After being in the payments industry for almost ten years (time flies when you are having fun), I have seen and heard it all. The ups and downs. I’ve seen it from both the business owner and the payment acquiring side.
Through it all, one thing has never changed for me, and that is my why. My purpose. It simply has always been to help others. It has been to help business owners partner with a payments company they can trust and recommend to friends and family and an opportunity for payment professionals to help said businesses.
I strongly dislike (can I say hate?) seeing people get taken advantage of. This comes in all walks of life. It has happened to me so many times in business as well. Too many vendors have made promises that they could not come close to delivering on.
It is no different for credit card processing. Let me preface this by saying there are some REALLY GOOD payment processing companies in the industry. Unfortunately, there are many rogue sales reps that sometimes equally make up that same number. Their intentions are not aligned with the same long-term results of that business owner. Somewhere along the line, the information being presented to the prospective business just isn’t adding up.
I want to offer the following piece of invaluable advice that will help you, the business owner, make a good decision on the next credit card processing company you use.
And that is this.
Understand what Interchange is.
Interchange is the fees that make up the overwhelming majority of the credit card processing fees you, as a business owner, pay.
Unless you have a TERRIBLE rate, your credit card processing company is not bringing in major dollars from your merchant account. The card issuers are the companies that make this revenue from your account.
The majority of a merchant account’s fees are from Interchange.
So what are Interchange or Interchange Fees?
Think of it this way. Interchange is the bottom level, hard cost of credit card processing. Your neighbor cannot negotiate a lower Interchange rate than you. Your friend at the chamber whose sister works at the bank cannot receive credit card processing rates less than the Interchange fees due to their relationship. They are set, published rates that everyone has access to on Visa and MasterCard’s websites. Interchange is made up of a percentage and an associated transaction fee.
Unfortunately, some rogue sales representatives and telemarketers mislead business owners every day in the payments industry. It is important to know that many promotional gimmicks are just not true, no matter what you are told or read. You can’t accept payments for no cost, and chances are very likely only a small percentage of your processing fees can be reduced by any company.
If you have less than fair pricing, you should expect to see somewhere close to a 25% savings. If you hear numbers much higher than that, please do your due diligence. Do the math. Find reviews online for the company. If the sales representative is local, ask to speak with some of his or her customers. Get the phone number for the business of these referrals and call them directly. Please don’t rely on the phone number provided (again, I am a skeptic, and so are most of you, since the credit card processing industry is not heavily regulated in sales and marketing).
Your biggest takeaway should know no one can reduce the majority of your credit card processing fees. Don’t get me wrong; you should want to reduce the rest of your credit card processing fees as much as possible. However, partnering with a company or an agent you can trust should be the main priority for accepting payments. With the many changes in technology and regulations, you will want to make sure you have someone knowledgeable to consult you in your business’ best interests proactively.