12 Days of Payments: Merchant Processing Clarity

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On the tenth day of payments, my payment processor gave to me: merchant processing clarity.

Deciphering a merchant processing statement can be one of the most difficult tasks facing a business. From various fees and markups to understanding your pricing structure, one glance can leave you feeling overwhelmed and confused.

While it’s one thing to recognize the fees on your statement month after month, it’s an entirely different ballgame to truly understand what you’re paying for in merchant services processing. We’ve outlined what it takes to comprehend your statement in ways that are supportive of your business’ success.

The Issues

It’s no wonder merchant processing statements are so difficult to understand. If you’re switching payment processing providers, your merchant account from Processor A will likely look completely different than your statement from Processor B. This inconsistency among providers adds to merchant confusion.

Transparency is also an issue that weighs heavily on merchants. Whether it’s unclear pricing structures or language that only industry-types are able to understand, the lack of straightforward communication compounds merchant frustration, so much so that some merchants choose to pay higher fees just to keep things simple for themselves.

The Actual Cost of Merchant Processing

As is the case with most anything a consumer purchases, there is usually a wholesale base cost and a markup cost associated with products or services received. It’s important to note that no matter your processing partner, the base cost is non-negotiable. That’s because the wholesale or base cost of a transaction is the fee determined by the credit card payment issuing bank (like Visa, for example), not by the merchant processing provider.

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Markups, however, indicate the processing provider’s profit from your business. With the right processor, these fees should be spelled out to the merchant. Some processors make these markups so difficult to understand that even seasoned business owners are left befuddled about their pricing. These fees are different from processor to processor and should be a merchant’s primary focus in choosing a solution that fits their business.

Important Merchant Processing Fees and What They Mean

Please note that these are just a handful of the fees that may be associated with your merchant processing statement.

  • PCI Compliance Fees: The Payment Card Industry Data Security Standards (PCI-DSS) are the requirements that all merchants must follow in order to maintain a secure data environment and protect consumer information. Compliant businesses are charged a small fee to help them maintain their level of compliance; non-compliant businesses, however, are assessed a fee that can cost hundreds of dollars a year.
  • Terminal Fees: For merchants that have a brick-and-mortar business, watch out for processing providers who lock you into a terminal agreement or a lease that could wind up costing you hundreds of dollars if you choose to break your contract. Buying your hardware outright is your best bet for long-term success.
  • Annual and Early Termination Fees: Many processors like to charge an annual flat fee, claiming that it covers the customer service 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. Avoid payment processors that assess annual flat fees and require you to sign a contract at all costs.

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It’s important to work with a merchant account processing provider who will help you to understand exactly what you’re paying for when you credit card processing service. Payline can provide you with an opportunity to speak with a dedicated account representative who will work with you to comb through your current statement and highlight the potentially unnecessary fees you’re paying month-to-month. This is just one simple solution that can illustrate how you can save money on processing solutions and increase profits at your business.

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