Payment processing fees you need to be aware of (pt. 1)

I am really excited about this two-part article because I am sharing insights that can save businesses lots of money. Literally, for some merchants, this can be thousands of dollars without doing much work.?

If we all can agree on one thing, it is that payment processing fees are complex and confusing. It is not intended to be that way, but I believe some payment processors take advantage of this and design their statements in ways that make it more difficult for merchants to spot junk fees.

Are you checking your processing statements?

Over the past decade, I have analyzed thousands of merchant account statements and put millions of dollars back into the pockets of businesses across the U.S. I do not say this to brag, but instead, I want to educate business owners about how important it is to read your processing statements.?

The majority of merchants simply look at their effective rate each month, which is the total processing fees divided by sales volume (I have a previous article dedicated to this). The problem with this approach is that as your business grows, so do your fees. It is essential to take a closer look at the growing fees to make sure that they are simply from increased sales and not added junk fees.?

For example, if your business processes $1M per month in cards, a new $125 monthly “PCI Non-Compliance Fee” will be virtually unnoticeable, as it will only increase your effective rate by 0.01%. However, months and years of not noticing this fee will add up over time. This can be avoided by increasing your awareness and being proactive with your monthly statement audits.

It’s all about communication and transparency

Merchants feel wronged when fees are not disclosed upfront. In general, no one likes being surprised with new or hidden fees, right? Just like any business, payment processors have costs and overhead, as well. The key is to make sure your processor is transparent from the start. Review all contracts and fee schedules before signing any documents with a new payment processor, as well as any financial penalties that could be assessed later on, like PCI Non-Compliance.

In my next article, I am going to discuss a few different types of fees that can be negotiated with your processor or avoided altogether. It is more about awareness and a reminder to check your statements each month.

Many sales reps will tell merchants just about anything to get them to sign the dotted line, only to cancel two months later because the rep “missed” that one costly fee.

Stay tuned for the fees in the next article, I promise it will be worth the wait!