The ability to accept electronic payments, especially credit and debit cards, is essential for most contemporary businesses. These payments are convenient and secure, and allow both the company and customer to keep instant track of financing through online maintenance. They also cost the business owner. While they are almost always worth it, many businesses may wonder if they are paying too much for merchant services.
Merchant services provide the means to transmit financial data from the customer’s bank to merchant bank; they may also provide the necessary point of sale equipment. They charge various fees in exchange for these services.
The fees assessed by merchant service providers can vary widely from business to business, even amongst direct competitors. It is a good idea to review your statements to determine whether or not you are being overcharged. You can make a fairly quick assessment by asking yourself a few questions.
How to Know If Your Credit Card Fees Are Too High
1. Were You Signed Under an Introductory Rate?
Low introductory rates for many merchant services providers can be quite attractive. You can try a merchant services provider at a low rate for a certain period of time, after which you will be locked into a contract at a much higher rate. You might be told you can cancel any time before the contract date kicks in. So what is the risk?
The trouble is that most business owners are busy. While these offers may be genuine, the model is counting on individuals to forget to cancel their service before the contract kicks in. It is not dissimilar from certain internet service providers or online streaming services offering you a “free trial.”
If you were initially signed to a low introductory rate offer and continued your plan through that provider, you will want to review your statement with a licensed broker to ensure your fees are competitive for your type of business.
2. Are You PCI Compliant?
The Payment Card Industry (PCI) requires that businesses using merchant services remain compliant with certain standards of security. If a business is found non-compliant, they are charged a monthly fee until compliance is achieved.
Your credit card processor should work with you to help you become PCI compliant to eliminate these fees. If months have gone by and you have received no assistance in this matter, it is time to look for a new provider.
3. Do You Own Your Payment Terminal?
Many merchant services providers offer the option to lease a payment terminal. Payment terminals are electronic devices that allow a customer to swipe, insert, or tap a credit card and enter secure information, like a PIN.
Depending on your business needs, you may wind up spending thousands of dollars just on your terminals. It can, therefore, be tempting to lease your devices to save on a monthly basis.
Keep in mind, however, that you will be paying interest rates on rented devices. The final amount you pay will be significantly higher than if you’d bought your terminals outright. If you can afford it, pay up front for your terminal devices.
4. Do You Qualify for Lower Rates?
If you are generally pleased with your merchant services provider but are unsure if your fees are competitive, ask what you can do to qualify for a lower rate for certain types of transactions. Card-Not-Present transactions, for example, are often subject to a higher processing fee due to increased risk of fraud. Providing additional details for each of these kinds of payments, such as customer address, is often enough to qualify for a reduced rate.
Get Help Reviewing Merchant Services Rates
As part of its services, Summit Payments will perform a thorough review of your merchant services statements. We will look for any discrepancies, compare competitor rates, and look for common instances where businesses are overcharged. We will also advise you on steps to becoming PCI compliant and enhancing overall cybersecurity. Call our office to schedule your consultation and start saving today.