When I am talking to merchants about their credit card processing rates, many times they ask my what my rate is? They think their rate is the total fees divided by the volume processed on their credit cards. They ask if I can beat that rate. But the rates vary on different types of cards and different ways of accepting cards, card present, over the phone or online. Asking me what my rate is would be like asking the grocer how much for a bag of groceries. It depends what is in the bag.
Different types of cards within different industries have different wholesale, interchange rates. The bank associations who issue the credit cards decide how much risk and therefore how much money they need to make to cover the risk of loaning the money and still make a profit.
Debit cards have lower risk and therefore a lower wholesale interchange rate. Rewards cards have a higher risk because somebody has to give away an airplane ticket. Corporate cards have the most fraud, so they have the highest interchange rate.
There are over 1000 different risks and rates on various types of credit cards depending on the type, if the card was present for the transaction of taken over the phone or over the internet. There are different risk and rates depending on the industry. All of this is indicated on the monthly merchant statement.
The monthly merchant statement tells the merchant how many transactions they had within the various categories and what the rates are for each category. It is like going through the checkout at the grocery store with a bag full of various items, fruits, vegetables, meat and milk and asking the grocer what his rate is for a bag of groceries. Everybody’s bag has different items and quantities of items adding up to a total.
Processors like Square, Stripe and PayPal charge a flat rate and flat transaction fee, which are high enough to cover the highest rated categories. These processors make a lot of markup on low risk categories like debit cards.
We, at Electronic Money Company, always price our merchants at the wholesale rate plus a markup for servicing the account. That way, the merchant gets the advantage of the best rates for the types of cards they are processing. We ask you for your merchant statement so we can present you with a spreadsheet comparison of rate savings in all of the categories. We compare apples, oranges, and all of the items in the grocery bag so you can see how much we are saving you. We are always lower than Square, Stripe or PayPal plus we give you personalized white glover service and support not available with Square, Stripe or PayPal.
Give us a call now at 505-296-2847, before you forget, and find out exactly what you are paying for your payment processing.
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Other topics you might be interested in: Avoid Costly Mistakes: Download our free report, 5 Mistakes to Avoid When Choosing a Credit Card Processor
