Accept Credit Cards? Read The Fine Print

Transaction Charges Vary On Risk, Expense Of Card Used

Posted: April 29, 2014

If your business has been accepting credit cards for very long you are fully aware there is more to the expense than just a quoted “rate.” Visa alone has more than 30 different ways it can charge a retail merchant. 

The variance depends on the type of card and how that card is being transacted. The rate and “per item” cost is dependent on the risk of the transaction and expense of the card being used. So yes, you are helping pay for the “rewards” your customer receives for using their card.

But as you have probably figured out, this is a cost of doing business. According to The Nilson Report, spending in the U.S. on credit, debit and prepaid cards was $4.63 trillion in 2012 and will reach $7.28 trillion by 2017. So, what are some ways to limit your cost and make sure you’re not locked into paying too much?

Look At The Whole Picture

Check your monthly merchant statement. If a charge doesn’t make sense to you, ask about it. Better yet, have an analysis done on two of your average volume months, by a professional you trust.

Make sure it includes all fees associated with your account including any annual fees.Also make sure you are getting charged less for debit cards, particularly PIN-based debit transactions, which are less risky.

Avoid Downgrades

Always swipe your cards when possible, enter all information that your terminal prompts for, and settle your batch at least once a day. Remember that if you are set up with a fee structure that is “tiered,” additional surcharges can be placed on those key-entered transactions or when something other than a “regular” personal credit card is used.

Read Your Contract

We know we should read the fine print but it doesn’t always happen, does it? With a merchant card contract it’s definitely best practice.

First look for the length of the term and the total cost to void it. If you don’t see it, ask specifically and make sure to get it in writing. Avoid long-term contracts with high early termination fees.

Also request a breakdown of all potential hidden fees before signing.

Beware Of The Bait And Switch

Ever had somebody you never heard of call you up offering merchant card rates too good to be true? This has probably happened more than once. It could be that the rates presented are true BUT for how long?

Make sure before signing anything that the rates you are quoted today aren’t going to go up in a couple months. While merchant rates will usually fluctuate with that of the credit card companies, ask about the surcharge that your merchant provider is receiving.

Buy Or Lease?

In most all cases it’s better to buy your merchant equipment than lease. I’ve seen businesses that have paid for their equipment 20 times over with monthly lease fees.

If the up-front cost of the equipment seems high, it might be worth comparing with another provider. You need to ask for not only the price but the data associated with the equipment.

Another reason to buy is if you do switch merchant providers you’ll be able to reprogram your existing equipment and not have to purchase or lease again.

Of course the other crucial factor that can get overlooked with accepting credit cards is having the proper customer support.

If your terminal or PC gets zapped by lightening do you know who to call? Are they readily available and how long will it take them to get you back up and running?

These are all questions that need to be asked up front. The last thing you want is to look unprofessional because you aren’t getting the necessary service from your merchant card provider.

Jonah Pence is a commercial relationship manager at Farmers & Merchants Bank at 80 Cross Keys in Harrisonburg. He can be reached by phone at (540) 437-3461, or email at

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