Why January Is a Great Month to Assess Your Payment Provider
The confetti is swept up, the champagne flutes are empty, and the resolutions have been written. But before you settle into business-as-usual mode, there is one crucial New Year’s activity that deserves your attention: reevaluating your payment processing program.
Why Reevaluate Your Payment Program Now?
While the new year signifies a fresh start to eat healthier, exercise more, or learn a new skill, January is also a popular time for credit card processors to bump up their processing fees.
These price changes may come in the form of an increase in your fixed monthly fees, transaction fees (either assessment or per transaction), or in new fees that just appear on your credit card processing statement. Often, advance notification of price increases are either nonexistent or they get buried in the notes section on your credit card statement. I’ve even seen processors point customers to login to their website for information on their fee changes.
So if your payment provider isn’t always transparent with its pricing, how can you know whether your fees are competitive? Below are a few things you can do to make sure you are not overpaying for your credit card processing.
1. Look for These Fees on Your Processing Statement
While different processors have different names for their added fees, here are a few common ones. If you see any of these on your credit card processing statement, you may be overpaying.
- Non-EMV fee: Additional fee charged by some processors for card-not-present transactions.
- Risk Fee: Helps your processor mitigate the risk across its entire customer base.
- Monthly Versus Daily Discount: Added fee to take out fees at the end of the month rather than every day. By the way, end or the month is the industry standard.
- Customer Intelligence Suite: Monthly fee for access to analytics, which in many cases is overkill for most small businesses. Many merchants don’t even realize they have access to the analytical information.
- PCI Non-Compliance: Fee for not completing industry security requirements. This is a fair fee if your business is not compliant with Payment Card Industry (PCI) security standards. That said, your processor should be offering to help you become compliant rather than charging you a fee for non-compliance.
- Bundled Rates: This is where a processor takes the hundreds of interchange rates from the credit card companies and puts them into three buckets: Qualified (lowest rate), Mid-Qualified, and Non-Qualified (highest cost). The processor decides which bucket your transactions fall into, and this can change over time. While some processors typically will tell you your “rate” is the qualified rate, many times you’ll see your transactions begin to shift into the higher mid and non-Qualified buckets. This results in significant overpayment on your part.
2. Compare Your Year/Year Statements
Contracts typically don’t lock in your fees. A quick way to check the consistency of your fees is to do a year over year comparison of your credit processing statement.
Calculate your net effective rate (Total Fees / Total Sales) for this month and compare it to the net effective rate you paid for the same month last year. Is this year’s rate higher? If so, your processor has raised its prices or introduced new fees at some point over the last 12 months.
Wind River provides a statement analysis for businesses at no cost. We’ll compare statements for you and let you know if your fees are higher than what you should be paying or if you are right in line with the average for your industry.
To be fair, sometimes small price increases are justified. But many times, they are unnecessary and just a way for credit processors to drive bottom line profit and shareholder value.
Beyond new fees and price increases, there are a couple of other flags to watch out for when reevaluating your payment processing partner:
Declining Customer Service
Have you had a hard time getting ahold of customer support of your current payment processor? Do you get stuck in a robotic loop of pre-programmed responses when you are looking for someone to answer your question? Do you submit a support request only to hear nothing in return?
If you said yes to any of these questions, you may not be getting your money’s worth out of your payment processing program. Customer service is woven into the fees you are being charged. You should be able to trust that you can reach your processor with any question or concern and receive a timely response – because your business is important!
Not Keeping in Touch
Your business changes over time. As a result, so do your payment acceptance needs. Does your current processor engage with you regularly to learn how your business is changing and how those changes may impact your payment program? In today’s world, merchants need more than a payment vendor, they need a partner that keeps them informed on technology advancements, alerts them to emerging trends in fraud and cybercrime, and helps look for ways to process payments more cost-effectively.
The bottom line is that while you’re busy running your business, you need to be able to trust that your payment provider has your back and is helping to lower your fees, not add to them.