Small Business Owners are a stalwart, hardy folk. They have to be brave and determined, as well as savvy, to survive in our current economy. Overhead costs keep increasing and profit margins keep decreasing. And, as these conditions continue to persist, the market has become over saturated with another disturbance to our already stressed entrepreneurs… never ending streams of salespeople pushing all sorts of products claiming to “increase profits” or “reduce costs’.
The merchant account industry, is probably the worst offender of the lot. My clients, as well as my business owner friends, frequently complain about the continuous telemarketing (or door-to-door) merchant service calls that they receive.
Because Merchant Accounts are a hot topic right now regarding non-qualified charges and because this is an essential service for most small businesses, I am going to share some relevant info that can help small businesses save unnecessary processing costs (but really)… thereby reducing a bit of their overhead.
1. Discount Rates: The discount rate is always a percentage amount of the purchase, the cost incurred for the processing service. The base qualified rate is the amount that the merchant pays to have a basic swiped credit card transaction processed, turned into cash and deposited into his bank account. Then, there is a level of non-qualified surcharges that are applied in addition to the base rate such as keyed- in transaction rates and/or incentive/rewards/ corporate card surcharges. It is common to see merchants set up in the wrong rate code for their industry. It is very important to have your business set up properly within this framework. This can save merchants hundreds of dollars… depending on their volume. Get someone who is NOT a salesperson for one of the processors, maybe your bank rep or an independent consultant to review it for you.
2. Batch Out: Before batching out it is important to review your daily transactions. If you accidentally made a mistake..(ie charged $100.00 instead of $10.00) or pushed a wrong button… VOID the sale! Don’t credit the mistaken amount. You’ll end up paying the processing fee for the sale and, also, for the credit. This is burning money. Many merchants don’t realize that depending on their processor, they pay the same percentage on a refunded transaction as on a purchase transaction.
3. Read and understand your contract clearly. A merchant account is a contract governed by industry bank rules and Visa/MasterCard regulations. There is usually an application from the sales office and a contract from the Provider Bank. If a desperate sales representative says something that sounds too good, make sure you have them point out EXACTLY where it is confirmed on the contract.