About the author : Carrington Fisk

For every new client I bring on board, I personally walk them through their statement and teach them how to hold me accountable. Some of them are right here payment processing in Apex, NC, but many are all across the country.

I train my sales reps to do the exact same thing – we named it the SETT Review. SETT stands for:

  • Service
  • Education
  • Transparency
  • Technology.

Let’s pause here to acknowledge that me and my team are certainly not the majority in this wonderful industry of ours.

So if you are reading this and you are not a client of mine or someone on my team, you’re going to have to teach yourself how to hold your partner accountable.

Luckily, it’s really easy.

Here is the one number that your processor may not want you to know: Effective Rate.

Effective Rate is the final cost of processing transactions. While it doesn’t show every last piece that you may want to know and certainly doesn’t dive into the detail me and my team deliver, it’s a great start.

Look at your statement – total up EVERY amount that is deducted from your account (or you can use your bank statement). Here are some things to look for:

  • Interchange
  • Dues & Assessments
  • Card Brand Network Fees
  • PCI Compliance Fees
  • PCI Non-Validation or Non-Receipt fees
  • Marketing and/or Digital Insights
  • Discount Fee
  • Transaction Fee
  • Authorization Fee
  • Per Item Fee
  • Transaction Processor Risk Fee

Basically, every single cent that gets deducted as a result of your taking electronic payments. This information should all be on your merchant statement that is sent to you by your payment processor.

Here are a couple sometimes tricky things you need to add to your statement manually:

  • Authorize.net and other gateway fees
  • Terminal lease or rental fees

Once you’ve totaled all of those fees, you’ll divide by your processing volume.

(Total Fees) / (Total Volume) = Effective Rate

What do you do with your result?

Track it.

Keep it in a note on your phone, a Google Sheet, excel spreadsheet, hell put it on your bathroom mirror on a post it note.

While each month may have some minor fluctuations it shouldn’t vary too greatly from month to month. The only caveat to that is really high average tickets.

Let me explain:

There are over 300 different types of cards that you can take as a business. Each one of these categories – called Interchange Categories – has a different cost associated with it. Some are really affordable and some aren’t.

Consider these two card types:

  • Visa Regulated Debit costs 0.05% plus 22¢ per transaction
  • Visa Commercial Non-Qualified costs 2.95% plus 10¢ per transaction
  • Get a full list of interchange rates below:
    Visa | MasterCard

On a $30 transaction, Regulated Debit costs 23.5¢ vs. Commercial Non-Qual costs 98.5¢. Big difference right?

On a $500 transaction, Regulated Debit costs 47¢ vs. Commercial Non-Qual is $14.85. Starts to become a pretty big deal, right?

If you do say $20,000 per month in payments volume and your average ticket is $30, no one or few transactions is going to alter your total cost very much. Even with the examples above, the difference is pennies on a transaction by transaction basis

If your average ticket is $500 and you do $20,000 per month, even one purchase at the much higher interchange cost card can offset your effective rate.

This is confusing!

Yes, it can be. Often, it’s a lot simpler when we have a real statement to walk through. I would be happy to walk you through your current processor’s statement so you can learn how to hold them accountable.


About the author : Carrington Fisk

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