If you already have a Merchant Services account or are managing a business or non-profit organization, chances are you have taken a look at a credit card statement and realized you have no idea what is what.  This is because bank statements are typically filled with banking acronyms, banking terminology and hard to identify charges.  Often times fees are included that you are not aware of or rates fluctuate and you don’t know why.  The standard banking rates for a mid-size business or nonprofit organization are set up in what is referred to as Interchange Pass Thru Plus pricing model* which can include various different per transaction fees and percentage fees that make up your overall rate. In order to make sure you are getting the best rate possible for the type, size and volume of your organization there are a few things you should be aware of.

  1.  The different Credit Card companies (Visa, MasterCard etc) base their charges on the types of cards being used (debit card, credit card, rewards cards, corporate cards etc.)and how the transaction is processed (e.g. if the card read through a terminal the rates will be lower in most cases).  These rates are referred to as the interchange rates and they are not controlled by the payment processor/merchant service provider. The interchange rate will vary slightly month to month but should be close to the rate noted on your original pricing proposal (I.e. some card types charge very high and some charge very low rates, by looking at the volume of similar size organizations or looking at a past statement from your organization, the new merchant services provider can analyze a rate that fits your organization).   See the post on “Interchange Rates” to read about how banks typically lay out the various interchanges rates in your Statement. *NOTE some payment processors will charge a flat rate which means that regardless of what the actual interchange rate is, they will charge the same amount.  In some cases, this is beneficial if the types of cards that your customers use are typically very high cost cards and your interchange pass thru would otherwise be high and in some cases you may be paying more then you otherwise would need to. Typically the rates end up being higher with flat rate pricing.
  2. The banks will also charge standard monthly and per transaction fees (which is the plus in the interchange pass thru plus model). To determine your actual rate we recommend looking at the effective rate, which is the total amount of fees charged divided by the total dollar amount processed. The effective rate includes per transaction fees (a flat rate typically $.20 – $0.45/transaction), a discount rate (the fee paid to the merchant bank and reseller and is usually a percentage) and monthly fees such as statement fees, online access fees etc. If you notice various other charges that you cannot identify, you should be able to call customer service at your merchant services provider or talk to your account manager at your payments technology provider such as PayQuiq.
  3. Rates will vary depending on the type of business being conducted.  Your merchant service provider should have you identify your MCC (Merchant Category Code) when setting up your application with the bank.  For example, if you are a non-profit organization you should be able to receive a lower interchange rate using the charitable organization category code.  If you are a higher risk business model where there are often times charge backs or refunds granted, your rate may be higher to protect the payment service company.
  4. There are a few various charges that may be charged on a quarterly or yearly basis to maintain your processing account as well as your PCI security.  PCI security rates may vary depending on your completion of a PCI security questionnaire.

If you think you are being charged too much or if you would like some assistance analyzing your current statements, you can contact your merchant services provider or set up a call with a representative at PayQuiq who can help analyze your current statement and let you know if they can help find better rates for your organization.