Are You Overpaying For Processing?

Being in the payment solutions business, I’ve discovered a phenomenon that just plain shocks me. For most business professionals, they are very careful with their spending - thrifty to the point of annoyance many times in order to find the best solutions that allow them to make the most money for themselves. That is, seemingly, with the exception of their credit card processing.

I know what you’re saying. “Wait a minute! I know I got a good rate from the last guy.” We hear that, literally, every time we talk to a customer. And yet, when we crunch the numbers for businesses that will give us a chance, we find that 99 out of every 100 customers are overpaying for their credit card processing...by a LOT! Multiple consumer reports over the last year report that 7 out of 10 businesses overpay for their credit card processing.

So, how do you fix this? I’d be lying if I said that I don’t want you to fix this by coming to INTEGRAL Merchants Group and allowing us to fix this for you, but there are some practical solutions that can help you regardless of if you work with us or not. Here’s a couple that should make sense to you.

1. Know your “true” rate. So many businesses tell us that we have to be a “rate” of 1.XX%. Almost every time a customer says that, we can do very simple math to prove that the businesses don’t pay anywhere close to that. Take the amount that you paid out to the credit card company on your statement and divide it by the amount of volume you processed. That’ll be much closer to your “true” rate. When a credit card company offers you some ridiculous rate, they are always talking about some starter rate for a credit card type that will, almost certainly, be processed a minimum amount of time. It also doesn’t count the cost per transaction, the cost per batch out every night, or the associated monthly fees with your account.

2. Know your “plan”. With every customer that tells me they have a great rate, my first question is always, “are you on a tiered plan or an interchange cost plus?” Most of the time, they don’t know. This is a core flaw for a business to be uninformed. This would be akin to buying a house or a car without knowing the terms of the purchase. In short, you would have no idea how the fees are accrued. Let’s face it, if you don’t know how the fees are accrued in your credit card processing, how can you know what your “rate” is likely to be?

3. Trust your representative. It’s startling to me how many people we talk to that tell us that their previous representative was underhanded and completely untrustworthy. I can’t speak for everyone, but when I don’t trust a salesperson, they just don’t get my business...no matter how much I need the item I’m purchasing. Most times, your gut will tell you immediately if the person you are dealing with is trustworthy. If so, move forward. If not, then it’s probably not the best idea for you to start a business arrangement with that person.

Credit Card Processing is a necessary evil of doing business today. As a payment solutions company, we understand that. We also understand that we have to fight against the unscrupulous dealings you may have experienced in the past with less ethical sales people. Before signing with ANY processor though, it’s up to you as the business owner to understand what you are signing up for with your processing. In short, if you understand the process and know the basic questions to ask, you are much less likely to be one of those 7 out of 10 that overpays.

By Chris Akin
Partner, INTEGRAL Merchants Group