Hidden Fees for High volume Merchants
High-volume merchants have a great advantage towards startups and businesses that rarely process credit cards: merchant providers love them. In fact, as a high volume merchant you’re likely to get a 50% – 60% discount in your rates compared to a startup. Unfortunately that’s not because your purchasing power allows you to make a bunch of savings but much rather because most merchant providers overcharge startups and small businesses with super-high monthly fees.
Since your processing volume is high, per transaction fees are more important to you than monthly charges. That’s why you should be on the look-out for the two biggest profit-melting hidden fees out there:
Hidden Fee #3: Downgrades
Fact is, downgrades are impossible to be avoided if you want to accept credit cards. But it is within your influence to reduce them significantly. Michael, who commented on part 1 of this series, pointed out an important fact: there’s a lot of stuff involved with downgrades. Starting with your POS (the terminal you use daily to run credit card transactions if you’re in retail) over incorrect batch times to keying in a transaction vs. swiping the card; literally dozens of factors influence your downgrade activity. As a rule of thumb, if more than 20% of your charges are downgraded, you should get an expert to check into it.
A professional analysis should typically not cost you anything as a merchant, you can get one here; make sure that your merchant provider shares any and all findings with you regardless if you consider switching the provider or not. Working with a completely transparent provider is a very strong indicator for its excellence.
Hidden Fee #4: Interchange
The interchange is the single highest fee that any and all merchants are forced to pay to the credit card networks of Visa, Mastercard, American Express and the like. The interchange fees are non-negotiable and all merchants have to pay them. This fee, sometimes reaching even 3% of the sale, is a huge cost factor for any size of business. While there is no immediate remedy, organizations are fighting the banking lobbyist in Washington to get interchange fees lowered. To show your support, visit http://www.thecreditcardcon.com for more information.
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