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How To Save Your Small Business Money On Credit Card Processing

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How To Save Your Small Business Money On Credit Card Processing


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Wondering how you can save money on your credit card processing service? What to know what to look for and what questions to ask merchant service companies, before you get set-up to accept credit card for your small business?

Everyone at BankCard POS understands that you may be looking at merchant account options and may ultimately go with another provider. We understand that you may want a more local provider, or you have personal or business relationship that would benefit from going with another merchant account provider, or some other perfectly valid reason, but we would like you to know what to look for, ask for, and demand out of your merchant services provider, so you don’t get screwed.

Top 10 Things to consider, when choosing a merchant account provider:

  1. What are the markups on rates, fees, and assessments that Visa, MasterCard, and Discover charge all the credit card processors? This important information to know, if you accept credit and debit cards: “What are good credit card processing rates?”
  2. Don’t be fooled by low rates and ask about customer service. Some companies that offer unbelievably low rates, fees, and assessments actually charge you for each customer service call. What about customer service?
  3. Can they handle all of your POS hardware, POS software, and merchant account customer services issues with one phone call?
  4. Can they integrate your accounting software, POS hardware, POS software, Website, and credit card processing together quickly without charging extra?
  5. What about the fine print? Make sure that you read through the entire agreement and cross out whatever you don’t want to agree to. For example, cancelation fees. Be wary of a credit card processor that isn’t willing to work with you to earn your business.
  6. How are they going to help your small business grow? Will they market your business online?
  7. Are there monthly minimums or annual fees? There shouldn’t be.
  8. Is there any batch header, AVS, or other fees? (most of the time these are just extra, hidden or nickel and dime fees)
  9. Are there application fees? There shouldn’t be.
  10. What are the total monthly fees?



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The type of merchant account that you establish with your credit card processor company usually has a tremendous impact on rates and fees, because most credit card processing companies only offer “tiered pricing” to small business owners. If you set up a merchant account with tiered pricing for retail swiping, or over the phone transactions and process credit card transactions that fall outside of your set parameters than all of those type of transactions will be “downgraded” to Non-Qualified.  To get the best rates, fees, and service you should really avoid tiered pricing all together and stick with merchant accounts that offer interchange plus pricing. Your rates and fees will still fluctuate with interchange plus pricing depending on how you process the credit and debit card information, but the fluctuation won’t be nearly so costly to your business.

If you decided to go with a credit card processor that only offers merchant accounts with tiered pricing, because of some personal obligation on your end make sure to ask the following:

  • What are your mid-qualified rates?
  • What are your non-qualified rates?
  • What makes your company consider a particular credit or debit card transaction to be mid-qualified?
  • What makes your company consider a particular credit or debit card transaction to be non-qualified?
  • Are there monthly minimums with your merchant account service?
  • Are there other fees like batch header fees, or AVS fees? (watch out—extra fees)


The biggest upfront cost to accept credit cards is always the POS hardware, credit card processing equipment, and the POS software. There is a huge variety in options for all types of business for both POS systems and credit card terminals and the upfront cost varies just as much. Here are somethings to consider, before you purchase, order, or sign up for a credit card terminal, or POS system from your merchant account provider:

  1. Make sure that you have the right payment processing equipment for your particular business. Some businesses have a lot of products and services, so they require feature rich POS software and POS hardware that has all sorts of things like barcode scanners, customer displays etc. Some business really only need a credit card reader that plugs into their smart phone. Make sure that you get what you need, but don’t spend money on something that you won’t use, or doesn’t bring serious benefit to your business.
  2. Can they work with your old credit card processing terminals? Many credit card processors like BankCard POS can program older terminals for no additional charge, when you open a merchant account. It may even worth asking, if you can get a credit card processing terminals for free.
  3. Avoid leasing a credit card processing terminal at all cost for a lot of reasons. These leases always mean the credit card machine cost more, there is a really high cancellation fees, and a long-term contract.


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 Credit Card Processing Rates and Fees


If you have a business that accepts a lot of credit and debit card transactions, then your highest cost will typically be the discount rate or the percentage that Visa, MasterCard, Discover, and your merchant account provider deduct from every payment made by credit or debit card.

Now, your discount rates can be affected by your type of business, risk level, credit history, average monthly volume, average ticket or sales size, and many other variables. However, most restaurants and small retail businesses generally only have credit card processing rate fluctuation depending on how they enter, or process the card information and what type of card they are trying to process.

Make sure you have a basic understanding on interchange pricing, before you establish a merchant account, because knowledge can save you a ton of money, when it comes to credit card processing.

What does qualified rate, mid-qualified rate, and non-qualified rate even mean?

Qualified-rate is the percentage rate that is deducted from a credit or debit card transaction that meets all the stipulation of your merchant account. For example, you swipe a consumer card that has no reward program attached to it, because you are a retail merchant. This is lowest rate you can receive under a tiered pricing format and this is the rate most credit card processor quote. However, most credit and debit card transactions do not typically fall into this category.

Mid-qualified rate is the percentage rate that is deducted, when you process a credit card that doesn’t meet the requirements of your merchant account provider to be considered Qualified. The mid-qualified rate categories tend to be about 1.5 times what you are quoted for your “special discount rate”. Most of the credit card transaction would be about half to one whole percent cheaper to process with interchange plus pricing. Most credit card processors will make a transaction hit as mid-qualified, if it is keyed in rather than swiped at the point of sale. Some reward and business cards tend to fall into this category as well.

Non-qualified rate is where merchants really get abused by their credit card processor company, because merchant account providers usually double up your original discount rate here. Visa, MasterCard, and Discover will charge higher rates for keying in a credit card, not getting the address verification number, missing zip codes, or not settling the authorized transaction within 24-48 hours, but the fees that merchant account providers charge here are typically double what your qualified rate is.

“Downgrade” essentially means rate increase and this occurs, when your credit card transactions don’t fit the criteria your merchant account provider (not Visa, MasterCard, and Discover) established. You can mitigate the number of downgrades that you receive every month by playing in accordance with the completely fabricated rules of your merchant account provider, or you can avoid the whole situation completely by signing up with an honest merchant account provider like BankCard POS that only offers interchange plus formats, because it rather lose on potential business being honest, than sign-up merchant accounts with the same lie everyone else is telling.

Now, it is important that your staff is trained to collect all the required information, swipe the cards, and batch the authorized transactions every day, because there are extra interchange charges for noting doing these things, but the markup that most credit card processor charges for these minor errors should be illegal.

“Batching” or “batch out” means sending the “batch” (all the credit and debit card authorizations for the day) to the acquiring bank for payment. To get the best possible rates for your entire batch it is important to “batch out” every 24 hours.  BankCard POS typically sets up our merchant partners with automated batching, so it isn’t even an issue. Not batching out causes the chances for dispute to rise, so the banks assume more risk, if you don’t settle the batch on time, thus the higher interchange rates.


There is a transaction fee for every authorization that Visa, MasterCard, and Discover issues and they typically charge between $0.05 to $0.25, which varies much like the discount rate does depending on how the transaction was entered and what type of card is being processed. A interchange plus of transaction fee of $0.10 means that $0.10 will be charged on top of what the card associations charge the credit card processor for that transaction authorization.

All merchant account providers pay the same interchange rates and fees, so don’t believe merchant account providers that advertise rate lower than interchange, because that means there is going to be downgrades and other hidden, or extra fees being tacked on somewhere, because no one is going to pay to process your credit and debit card transactions, but you. Make sure to severely question bundled rates as well, because this never works out in the business owner’s favor either.

“chargeback” means that your customer has disputed the credit or debit card payment and it has been returned to the acquiring bank. It is important that you respond to these types of disputes immediately. It’s important that you have a merchant account provider that knows how to help you win disputes.

Bottom line: there is no avoiding paying interchange rates, fees, and assessments should you want to accept credit and debit card transactions, but it’s up to you, if your business has to deal with the qualified, mid-qualified, and non-qualified nonsense. The best way to avoid the hidden cost, extra fees, and games that we have described in this post is to simply educate yourself on interchange rates, fees, and assessments, then determine how much of a markup you are ok paying for in exchange for good customer service and limited hassle. The reality is that there is a million credit card processors, but there are only a few that will give you a great interchange plus pricing program combine with quality customer service and the best option out of these limited few in our humble opinion is BankCard POS.

These articles below offer different information on Interchange Plus Pricing and POS Systems:
Interchange Plus Pricing!
What Credit Card Processing Options Are Available For My Restaurant?
How Much Should My Point Of Sale System Cost?
Interchange Plus Pricing Means Low Transparent Rates And Fees!
What Does EMV Mean To The Merchant?
What Is A Point Of Sale-POS-System?



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