Cheapest Credit Card Processing

The cheapest credit card processing can be found by dealing with a reputable sales agent that will look at your current processing statement and clearly set forth pricing that will save your business money. The best way to start is by comparing your current monthly “effective rate” to the rate a merchant sales agent is offering you.  The effective rate can be found by dividing your total processing costs by your total credit card charges in a given month.   Example:  $895 in processing charges divided by $27,000 in credit card processing sales equals an effective rate of 3.3% which is typically a high rate. You can use the form on the right or contact me directly for pricing to lower your rate. A yearly review is always a good idea, because many processors will raise your rates unless otherwise expressly agreed.

Always check the amount deducted from your bank account against what your statement says was deducted for processing fees; some processors use a statement format that can be misleading.

Although the processing costs and credit card charges should be clearly set forth on the front page of your monthly credit card processing statement, some agents and processing companies choose to make it complicated.  They can actually select a format for the monthly statement that is very difficult to understand, even if you are an accountant. Also, I have seen some statements that I actually felt were misleading because what the statement showed as the processing costs for the month was not the same as the amount the processor deducted from the merchants bank account that month. 

Another way to get the cheapest credit card processing is to make sure you are not paying unreasonably high monthly fees. There are several categories of monthly fees that include monthly statement fee, debit enablement fee, next day funding fee, PCI compliance fee, PCI non-compliance fee and monthly service fee. 

Use "Interchange Plus" Pricing to get the Cheapest Credit Card Processing Rates

Business owners usually pay for credit card processing based on what is known as “Interchange Plus” pricing.  Interchange plus pricing has three components which are basis points (1 basis point equals .0001) times the amount of the credit card charge, an authorization fee for putting the amount through and a transaction fee. I do not charge a transaction fee while many sales agents do and may not fully explain that to the merchant.

On occasion, I have had some sales agents claim to match my pricing on the number of basis points and the authorization fee, but then charge and additional $.05 to $.10 per transaction. In order to get the cheapest credit card processing rates, you have to understand how the sales agent will price your business with an authorization fee, transaction fee and number of basis points above interchange.

Interchange is a small fee paid by a merchant's bank to a cardholder's bank to pay the cardholder’s bank for the value and benefits that merchants receive when they accept credit card payments. Believe it or not, there are over 200 different interchange rates set by the payment networks (ie., MasterCard and Visa). The reason why there are so many different Interchange rates is because there are so many different types of cards issued by banks that range from rewards cards, travel cards, corporate cards and government issued cards.  The Interchange rates range from a high of about 2.95% and $.10 per transaction for certain business credit cards to a low of about 0.05% and $.21 per transaction for PIN Regulated POS Debit cards.   

It doesn’t matter who you choose as a processor when it comes to Interchange because all businesses pay the same Interchange rates set by the payment networks. The only exception being non-profits, which the card brands give lower rates to as a benefit. So be wary of sales agents that say they have the cheapest credit card processing rates because their Interchange rates are lower. Interchange rates are set in stone by the payment networks, not the processors. Although we provide our services across the United States, our East Coast office in Connecticut has helped many businesses large and small with Stamford credit card processing solutions.

Mercury Payment Systems found out the hard way when they were sued misleading merchant customers by deceptively hiding excess profits in the interchange fees charged by credit card networks and their issuing banks, in violation of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), and related laws of the State of California. It is hard to get the cheapest credit card processing proposal from a credit card processor that manipulates the Interchange rates on your monthly statement.

Comparison is one of the easiest ways to get the cheapest credit card processing for your business. It is also easier to get lower rates the larger your business is because the agent can afford to give you a lower rate based on the large amount of processing.

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