The answer is very carefully, and watch out for hidden fees not represented. Here is my most recent story about rate comparing. A client, who owns two businesses, asked me to get with his accounting person to set up his third business. I thought I would be getting a new application ready immediately, but here was the challenge. The owner who referred me had no understanding of his fees or merchant statement because he is too busy running his business. The accountant he referred me to had no idea how to read their current merchant statement, much less understand a quote. Credit card processing merchant statements are confusing and our customers who get a full education when they sign up with us, seem to forget that education a month or two later. Other merchants are likewise in the dark as well.
So we had our merchant on a cost + .25% pricing model with a $.07 transaction fee and $19.95 per month. The other quote was to match the quote at 2.55% and $.07 and $4.95 per month. At first glance, it seems that the quote is lower because they are saving $15/month. At second glance, however, the new quote had a $20 minimum and a $100 coupon for a clover terminal. How the minimum comes into play is when a merchant has a slow processing month. If the fees are less than $20, then the merchant gets charged $20 as a minimum for fees. This merchant had a couple of months with low volume and the merchant would end up paying an additional $20 per month. The coupon for the Clover helped pay for the Clover but didn’t cover the monthly Clover fees, which weren’t included in the quote. Since I also sell Clover, I know that those fees can be as high as $35 per month. Besides that, this merchant took all credit cards over the phone and could use a virtual terminal online with no fees. There was no need to pay for a Clover terminal.
Now let’s address the rate of 2.55% versus Cost +! There are over 1000 different rates a card can incur for a merchant. A debit card can be as low as .05% and $.22. A corporate card can be as high as 2.95% and $.10. Rewards cards are in-between ranging from 1.65% to 1.95%. So if the merchant takes a bunch of debit cards, he will be paying through the roof at 2.55% and generating a huge profit for the processor. Cost + is a more fair way to price card processing. Each card rate is marked up an additional .25% for the processor. Additionally, this quote of 2.55% did not address (i.e. purposely forgot to mention) the assessments, acquirer fees, PCI fees, and non-qualified surcharge fees. Without knowing enough to ask about those extra fees, this merchant can get majorly taken advantage of. Many times these fees get overlooked on the application and the merchant can get hoodwinked.
Once I exposed this quote to our transparent merchant statement, the merchant thanked me and
signed up for their 3rd location with us. We hate to see people get hoodwinked by slick salespeople!
Give us a call at 505-296-2847. We will take the time to give you an honest comparison and explain the difference between working with people who pride themselves on transparency and genuine customer service.