Processing Brokerage Blog

WSJ Article is incorrect in regard to interchange fees

February 15th, 2010

Every couple of weeks, I like to browse the most recent payments industry articles that have been published online to see what people are saying. For the most part, I very rarely read anything that is not published by a reputable site. With that being said, I was shocked to read this weekend an article posted online by the Wall Street Journal (WSJ) titled “For Businesses That Accept Cards, Tips for Cutting Fees“. The following is how this article started:

“When it comes to credit-card fees, bigger companies have more clout with issuers than small ones. But there are ways to minimize costly processing fees, from negotiating to shopping around. Here are eight tips.” – At this point, I am very intrigued! The author is right, bigger companies will always have more clout but that doesn’t mean you can’t have a low rate.

“Negotiate processing fees – To negotiate the interchange rate, which is set by Visa and MasterCard accounts for about three-quarters of merchants’ card acceptance fees, business owners should contact Visa and MasterCard directly, says Trish Wexler, a spokeswoman for the Electronic Payments Coalition, a group representing banks and credit-card networks.” - This statement is incorrect and it is articles like these that confuse merchants on what they should do. Unfortunately, you cannot call Visa and MasterCard directly to negotiate interchange rate as this rate is un-negotiable. There are over 300 interchange rates and though you may not be able to negotiate for a better rate, there are steps that you can take to make sure you process at the most optimal rate. If you would like more information on if you are processing at an optimal rate, contact your processor or us at The Processing Brokerage and we would be more than happy to point you in the right direction.

Steve Williams – The Processing Brokerage

Tags: Credit Card Processing, Credit Card Processing Fees, Interchange Fees, Processing Brokerage
Posted in Industry News | No Comments »

Credit Card Processing for Non Profits – It’s Time to Check Your Rate

November 10th, 2009

We recently helped a Non Profit client who had not looked at their credit card processing rate since 1999. As it has now been a decade since their last reduction, they thought it was time to see if the market had changed and if they could reduce their fees. Needless to say, once we provided our analysis and showed them what they should be paying annually, they were shocked! The Processing Brokerage significantly reduced their fees and there are lessons that Non Profits, Associations, and Charities can learn from this case.

What happened to our client is very common for nonprofits as they are naturally focused on their cause and as long as they can accept credit cards, that is good enough for them. If you are a Non Profit reading this right now, this probably sounds very familiar: The last time you looked at your credit card processing was when you decided to take donations online or needed a new merchant account. Since that time, your organization has experienced great growth and success. With everyone being so busy, consistently meeting fundraising goals, and dealing with a scope that has probably broadened; who has the time to look at their credit card processing? Maybe that was you about a year ago and now with a changed economy, your organization needs to change as well. Either way, it behooves you to look into reducing your credit card processing fees further.

There are typically three options that you can take when attempting to reduce your credit card processing fees:

Read the rest of this entry »

Tags: Credit Card Processing, Credit Card Processing Fees, Nonprofit, Processing Brokerage
Posted in Nonprofit | 1 Comment »

WSJ – Interchange Fees Step Into the Spotlight

November 8th, 2009

According to the Wall Street Journal, U.S. banks raked in $45.3 billion last year from credit- and debit-card fees charged to merchants. About 75% of that comes from interchange fees set by Visa Inc. and MasterCard Inc. Overall merchant fees, including other revenue collected by banks and processing middlemen, are up 78% from $25.5 billion in 2003, according to the Nilson Report, a Carpinteria, Calif., newsletter that tracks the payments industry.

Merchants in the U.S. paid an average interchange rate of 1.82% per transaction last year, down from 1.93% in 2005, according to the Nilson Report, an industry’s argument that fees are falling. Please contact the Processing Brokerage for information on our interchange optimization program.

To read the rest of the article about credit card processing interchange fees, please click below:

http://online.wsj.com/article/SB125590252696692963.html

Tags: Credit Card Processing, Credit Card Processing Fees, Interchange Fees, Processing Brokerage, Small Business
Posted in Industry News | No Comments »

Yankees and Credit Card Processing Fees

November 5th, 2009

The Processing Brokerage wants to congratulate the New York Yankees for winning the World Series!!!

Tags: Credit Card Processing, Credit Card Processing Fees, New York Yankees, Processing Brokerage
Posted in Uncategorized | 3 Comments »

8 Ways – Small businesses can immediately lower credit card processing fees

November 2nd, 2009

Having to deal with your credit card processing fees to some is the most painful task a business owner has. Though it may seem painful, everyone knows that this is an area that provide significant savings immediately for a merchant. Here are some helpful tips that will get you on your way to reducing your credit card processing fees.

8 Ways Small Businesses Can Manage Credit Card Processing Fees

Read the Fine Print: This advice applies to every merchant but is specifically important for small businesses. Know the rate that you agreed to and educate yourself on the various credit card processing fees that you are being charged. Many times merchants will enter into an agreement thinking they will be receiving a low rate and then find out years later that they received a promotional rate that was quickly changed only months into the contract. If you find that this has happened to you, you might be owed a refund.

Look at Your Termination Clause: If your termination clause states that you have either a minimal fee to terminate or no fee at all, this it to your advantage. Shop your rate around and see if another processor will propose a larger reduction in your credit card processing fees. Read the rest of this entry »

Tags: Credit Card Processing, Credit Card Processing Fees, Processing Brokerage, Small Business
Posted in Uncategorized | 2 Comments »

Discussion on growing Interchange Fees

October 26th, 2009

Interchange is in the news again due to the House Committee on Financial Services hearing which discussed the components of the Expedited CARD Reform for Consumers Act of 2009. As many of you know, Interchange makes up a large part of your credit card processing fees and there is currently a discussion on BusinessWeek.com with different merchants who are sharing their stories on what they have done to reduce these fees.

Referenced Site:
http://www.businessweek.com/smallbiz/running_small_business/archives/2009/10/small_merchants.html

Thanks,

Steve Williams – The Processing Brokerage
www.processingbrokerage.com

Tags: Credit Card Processing, Credit Card Processing Fees, Interchange Fees, Processing Brokerage, Small Business
Posted in Industry News | 1 Comment »

7-Eleven Store Owners Have Had Enough…

October 7th, 2009

We are happy to see businesses start taking action against the high fees that they are paying for their credit card processing. Let’s take a look at one of the excerpts from the article posted below:

“We have two stores in California. 50% of our credit card processing fees is about $800 per month. The other store is almost a $1,000 a month. Our [interchange] fees are based on the total transaction, not on a merchandise purchase. If a customer bought a thirty-five cent pack of gum and received $30 cash back so that $30.35 was run on the card, I would pay the percentage of fees based on the money I gave back as well, not just on the merchandise that was sold. My store allows customers $40 or $50 cash back, and it has typically 50 of those in a day. I have to pay interchange fees on all of that.”

There are a couple points that all merchants should know in regard to this quote:

1.) If you allow cash back on your transactions, you are essentially paying their ATM fee for them through your interchange fees. Remember, your interchange fees will range from 1.4% to over 3.00%.

2.) All customers and their cards are equal – Remember, according to Visa rules and regulations, you cannot add your own convenience fee to a transaction just because they are using a credit card. You have to charge everyone the same. In this case, you are unable to charge a convenience fee just for a credit card purchase on cash back…you would have to charge everyone (even cash customers) the same convenience fee on all transactions. This is a very frustrating aspect as you are pretty much trapped into eating these exorbitant costs.

Referenced Article:

http://www.businessweek.com/smallbiz/running_small_business/archives/2009/10/7-eleven_store.html

Thanks,

Steve Williams – The Processing Brokerage
www.processingbrokerage.com

Tags: Credit Card Processing, Interchange Fees, Processing Brokerage, Small Business
Posted in Industry News | No Comments »

Does Software Limit Credit Card Processing Options?

September 23rd, 2009

We recently worked with a client who was told by their current credit card processor three years ago that the software used by the client could only accept credit cards through them.

Unfortunately in this case, what the processor told their merchant couldn’t be farther from the truth. After the Processing Brokerage called the software manufacturer it was discovered that several processors have always had the ability to process transactions through their software. Though there are cases of preferred vendor relationships between credit card processors and software providers, you shouldn’t always assume that your credit card processor is telling the truth. Read the rest of this entry »

Tags: Credit Card Processing, Merchant Account Services, Processing Brokerage
Posted in Credit Card Processing FAQ | 1 Comment »

Credit Card Processing Fees – Lowering Your Rate

February 28th, 2009

Credit card processing is just a part of doing business for small business owners. An area that businesses should research on are the credit card processing fees assessed by the processor. These fees are commonly known as a transaction fee or simply pricing.

The pricing a businesses pays will either be billed as a percentage based fee or a flat fee. The transaction fee can also be wrapped up in the discount rate that is also a percentage based fee that consists of all credit card processing fees. We recommend that if you are a company and are being charged a discount rate, it would be in your best interest to change your discount rate to a pass thru setup. When your business is setup at pass thru, it means everything charged is clearly visible and shown individually which allows the merchant a better ability for large reduction in credit card processing fees.

When analyzing your rate, please note that the rate most competitive for you, may not be the right choice for another merchant. Your transaction fee is determined by average ticket, processing volume, and how many transactions a business processes over a 12 month period. It’s important that a merchant shop around for the best rate. While looking for a lower rate, it’s important to read the fine print of the contract to make sure you are comparing apples to apples and are truly agreeing to the pricing agreed upon.

The Processing Brokerage will assist you through lowering your credit card processing fees. The Processing Brokerage is an independant expert in the payments industry who strives to empower the merchant through cost cutting solutions.

Tags: Credit Card Processing, Credit Card Processing Fees, Processing Brokerage, Small Business
Posted in Credit Card Processing FAQ | No Comments »