The Importance of Solid Statement Analysis in Winning Merchants

Merchant service accounts are often sold to retailers and restaurant owners based almost solely on price as merchant service providers race to the bottom in order to capture the lowest price possible. But high-risk merchants find they’re often paying much higher prices in order to make up for these other low-profit merchants. And a quick statement analysis would show them the problem.

A recent article in The Green Sheet trade magazine by Dee and Emily Karawadra discussed some of the different fees that merchant service providers may mark up and pass on to their customers. When you look at your statements, pay close attention to the different fees you’re being charged. Since high-risk merchants are already paying higher rates than traditional merchants, there may be a few places you can find some savings.

A credit card payment machine. A statement analysis would tell you if you're paying too much for these services. First, if you’re on a pass-through-plus pricing plan, look at the Network Access and Brand Usage (NABU) fee. MasterCard set this fee at $.0195 per transaction in 2018, but this is a favorite markup target. The Green Sheet said they have seen the fee get as high $.06 per transaction, if not more.

There are also times some merchant service providers pad the interchange fees to their customers., anywhere from .05 basis points to as much as 90 basis points. That can be an additional $90 for every $10,000 in sales volume on top of the interchange fee you’re already paying,

Are you PCI DSS compliant? If you’re not, you could be hit with some hefty fees, as much as $125 per month. The Payment Card Industry Data Security Standard is a set of rules that requires merchants to ensure their credit card systems are secure, and that they fill out a self-assessment questionnaire (SAQ) on a regular basis. The SAW may have to be filled out every six months or even every 60 days. But if you fail to fill out the form when it’s required, you can get hit with this fee just for failing to fill out this little form. Put it on your calendar and fill it out a week before it’s due to avoid being hit with this one.

Look out for PIN debit fees. Some credit card processors are trying to move sales traffic from credit cards over to debit cards by prompting shoppers to enter their PIN at the cash register. That’s because debit cards with PINs have a lower risk than credit cards

The goal is to reduce the processing costs by switching more people to debit cards. It’s great for merchants because lowering the number of credit card transactions can reduce the risk of chargebacks, which means the interchange rate is typically lower. But the debit interchange is being marked up just like the credit card interchange. The authors have seen anywhere from .10% to 1.75% padding.

Finally, something not in the article: Look for other miscellaneous fees. These are the other fees that are just a part of doing business; merchant service providers will often require these of their merchants. Not because they’re being sneaky or dishonest, but because these are fees they need to operate. They’re like miscellaneous fees on your cable or cell phone bill.

You will likely see entries equipment rental, batch fees, hosting fees, Address Verification System, and so on.

These may be monthly or one-time fees, but you should know how much they will cost you in advance. Compare past monthly statements to your latest one and see if there have been any increases. If there are, ask your merchant service provider about it and see if they can return you to the previous level or provide you with some other services.

Accepting credit cards at your business can be a bit confusing, so it’s important to work with a merchant service provider who can help you understand the fees and won’t try to slip in hidden increases or needlessly pad your standard fees.

CorePay can help you understand your fees and help you find ways to keep them low. To learn more, just visit our website or call us at (800) 408-0095.

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