Most merchants have had so much information “fed” to them about merchant services costs and how this company has the best “deal” or that one has the lowest rate– that they are in overload. There is a simple formula that will help you to know when your processor is taking advantage and charging too much. This article will go into detail so you will not be confused by a sales person or by your merchant services statement.
Hopefully you have read my previous articles concerning the merchant services cost sheet that is available to you. I will be pulling some information from that cost sheet so you can understand the process and be on guard. It is not uncommon for merchants merchant services agent program to be inundated with confusing information and “sales speak”.
There are many areas that can harbor hidden charges on your statement and might look perfectly logical to you. However, one area found to be commonly abused by processors is the debit transaction. The debit transaction rate, as shown on the Merchant Services Cost sheet, is much lower than the credit transaction rate. If your processor has given you a standard across – the – board rate, then you will find debit transaction rates to be out of line.
You will see an example of a line from a merchant services statement that will help guide us through the maze to help you decide if your rate and fees added are too much for your budget. Or if your statement could be hiding fees that might be added to boost the processor’s overall margin to cover that unusually low rate.
Debit Sales $898.34
Rate 1.77%
Total Due from merchant $15.89
Rate on Cost Sheet 1.03%
Actual Cost $9.25
So, as you can see, there is a 58% profit margin the processor is making on debit from this merchant. This could be indicative of more problems. The low across – the – board rate is not good for the merchant. Please check with your processor if you see this happening on your merchant services statement.
Buyer Beware
If you suspect something is wrong with your merchant services statement, please email me for a free more comprehensive analysis. I can analyze about 10 statements per month. Please visit my web site for the free merchant services cost sheet.
