Credit Card Merchant Services Fee Guidelines

If you are in our business, you are probably used to fielding questions about the lowest possible credit card merchant services fees available to businesses. I don't know about you, but my responses have no doubt disappointed many merchants, because I simply tell them that the question is not answerable. It is just not feasible that one can be arrived at. The issue is that, if you want to reach an answer, you will be required to wade through zillions of website pages of across all merchant account service providers in existence, provided you could get your hands on a list of their URLs. Then, even if you somehow managed to do that, you will immediately run into another issue, which is that many of the credit card merchant services vendors just won't list their processing rates online.

Watch out for 'Low Rate' Banners

So we have all stumbled upon incredibly low processing rates, prominently displayed in banners with contrasting colors within the headers of their websites. I have, for example, just recently seen one such banner promising rates "as low as 1.57%" for card-not-present transactions. That will have to be the lowest non-face-to-face rate I have come across. OK, but what does such a rate tell us? What kinds of payments does it apply to? Under what conditions? What kind of rates do all other transactions get?

There are many other questions whose answers you will need to know, before you can make a well-informed decision, one you can feel confident will ensure a real low-cost processing service. To get these answers, you will have to analyze the pricing schedule in its entirety. If you have not received a full proposal, make sure to get one from your processor.

Analyzing Pricing Proposals

This is the crucial pint so let's stop for a moment and analyze the information the above rate gives us. A 1.57 percent is only possible to apply to some of your debit card transactions, but is not at all possible to have your credit card payments processed at this rate. It is just that interchange fees prevent that, unless the processor wants to be losing money.

The issue is that debit payments typically make up a very tiny proportion of the average merchant's total card volume. That's the reason you absolutely need to find out the rate for credit cards. In our little example your credit card processing rate is probably going to be a little over 2 percent, although it is not completely improbable to be somewhat lower than that.

So you will need to make sure that your credit card processing acquirer gives you separate rates for credit and debit cards. That is the only way to ensure that you are not overcharged for any of your transactions.

Examine the Whole Proposal!

Now that you understand that the flashy advertising rate on your credit card services provider's website is but one of the factors that you should be taking into consideration when selecting a service provider, you should also have realized that there are a few other factors you should look at and you will have to take the trouble to understand them all. Otherwise you just can't be sure that the incredibly low headline rate is not made up for in some other way.