What Aren’t Credit Card Processors telling you?
The credit card processing industry can be filled with smoke and mirrors. Plenty of false promises of low or even zero fees, but to your surprise when your merchant statement arrives, it’s filled with charges that ‘weren’t suppose to be there’.
We are going to drive down into the details of every pricing model. We aren’t going to use cheap buzz words to try and convince you they are bad. We are going to use cold data to demonstrate the savings. While most processors will pretend they are the low cost provider, they’re lying.
We break down each pricing model and use real world numbers and go through each formula step by step. We’ll disclosing all fees and costs associated with each model. Follow along with your own financial data. All you’ll need is your average processing amount, average ticket size, and card distribution of qualified, mid-qualified, and non-qualified. If your not sure, request a free analysis of your merchant statement by clicking here.
What pricing model do you currently use?
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Companies such as Square use this pricing model. How it works is they charge a flat fee for all transactions processed. It doesn’t matter the card type; it all costs the same. For example Square will charge 2.75% for all transactions. That is quite the overcharge, however Square doesn’t as many fees associated with their processing. So Square will be best for a merchant doing very little card payments.
Recently, a type of merchant services pricing has been making some noise in the news. It’s called Subscription pricing model. Providers such as FattMerchant use subscription based models. These models sound enticing because of their no interchange markup and low fees. However, their monthly subscription costs and higher per transactions fees drive their costs up.
Most major banks such as Bank of America use a three-tiered system. They break the 300 different rates into 3 groups: Qualified, Mid-Qualified, and Non-qualified. Safe cards are processed in the Qualified section, riskier cards in the Non-qualified. This batch pricing leads to less overcharging but now has high fees included. Still not the greatest deal.