Posted by Jeff Cohen on Thu, Aug 20, 2009 @ 11:39 AM
Below are a few of the key reasons why merchants overpay for credit card processing, and what business owners can do to address these problems:
1. Confusion about how fees are charged, resulting in costly downgrades
Problem - Credit card processing fees are confusing - transactions can fall into qualified, mid-qualified or non-qualified categories, and many businesses end up paying mid and non-qualified surcharges when they don't have to.
Solution - Contact your credit card processing representative to find out why your transactions are downgrading and what can be done to remedy the causes. If downgrades can't be lessened, consider switching to a new merchant account provider where transactions won't be downgraded as often.
2. Failure to read credit card processing statements
Problem - some businesses just don't read their merchant account statements, which is the main communications tool that many credit card processors use to inform merchants about rate increases and other vital information.
Solution - read your credit card processing statements every month, and pay special attention to the area where important updates (like rate increases) are listed.
3. Difficulty understanding credit card processing statements
Problem - processing statements are notoriously confusing, and to make matters worse, each processor has their own way of structuring their statements, which makes general tutorials on the subject impossible.
Solution - call your credit card processing rep and have them teach you how to read your statements - the time it takes to do this could save you a substantial amount of money.
4. Failure to regularly compare rates
Problem - Credit card processing rates can fluctuate over time. Changes can come directly from Visa and MasterCard or from individual processors, so failing to compare rates on a regular basis could leave you at an expensive competitive disadvantage.
Solution - Periodically test the market and get multiple merchant account quotes. If you're current rates don't compare favorably, it may be time for a money-saving switch.
5. Downgrades to due 'user-error'
Problem - credit card transactions downgrade because of things a person does or doesn't do when charging the card. Certain requirements must be met in order for a credit card transaction to fall into the lowest merchant account rate category, and failing to meet these qualifications may cause a higher rate to be charged.
Solution - learn about the different qualifying requirements for your credit card processor and your specific type of merchant account. The easiest way to do this is to call your credit card processing rep and have them walk you through it.
Courtesy of: MerchantCouncil.org