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Making the wrong choice about who handles your credit card processing can cost your business thousands of dollars in add-on fees!!! Read More >>
  • What You Need To Know About Credit Card Processing

    Do You Need A Pinpad To Process Debit?

    No, any debit card that has the Mastercard or Visa logo on it can be
    processed as a debit card through your credit card machine, point of sale
    device, etc.
    Also, a regulated debit card which has a substantially lower cost can also
    be processed at the lower cost without a pinpad.
    Pin-based debit which is processing a debit via a pinpad, can have lower
    costs associated with processing that debit card. So there will be some
    instances where having a pinpad is to your advantage.
    Every business model is unique so we would look at your scope of customers
    and clients and determine if using a pinpad is advantageous for you or if
    you do not need one.

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    What is daily discounting?

    This is when the processing companies take out a portion of the fees
    everyday. Meaning:  Your credit card sales were $500.00 but you only
    received $482.11. The difference of $17.89 goes into the pocket of the
    processing company.  You are not required to have your fees assessed every
    day. It is your money, you keep it until the fees are assessed at the end
    of the month. Use it for your cash flow. Do not let the processing
    companies use it for their cash flow.
    Also, when you receive your statement at the end of the month, the daily
    discounting fee is not clearly stated on the statement so it appears that
    your fees are much lower than what they actually are.

    Reconciliation of fees is easier when your fees are clearly listed on your
    processing statement and are not deducted daily. A single line item is
    deducted from your checking account.

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    Why is your statement difficult to understand?

    So you can not understand what they are charging you for! The statement is
    designed to be confusing and the processing companies have succeeded in
    making the statement very difficult to understand. The processing
    companies know that the less you understand their terminology the more
    they can assess hidden fees that you will never know about.

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    How can your rate increase but your total costs decrease?

    Processing companies quote a very low fee, say 1.49%. What the processing
    companies do not tell you is how much you will be charged for the cards
    that do not qualify for this low fee. There will be many cards that do
    not qualify for this low fee. The cards that do not qualify for this low
    fee will have a surcharge added to the low fee. The surcharge can be 2%
    or more on top of the low fee. So now you are paying 3.49%.
    The low fee is mostly for debit cards only.
    B2B merchants will process less debit cards than a merchant who is selling
    to consumers. A B2B fee of 2% and a surcharge of .5% equals a total cost
    of 2.5%. This 2.5% total fee is less than 1.39% and a surcharge fee of 2%
    which equals 3.39%.
    Your “fee” is higher but your total overall cost is lower.

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    Is debit always lower than credit?

    The fee for debit is lower than the fee for credit. However, some
    transaction costs on debit will be higher than credit. There will be some
    instances where the credit transaction has a total lower cost than a debit
    transaction. But debit is usually the way to go for lower costs.

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    Is the lowest rate always less expensive?

    No.
    The reason is that each type of card has its own fee. The low fee only
    applies to a certain type of card. Most processing companies sell “low
    fee” programs. These low fee programs are deceptive in that there are
    additional fees that the merchant has to pay for rewards, business and
    corporate cards. These additional fees are never explained to the
    merchant.
    Example. Your low fee is 1.39%. If you process $10,000.00 in sales and
    your low fee applied to everything than your total fee cost would be
    $139.00 which is $10,000 x 1.39%.
    At the end of the month your fees were $441.12 which comes out to 4.41%.

    What happened to the low fee of 1.39%. These low fee programs are “loss
    leaders”. The processing companies will lead with this low fee. It is
    attractive and sold as the lowest fee possible. These low fee programs
    have surcharges for cards that do not qualify for this “low fee”. The
    surcharges can be 2% or more on top the low fee you were quoted. Now you
    are at much higher cost and are paying much more than you should.

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    What is meant by “no transaction costs”?

    This is another gimmick by the processing companies. Every card has an
    assessed transaction cost. It does not matter what type of card it is and
    that includes debit.
    There are many different terms of “transaction costs”. Such as,
    authorizations, p.o.s. costs, item costs, item charges, settlement costs,
    etc.
    When a processing company says they do not charge “transaction costs” and
    on your statement there is a line item fee labelled item charges,
    authorizations, item costs, etc. It is the same thing as a transaction
    cost.

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    Is “free” equipment ever really “free”?

    When a processing company says that they will give you the machine
    for free, do not accept it.
    The processing company did not receive the machine for free. They
    bought it from the manufacturer. The “free” machine means that there will
    be some other hidden cost that usually comes out to $25.00 per month that
    will be attached to your processing fees.
    So, let us “do the math”.
    The processing company bought the machine, usually $300.00. They give it
    to you for free. You have signed a contract that is 3 years in length or
    36 months. The hidden cost of $25.00 or the additional processing fee of
    $25.00 x 36 months = $900.00. That is how much the “free machine costs”
    Would you take $300.00 from someone knowing that you had to pay them
    $25.00 every month for 36 months?.
    Purchase the machine, stay away from contracts and free machines.

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    What does “rate” really mean?

    NOTHING! I associate rate to the sticker price of an automobile. It is
    just a number and does not have any value. Your rate is the number that
    you and the processing company agreed to so you would sign their contract.
    To prove this, perform this exercise.
    Total up your Mastercard, Visa and Discover sales and multiply this total
    by your rate.  Example: $10,000.00 x 1.49% = $149.00.
    Your processing company deducted $548.50. This comes out to 5.48%.
    WHY THE DIFFERENCE?
    Because your rate does not mean anything!

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    What You Need To Know About Credit Card Processing
  • Credit Card Processing Explained

    The “hidden” truths behind credit card processing

    Processing companies do an exceptional job of telling you what they want you to know. They do an even better job of making sure you do not find out what they do not want you to know. Such as

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    Credit Card Processing Explained

Testimonials

"I am very pleased with the machine, the batching process, and the reduced fees. You are very proficient and you have been pleasant to work with" ~ K. Keyes, Keyes North Atlantic

 
"Thank you so much for your help, you made my life easier, especially crunch time when I needed the most. You were prepared to drive 45 minutes on a Saturday Morning just to help me before my first day of opening. You are one of the best in this business and I will gladly recommend you to anyone I know. Plus, you are a very nice person"
~ R. Froehlichstein, Rada Boutique

Contact Me

Frank Scearbo

Credit Card Processing Expert
64 Central Street
Georgetown, MA 01833 * USA
Phone: +1-617-823-8043