Credit Card Processing 101: Who Gets the Rewards?
International Payment Solutions, LLC has always strived to educate merchants. The first thing that we teach you is that ALL credit card processing companies have the same cost (interchange) that is dictated by Visa/MasterCard. The only difference in processors is integrity, profit margin and customer service.
Interchange is a 22 page document that has pricing based on the type of card and the way you take that card. Types of cards range from debit/check cards, consumer cards, rewards cards, world cards, and corporate cards to name only a few. To only disclose one rate within a pricing structure is deceptive and the primary reason most merchants are being overcharged. The most significant difference between International Payment Solutions, LLC and 90% of processing companies are the rewards cards from Visa and world cards from MasterCard. Rewards/WorldCards are the ones your patients use to get bonus miles and cash back. They represent 40% of all credit cards. We do not separate them and charge higher pricing, while they do. With the exception of corporate cards, International Payment Solutions, LLC charges you based on the way you TAKE the card, either swiped or keyed.
There is a company advertising a 1.59% + .25¢ rate, but after seeing their statement it turns out that only two consumer cards will qualify for the 1.59%. Most others are between 3.50% - 5%. These companies often have a termination fee of $350 or more along with a Loss Profit Clause. A Loss Profit Clause is just that, they can charge you for how much money they were making monthly and multiply that by the number of months left on your contract. We had one potential client whose processor was going to charge him $4500 to leave. There is no termination fee or Loss Profit Clause with International Payment Solutions, LLC.
Ways to tell whether or not you are getting overcharged on your credit card processing.
· Is there a separate category for Rewards or World cards?
· Have you seen your Mid-Qualified and/or Non-Qualified totals rise significantly?
· Do you have a rate without a transaction fee?
· Are you going through your local bank?
· Have you been told that you have to “upgrade” your current equipment?
· When you called to negotiate rates, did your bank say you’re already getting a great deal?
· Do you have a contract that requires you to pay a termination fee to leave? This is a way for the bank to start you out with a great rate, and then raise your rates throughout the contract, making it too costly to leave.
· Does your statement indicate fees but does not include the dollar amount of the transactions that correspond to those fees? If so, this is a way to hide what rate you’re paying on keyed and corporate cards.
We offer a price match guarantee which states that as long as you are our client we will match any legitimate offer you may receive. The key is a legitimate and fully disclosed quote.
International Payment Solutions, LLC has always done spreadsheet comparisons where every rate and fee is not only disclosed but explained. The single biggest reason why most merchants are being overcharged on their credit card processing is that they let someone throw a number at them without an explanation. This isn’t always just simple math. Ninety percent of merchants have no idea how to read their statements. Of the 10% that do, most don’t understand the terminology or pricing structures that their bank is using. Our policy requires a statement be faxed for review as opposed to just throwing numbers at you. This is why our national average is a 21% reduction in cost and we have had merchants where we have cut their cost by over 90%. How would you like to never have to switch your processing again and receive honest and wholesale pricing? This is our promise to you and we hope you would give us a chance to earn your business.
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Credit Card Processing 102: You Do the Math!
Leo Townsend owner of International Payment Solutions, LLC, has been educating merchants for the last six years about credit card processing. Credit Card Processing 101 has been a huge assistance in the education of merchants about true costs. Credit Card Processing 102 will show you how the math really works and to be able to recognize obviously misleading quotes.
Credit card processing costs are dictated by Visa/MasterCard but controlled by the profit margin requirements of each processing company. Each card type is assigned a price based on the risk associated with the card type. The manipulation of the card types is how processors can increase their profit.
The lowest risk card is a check/debit card. The risk is obviously low because the money is drawn directly from the customers’ checking account. The cost for these types of cards is approximately 1 1/8% plus a .16¢ transaction fee. This is how companies are able to quote a 1.29%. The only cards that will fall in to that 1.29% are the check/debit cards. The lowest cost credit card is a Visa Consumer Card at 1.63% plus a 10¢ transaction fee and the MasterCard WorldCards are at 1.83% with a transaction fee of 10¢. If you think you are getting a 1.29% on all your transactions do you think the bank is going to take that big of a loss? You must ask yourself what is your real cost. The best way to ascertain what your real costs are is to divide your total fees in to your total processing volume which will determine your effective rate. We see merchants’ statements where the only rate shown is 1.49% but their effective rate is over 3%. What happened to the 1.49%?
Does your current processor take their fee on each transaction every day, or do they take it all at the end of the month? If they take it each day you are on daily settlement. So you must add the fees they have already taken to the fees they take at the end of the month to get a true effective rate. If you are taking thousands of dollars in processing but only see approximately 1% in fees on your monthly statement you are probably on daily settlement. This is an accounting nightmare and one of the main reasons merchants don’t really know their true effective rate!
The biggest difference between International Payment Solutions and other processors is the separation of Rewards & World Cards. These are the cards your customers use to get bonus miles and money back and are over 40% of all credit cards in use today. Over 90% of processing companies separate these cards without informing you during the sales process. IPS does NOT separate these cards out. No one is immune to taking these cards and we have seen merchants paying over 6% for these cards but never realized it. This is why International Payment Solutions requires a statement be faxed for review so that we may assist you in understanding what you are currently being charged and show you where you can save money on your credit card processing. Leo Townsend talks to CFOs of major corporations that do not know how to read their statement. In fact, most merchants don’t and many don’t even look at it.
Our policy requires a statement be faxed for review as opposed to just throwing numbers at you. This is why our national average is a 21% reduction in cost and we have had merchants where we have cut their cost by over 90%. How would you like to never have to switch your processing again and receive honest and wholesale pricing? This is our promise to you and we hope you would give us a chance to earn your business