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Affordable Credit Card Processing | We have you covered

Posted by Alex Neir on Wed, November 16, 2011 @ 01:23 PM
Affordable Credit Card Processing

Affordable Credit Card Processing | We have you covered

Are you looking for an affordable credit card processor? More often than not affordable and credit card processing don’t seem to fit well together. This is partially due to the fixed cost imposed on merchants to accept credit cards called the interchange rate. The second cost factor is the additional rates and fees imposed by your processor.

Now the term affordable is subjective. What is affordable for some may be expensive for others so let’s begin with a base line of affordability. When auditing a merchant account it is important to calculate the effective rate for your processing. The effective rate is calculated by dividing your monthly processing fees by the total volume processed. This number should be below 3.0% for low risk retail merchants.

So, that being said, anything above 3.0% becomes more expensive than it should be and therefor more unaffordable.

The beauty of the effective rate calculation is the fact that it is a retrospective look at all the rates and fees your business is charged. Lots of providers offer seemingly incredible deals on processing rates only to hit you with exaggerated ancillary fees to make up the difference.

So if you truly want an affordable credit card processing solution, stop negotiating the individual rates and get commitment from your processor that your effective rate be 3.0% or less. Then you know you are getting the most affordable merchant account possible.

Let Maxx Merchants review your processing and we’ll guarantee your effective rate is 3.0% or below* while also providing the best in class customer service and support.

Affordable Credit Card Processing


*Certain restrictions apply

Tags: Effective Rate, Affordable Credit Card Processing, Good Rate On a Merchant Account

Merchant account effective rate: what you pay to process credit cards

Posted by Alex Neir on Tue, September 13, 2011 @ 11:13 AM
Effective Rate

Merchant account effective rate: what you pay to process credit cards

Merchant Account Effective Rate

Adding merchant services capabilities to any business can significantly boost its bottom line. Ease-of-doing business not only makes the shopping experience more favorable for consumers, but it can contribute to ongoing repeat business. One of the features to understand when either adding or updating your current merchant services account is the effective rate charged.

So, what exactly is this charge and how should it equate into the overall decision making process about which vendor to leverage for your business?

Effective Rate Basics

In simplest terms, the effective rate refers to the NET percentage of a business’s sales that will be charged for the ability to accept credit cards; credit card processing fees.

For example, if a business receives $15,000 in credit card sales in any given month, and their total processing expense is $450; its effective rate for that month was 3.1%. While this calculation is very basic and straight forward, there is another consideration to be aware of; the qualified discount rate.

If you are offered a qualified discount rate, which is very common and an excellent option to consider, this is the base fee rate to be assessed. Once surcharges and other merchant account fees are added back into the equation, you arrive at the net effective rate. When determining your fees, be sure to break them out individually so you can assess each one independently.

Calculating your Estimated Effective Rate

For established businesses, this calculation will be fairly simple; take your average monthly credit card sales x the effective rate from the merchant services provider, to arrive at your average monthly processing fee. Newly established businesses or businesses with inconsistent sales will have a slightly more difficult time arriving at this calculation. In these instances, factoring a higher monthly average than anticipated will make it easier for the business to budget costs.

While an effective rate is indeed a cost assessed, it is often a small price to pay for the end value offered to your customers and ultimately to your business for this added payment option.

Tags: Credit Card Processing Fees, Effective Rate, Good Rate On a Merchant Account

Good rate on a merchant account? Your average sale will tell you.

Posted by Alex Neir on Tue, September 28, 2010 @ 02:32 PM

A common question often asked is “What’s a good rate on a merchant account?” The question seems simple and straight forward but in actuality depends greatly upon the average sale amount of the merchant.

The reason for the dependency has to do with the way in which merchant account rates are applied. There are two components that make up the charge total for each transaction completed by the merchant. The first component is a percentage charge and the second is a fixed per transaction fee.

Both the percentage amount and per transaction fee can be negotiated with your merchant service provider. Knowing your average sale amount gives you the ability to determine which component of the charge total is most important in keeping your costs down.

Let’s look at an example to see how a merchant’s average sale affects their total processing costs. In the examples listed below the sales volume for the month is $10,000.

What's a good rate on a mercahnt account

What’s a good rate on a Merchant Account?

Analysis of these two graphs tell us a couple of things. If your business has a low average ticket then savings are most abundant through lowering your per transaction cost. On the other side, as your average ticket grows (great than around $80) savings are going to be greatest through a reduction in the percentage component of your overall rate.

Knowing how your average ticket amount affects your total processing cost is helpful when considering a merchant services proposal. This is a very good example of why shopping for the lowest advertised rate will not always result in the lowest processing costs.

Tags: Payment Processing, Good Rate On a Merchant Account