credit card processing continues to become harder with new fees, technology and regulations. We know that you may well be overwhelmed with the changes.
As a tiny company owner, you're inundated with offers from charge card processing firms that promise to genuinely help you save money. Usually most offers start with a low rate. Each merchant services provider tries to trump another with that lower rate to win your business. If you have experienced business for a time and switched processors, you might have realized these low offers don't constantly pan out.
Actually from 2000 to 2010, the most popular charge card processing rates for retail have risen from about 2.00% to 2.66% excluding extra fees like statement fees, batch fees and PCI fees. This rise is despite an enormous drop in bank card rates and upsurge in bank card usage. Why the increase? Rewards cards are among the main culprits. Banks are passing on the cost of those fancy rewards, airline miles, etc, to the merchants.
The following main reason is deficiencies in merchant processing education. Merchants are trained by the banks to react to low rates. The thing is there are 440 Visa/MasterCard/Discover rates and the banks are merely showing you the best transaction rates.
The appropriate question to ask isn't "what's your rate?" but "what's your effective rate?" The effective rate takes under consideration most of the possible Visa/MasterCard/Discover categories for which a transaction may qualify. Knowing your effective rate offers you a far more accurate estimate regarding the real cost of one's processing. You can determine your effective rate using a simple formula.