Why You Should Let Me Help You Get A Merchant Account
Credit card processing companies seem, to most business owners, as all being alike. They all claim to be able to help you accept credit cards and provide 24/7 telephone support with the lowest processing fees. At least, that’s what it seems like.
However, just as there are different credit card processing companies, there are differences in quality they can provide your business. One idea to keep in mind is, the ability to accept credit cards is a benefit your business. It allows your customers an opportunity to afford buying from you. Customers can self-finance purchases. Having a credit card processing service provides your business with non-cash payment alternatives. And in today’s world, safety is what is driving people not to carry cash.
Consider this if you sell high priced items. Being able to accept credit cards or debit cards allows your business to avoid establishing a credit department. You don’t have to handle financing or issue lines of credit. Therefore, there is going to be a cost associated with accepting non-cash payments. However, you won’t need to create a credit department and pay those costs. Instead, by getting a merchant account, a processing company will handle credit sales for you at an extremely lower price.
I stress this point because people seem to have forgotten the importance of why businesses accept credit cards. People forget that shopping for credit card processing services should not be handled like shopping for a hamburger. Of course, I realize because we live in a fast-food driven society, business owners can get into the habit of shopping for credit card processing services based on low prices and the speed of getting the merchant account set up.
For example, the #1 question I get is “What are your rates?” After I give people the discount rate, along with the monthly minimums, statement fees, authorization and batch rates people usually respond by saying, “Well, I just got some other quote and your rate is very high, or someone else doesn’t charge statement fees or authorization fees.” At that point I really feel like rolling my eyes and sighing, but I can’t. No matter how annoying this response gets, I have to keep focused on that fact that these business owners, are untrained on the true costs of credit card processing.
Most people don’t know where to get the industry rates for accepting credit cards. Therefore, they don’t know how to spot false advertisements or realize they’ve been told lies. What really gets my goat is that processing companies are not allowed to advertise false rates. For example, some companies advertise .25% as a rate. That is an absolute misrepresentation and a bogus rate.
To fight this type of credit card processing ignorance and false advertising, I have to use hard evidence. Therefore, to prove to some business owners that they’ve been misinformed, I refer them to the Mastercard Interchange Rate Guide and the Visa Interchange Rate Sheet. You can view them and download yourself by clicking on the links. As you will see, there is no rate at or below .25%.
These documents are the Interchange Rates charged to MSPs (Merchant Service Providers) and Acquiring Banks. These are the fees that credit card processing companies must pay to the bank networks. This is similar to banks paying the Prime Rate to the Federal Reserve for borrowing money. There are no freebies from Mastercard, Visa or any credit card company. Everyone has to pay these fees. They are essentially the bottom wholesale rates. So, when someone says they don’t have to pay these fees according to some rep, they have been duped. Processing companies have to cover their costs and they will make it up elsewhere by increasing something to make up the price difference they lose elsewhere.
These rate sheets clearly show what credit card processing companies pay for processing credit cards. Now, these fees have to be passed on to merchants, you the business owner, at a slightly higher rate in order to make a profit. These fees are then called Discount Rates and are fees that must be charged to cover the Interchange Rates charged by Mastercard or Visa. They have to make a profit in order to stay in business. Using the rate sheets, if you are able to make a general sense of all the figures, you will see that there are in fact monthly minimums, authorization fees, batch fees, bank network fees, costs associated with processing credit cards. There is no .25% rate for Visa, Mastercard, Discover or American Express.
So, when any company tries to make you believe that your not going to be charged fees, or pay some crazy low-ball rate watch out! Because, what’s going to happen is the fees they claim you won’t be charged, will be billed to you…but actually built into other less obvious fees. I caution you because, from experience, 9 times out of 10, companies that offer things for free tend to overcharge for services. I don’t care how loyal you are to your bank or your processing company, if your money is important to you, don’t fall for these free or dirt cheap offers. Be willing to accept upfront, but fair, charges.
So What Choice Should You Make? Who Should You Work With?
Deciding who you should pick to help you manage your credit card processing service really needs to narrowed down to your consultant. Who is the person, the face or voice, that you can rely on and call on to help you negotiate your merchant account fees? That person is your Agent.
Who can you call on the weekend or holiday, evening or otherwise to get advice, not only on credit cards, debit cards or check acceptance, but also on simply how to increase your business sales? That person is an experienced Agent. Sometimes, unfortunately, picking your employees son in law who happens to work in merchant services isn’t the best choice. It’s going to come down to experience, dependability, accessibility and performance history.
Therefore, if you’re one of the business owners who knows that all those so called “Lowest Merchant Rate” and “Acquirer of the Year,” or “Free Credit Card Machine” offers are really just hype, perhaps your someone who needs to be talking to a straight forward consultant. Someone who’s going to give you advice, even if it’s not the news you want to hear.
If this is the type of advisor you want on your side. You might be the kind of business owner I want to work with as well.
If you need help saving more money while accepting credit cards, give me a call. To learn more about how to buy a credit card machines or open a merchant account correctly contact me at.