Credit card charges impact your bottom line. You know what your home interest rate is, but how much are you paying to accept credit cards?
Every month, your credit card processing company sends you a statement that summarizes the transactions and charges for your business during the previous month. Knowing how to read and understand the components of this statement is the first step toward taking ownership of your business’s transactions. Even more importantly, you’ll learn if you’re paying too much for payment processing and how to stop! The statement usually covers three kinds of charges:
Interchange Charges = Bank Fees
Interchange charges are fees paid to the banks that issued your customer’s credit cards and will probably make up 70-80% of your credit card processing costs every month. Rates will vary by bank and brand, but will be applied to every single transaction. These fees are actually charged to your payment processor and are usually included in the rate you pay your provider every month. Your provider doesn’t keep any of this money and has no control over how the rates are set. You can expect to see both percentage and flat transaction fees depending on the bank, type of transaction, and type of card.
Assessment Charges = Card Company Fees
Assessment charges are paid to the big credit card brands like Visa, MasterCard, American Express, and Discover, and are how these companies make money. Approximately 2-3% of your monthly charges will come from these fees, which are also fixed and not controlled by your payment processing vendor. Assessment fees are calculated several different ways, with some depending on the total volume you processed that month and others based on the type of transaction or authorization.
Markup Charges = Where Many Get Ripped Off
Markup charges are any fees above and beyond the fixed costs imposed by banks and credit card companies – they’re how your payment processing vendor makes their money. These fees may be assessed for processing costs, leased hardware or software, or the use of electronic payment gateways. These costs are controlled by your vendor, so take a good hard look at your statement and make sure your provider is giving you a great value. Your provider may base these costs on how many transactions you process, what kind of business you run, or how you process payments – make sure you ask your vendor how these charges will be calculated and see if there is room for negotiation!
Leasing Equipment = A Way to Hide Markup Charges
When you sign up with a new credit card processor, you’ll spend some time setting up your fancy new equipment. Ideally, your new processing partner will send a professional, experienced technician to handle the whole thing for you (psst – we do that). When your first monthly statement comes along, however, you might be surprised to see a recurring charge to lease your equipment from your processor – ouch! Many companies hide their markup charges by making you rent your equipment – but not 360 Payments. It’s a serious waste of money to lease your credit card machine. Take a look at your monthly statement and make sure you’re not paying for something you shouldn’t.
Is your credit card processor failing to make the grade?
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A good payment processing company will put you, its customer, first. You should expect and demand fair, transparent fees on your monthly statement, and make sure your vendor’s customer service department will be available and able to answer any questions you may have. This is where we excel at 360 Payments. We’re open, honest, and upfront about what you can expect from us, and we pride ourselves on our customer experience. Our friendly team is always on hand to help you understand your statement and make sure you’re completely satisfied.
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