5 thoughts on “How Credit Card Processing Companies Deceive You With Low Rates”

  1. Scott Bradley says:

    Steve – You did an awesome job at explaining and breaking all of this down! Thanks for the link and the mention in this article.

    Other things that affect credit card rates include.

    1) When You Close Out Your Batch

    For example…some processors penalize merchants who don’t close their batch out within a 24 hour period. This usually applies to a typical brick and mortar store. So lets say that the merchant processed over $5000 in transactions, and if they batched out all of those transactions within a 24 hour period, the rates on the cards that were swiped would stay the same. But here is where they get you…if that same merchant waited more than 24 hours to batch out the transactions, most or all of them would fall into a higher tiered buckets (assuming they are on a tiered plan).

    2) How The Card is Taken Also Affects What The Merchant Pays

    For example…An in person swiped transaction will be cheaper than a transaction done via the internet. The rate is higher because the risk is higher. If you can help it, you always want to make sure that you swipe the card yourself, and if you can’t, as you described above, make sure that you get the most amount of information from the customer before processing the transaction online or over the telephone.

    Another tip I would also like to share with the audience is that if you are going to seek a new processor…be sure to black out the rates on your statement along with your fees. All the new sales rep should know is your monthly processing volume and what business you are in…once they know the rates you are paying, they can still take advantage of you by only lowering them a little bit. (Normally it is customary for them to ask for a statement before quoting a new rate, so if you use this little tip it will save you potentially thousands of dollars!)

    When it comes to the other fees involved on top of “dues and assessments” (Processors don’t control these costs…these fees are determined by Visa/Mastercard) make sure that you don’t pay more than these amounts below.

    -Don’t pay more than .10/transaction for Visa/Mastercard
    -Don’t pay more than .10/transaction for AMEX
    -Don’t pay more than .20/batch for the batch fee
    -Don’t pay more than 7.50/month for a monthly statement fee

    *If you are paying higher than this, you are being taken to the cleaners.


    Always buy your equipment, NEVER RENT! (Renting is a total ripoff…you could be paying upwards of $1200/year vs a $300 one time payment on a terminal if you make this mistake.)

    It is also important to know that every October and April the interchange rate for all credit card transactions change. You want to make sure as a merchant that you check your statement to make sure the processor accounted for this change, so they don’t keep charging you a higher rate if the interchange rates decreased for particular cards you take.

    I look forward to the conversation!

    1. Steve C says:

      Thanks Scott!
      I think collectively, we’ve covered this topic enough. I received several emails from people telling me that they are more confused than ever now:)

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