What’s the best card processing rate available?

What's the best card processing rate

Often, I sit with merchants who are fixed on the best card processing rate they’re paying, this has become the benchmark for what merchants think will give them the better deal. But in reality what they are paying goes beyond those rates.

My thoughts time and time gain revert to the reps that have visited before and said “I’ll beat the card processing rate you’re currently paying” but neglected to show the merchant the real cost of card processing fees. I’m sure I hear my own eyes roll when this happens and spend the next few minutes explaining that it’s not just about the rate you’re paying, it’s the additional processing fees and how they impact your charges and monthly bill.

Why do I need to see your monthly fee statement

Many merchants don’t bother to download their statements, they simply accept the fees they pay. Viewing a statement I can see what your paying and identify the hidden charges, this doesn’t necessarily mean it’s all bad but if you have got a good deal don’t you want to know? Better still if those costs can be reduced further, a free review is perfect.

Would you buy a cheap bed frame without the slats, nuts and bolts?

I liken the cost of customer payments to buying a bed, you simply wouldn’t buy a cheap bed frame and get it home to find there are no slats, nuts and bolts. Card processing fees are the same, the rate you pay is the bed frame but then you need to purchase the slats which we could liken to authorisation fees and then the nuts and bolts the PCI compliance fee. You need all of these elements to process your customers payments

What are authorisation fees?

Authorisation fees are an expense to a business for each time it processes an electronic payment for a customer transaction. Per-transaction fees vary across service providers and typically 0.03p to 0.05p.

A convenience store owner and a car sales showroom will have significant fee charges

Authorisation fees and the impact on a convenience store owner, pub or fish and chip shop is significantly different to a car sales showroom due to the quantity of transactions being processed.

Last week I visited a local convenience store in Wolverhampton, not a big store but one that appeared to be the tardis of all things needed, you know the ones.. they literally manage to sell everything need! Popular in the local community this store owner processed 3,724 card payments in the previous month.

He was being charged 0.3% on debit cards and 0.7% on credit cards (Consumer) and processed £48,000 in card payments in that same month and paid £162.00 in authorisation fees, in addition to the card rate.

The store owner thought he was on the best rate available and that he was paying the lowest fees available, he also believed that in some cases he was on a better rate than other business owners he knew. However, this merchant didn’t get the right deal for his business and with the other additional costs for PCI, dashboards he’s never accessed it transpired he was paying £121 per month too much.

Check to see if you’re paying over odds

The conclusion is that the above merchant was paying over the odds 0.75% of his revenue for card processing fees, totalling £361 that month. Working with an independent advisor like myself would have saved him £121 in that same month and card processing fees across the board costing 0.50%.

The upshot being, the rate you pay for debit and credit cards is not the defining factor when looking for the better deal, all charges need to be included and you need to be matched with an acquirer that has the right offering for your type of business, it really isn’t a one size fits all. You should be aiming to pay 0.50% – 0.55% on total fees, dependent on your annual turnover of course.

Check to see if you’re paying too much for your card processing info@hellomerchantsolutions.co.uk or give me a call for a chat 01952 915059

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