Our clients have told us many stories over the years about some of the sales pitches they have been given about credit card processing fees. Some companies promise rates of 1% and even less. Here’s why those promises are not real and how they can wind up costing you much more than an honest and transparent rate soon after the overblown promises evaporate. We also want to show you what you can expect in return for a fair and transparent rate that you can depend on.
Credit Card Processing Fees are Often Presented in Deceptive Ways
If you have shopped for credit card processing services for your brick and mortar retail location, mobile business, or online store, you probably have noticed how confusing the pricing and fees associated with card processing can be.
The obvious method is to simply look at what a processing company tells you the monthly rate and processing fees are, and then go with what looks like the lowest rate. The reality is that the decision can involve much more than looking at what appears to be a bottom line. Some companies are known to disguise total fees in different ways.
When the Rate Isn’t Really “the Rate”
Often times, a rate quoted to a new business with transaction amounts and volume normally associated with a business getting started only applies to certain qualified transactions. Many times processing companies will only provide a rate that looks amazing, but they don’t make you aware that multiple rates (“tiered” rates) apply to many (or virtually all) of your transactions.
The super-low rate you are quoted often only applies to a tightly defined class of consumer cards, which also happen to be the type of card you are least likely to receive payment with. The lowest rate is a “qualified” rate, but most transactions fall under other tiers, for example, an other-qualified rate or a non-qualified rate. These tiers typically involve much higher rates for each transaction.
The offered qualified rate usually includes some involved and strict rules. Business credit cards, which include most consumer rewards cards, are typically excluded from the qualified rate. Authorization requests without full address verification and various other transactional details also will not get the qualified rate.
At the end of the day, if most of your transactions fall into the more common tier of non-qualified transactions, the 1% or other ridiculously low rate you thought you were getting can turn into something several points higher.
Hidden Fees Add to Your Costs
Some processing companies add to certain fees (APF/NABU/Data Usage Fee) that normally appear to be a charge by the credit card provider. For example, Visa usually charges a fee of 1.55 to 1.95 cents per transaction. Some payment processing companies are known to add to this line item to make the fee total 5 cents or more while maintaining the impression that the entire fee is paid to the card provider.
How Honest and Transparent Rates Benefit Your Business
Flat-rate pricing for all of your in-store transactions with a swiped card or your keyed-in transactions provides you certainty with all of your processing fees no matter what kind of card your customer uses.
For most small companies, knowing with certainty that your true rate is steady and dependable allows for much better budgeting and cost projections. Your pricing and cash discounting decisions are more reliable and provide better information and convenience to your customers.
PayHub Payments is your trusted partner for straightforward, honest, and completely transparent payment processing. We deliver the value you expect at fair prices that you will understand and can rely on. Contact us today for all of your business’s payment processing needs and we will explain our transparent and reliable fee structure.