Stop Losing Money To A High Priced Merchant Account

[bholus10]

If you own a business and accept credit cards you are probably paying a lot more than you should for your merchant account. You're probably overpaying without knowing that you are or really even caring that much. But when you find out by how much you're overpaying, you'll be much more likely to switch to a new merchant account.

The discount rate is the rate that banks charge each other to process transactions and is used to manage the risk associated with transactions as well.

There are three different discount rates, there's the qualified discount rate, the mid-qualified discount rate and the non-qualified rates. These rates vary depending on the type of credit card and some other components of the transaction.

You have a discount rate that represents a percentage of your overall volume, but you'll also have a per transaction fee which is a flat fee charged on all transactions.

This fee is charged to cover the cost of sending those transactions electronically. This is a revenue center for both the banks as well as the merchant account companies but should still be something you're aware of as a business owner.

For you merchants who are processing smaller ticket items, the per transaction fee usually represents a larger percentage of the overall transaction amount. Keeping this per transaction low is even more important that your discount rate if you have a low average per transaction.

Merchants processing high tickets, the discount rate will usually always overshadow the per transaction fee simply because a $.25 per transaction fee for a $5,000 product is extremely small where a higher discount rate of say .

5% higher on that $5,000 transaction represents an increase of $25. So if you process the higher ticket items, you need to negotiate as low as you can the discount rate even if you pay a higher per transaction fee.

Switching merchant accounts is not difficult and should come with an option to make sure that you can back out if the new contract doesn't lower your overall effective rate.

The point of switching your merchant account is to lower your rate and get better services. Find a provider that has a good rates, can lower your rates and has exceptional service.

Some small business owners are hesitant to switch to a new account simply because they have an early termination fee hanging over their head from their current processor. You can look for merchant service providers that can help you by offering a reimbursement or voucher that will pay you back for any termination fee that you incur.

Getting new equipment can also be a benefit of switching your merchant account. Competition for new merchant accounts is fierce so some of the incentives that processing companies are offering include new equipment. So, if your equipment is older or if you just want new equipment, make sure to ask about that and make that a part of your switching strategy.

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