Start controlling your fees by understanding your statement and what you’re really being charged.
Processing statements are often confusing and hard to understand. Look for these common deceptions that can increase your per-sale cost with no added value to you:
Non-specified card type – Many processors list Visa or MasterCard in the card type column — designating the card company — but not the card type. By not identifying the card type, many processors charge you more for lower-cost transactions. Debit cards, for example, usually cost less than credit card transactions. Without the identification of card type, it’s hard to ensure you are being charged less.
Not all card transactions are created equal – The card companies charge more than 250 interchange rates depending on the type of business, card and transaction. To make it even more confusing, many processors create their own categories like “qualified,” “non-qualified” and “mid-qualified” as a way to mark up the rate card companies charge without full disclosure.
“Total card fees” don’t represent the real total – Don’t rely only on the “total card fees” line item. If your statement lists this amount, you’ll have to do a little math to find out the total you’re really paying. Add the “less discount paid” (the fee you pay your processor) to the “total card fees” (the interchange you pay) to arrive at your real bottom-line.
“Discount rates” are misleading – “Discount rate” is an industry-accepted term for the fee your processor charges. However, many processors quote you a low in-the-door discount rate without disclosing that most of your transactions won’t qualify for it. Look at your statement carefully, and you’ll likely see many transactions charged at much higher rates.
Beware of bill-backs and other surcharges – Many processors hide arbitrary fees — often classified as “bill-backs” and “surcharges” — without disclosing them. They charge a low discount rate on all your transactions, then add extra surcharges to them. Some are billed the month the transaction occurs and others the following month making reconciling charges and figuring out your total monthly costs even more difficult.
Take note of additional fees – Additional fees may include per-transaction, batching, authorization, annual charges and more. Understand what they are and why you’re paying them. It’s possible some are just randomly included.
Address verification should lower costs – The Address Verification Service (AVS) compares a customer’s address with the billing address linked to the credit card. When you use AVS, transactions qualify for a lower rate because you’re reducing the risk of fraud. AVS Some processors don’t pass this savings on to you. In fact, some actually charge you more.
It pays to understand your statements. Understanding them can help you reduce hidden fees from your card processing costs … and reduce your out-of-pocket expense on every sale