After being in the payments industry for almost ten years (time flies when you are having fun), I have seen and heard it all. The ups and downs. I’ve seen it from both the business owner’s and the payment acquiring side.
Through it all, one thing has never changed for me, and that is my why. My purpose. It simply has always been to help others. It has been to help business owners partner with a payments company they can trust and recommend to friends and family, as well an opportunity for payment professionals to help said businesses.
I strongly dislike (can I say hate?) seeing people get taken advantage of. This comes in all walks of life. It has happened to me so many times in business as well. Too many vendors have made promises that they simply could not come close to delivering on.
It is no different for credit card processing. Let me preface this by saying there are some REALLY GOOD payment processing companies in the industry. Unfortunately, there are many rogue sales reps that sometimes equally make up that same number. Their intentions are not aligned with the same long-term results of that business owner. Somewhere along the line, the information being presented to the prospective business just isn’t adding up.
I want to offer the following piece of invaluable advice that will help you, the business owner, make a good decision on the next credit card processing company you use.
And that is this.
Understand what Interchange is.
Interchange are the fees that make up the overwhelming majority of the credit card processing fees you, as a business owner, pay.
Unless you have a TERRIBLE rate, your credit card processing company is not bringing in major dollars from your merchant account. The card issuers are the companies that make this revenue from your account.
The majority of a merchant account’s fees are from Interchange.
So what is Interchange or Interchange Fees?
Think of it this way. Interchange is the bottom level, hard cost of credit card processing. Your neighbor cannot negotiate a lower Interchange rate than you. Your friend at the chamber who’s sister works at the bank, cannot receive credit card processing rates less than the Interchange fees due to their relationship. They are set, published rates that everyone has access to on Visa and MasterCard’s websites. Interchange is made up of a percentage and an associated transaction fee.
There are rogue sales representatives and telemarketers that mislead business owners every day in the payments industry unfortunately. It is important to know that no matter what you are told or read, many of the promotional gimmicks are just not true. You can’t accept payments for no cost and chances are very likely only a small percentage of your processing fees can be reduced by any company.
If you have less than fair pricing, you should expect to see somewhere close to a 25% savings. If you are hearing numbers much higher than that, please do your due diligence. Do the math. Find reviews online for the company. If the sales representative is local, ask to speak with some of his or her customers. Get the phone number for the business of these referrals and call them directly. Don’t rely on the phone number provided (again I am a skeptic and so are most of you, since the credit card processing industry is not heavily regulated in terms of sales and marketing).
Your biggest takeaway should be knowing the majority of your credit card processing fees cannot be reduced by anyone. Don’t get me wrong, you should want to reduce the rest of your credit card processing fees as much as possible. However, partnering with a company or an agent whom you can trust should be the main priority when it comes to accepting payments. With the many changes in technology and regulations, you will want to make sure you have someone knowledgeable to proactively consult you in your business’ best interests.