“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

The first issue will be released in January to our permission-based list and we would like to extend you a pre-release invitation. Everyone who subscribes to the newsletter before the end of the year will receive a copy of our handy guide ”7 Tips for Interchange Optimization”. Consider the newsletter and our guide a gift that says thanks from The Processing Brokerage.

We hate spam as much as you do. That is why we want to be respectful to everyone and ask for your permission before we send our newsletter. The newsletter is free of charge and will be exclusively sent to only our permission-based list.

The “Non-Profit Fee Watch” will be focused on best practices and suppling timely information on the payments industry. If you decide not to take us up on this offer, The Processing Brokerage will remove you from our subscription list.

So click here and subscribe now, to the “Non-Profit Fee Watch” and gain the information you need to handle your credit card processing fees.

Happy New Years and to Your Success in 2010,

Allison Elliott – VP, Marketing & Communications

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:

1.) Approach your current processor and ask for a rate review. Every merchant is entitled to a rate review and is something you should do. If this is all you do, this turns into the “all the eggs in one basket” approach as you are relying on your current processor to treat your right.

2.) Request For Proposal. The advantages for running an RFP is that you get proposals from several credit card processors. This approach provides a better chance to achieving a lower rate. The disadvantages for running an RFP is that the process takes a considerable amount of time and its tough to get an apples to apples comparison.

3.) Processing Brokerage. We can negotiate on your behalf with your current processor, we can run an RFP for you that will achieve significant results, and ensure that you are receiving that absolute lowest for your credit card processing. Most Non Profits will qualify to use our Small Business Standard Service that will provide all of those services and more for $360. We are independent experts that work for you and your best interests. We have extensive experience working with nonprofits, reducing their processor fees, and optimizing their interchange fees.

The main thing to keep in mind is that your organization is probably due for a rate reduction. If done properly, your organization should realize several thousands of dollars in savings. The size of the reduction achieved depends on knowing what rate is competitive for you, the right processor, and signing a contract with terms that are fair to both parties.

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

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.

Perform an RFP: This is probably a no brainer for merchants looking to reduce theircredit card processing fees. The point we want to bring up is to look at various options for your business. Sprinkle in a couple local ISO options along with some top-tier processors. If the ISO’s provide better service and are comparable to price, this should probably be your first choice. However, you will be surprised how low a top-tier processor can go if pushed. Push them!

Dont Settle for Standard: Seeing the word “standard” on your credit card processing statement is not a good thing. This is called a downgrade and means that you are receiving a much higher rate than what you could be receiving. Ask your processing representative on what you can do to stop this from happening.

Apples to Apples: If you are going to perform an RFP to choose your next credit card processor, write the RFP specifically in a way that will create an apples to apples comparison. Detail in your RFP what type of format you are looking for and a timeline as to when all proposals should be received. We suggest you ask for a Interchange Plus type pricing as this is the easiest way to reduce your fees and compare between bids.

Use a Broker/Expert: This could be the easiest way to reduce your fees and will probably give you the best results. Use a credit card processing broker to obtain a low rate for you on the market. One thing to keep in mind, make sure to use a broker who is independent. The brokerage fee that you will pay is well worth the additional savings you will receive from someone working for you, not another processor.

Know Your Percentage: What is the easiest way to stay on top of your credit card processing fees. Take your monthly total credit card processing fees and divide by your credit card processing volume. Keep track of this percentage and look for trends and this will allow you to catch your processor secretly raising your rates. A quick rule of thumb, if you are a small business and you are 2.8% or above, its time for a new rate.

Every 2 Years: If you have gone over two years without looking at your credit card processing fees and if there is a better rate out there, you have gone too long. The standard rule applies, if you don’t ask you wont get it. This is why so many processors have retention departments, they will reduce your rate but you have to ask.

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

“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

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.

Why does this matter to you? Some credit card processing sales representatives will tell their merchants anything in regard to not only keeping them as a client but to also continue in charging an exorbitant rate. The following are some simple steps to follow in making sure this doesn’t happen to you:

1.) Make Contact – Pose as a new client and talk to their technical support about credit card processing options.

2.) Ask – Specifically ask what credit card processor’s can connect to their software. (the next steps assumes the answer is not what you are looking for).

2.) Large Processor/Acquirer – Tell the technical support that you are currently using First Data Merchant Services (FDMS) or Chase Paymentech (CP). FDMS and CP are two of the largest processors/acquirer’s in the industry and there is a good chance a software provider will not want to exclude such a large client base.

3.) Ask again – Specifically ask if they have anyone using either FDMS or CP through their software? Many times, the answer that comes back my surprise you. Though their could be some additional code that is needed, someone more than likely has already forged a path into the gateway of these two processors.

4.) Stability – Before getting too excited, ask if this option is stable for others to use.

Though their may be additional cost involved with programming, the potential savings due to a significantly reduced rate of credit card processing may be in your best interest.

Steve Williams – Processing Brokerage
www.processingbrokerage.com

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.