In today’s fast-paced business environment, the speed at which merchants receive their funds after processing transactions can significantly impact their cash flow and overall financial health. Funding speed, or the time it takes for a merchant to receive funds from credit card transactions, is a critical factor for businesses of all sizes. In this article we will look at the intricacies of funding speeds for merchant accounts, highlighting their importance and offering insights into how businesses can optimize this process.

What Are Funding Speeds?

Funding speeds refer to the time it takes for a merchant to receive funds from their payment processor after a transaction is completed. This period can vary widely depending on several factors, including the type of payment processor, the merchant’s bank, and the specific terms of the merchant account agreement. Typically, funding speeds range from the same day to several business days.

Factors Influencing Funding Speeds

1. Payment Processor: Different payment processors offer varying funding speeds. Some processors provide next-day funding, while others may take two to three business days. It’s essential to choose a processor that aligns with your business’s cash flow needs.
2. Merchant Account Type: The type of merchant account you have can also affect funding speeds. High-risk merchant accounts, for example, may experience longer funding times due to the increased risk associated with their transactions.
3. Banking Relationships: The relationship between your payment processor and your bank can influence funding speeds.
4. Transaction Volume and History: Merchants with a high volume of transactions and a solid transaction history may benefit from faster funding speeds as they are perceived as lower risk by payment processors.
5. Cut-off Times: Payment processors have cut-off times for processing transactions. Transactions processed after the cut-off time may be funded the next business day.

The Impact of Funding Speeds on Businesses

Funding speeds can have a significant impact on a business’s operations. Faster funding speeds mean quicker access to cash, which can be crucial for managing daily expenses, purchasing inventory, and investing in growth opportunities. Conversely, slower funding speeds can lead to cash flow challenges, making it difficult to meet financial obligations and potentially hindering business growth.

How to Improve Funding Speeds

1. Choose the Right Payment Processor: Selecting a payment processor that offers fast funding speeds is crucial. Look for a processor who can provide you with the funding time-frame that works best for your business.
2. Negotiate Terms: Work with your payment processor to negotiate terms that favor faster funding. This may include adjusting cut-off times or exploring different merchant account options.
3. Maintain a Good Transaction History: Consistently processing transactions without issues can help build a positive relationship with your payment processor, potentially leading to faster funding speeds.
4. Optimize Your Banking Relationships: Strengthen your relationship with your bank to ensure smooth and quick transfers of funds from your payment processor.

Conclusion

Funding speeds for merchant accounts play a vital role in the financial health of a business. By understanding the factors that influence funding speeds and taking proactive steps to optimize this process, businesses can ensure quicker access to their funds, thereby improving cash flow and supporting growth.

If you’re looking to improve your funding speeds and streamline your payment processing, contact us today. Our team of experts are dedicated to helping businesses like yours receive their funds faster, ensuring you have the cash flow needed to thrive in today’s competitive market. Let us help you take control of your financial future and achieve your business goals.

Have outstanding invoices? Let’s look at a solution.

Invoicing is a core component for most businesses to capture revenue from sales. Managing outstanding invoices and collecting those invoices can be a difficult, labor-intensive process that is not always the best experience for the end customer.

Online systems have streamlined and automated much of the collection process, giving customers quick access to check their outstanding invoices and make payments online. These days, with text message advertising averaging a 45% response rate compared to the 2% response rate of email, imagine how much more effective your invoices would be if sent by SMS text. SMS invoices see a near 80% open rate within the first hour for most of our customers.

Is it easy to set up?

From a simple payments page that you can link to on your existing invoices, to fully detailed invoices generated by your existing accounting software with integrated payments and everything in between, if you invoice, then there is an option that is right for your business.

We set up the entire system for you, then it’s just a few minutes on your end to tie everything into your business. Really, in about 5 minutes, you will be able to send invoices via SMS or email with integrated payment options.

Then it’s got to cost something.

For most businesses, it costs $5 to $10 per month in addition to your existing payment cost, and in most cases, we can save merchants far more on their existing processing services to more than offset that additional cost. From there, it’s just pennies per invoice.

What’s the customer experience like?

Your customers will appreciate the ease and convenience of being able to see outstanding invoices in one place, without needing another account to log in to. Simply click the link in the text message or email, and go straight to their most recent invoice.

You are also able to customize a lot about how the invoices are delivered, what they look like, and even add customer messages and information.

This also allows you to offer alternative forms of payment like online check drafting for those customers who prefer payments by ACH.

Let’s talk about what you would want out of an invoicing system, and we can put a package together for you today. Call us today at 866-937-7991.

It is not necessarily against the rules to offset processing costs. However, it must be done in a manner that aligns with local laws and the rules set by card brands. In this discussion, we will take a deeper dive into the rules to follow to ensure compliance with card brand rules.

What is Allowed?

Cash Discounting:

Merchants are allowed to offer a discount to customers paying cash. That said, the posted price on goods and services must represent the regular price or the card price. Merchants may then offer a discount to customers paying with other forms of payment.

Compliant Surcharging:

Merchants are also allowed to surcharge, where it is legal, to help offset processing costs. Surcharging comes with some additional rules. At the time of writing, merchants can surcharge a maximum of 3% for Visa and 4% for MasterCard credit cards. The surcharge amount cannot exceed your transactional cost, and debit cards are not allowed to be surcharged in any way. Before surcharging, you are required to register with your payment provider, and updates may be required for your point of sale or credit card terminal.

Let’s boil it down:

A discount is only considered a discount if you offer a lower price for cash customers than the posted price. If you post a price on goods or services and then increase that price for customers paying with credit cards, that is a surcharge.

How does Cash Discounting Offset Processing Fees?

The idea behind cash discounting is that you increase all pricing to represent the purchase to cover your payment costs. For customers who opt to pay with cash, you then discount the sale to offset your higher pricing.

Can I Charge a Service Fee or Convenience Fee?

Service Fees:

These are reserved for certain types of merchants like government or educational establishments. This is effectively a surcharge with additional restrictions.

Convenience Fees:

These are allowed by the card brands; however, they must also meet strict guidelines. For one, you have to offer a bona fide convenience to the customer as an alternative payment option. An example would be an apartment building where tenants have the ability to pay rent in person at the management office with no additional charge. The management may create an online payment portal that charges a convenience fee to offset their cost of building and maintaining that payment system. In this case, tenants are still able to make in-person payments without penalty but are offered a more convenient payment option at a higher cost. There are other rules with convenience fees; however, what is mentioned here is normally what prevents businesses from being able to charge these kinds of fees. Do not charge these fees unless you have consulted with your payment provider about your eligibility and proper setup and disclosure.

What Can Happen if I am Not in Compliance?

Visa has received many consumer complaints and has even hired an outside audit firm to secret shop their merchants. Visa can implement fines of $25,000 per month for businesses who are found to be out of compliance. If you think you are currently out of compliance, reach out to your processor immediately. They should be able to review your setup and confirm if you are in compliance or not. From there, make the required changes to your payment practices to avoid any fines.

Am I Going to Have to Re-price My Entire Business?

That is a possibility. You could just go back to not assessing customers a fee for accepting their payments, or you could increase your pricing to include your transactional costs. Once you have increased your pricing, it is up to you whether you offer any sort of discount.

Conclusion:

Accepting card payments does come at a cost, and for the last few years, it seems like costs for everything have continued to increase. The cost of accepting credit cards should be outweighed by the amount of money cardholders spend. That said, these days it feels like accepting credit cards is practically a must for most businesses. It is natural to look for ways to offset increasing costs, and when you can’t offset those costs, then the business has to find a way to pass those costs on to the customers. Re-pricing your business may be a more difficult route than just tacking on an extra fee for card-paying customers; however, like with most things, the easy way isn’t the right way.

Credit card fraud is a serious issue that can cause significant financial losses to businesses. During the holiday season, fraudsters take advantage of the increased volume of transactions to steal credit card information and/or defraud businesses. Here are some steps businesses can take to protect themselves from credit card fraud during the holidays:

1. Always use EMV or NFC payments: EMV-enabled cards (chip cards) and NFC (contactless cards and devices) are more secure than magnetic-stripe cards because a one-of-a-kind code is created for each transaction. Transactions processed as EMV or NFC protect the business from losses due to stolen credit cards by the card issuers. The chargeback liability for accepting stolen EMV or NFC transactions falls on the card issuer and not the business.
   
2. Be aware of potential fraudsters: Watch for customers who seem not to be price-sensitive or looking to make purchases that are outside of your normal transactions. Fraudsters are not price-sensitive and tend to want to maximize what they spend as it’s not their money they are spending. These fraudsters will usually come in ready to purchase way more than normal customers and don’t care about things like shipping or delivery costs. The holiday season helps them blend in a bit more as spending per customer tends to go up during the season.
   
3. E-commerce businesses (CVV&AVS): Unlike EMV, merchants who do not physically have access to the customers’ cards are fully liable for accepting any stolen transactions. That’s why it is important to make sure your website requires CVV numbers and Address Verification (AVS). While these are not foolproof, they do give you a bit of peace of mind that the person making the purchase at least knows the CVV code and what address the card is billed to. While not possible for many businesses, shipping to only the billing address on the card may offer you a bit more protection. If there is a dispute, having proof of delivery to the customer’s billing address offers you more protection.
   
4. Keep track of purchase prices: Return fraud can be a larger-than-normal issue around the start of the year. As people take advantage of seasonal discounts only to later return products for the full non-discounted value. Even without a receipt, many stores will offer store credit for returns. However, if you don’t know at what price the item was originally sold for, you may be crediting more than should for the item. Having a Point-of-Sale system that logs customers by name or ID along with a detailed list of items would allow you to look up customer purchases even if they don’t have a receipt.

And arguably the best two for last:

5. Fraud at Point-of-Sale: It seems obvious that you would restrict access to your point-of-sale, but that’s not just a physical thing. Fraudsters will many times try to manipulate you or your employees to do something with your point-of-sale device that puts you in jeopardy of not receiving funds or receiving an unwinnable chargeback. If a customer tells you that they need special approval or you need to enter a special code or approval number on your device, do not accept the transaction without first talking to your processor. The only valid approval codes come through your processor, either directly during the NORMAL transaction process or through a process your processor tells you to go through. Approval codes do not come from customers or the number on the back of the card.
   
6. Knowing your customers: You know your business and its customers, so if you start feeling that a customer or an order feels off, at least stop and think. Sure, on some sales, it’s going to be small enough that it’s not worth risking a relationship with a potential customer, while on others you might want to ask for a more secure form of payment. Legitimate customers tend to understand, while fraudsters tend to push harder and harder about doing a transaction their way. If a customer is pushing to get something done their way, have an excuse or two. Maybe it’s a store policy, your processor told you not to, or maybe your payment device is not working.

The good news is there is a relatively small number of fraudsters, and most are looking for the easiest targets possible. These are just a few things to consider and watch out for, and by doing so, you have made your company a harder target. Train your employees on what to look out for and get ready for the holiday season!!!

As a business owner, navigating the world of credit card processing can be a bit like deciphering a complex code. One of the puzzling terms you might encounter is the “monthly minimum fee.” Don’t fret – we are going to shed some light on this often-misunderstood aspect of payment processing.

Understanding Monthly Minimum Fees

When you set up a merchant account to accept credit card payments, you’ll encounter various fees. Among them, the monthly minimum fee plays a unique role.  Simply put, it’s a fee that safeguards the payment processor from losses on accounts that process little to no volume every month, but more on that later in the article.

Here’s how it works:

1. Setting the Threshold: Your credit card processor will specify a minimum dollar amount that you must reach in transaction processing fees each month to avoid incurring the monthly minimum fee. This threshold varies between providers but typically falls within the range of $25 to $50 per month.
2. Monthly Calculation: At the end of each month, your processor calculates the total transaction processing fees generated by your business. If this amount meets or exceeds the minimum threshold, you won’t be charged a monthly minimum fee.
3. The Safety Net: Here’s where the monthly minimum fee acts as a safety net. If your total processing fees for the month fall short of the minimum threshold – let’s say you had $0.00 in fees – you’d be billed the full monthly minimum amount. However, if you generated $20.00 in fees and your processor set a $25 monthly minimum, you’d only be charged the additional $5 needed to reach the minimum threshold.

Why Monthly Minimum Fees Exist

You might wonder why these fees exist in the first place. Well, they serve a couple of important purposes:

1. Provider’s Operational Costs: Credit card processors have their own costs to cover, including customer support, account management, and maintaining the infrastructure that facilitates credit card transactions. The monthly minimum fee helps ensure that all accounts are covering the costs of maintaining an open account.
2. They can Reduce Fixed Expenses: Fixed expenses like service fees or statement fees stay the same month to month regardless of processing volume.  Monthly Miniums are sometimes used to lower or eliminate fixed monthly costs on a merchant account.  Since the Monthly Min decreases based on volume it can be more cost effective depending on your processing volume.

How to Approach Monthly Minimum Fees

Now that you understand the basics, here’s how to approach monthly minimum fees:

1. Read Your Agreement: Carefully review your merchant account agreement to understand the specific terms and conditions related to monthly minimum and fixed monthly fees. Different providers may have different thresholds and fee structures.
2. Consider Your Business: Think about your business’s transaction patterns. If you consistently process a high volume of credit card payments, you might be better off requesting a higher monthly minimum to remove fixed monthly fees or to even get a discount on your processing fees.  If you are processing sporadically or with very low monthly volume, you might prefer to have smaller fixed monthly fees, but pay a little more per transaction.

In conclusion, monthly minimum fees are a mechanism to ensure a minimum level of revenue for your credit card processor and can help provide stability in your payment processing expenses. By understanding how they work and considering your business’s unique needs, you can make informed decisions that benefit both your bottom line and your customers’ payment experience.

Dual pricing is a pricing strategy that allows merchants to offer different prices for the same product or service depending on the payment method used by the customer. Dual pricing has been around for tens of years and most used by gas stations.  This strategy is becoming increasingly popular among merchants as it helps to effectively lower payment processing costs.

The concept of dual pricing is simple. Merchants offer a lower price for customers who pay with cash or debit cards and a higher price for customers who pay with credit cards. This is because credit card transactions are more expensive for merchants due to the fees charged by credit card companies.

For many merchants Dual Pricing wasn’t due largely to the time and expense is setting up and operating such a program. These days with highly effective low-cost Point of Sale systems implementing Dual Pricing is quick and easy, and the POS maintains and tracks everything in real-time so you don’t have to.

Dual pricing can be beneficial for both merchants and customers. For merchants, it helps to reduce payment processing costs, which can be a significant expense for businesses. By offering a lower price for cash or debit card payments, merchants can encourage customers to use these payment methods, which are less expensive to process.

For customers, dual pricing can be an opportunity to save money. By paying with cash or debit cards, customers can take advantage of lower prices offered by merchants. This can be especially beneficial for customers who are on a tight budget or who are looking for ways to save money.

However, it is important to note that dual pricing is not without its drawbacks. Some customers may feel that they are being penalized for using credit cards, which can lead to negative feelings toward the merchant. Additionally, some customers may not have access to cash or debit cards, which can limit their ability to take advantage of lower prices.

Despite these drawbacks, dual pricing remains a popular pricing strategy among merchants. By offering different prices for different payment methods, merchants can effectively lower payment processing costs while still providing value to their customers.  Now that Cash Discounting and Dual Pricing have become more publicly available many cardholders have grown more accustomed to it leading more and more businesses to adopt these methods.

In conclusion, dual pricing is a simple yet effective pricing strategy that can help merchants to reduce payment processing costs while still providing value to their customers. By offering lower prices for cash or debit card payments, merchants can encourage customers to use these payment methods, which are less expensive to process. While dual pricing may not be suitable for all businesses, it is certainly worth considering as a way to reduce expenses and increase profitability.

It’s one of those questions that comes up all the time with businesses, and the answer is generally yes. As consumers, we have an understanding of debit and credit cards. Debit is attached to a bank account while credit is attached to some line of credit.

When it comes to businesses looking to accept debit cards, many times they think they have to be able to accept PIN debit in order to take payments from those cards. The truth is, most, if not all, debit cards can process transactions on either the credit or debit networks.

Credit and debit cards display logos of the networks they work through. For cards that work through a credit network, you will find the Visa, MasterCard, or Discover logo on the card. If a card is also set up to work through a debit network, you will find logos such as Nyce, Star, or Plus.

While basically any business set up to accept credit cards is capable of taking a payment from normal debit cards, not all debit cards are accessible to those businesses. For example, EBT cards require businesses to not only be approved by the state but also require those transactions to operate on the debit networks as they use the PIN number to authenticate the transaction. There are other industry-based payment systems, such as Wright Express (WEX Inc.), which also use the PIN debit network to handle their transactions.

In both of those scenarios, most businesses wouldn’t be able to accept those cards even if they were set up to accept PIN debit transactions as they do not fit into the scope of what those payment types are used for.

Many businesses ask if they should accept PIN debit, and I think that’s more of a decision for the business. If you need to operate through the debit networks to make use of specialty payment systems, then the obvious answer is yes. Assuming your business doesn’t need to use such systems, then it comes down to preference. We believe it’s ideal for businesses to offer as many payment options as possible to their customers, and the cost can be relatively similar to credit transactions. The only real hurdle is that you may need some additional hardware, like a customer-facing PIN pad, which for some businesses seems like a needless expense to accept a payment card that they can already accept.

Some businesses have no need to accept PIN debit transactions, like eCommerce businesses. PIN debit is a card-present transaction, meaning the consumer needs to be physically present at the point of sale. eCommerce and other card-not-present businesses do not meet the requirements to accept that payment type.

The situation is similar for restaurants, many of which do tip adjustments and do not process their payments in front of the customer. Since you cannot tip adjust a PIN debit transaction, any gratuity must be added to the sales total prior to completing the transaction. That prevents restaurants, including counter service in most cases, from having the ability to accept PIN debit. This is particularly true for restaurants where servers take the customer’s card away from the table to process the transaction.

Our thinking is that if you have a business where you can take card-present transactions with the consumer at the point of sale, you should consider accepting PIN debit transactions. Having additional payment options available for your customers doesn’t hurt

Going cashless has become a popular trend in recent years, with more and more businesses adopting digital payment systems. While cashless payments offer several benefits, such as convenience and increased security, they also come with some drawbacks that small businesses should be aware of before making the switch. In this article, we’ll explore the pros and cons of cashless payments for small businesses.

Pros of Cashless Payments for Small Businesses

1.            Convenience: Cashless payments eliminate the need for customers to carry cash, making transactions faster and more convenient. This is especially true for businesses that offer online or mobile payments, as customers can make purchases from anywhere at any time.

2.            Increased Security: Cashless payments reduce the risk of theft and fraud. Digital payments are encrypted and secure, and many payment processors offer fraud detection and prevention tools to help businesses protect against fraudulent transactions.

3.            Better Record Keeping: Cashless payments make it easier for businesses to keep track of transactions and manage their finances. Digital payment systems automatically record transactions and generate reports, making it easier to reconcile accounts and prepare financial statements.

4.            Improved Customer Experience: Cashless payments offer a more streamlined checkout process, reducing wait times and improving the overall customer experience. This can lead to increased customer satisfaction and loyalty.

Cons of Cashless Payments for Small Businesses

1.            Cost: Cashless payment systems often come with fees and transaction charges that can add up quickly. Small businesses with low transaction volumes may find it difficult to justify the cost of implementing a cashless payment system.

2.            Exclusion: Cashless payments can exclude customers who don’t have access to digital payment methods, such as credit or debit cards. This can be a problem for small businesses that serve low-income communities or elderly populations.

3.            Technical Issues: Cashless payment systems rely on technology, which can be prone to glitches and outages. If a payment system goes down, it can disrupt business operations and lead to lost sales.

4.            Cybersecurity Risks: Cashless payments can be vulnerable to cybersecurity threats, such as hacking and data breaches. Small businesses that handle sensitive customer data must take extra precautions to protect against these risks.

Conclusion

While going completely cashless offers several benefits for small businesses, it also comes with some drawbacks. Before making the switch to being completely cashless, small business owners should carefully consider their customers and how they might react to such a change.  While most of the cons can easily be outweighed, the customer experience should be the focus.  If going completely cashless is something you are thinking about, try posting signs around the business explaining to customers that you are considering it and asking for feedback prior to making any such change.  Take that feedback from customers and use that to help guide your decision.

In our previous article we were looked at calculating your effective rate and getting a baseline for current payments cost per dollar of processing volume. In this article we will cover things like average tickets and how they can have a profound effect on your processing costs and of course on your effective rate.

Lets start by diving into you average ticket. Each transaction through your merchant account is effected by two different costs, a discount fee based on the dollar volume and a flat transaction fee. The higher the dollar amount of each transaction the more your costs are effected by the discount rate. The lower the dollar amount of your transaction the more you costs are effected by the flat transaction fee. Basically the lower your average ticket the more important it is to focus on lowering your flat transactional fees.

Lets take a look at an example just looking at the interchange costs. This example will be on the higher end but it illustrates the point nicely. If your business has a $5.00 average ticket and you accept a regulated debit transaction the interchange fees on that are capped at 0.05% + $0.22 per transaction. That 0.05% discount fee is effectively $0.0025 in cost. That $0.22 transaction fee is effectively 4.40%.

If we then add on fees from your processor things get worse. If you processor is charging you 0.35% + $0.10, then your looking at an additional $0.0175 in discount fees plus the flat $0.10 transaction fee. That flat fee is effectively 2.00%.

Combine you are looking at a rate of 0.40% + $0.32 per transaction. You are basically paying $0.34 per transaction in this case, or 6.8%. Now take this same scenario but with a $7.00 average ticket. You would then be paying $0.348 per transaction or 4.97%. Expanding that ticket size to $25 the effective cost becomes $0.42 per transaction or 1.68%.

I know I just though a lot of numbers out there, so here is a chart that represent different ticket sizes vs those same rates.

There are a few things you can do with this information. If your average ticket is less than $12.00 then the most cost effective this you can do is increase your average ticket. Sure you could go try to get a couple cents off the processor per transaction which would help, but not nearly as much as increasing ticket sizes.

This also helps you identify where to not waste your time if you are going to be negotiating with a processor. If you average ticket is $30+ your costs are going to mainly originate from the discount fees. If you have to eat an extra penny per transaction to get 0.10% off your discount rate then you are coming out ahead by doing that vs paying 0.10% more and saving the penny.

Next article we will take a look at transaction types and how those will effect your processing fees.

If you are looking for the short answer:

If you are processing less than $3k per month in volume you should be using a payment aggregator like Stripe, Paypal, or Square. If you are processing more than $3k per month you are generally better off with your own underwritten merchant account from a traditional payment processor. The more you process the better off you normally will be with a traditional processor. That said if you have a low average ticket, something under $8.00 you need to pay close attention to any per-item transaction fees like authorization fees. The lower your average ticket is then the more important it is.

This is the longer answer, however, it will be worth the time:

We are going to break this down into multiple posts as it’s going to get quite long. In this post we are going to touch on some information you will want to get ready and have at hand. In future posts, we will go over using your effective rate as a comparison tool and then into additional aspects of your processing that can affect the overall cost. Finally, we will go over some possible changes you can make to help lower your payment costs.

Quick Intro:

There are many different articles out there that go over how to tell if you are paying too much for payment processing. While they have some good rules of thumb I feel there is a better way to cover this topic. Most articles are geared toward generalities, mainly because there are an absolute ton of variables that can affect your processing costs. What we are going to do is break down how you can assess your own business and develop a baseline that you can use to compare against. We will also include some generalities as examples, but the idea here is to make sure you have the tools to better understand the cost of your payment.

Let’s get some data together:

To start we are going to need some data about your business, some things you will know, but others you may have to look up. You are better off starting with a recent past month that is as close to an average month as you can find. Once you choose a month to focus on, let’s make sure you get some key data to have at hand.

You will want to have your monthly processing volume, the total number of transactions, and your total processing fees for that month. If you have a merchant processing statement from that month you should have everything we need. If you do not you can review your bank account and batch reports to compile this data. The bank account should show any fees that were debited from your account throughout the month. Keep in mind that merchant accounts bill behind, so if you are focused on the month of June any month-end fees will have been billed to you around the 3rd of July. The batch reports should give you the information to be able to calculate your total sales volume and the number of transactions. You can also compare the batch reports to the bank deposits to see if any fees are being taken out of your batches before they are deposited.

Having acquired that data we should go ahead and calculate your average ticket by dividing your total sales volume by your total transaction count. For example: if you processed $10,500 over 315 transactions your average ticket is $33.33 Then we also need to calculate your effective rate by taking your total processing fees for the month and dividing them by your total sales volume. Continuing our example if you paid $238.35 in fees for processing $10,500 in volume then your effective rate came out to 2.27%. An effective rate is a nice tool because it accounts for all your merchant processing fees including both transactional and fixed monthly costs.

For now, we are going to focus on the effective rate. Hold on to that other data for our next articles on the topic.

Digging into Effective rates:

Now you have an effective rate, there are many different things we could do. First I would recommend doing that calculation for additional months and not all of those down. Maybe get the effective rate on your highest and lowest volume months.

Then we start window shopping. You can pull up the rates from aggregators online by searching for their rates. You can review their rate table and find the way you would be accepting cards through them. Our example business is a retail store that is able to accept 99% of its transactions as EMV or Contactless. If we find that the card’s present rate from that aggregator is 2.89% + $0.10 per transaction with no monthly fees then it starts to be very apparent that our effective 2.27% looks pretty good. On the other hand, if you are a card present business and your effective rate is 3.21% an aggregator starts looking better. That said the additional $0.10 per transaction may offset any savings, but we will have to get into that when we cover the average ticket in an upcoming article.

This is just the starting point, so look for the following few articles to continue breaking down your rates. I recommend calculating your effective rate for a few months and keep monitoring it. We are trying to get a solid understanding of your baseline and how different monthly volumes affect your effective rate.

Your Effective rate is a great tool for you to use to make comparisons between time and processors. While it’s an important foundational tool, there is a lot more to cover. In our next article, we are going to cover comparing your existing statement to another processor quote. The article after that will cover things like average tickets and how they can have a profound effect on your processing costs and of course on your effective rate. Until then if you need assistance understanding your statement we are always here to help. We review merchant statements all the time and have people on staff just to help with processing statements from all processors. Yes, we are probably going to send you our side-by-side breakdown, but there is no pressure to sign up. If the numbers interest you then we are willing to have that talk as well.