Merchant Account Providers

When looking at some of the merchant account providers out there, the tendency to go for the one with the lowest prices published and the least amount of techno-numerology involved in their pricing algorithm can often mislead you. If you understand the rules, then you can understand the game. The more you know, the less you will need. Here are some of the trade secrets and tactics we’ve seen many merchant account processors use.merchant account providers

Avoiding the Pitfalls of Tiered- Pricing

Let’s begin with a tour of a credit card transaction as seen through the merchant account processor’s eyes. The merchant account provider processes the flow of money, paying the credit card association a fee in doing so. This fee is called interchange and is published by the credit card associations to cover several of the services they provide. Once the merchant account provider pays the interchange fee, they pocket the difference between the rate charged to you and the published rate of the credit card association. There is a practice called; tiered pricing. This is the result of the processor designing a multi-tier rate system based on how the merchant qualifies. The tier that you are approved for takes the interchange rate and adds to it in order to make the processor more money off your hard work. Often times there will be a teaser such as not having a set-up fee or monthly fee to make the service more appealing to potential clients. However, many of these tiered practices tend to have a hefty cancellation fee and a lengthy contract to sign. If there were three tiers for example, then the best and lowest rate would probably be very difficult if not impossible to be approved for. Of course, the nearly impossible-to-get approved-for-rate will be what they advertise whereas the middle and higher tiered rates will be the majority of their clients pay. After checking the rules and regulations put in place by the processor for tiered pricing you will see all kinds of strict rules and conditions. Take for instance you paying your merchant account provider a higher, non-qualified rate because too many of your customers paid with a Discover Card or something of a similar nature.

Bundled Rates Don’t Make Anything Better.

Additionally, the merchant account provider can choose to use a bundled rate strategy. The bundle is when the processor takes several interchange fees from different card companies for a particular transaction type and combines them. By bundling these interchange fees for a specific type of transaction the processor adds a fee for them to collect from you. Because the fee is shown as a bundle, and not as the individual interchange fees, you cannot verify what you are actually paying each of the credit card associations. At the end of the business day you could be losing money on every single transaction you make. When you’re processing hundreds of these transactions a month, you have no idea of how much money you’re losing out on.

A More Simplified Solution for Your Merchant Account

Published interchange fees are published for your knowledge. With Transparent as your merchant account provider, the fees are simple to understand without any part of the pricing hidden from you. There are no bundles, no tiers, and no nonsense: just a monthly service fee, a per-transaction fee* based on your pricing model and then the interchange fees published by the card associations. There are no set up fees, no contracts to sign and no cancellation fees. Nothing hidden, all Transparent.

*Transparent aims to keep your processing simple and easy to understand by offering only 2 pricing programs, one for merchants who process less than 500 transactions, and another for merchants who process more than 500 transactions. Please see the pricing chart here