processor’s price model alone. The interchange pass-through is only one piece of the issue; you must also ensure that the interchange markup and other costs are reasonable.
3.) Monthly savings are preferable to daily savings.
Credit card processors take charges throughout the month, which results in a daily reduction. Processors accept charges in one lump sum at the end of each month, which is referred to as a monthly discount. Discounting every month is less expensive, easier to reconcile, and improves cash flow. More information on the matter may be found in our article about daily discounts versus monthly discounts, which also explains how to interpret charges on a daily discount processing statement.
4.)”Wholesale” refers to the total of transactions and evaluations.
When merchants accept their credit cards, card-issuing banks impose interchange fees. Charging assessments is how Visa, MasterCard, and Discover make money. For all credit card processors, the interchange and assessment fees are the same. As a result, the “wholesale” cost of credit card processing is best thought of as the sum of interchange and assessments.
5.)”What’s your rate?” should never be asked of a salesperson.
When comparing deals, it’s only logical to inquire about a salesperson’s charges. Isn’t it true that pace is the most important factor? Wrong. More important than the actual rate is the pricing methodology on which prices are established. “What is your pricing model?” is the first and most crucial question to ask. You can confidently question prices after you understand that pricing is determined by interchange pass-through. Here at core financial processing, we make things simple by asking processors to quote only interchange pass-through rates.
6.) The revenue generated by interchange fees is collected by issuing banks.
Interchange fees provide no financial benefit to Visa, MasterCard, Discover, or your credit card processor. The institutions that supply credit and debit cards benefit directly from interchange fees. In the small business credit card processing game, banks are the main winners. For companies to accept credit cards, banks charge interchange fees, and cardholders pay interest on their transactions.
7.) Card Fellow will help you save time, money, and frustration.
Core financial processing automatically compares several credit card processing prices from prominent companies. Once you’ve decided on the finest processor for your company, we’ll keep track of your rates for the rest of your life to make sure they don’t go up. This is simply something to think about as you go through the next ninety or so suggestions.
8.) Refuse to pay a penalty for canceling your reservation.
Many credit card processors do not charge cancellation fees. If a processor tries to lock you into a long-term processing agreement with a cancellation fee, either ask for it to be waived, or look for a more competitive processor who doesn’t need to hide behind cancellation fees.
9.) With credit card processing quotes, quality outweighs quantity.
To locate the best credit card processing solution for your company, you don’t need to seek estimates from fifteen different companies. Instead of contacting a large number of processors for quotations, narrow your search to those that offer interchange-plus prices without cancellation costs. This ensures that each quote is truly competitive and that you can compare apples to apples.
It’s more than enough to obtain five or six competitive bids. Only a few hundredths of a percent separate the quotes in our marketplace. Obtaining more than five or six quotations is time-consuming and redundant.