My mother used to tell me all the time, if it looks “too good to be true” than it probably is. This advice is applicable to all walks of life and especially pertinent to Merchant Service Providers. We all have the inner critic that screams inside us when we know we see something good, so good that it can’t be real….We want to believe the deal, we want good pricing at affordable realistic costs but that’s the key…it must be realistic. One has to educate themselves with regards to basic service costs in order to properly determine what is a good deal, and what is a too good to be true deal!
Understand The “Basics” Of Credit Card Processing
The most important aspect of any Merchant Service Provider’s contract that one must understand is that Visa and Master card make their money first. There are real minimum’s that they have to meet in order to be able to afford to process for customers and merchants. These minimums are known in the industry as Interchange.
No merchant provider can go below interchange and if they do, they are making up the monies elsewhere in their service contract. And this is where it becomes dangerously costly for the merchant. A good solid rate should lie (today) anywhere between 1.90 and 2+ percent. Interchange is always changing, subject to change without notice and for ever flexing to incorporate different types of cards customer’s use. To see a low rate as 1.30% (which is out there) simply means that the Provider is going below interchange to snag customers, and making it up in additional fee’s and costs that will end up costing the merchant much more than they would have paid accepting a modest and truthful rate.
Don’t Get Caught in the “Lost Litre” Marketing Scam
A basic rule of thumb to avoid getting stuck paying much higher qualifying fee’s, is to know that if it’s too low, it’s not a real rate. It is what sales refer to as a “lost litre”. The merchant services provider will lead customers in with low qualified rates and double or triple what should be the Non Qualified because they can, when merchants don’t know any better, they will be fished in with the lost leader. So on this note, be sure to scrutinize those too good to be true rates against a company who offers a flat rate for all transactions.
Just as Visa and Master Card cover their expenses in their price, so do the companies offering Merchant Services. Every business has to pay the basics in order to be able to operate. One needs to pay rent, heat, employee’s ect, to obtain enough profit to run a business, you will see additional fee’s on contracts. These fees just further prove that the company is valid. When there is no fee for service, you probably won’t get any. This is a realistic assumption. Allot of companies now a days are operating only online, therefore cutting any over head expenses…..expenses like customer service, real time assistance, detailed billing and warranties on their equipment. Just like Visa and Master Card, there will be fees implemented to the merchant to ensure the provider is able to stay in business as well.
Getting Low Merchant Discount Rates Is All in The Education
Like any shopping situation, bargaining has to be the result of a well educated rebuttal, companies cannot process for free, just like Visa and Master Card will not. So when you are looking for services, or to re-vamp your current pricing, be sure to educate yourself on real costs, from real business’ so that you can tell from a mile away going forward, what kind of offers are just too good to be true.
