With ever-changing markups, ancillary fees, and lengthy contracts, it’s easy for processing to become more painful than a root canal! But the truth is, it doesn’t have to be. If you look out for the right things and ask the right questions, you can significantly decrease the cost of your merchant services.
The first and possibly most important question you need to ask is, “Do you charge any markups on top of interchange?” Interchange are the rates set by the credit card companies themselves. This means that no matter who your provider is, the cost is the same for every merchant across the board. Everyone has to pay it, making it the direct cost of processing.
Traditional merchant services providers charge a percentage markup on top of interchange for every transaction run. This means that the harder you work, the more money they make. Markups are so important for you to understand and question because this is where most providers take advantage of businesses. The right provider won’t even charge you a percentage markup, just interchange.
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The second question you need to ask is, “What equipment do I receive, and how much will it cost?” Merchant services providers will either lease the equipment to you or sell the equipment to you outright. You need to be wary of both, because either way they make a profit off of you. While leasing might look like a good option at first, you will inevitably end up paying the cost of the machine tenfold. If they are selling you the equipment outright, do your research to see what the true, direct cost of that equipment is. Merchant services providers will often try to sell it to you at a drastically increased price. Look for a provider who will sell you the equipment at cost or provide it to you for free as long as you process with them.
The third question you need to ask is “What ancillary fees will I be charged?” Ancillary fees are all the miscellaneous fees you are charged each month. Examples of ancillary fees are statement fees, batch fees, PCI compliance fees, and even customer service fees. These are almost always unnecessary and avoidable, so the more you see the more wary you should become.
The last question you need to ask is, “Do I have to sign a contract?” Many merchant service providers make you sign a contract that handcuffs you to them and their services. If a provider is honest and transparent, however, you will never have to sign a contract. Contracts allow providers to essentially change your rates and fees whenever they like, but you are powerless to leave them. Contracts often outline hefty cancellation fees and monthly minimums. If a merchant service provider is truly committed to you and your business, they won’t need a contract that forces you to stay with them.
While merchant services might seem overwhelming, there are some providers out there ushering merchant services into the 21st century. Odds are they’re the perfect fit for your business. Some subscription-based merchant services providers, for example, don’t charge markups, ancillary fees, equipment costs, or ask you to sign a contract.
By asking the above questions and doing your research, you’ll be able to find a provider that is transparent and cost effective, saving your practice headaches, time, and in some cases, up to 40% a month on your credit card processing bill!
