Switch Your Merchant Account To Save Thousands

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by BrianArmstrong

Business owners often overlook their merchant accounts because it only represents a small part of their overall financial picture. The reality is that merchants are overpaying and often don't do anything about it because they believe it's too much of a hassle to switch. Merchants that process transactions on a regular basis can save a significant amount of money by switching and it is significantly less work that most merchants might think.

When pricing accounts, both new accounts as well as pricing to switch over, most merchants look at nothing more than the qualified discount rate and base their decision on this number only. Instead of basing your decision to switch on just the qualified discount rate alone, you should instead base it on your effective rate which is the ratio of overall fees to the gross volume that you process. If you base it on the effective rate, you can usually always find a lower rate by modifying some components of pricing. If you're overpaying by $100 per month on the non-qualified rate, you can keep all other rates the same and reduce just that fee alone to get an extra $1200 in your pocket every year.

You have a discount rate that represents a percentage of your overall volume, but you'll also have a per transaction fee which is a flat fee charged on all transactions. This fee is charged to cover the cost of sending those transactions electronically. This is a revenue center for both the banks as well as the merchant account companies but should still be something you're aware of as a business owner.

For merchants processing smaller ticket items, such as fast food restaurants or convenience stores, the per transaction fee usually represents a larger percentage of the overall transaction and can significantly increase the overall percentage you're paying for accepting credit cards.

If you process large transactions, the discount rate will affect your fees much more than your per transaction fee. For those processing retail transactions where the card is physically present at the time of the transaction, an important note to remember is that if you process Visa and MasterCard check cards, they should process at a lower rate than your "regular" credit cards. This is where most of the savings occur for the majority of business owners that choose to switch their merchant account.

Switching merchant accounts is not difficult and should come with an option to make sure that you can back out if the new contract doesn't lower your overall effective rate. The point of switching your merchant account is to lower your rate and get better services. Find a provider that has a good rates, can lower your rates and has exceptional service.

One of the reasons many merchants won't switch their merchant accounts is because they have an existing contract for which they have an early termination fee. The irony here is that for most accounts, the savings on switching to a lower priced account far exceed the early termination fee. Some merchant account providers even offer a waiver or reimbursement to provide incentive for merchants to switch so if you find the right merchant account provider to go through, you'll have that early termination fee with your existing processor covered.

Getting new equipment can also be a benefit of switching your merchant account. Competition for new merchant accounts is fierce so some of the incentives that processing companies are offering include new equipment. So, if your equipment is older or if you just want new equipment, make sure to ask about that and make that a part of your switching strategy.

About the Author:

All the information you need to make a good decision about who you choose to use for your credit card merchant account you can find on Brian's website at MerchantHotline.com. Contact him through his website for a free quote for your own merchant account including a free analysis of how much you'll save by signing up with MerchantHotline.com.

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