The Truth Behind Merchant Accounts Rates

50 %
50 %
Information about The Truth Behind Merchant Accounts Rates

Published on October 9, 2007

Author: sptrobb

Source: slideshare.net

Description

Here is a presentation I created for a potential client that was promised a discount below cost - 1.19%. How can this be? Watch to find out.

Merchant Account Rate Reality Robb Lejuwaan - US Merchant Services

Presentation Outline Where do merchant account rates come from? How is a merchant account rate built? Rate cost examples How were you offered a rate below cost? A look at my price model Who is US Merchant Services?

Where do merchant account rates come from?

How is a merchant account rate built?

Rate cost examples

How were you offered a rate below cost?

A look at my price model

Who is US Merchant Services?

Where do the rates come from? They come direct from Visa and MasterCard

They come direct from Visa and MasterCard

Where do the rates come from? They come direct from Visa and MasterCard The official name for these rates is INTERCHANGE

They come direct from Visa and MasterCard

The official name for these rates is INTERCHANGE

Where do the rates come from? They come direct from Visa and MasterCard The official name for these rates is INTERCHANGE Here are links to the web sites with this information: Visa Interchange Guide MasterCard Interchange Guide

They come direct from Visa and MasterCard

The official name for these rates is INTERCHANGE

Here are links to the web sites with this information:

Visa Interchange Guide

MasterCard Interchange Guide

Key Point ALL MERCHANT ACCOUNT PROVIDERS HAVE THE SAME COST FROM VISA AND MASTERCARD

ALL MERCHANT ACCOUNT PROVIDERS

HAVE THE SAME COST

FROM VISA AND MASTERCARD

Key Point ALL MERCHANT ACCOUNT PROVIDERS HAVE THE SAME COST FROM VISA AND MASTERCARD THERE IS NO SUCH THING AS A “ Wholesale Rate”

ALL MERCHANT ACCOUNT PROVIDERS

HAVE THE SAME COST

FROM VISA AND MASTERCARD

THERE IS NO SUCH THING AS A

“ Wholesale Rate”

How a rate is built Example #1 Transaction Type: Card Swiped Normal Visa Consumer Card: 1.5400% + $.10 Visa Acquiring Fee: .0925% Cost for this transaction: 1.6325% + $.10 Normal MC Consumer Card: 1.5800% + $.10 MC Acquiring Fee: .0950% Cost for this transaction: 1.6750% + $.10 These are considered to be the BASE RATES

Example #1

Transaction Type: Card Swiped

Normal Visa Consumer Card: 1.5400% + $.10

Visa Acquiring Fee: .0925%

Cost for this transaction: 1.6325% + $.10

Normal MC Consumer Card: 1.5800% + $.10

MC Acquiring Fee: .0950%

Cost for this transaction: 1.6750% + $.10

These are considered to be the BASE RATES

How a rate is built Example #2 Transaction Type: Visa Rewards Card Swiped Visa base rate: 1.6325% + $.10 Rewards 1 Surcharge: .11% Cost for this transaction: 1.7425% + $.10

Example #2

Transaction Type: Visa Rewards Card Swiped

Visa base rate: 1.6325% + $.10

Rewards 1 Surcharge: .11%

Cost for this transaction: 1.7425% + $.10

How a rate is built Example #3 Transaction Type: Visa Commercial Card Swiped Visa base rate: 1.6325% + $.10 Commercial Card Surcharge: .66% Cost for this transaction: 2.2925% + $.10

Example #3

Transaction Type: Visa Commercial Card Swiped

Visa base rate: 1.6325% + $.10

Commercial Card Surcharge: .66%

Cost for this transaction: 2.2925% + $.10

How a rate is built Example #3 Transaction Type: MC World Key Entered MC base rate: 1.675% + $.10 Commercial Card Surcharge: .47% Cost for this transaction: 2.145% + $.10

Example #3

Transaction Type: MC World Key Entered

MC base rate: 1.675% + $.10

Commercial Card Surcharge: .47%

Cost for this transaction: 2.145% + $.10

But, you have a 1.19% rate! Currently, you have a rate that is .4425% - 1.15% lower than cost? How is this possible?

Currently, you have a rate that is

.4425% - 1.15%

lower than cost?

How is this possible?

But, you have a 1.19% rate! Currently, you have a rate that is .4425% - 1.15% lower than cost? How is this possible?

Currently, you have a rate that is

.4425% - 1.15%

lower than cost?

How is this possible?

How do you have a 1.19% rate? If you would have paid that rate in August of 2007 The merchant account provider would have lost $179.42 on your account!

If you would have paid that rate in August of 2007

The merchant account provider would have lost $179.42

on your account!

How do you have a 1.19% rate? I call this type of rate a “Hollywood rate,” it has a great looking facade but with out all the makeup it is scary!

I call this type of rate a “Hollywood rate,”

it has a great looking facade

but with out all the makeup it is scary!

How do you have a 1.19% rate? I call this type of rate a “Hollywood rate,” it has a great looking facade but with out all the makeup it is scary! Here is how it works…

I call this type of rate a “Hollywood rate,”

it has a great looking facade

but with out all the makeup it is scary!

Here is how it works…

How do you have a 1.19% rate? The 1.19% rate is for swiped, regular, consumer card transactions Then there is a another rate for “mid-qualified” transactions, maybe 3.25% Card transactions such a swiped rewards cards and keyed in regular consumer cards fit into this category.

The 1.19% rate is for swiped, regular,

consumer card transactions

Then there is a another rate for “mid-qualified” transactions, maybe 3.25%

Card transactions such a swiped rewards cards and keyed in regular consumer cards

fit into this category.

How do you have a 1.19% rate? Then there is a another rate for “non-qualified” transactions, maybe 4.25% Card transactions such a corporate cards and Visa EIRF fall into this category

Then there is a another rate for “non-qualified” transactions, maybe 4.25%

Card transactions such a corporate cards and Visa EIRF fall into this category

How do you have a 1.19% rate? Let’s see the numbers on this comparing the 1.19% rate to 1.95% using your July Merchant account statement…

Let’s see the numbers on this comparing the 1.19% rate to 1.95% using your July Merchant account statement…

July 2007 Category 1.19% 1.95% Qualified $146.66 $240.33 (1.19% vs. 1.95%) Mid-Qualified $244.26 $155.40 (3.25% vs. 2.06%-2.10%) Non-Qualified $267.13 $161.37 (4.25% vs. 2.61%) Totals $658.05 $557.10

So the 1.19% rate does not lower costs It causes them to go up $100.95!

$100.95 Loss? How can this be?

It is very simple They make all their profit by padding the surcharges from Visa and MasterCard We, on the other hand, offer “ straight pass through” which means we pass through the surcharges from Visa and MasterCard at cost, without any padding.

So even when our base rate is .76% higher than our competition our fees are still considerably lower Their “mid-qualified fees are 1.15% higher and Their “non-qualified” fees are 1.64% higher than our rates

Merchant account providers have conditioned merchants to focus on the base discount rate… … when there actually two price points to focus on: Base rate Surcharges Fees

Merchant account providers

have conditioned merchants

to focus on the base discount rate…

… when there actually two price points to focus on:

Base rate

Surcharges Fees

So What Is Our Offer? Base Rate – 1.95% Surcharges – at cost from Visa and MC Here are some surcharge examples: Visa swiped rewards - 1.95% +.11% = 2.06% Visa card not present - 1.95% +.31% = 2.26% MC Comm. Face to Face - 1.95% +.47% = 2.41% Visa debit card swiped - 1.95% +(.51%) = 1.44% MC debit card swiped - 1.95% +(.53%) = 1.42%

Base Rate – 1.95%

Surcharges – at cost from Visa and MC

Here are some surcharge examples:

Visa swiped rewards - 1.95% +.11% = 2.06%

Visa card not present - 1.95% +.31% = 2.26%

MC Comm. Face to Face - 1.95% +.47% = 2.41%

Visa debit card swiped - 1.95% +(.51%) = 1.44%

MC debit card swiped - 1.95% +(.53%) = 1.42%

Who Is US Merchant Services? US Merchant Services is a Registered Member Service Provider for MasterCard International and a Registered Independent Sales Organization for Visa USA through Fifth Third Bank. 14 Years in business. BBB member with a “AAA” rating. $1.8 Billion in annualized volume (new business) in 2006. Reprogram 200-250 merchants per month. 5 th 3rd Bank – 145 years old; over 1100 locations. T-SYS – The original Visanet, created by Visa. Now owned by Total Systems, is the largest single payment platform in the world.

US Merchant Services is a Registered Member Service Provider for MasterCard International and a Registered Independent Sales Organization for Visa USA through Fifth Third Bank.

14 Years in business.

BBB member with a “AAA” rating.

$1.8 Billion in annualized volume (new business) in 2006.

Reprogram 200-250 merchants per month.

5 th 3rd Bank – 145 years old; over 1100 locations.

T-SYS – The original Visanet, created by Visa. Now owned by Total Systems, is the largest single payment platform in the world.

Who Is US Merchant Services? US Merchant Services provides the following processing solutions: Prioritized 24/7 Customer Service. No Hidden Fees. Full Visa/MasterCard Check Card Rebates. A Straight Pass-Through from Visa/MasterCard on Surcharges and Interchange Reductions. Premiere 24/7 On-Line Reporting. Discount Charged Monthly, Not Daily. No Switching Costs. Full Disclosure of all Processing Fees. Easy to Understand Monthly Statements. An Account Executive Permanently Assigned to you.

US Merchant Services provides the following processing solutions:

Prioritized 24/7 Customer Service.

No Hidden Fees.

Full Visa/MasterCard Check Card Rebates.

A Straight Pass-Through from Visa/MasterCard on Surcharges and Interchange Reductions.

Premiere 24/7 On-Line Reporting.

Discount Charged Monthly, Not Daily.

No Switching Costs.

Full Disclosure of all Processing Fees.

Easy to Understand Monthly Statements.

An Account Executive Permanently Assigned to you.

Want More Information? This was a presentation created for a specific client that had been offered a rate of 1.19 %. If you have “mid-qualified” and “non-qualified” fees on your merchant account and you want to get rid of your hidden fees please click the link below and fill out the form. Get a Straight Pass Through merchant account

This was a presentation created for a specific client that had been offered a rate of 1.19 %. If you have “mid-qualified” and “non-qualified” fees on your merchant account and you want to get rid of your hidden fees please click the link below and fill out the form.

Get a Straight Pass Through merchant account

Add a comment

Related presentations

Related pages

The Truth Behind Merchant Accounts Rates ...

Merchant Account Rate Reality Robb Lejuwaan - US Merchant Services Presentation Outline Where do merchant account rates come from? How is a merchant ...
Read more

goEmerchant Reviews - The Truth Behind goEMerchant Accounts

goEmerchant Merchant Accounts Review by Gretchen Streeter, June 22, 2011. ... Rates, Services . Copyright © 2009 Rate Credit Card Processing Services ...
Read more

The Truth Behind the Rate - CentrisFCU

Youth Accounts; Rates; Loans. Mortgages; Home Equity; ... Merchant Processing; Paychex; ... The Truth Behind the Rate.
Read more

The Truth Behind Your Payment Processor - Avangate

Truth: Payment providers charge ... "We improve authorization rates." Truth: Most payment processors do not ... Merchant accounts are based on credit ...
Read more

Fact or Myth? The Truth about Online Small-Business Loans ...

Fact or myth? There are several myths concerning online small-business loans that merchants should be aware of. While there can be some truth behind these
Read more

Think Outside the Square: Analyzing the Cost Effectiveness ...

Think Outside the Square: Analyzing the Cost Effectiveness of Square’s ... your rates could be ... basic” truth behind square vs merchant accounts.
Read more

Send Money, Pay Online or Set Up a Merchant Account - PayPal

Paypal Home. Shopping online shouldn't cost you peace of mind. Buy from millions of online stores without sharing your financial information.
Read more

What You Need to Know About Credit Card Processing - The ...

... you will see special interchange rates associated with different MCC codes. ... standing behind the merchant service provider was another ...
Read more