Switching Merchant Accounts Can Save You Thousands
What most merchants don't realize is that they are significantly overpaying for their existing account. Some merchants may even have a good idea that they are overpaying, but don't realize how easy it is to switch their account. The more volume you are processing as a merchant, the more you'll save by switching to a less expensive merchant account.
When you initially researched your merchant account for pricing information, you probably did so looking for the least expensive discount rate or percentage rate. Many advertised rates pull the "bait and switch" where you are drawn in with some insanely low rate only to realize after you start processing that the low rate originally advertised isn't for you. Most merchant accounts have a qualified rate, a mid-qualified rate and a non-qualified rate.
There are per transaction fees for every merchant account. Sometimes this fee is not charged if the merchant has history and does a flat rate on just the discount rate. But even if the fee doesn't show up on the statement, the merchant account provider and the bank still have this fee. They simply make it up in the discount rates. Flat rate pricing has one advantage and that is simply for accounting. It may be easier to know that every transaction is subject to a flat rate, either a flat per transaction or a flat percentage or discount rate.
If the average sale or average ticket items are small, the per transaction fees will represent a larger percentage of the overall fees than the discount rate. This fee doesn't get taken advantage of by most merchant processors nearly as much as the discount rate, but shouldn't be overlooked.
If you process large transactions, the discount rate will affect your fees much more than your per transaction fee. For those processing retail transactions where the card is physically present at the time of the transaction, an important note to remember is that if you process Visa and MasterCard check cards, they should process at a lower rate than your "regular" credit cards. This is where most of the savings occur for the majority of business owners that choose to switch their merchant account.
Switching your merchant to a new provider is easy. Generally it only takes a few minutes to complete an online application and a few minutes of verifying your prices and fees to know that you're saving money. Although the time span for switching to a new account isn't quick, the actual time you personally spend is typically less than 30 minutes.
Most merchant accounts have an early termination fee, so the process of switching accounts may have costs associated with terminating your existing agreement. There are a few options here, depending on how much your early termination fee is and the duration of your contract. Some merchants can save $100 or more per month and keeping the existing account open for $25 per month may make sense. You should check with the provider you're considering to also see if they offer a reimbursement for switching by paying off your early termination fee for you. Some providers will do this, others will not, but it's worth asking.
Getting new equipment can also be a benefit of switching your merchant account. Competition for new merchant accounts is fierce so some of the incentives that processing companies are offering include new equipment. So, if your equipment is older or if you just want new equipment, make sure to ask about that and make that a part of your switching strategy.
I have been setting up merchant accounts for quite a while. I'm promoting a couple of videos on Youtube on this topic. You can find the two videos I've done most recently about internet merchant accounts and ecommerce merchant accounts. I'm working to get these videos in the top of the search engines.
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