With all of the great offers how can it be that over 95% of merchants are still being overcharged?
The answer is easy, with virtually zero regulation! Banks & processors can say and do anything they want.
Click here to watch a video of Sen. Dick Durbin addressing the House and President Obama about how banks along with Visa and MasterCard are overcharging merchants without restraint. Senator Durbin goes on to say that “Interchange is a price fixing scheme. Period!” Banks and processors have free reign to say and do what they want, making up terms and definitions and changing pricing on the go.
To level the playing field, we have laid out the most common tricks banks/processors use. Remember that anyone can say they have the best deal when there’s no one to prove otherwise. Our staff is more than happy to assist you when calling banks/processors for a new merchant account, and the best part is that it’s free!
Offer a Low Base Rate and then Surcharge The downgrades!
- Base Rate (contract rate) of 1.54%
- Applies to swiped Visa card present non- rewards, non-commercial transaction only
- All other transactions downgrade
- Processor HIDES their additional fees in the downgrades
It’s easy for a merchant account provider to use this trick, as most of them only disclose their base contract rate and not their downgrade rates. When merchant account providers do this, the merchant will see the fees only, not actual rate being charged by transaction type. Therefore, the merchant could be paying as much as 5% or more and would never know.
Offer A False Low Base Rates
A very common deceptive billing practice is to advertise or promote 0.95%
- This is a swiped DEBIT rate fee
- Does not apply to credit cards
- Does not include the Dues & Assessments Fee of 0.11% which Visa adds to all transactions.
- Does not include all the other miscellaneous fees added by the networks
- Does not include the network transaction fee
- Does not include the merchant account provider’s Discount Rate (Processors’ markup)
- They are not disclosing any of the other add-on fees such as:
- Does not include the merchant account provider’s Discount Rate
These Merchant Account Providers sites do not disclose any of the other add on fees such as:
- Statement Fees/Application Fees/Transaction Fees/Watts Fees/Auth Fees/Batch Fees/Settlement Fees/Maintenance Fees/POS Fees/AVS Fees/Downgrade Itemization of Interchange Fees
We find that processors using this type of advertising tactic are likely to use other billing scams as well.
Generic Billing
| Using Words | Using Numbers |
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There is no such interchange category as Mid-Qualified, Non-Qualified, etc. These terms could be applied to one of any of several hundred transaction categories set by the networks. By keeping the terms generic instead of specific, a merchant can’t compare rates or validate fees.
Here is an example of what a grocery bill would look like if stores were given the same billing freedom as merchant account providers. Hundreds of items would get condensed to four line items with no pricing detail. Imagine not knowing what you paid for a gallon of milk, just that it was part of the $257.07 they took out of your account. Luckily, all other industries have laws and regulation that protect us from this type of billing.
Missing Volume (very common)
Not disclosing the line item (transaction) volume on the downgrades.
Without the transaction volume, you can’t determine the processing rate. When a merchant account provider uses this type of billing practice, they can charge any percentage rate they want! Reminder: There are no laws capping the fees or rates a merchant account provider can charge.
Date Description Total
8/20/09 Jun BB124-TRAN CLRD AS CORP DATA II (US) Business BUS MC 1 -3.37
What rate did the merchant pay on the above transaction?
Can’t figure it out? That’s okay. Merchant account providers and our team of Interchange (credit card processing) experts can’t either.
To calculate the rate, take the fee charged and divide it by the transaction volume. In this example, you would take the $3.37 and divide it by _?_ which = _?_. It does not matter what your base rate is when your merchant account provider can charge any rate they want on your downgrades.
Most industries spend their Research and Development (R&D) dollars finding out how they can make their product less expensive and more efficient, which is how they gain market share. That’s their only way of getting ahead.
However, a merchant account provider can say anything they want, using very misleading terms. Unlike other industries, merchant account providers don’t have to disclose anything. So their R&D budget is spent on how they can deceive a merchant into thinking one thing, while delivering a completely different result.
Some of the other games played by merchant account providers include:
- Initial low introductory rates followed by a substantial increase (just like they do on personal credit cards).
- Enticing merchants with free equipment, only to raise rates later to make up for it.
- Guaranteeing lowest rates. As above, it’s easy to make it appear they are less.
- No contract, which is good, but can give you a false sense of security.
Remember that you don’t have to be the expert in merchant processing; that’s our job, and we are the best in the industry. We protect merchants from unethical billing, and there’s no cost to merchants looking for a new merchant account. No gimmicks, no strings, just free help. Of course, not all of our services are free; click here to learn more about our premium services.