Rates
Having consulted with thousands of merchants, the question we are most frequently asked is "What’s your rate?" Ever wonder how this question became the starting point for all negotiations?
Obviously, rate is an important component, but what we have found is that merchants have actually been taught to ask this question by sales reps. Inexperienced and untrained sales reps rarely do more than sell on rate, using rate as the chief motivating factor to get merchants to sign contracts.
If you ask for rates, savvy marketers will only be too happy to entice you with below-market gimmick rates designed to lure your business into a contractual obligation. These contracts may be long-term equipment terminal leases or multi-year processing agreements with stiff early-termination fees.
Having more knowledge about what determines your rate and the fees that impact your bottom line cost will help you make an informed decision when selecting a credit card processing provider. Understanding the importance of price structure and having a company that can help you manage your interchange qualification are very important.
Merchants today must pay even closer attention to their rate structure than to their rate.
Do you currently have a tiered rate structure with a qualified, mid-qualified and non-qualified bucket pricing?
You will want to avoid this pricing structure since you will find that many of the transactions that once were consider qualified will move to the mid or non qualified rate bucket beginning with the new 2005 Interchange pricing from MasterCard and Visa. Traditionally, most merchants only paid attention to the qualified rate; therefore merchant account providers have built expensive margins into their mid and non-qualified pricing.
Do you have the same rate for both MasterCard and Visa transactions?
Effective April 2005, MasterCard increased the base rate for retail swipe card transactions by 0.09%. Visa’s base retail rate remain unchanged. Since Visa may account for as much as 70% of your transactions, if you pay the same rate for both MasterCard and Visa transactions, you will want to consider changing to a custom price structure, quoting independent rates for each.
Do you currently have only one qualified rate?
If you do, you are not able to qualify for all the reduced incentive Interchange pricing levels available to you. For example, restaurants can qualify for reduced Interchange rates for credit and signature debit (check cards) transactions under $15. Also, signature debit card transactions that qualify for both Merit 3 Debit and Restaurant Debit will get a better rate with the Merit 3 Debit program if the amount is greater than $35.71 or the Restaurant Debit program if the amount is less than $35.71. This example illustrates the upside of having a professional payment systems consultant work with you to analysis your card processing activity to find the best rate structure for your specific business.
We trust that the topics in this price section will lead you to better vendor relations. Keep reading or contact HiTechvalue Inc. for a personal consultation. We will provide a valuable analysis to show you a comparison of the Interchange pass through pricing model. It is by far your best option to insure you qualify for the best rates. Simply email a statement to us at admin@hitechvalue.net.
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