In previous posts we have gone over such important subjects as understanding what a merchant account does as well as the types of rate structures they often implement. This post will discuss the importance of understanding your merchant statement with your current processor.
Many times, merchants are promised a very low initial rate by whoever is setting them up with their merchant services. We covered this in our 'don't get tricked by a low quoted rate' post. As we said in that post, many companies will quote a low qualified rate and then include other higher rates or even throw in hidden fees to increase their margin of profit. This unsavory practice can be tough to catch at first if you don't know how to read your statement. We will show you how to do this and make sure you are getting a fair deal.
Step 1 - Compute Your Effective Rate
The first thing you want to do as a merchant is to figure out roughly what your overall effective rate is with your current processor. Here's how you do this:
- Add up all of your Visa and Mastercard fees.
- Divide that number by the amount of transactions you had.
- Multiply that number by 100
What this will do is show you roughly what your average cost per transaction is. We bet this effective rate is much higher than the initial rate you were quoted. This is because many companies add all sorts of extraneous fees such as support fees, monthly maintenance fees, etc that are often not mentioned when you are set up or written in such fine print on the contract that they are overlooked when you sign off. Then, when the first statement arrives, it is so hard to read that many merchants simply trust that they are being billed correctly. This is not done by accident. Empower yourself today and learn how to read your statement! With so much competition for your business, you will have the upper hand once you can show your processor why you are unhappy with what you are paying.
Step 2 - Learn How To Read Your Statement
Many merchant statements are very cryptic in how they show their charges. The key is to look for where you see rates displayed. Usually, these will look like 0.0172000. You want to see how many different types of numbers are listed on your statement and make sure they are consistent with the card types listed next to them. If these aren't consistent, a red flag should be raised and you should call your processor to find out why.
Many statements will only say one type of card type for each card. If this is so, there should be another row stating if it is 'qual', 'mid qual' or 'non qual'. Make sure these are all consistent. If you are not getting a lower rate for debit or offline debit transactions, call your processor and ask why. These cards come in at a much lower interchange rate and you should be getting some of these savings as well.
There should be a list of all transactions and the rate paid for each or at least combined by card type. When reviewing these, make sure to look out for something called 'bill backs' or surcharges. These are additional fees the processor may charge on top of the initial rate for a particular transaction and may even be added 2 months later. These can be a nightmare for accounting and should be avoided if at all possible.
Next, you want to find where it says 'total card fees' and notate the amount. Also, check and make sure there isn't a 'Less discount paid' amount. If there is, you need to add that to the prior amount to get your real total. This is a tricky tactic because most people would think 'less discount paid' means less fees paid when it is actually the opposite.
After that, you should have a section of other fees. These are typically where you will find your account maintenance or 'statement fee' which is pretty standard as well as any other added fees. You want to be very careful to look for anything like annual fees or leasing fees. Often times, merchants sign a contract thinking they are getting hardware for free when they are in fact obligated to lease it for a certain number of years or pay annual fees to use it. Also, your batching, AVS, authorization fees, etc should be located here.
Once you have run through all of this, you should have a better idea on how your processor is handling your account and what type of company they are based on how their statement is set up. The more transparent the billing, the better!
Step 3 - Take Action!
If you are not happy with what you have found on your statement as compared to what you were promised when you signed up with your current processor, there are ways to take action and lower your costs immediately. We can help you do that here at Trinity Merchant Services. We offer a service where we will review your statement with you at no cost and go over how we can save you money. Because we are a gateway company and merchant broker in one, we have the power to drastically cut your costs from your gateway and shopping cart needs to your merchant processing. First and foremost, however is customer satisfaction. PayJunction is one of the most customer friendly companies in the biz and has had amazing success because of this; just Google us and find out for yourself! We provide easy to read, transparent statements and very simple pricing options as well.
We have saved companies thousands of dollars due to hidden fees and rates. To learn more contact us today!
