At Advantage Card Services, our primary goal is to help you ask the important questions when shopping for merchant service providers and educate you about what the answers really mean. We want you to get the best possible deal for your company. We believe you will find Advantage Card Services can give you that.
The first question most people ask is, “What are your rates?” At Advantage Card Services, we prefer more specific questions and will give you honest, detailed answers.
Some of our competitors might use advertising that looks like this:
Rates as low as .49%!
Unfortunately, the above ad is misleading for new business owners. Although you may think .49% is a good deal, you will soon discover that our competitors’ processing costs will actually range between 1.9% to 3.5% of card sales, or higher. Or course, your type of business is a factor, but knowing how to shop for a merchant services account is critical to ensuring you are getting the best deal possible.
At Advantage Card Services, we mainly use “Cost Plus” Pricing. If you’re shopping for merchant services you should ask, “What are your cost plus rates?” Our corresponding ad would look like this:
Rates as low as “Cost plus” .01% and 5 cents!
Now thats low!
If you already know about Cost Plus pricing, then you will now realize Advantage Card Services delivers the best pricing in the industry. So give us a call or click here to see much you can start saving!
To learn how “Cost Plus” pricing works, please continue reading and discover what we have taught thousands of merchants across the country.-Merchants who switch to Advantage Card Services save an average of 20% of their monthly fees!
Since 2003, our goal has been to help people understand how to do comparison shopping of merchant services. Then they will discover that we can offer the most economical deal. To say this industry is confusing is an understatement. Any business owner can attest to how difficult it is to understand their monthly statement without some help, so let’s see if we can simplify things for you.
To help save your time, we have a brief summary below with enough information to guide you through shopping for a merchant account, followed by more detailed information for those who want to know more.
Shopping Rates and Fees
There are 2 types of fees:
Processing fees (The cost to actually run and process a card. This is the most confusing part)
Fixed fees (Monthly, quarterly and annual fees charged just to have the account whether you take a card or not)
Combined, they are your total processing costs. Divide these by your total card sales and you get your percent of sales or “Effective Rate”.
Example: Statement shows $10,000.00 in total credit card sales and $170.00 in total* fees.
$170.00* / $10,000.00 = .017 or 1.70% effective rate.(We find this to be a pretty standard effective rate for most merchants who swipe cards.) *Determining monthly fees can sometime be a challenge because some statements are very difficult to understand and merchants often can’t see, or aren’t aware of additional fees being charged. They definitely aren’t aware of which of those fees are negotiable.” -The experts at Advantage card services can easily show you how to read your statement and explain exactly what you can and cannot negotiate and how much you can start saving with us.
First, understand that the merchant services industry is a wholesale to retail markup just like your business. This means every processor that “cold calls” you, or walks in off the street is simply buying credit card processing at a wholesale cost from Visa, Mastercard, etc. then marking it up and selling you the ability to accept credit and debit cards.
The most important thing to understand is that every processor pays the same wholesale amount! That right. Don’t fall for their misleading sales pitch – they’re bigger than everyone else, or they’re more connected, or they’re direct, etc. Not true! They all pay the same cost and no one gets a better deal than anyone else. In fact, these wholesale costs are regulated and are public information available online from Visa, Mastercard, etc.
So if the wholesale costs are fixed, regulated and non-negotiable that means the processors retail markup is the only thing that is negotiable. Make sense?
So how do you know what the markup is?
Good news! It’s actually very simple! The pricing plan most merchants want to have is called “Interchange Plus” or “Cost Plus” pricing. This plan passes all the wholesale costs directly to you on one part of your statement without markup. In a different section, the processor will add the markup for their service and so this “plus” part is what you are comparing. This will usually be a combination of a “discount” or percentage on the total amount of the sale and a fixed fee for each transaction or “transaction fee”.
-Most merchant account statements are so confusing that it literally takes a professional to correctly interpret them. Hopefully you trust them! The professionals at Advantage Card Services are your best source for a non-biased analysis.
Cost + .20% and .08 per transaction
You have 200 card sales totaling $10,000.00. You will pay $36.00 to the processor and the rest of your fees will go toward the wholesale cost.
(200 x .08 = $16.00) + (10,000 x .20% = $20.00) = $36.00 total fee (goes to processor)
Now, $36.00 divided by $10K is only .36 %. If your “effective rate” is 1.70%, then 1.34% of your costs, or $134.00, goes to pay the wholesale costs charged by the issuing banks and the networks (Visa, Mastercard, etc.).
1.70% – .36% = 1.34%, x $10K = $134.00 (paid to wholesale costs charged by issuing banks and networks)
You can see that the processors don’t have to make that much money on your account and the large part of your fees are non negotiable. If, for example, we save you $100.00 per month, it’s not because we are getting you a better deal on the wholesale costs. We are simply charging $100.00 less for getting the same service thru us! Why pay more?
That’s about all most merchants need to know about processing rates so lets summarize…
- Verify that a “Cost Plus” program is the best plan for your business. Click Here
- Shop rates based on the “Plus” part of their program; “discount” (percentage) and “transaction fee.”
- Price isn’t everything. Be sure to consider the level of personal service and the benefits of having a “credit card guy” that you can call and trust to be there and to give you straight information, now and in the future.
- Be sure to get a copy of the entire contract with fine print, before you sign, so you can see exactly what you are agreeing to.
- Have a professional in the industry such as Advantage Card Services review the contract for you prior to signing anything!
- NEVER agree to lease or or make monthly payments on credit card equipment! NEVER!
We will go into detail on how the wholesale costs work later on since it really doesn’t matter what they are. Basically, if you take cards, then you pay the fees and they’re the same for everyone. These wholesale percentages range between .16% and 3.25%, and the transaction fees range between $0.02 to $0.24 depending on the type of card and how they are processed.
This next section deals with fixed fees and goes into some detail. However, for most merchants we can be done here by simply saying:
Our basic merchant account fixed fees are $10.00 per month with no other hidden fees GUARANTEED!
So between the fixed fees and the processing fees your effective rate should be approximately 1.7%! That’s only $17.00 per $1000.00 processed! Check your statement and give us a call.
If this all makes sense and your ready to go or for more information click here and lets get started!