The Total Cost of Accepting Credit & Debit Cards For Your Business
My business partner at BPD Systems and I had decided from the start that we did not want to compete in the outbound, door-to-door, retail merchant account sales space. The return just isn't worth the cost of acquisition unless of course you can get the phone to ring and keep it ringing without spending a lot of money to make that happen. Then you have to hang onto those merchants knowing that every month they will get on the low end three calls or visits by competitors every month. But my friend wanted me to meet this merchant so I could at least leave them with a good understanding as to how they could evaluate the true cost of the merchant services from their new provider.
I explained to them that there are many factors involved in determining the final cost of processing transactions and that the only way to compare apples to apples among merchant service providers is to evaluate the total cost on a monthly basis as a percentage of total dollars processed from card payments.
So look at a recent statement and find the total amount deducted from your businesses checking account. This amount should include any "security compliance fees", terminal lease fees, statement fees and any other fee that the provider is charging the business. This is the real cost of processing cards for that time period. Now divide that amount by the total dollar volume processed for that same time period. If you find that the percentage is higher than 2.7% in a card-present environment, or 3.8% in a card-not-present environment then you're paying too much and you need to shop around.
Lastly, keep in mind that the industry is too competitive for your provider to be charging you other fees such as a high minimum monthly transaction volume fee, any cancellation fee or early termination fee, or any of a number of other fees. Talk to them to see if they will eliminate fees or re-price your business and still shop around to see if you can find a better deal.