Even though you know how to accept credit cards at your business, it’s possible that you don’t know what all of those numbers mean on a statement. There is no doubt that you are paying various unavoidable fees as determined by your payment processor and card issuing banks. These fees may seem menial on a statement but over time can add up to something that could hurt your business. Here are the 5 fees you may be overlooking on your processing statement:
5 fees to look for if you want to understand how to accept credit cards
PCI Compliance Fees
The Payment Card Industry Data Security Standards (PCI-DSS) are a set of requirements that all businesses must follow to ensure that a secure data environment is maintained in order to protect consumer information. For businesses that are PCI compliant, the merchant account provider assesses a fee to help keep you compliant and provide avenues in which you can become compliant if you are not meeting the requirements. If your business is not compliant, however, a non-compliance fee is assessed which costs hundreds of dollars per year. Unfortunately, many credit card processing companies charge for PCI compliance or non-compliance without your full understanding of the charges.
These fees are assessed to business who take payments on a terminal. Some payment processors try to lock merchants into leases for terminals, and while this may seem cost-effective, a lease can actually hurt your business and your terminals should be bought outright for a low, one-time cost. This can end up saving you thousands of dollars, especially if you have a business with multiple ways of how to accept credit cards (i.e. more than one terminal or more than one location).
Annual and early termination fees
Although self-explanatory, annual fees and termination fees don’t make sense if you’ve been properly trained by your processor on how to accept credit cards and what to look for in processing statements. Many processors like to charge an annual flat fee, claiming that it goes to cover the services provided to the merchant, but this fee is already included in the pricing structure. As for early termination fees, this fee is charged if you end your contract early (and, if you’ve signed a contract, it’s likely you’ve paid a fee for that, too). Avoid payment processors that assess these flat fees at all costs.
With everything going digital these days, it’s not too far-fetched to see why some processors will charge you for sending a paper statement. Some processors, however, stretch or exaggerate these printing and mailing costs to reach (and in some cases exceed) $15 per month. We know that standard mail does not cost nearly that much to print and send, so this fee is usually a bogus fee that is greatly padded by certain processors.
Fees associated with pricing structure
There are two different pricing structures that most payment processors use – tiered and interchange-plus; and, the best-fit pricing structure is one that is designed to help your business know how to accept credit cards.
Tiered pricing is a rate structure in which several hundred different processing rates are packaged into tiers that represent three different possible rates. Most providers package the rates into three groups with varying markups. Unfortunately, there is no regulation behind how merchant account providers must package their tiers, which prevents merchants from knowing exactly how much a given provider is making on each transaction. Despite the prevalence of tiered pricing in the credit card processing industry, a more competitive and transparent pricing model is available in the form of Interchange-plus pricing.
Interchange-Plus pricing is the most transparent pricing model. This model puts the power in your hands by giving you a straightforward and clear explanation of charges. Interchange describes the rates that come directly from the card networks. Business owners must realize that no merchant or processing company has any control over these rates. Every merchant pays interchange, which varies based on the type of card your customer is using. The plus is what a processor like Payline is charging you for our service. It is our profit and is shown in terms of a very small percentage markup and a minimal transaction cost.
It’s important to work with a payment processor who will be honest about the fees you are paying each month. Payline can provide a complimentary statement analysis where a dedicated representative will work with you to comb through your current statement and highlight the unnecessary fees you’re likely paying month-to-month. This is one easy solution that can show you where you can be saving money and increase profits by thousands of dollars at your business.