Shopping for or comparing merchant accounts is a task that many business owners dread. The pricing is confusing, the sales pressure is intense and every provider promises to offer the lowest rates and fees. Luckily, there are two fundamental things that you can do to cut through the fog and ensure you're paying as little as possible to processing credit cards.
Shop by cost; not by savings.
The first mistake that you can make when shopping for a merchant account is to compare new offers against your existing rates. If you're currently overpaying by $500 a month and a new provider promises to save you $200, you're still overpaying by $300 a month.
Start from zero when comparing merchant accounts. Don't ask providers how much they can save you; ask them how much their solution will cost. Ask prospective providers to break your current credit card processing costs down to two categories: interchange and assessments from Visa, MasterCard and Discover and everything else.
You'll have to pay interchange fees and assessments to the card brands regardless of which provider is processing your credit card transactions. Almost all other costs are negotiable. Once you know what you're paying in interchange fees, you can accurately judge who is offering you the least expensive processing solution.
Process cards properly - pay less.
To make matters a bit more confusing, having the lowest rate or even the best pricing structure such as flat rate or interchange plus isn't enough the guarantee that you will pay the lowest merchant account rates. Reason being is that the underlying interchange fee that is applied to a credit card transaction is dependent on a number of variables, many of which you influence. For example, an e-commerce business that fails to properly obtain and process address verification information when processing orders will cause their transactions to downgrade to a higher interchange category. By properly processing transactions, this costly downgrade could be easily avoided.
A good deal of merchants overpay for credit card processing not because they have high rates or a poor pricing structure, but because they're not processing cards in a manner that guarantees their transactions will achieve the lowest interchange category as often as possible.
Optimal processing procedure is just as important as the rates, fees and pricing structure of your merchant account. If you've never had your processing procedure evaluated, it's time to call your merchant account provider to make sure that you're doing everything you can to ensure your transactions are qualifying to the lowest interchange category.
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