How to save money on card-based transactions

Small businesses are losing money

One of the most prevalent mistakes made by small businesses is to overlook their bill for credit and debit card transactions. It’s easy to do and results in an entirely avoidable loss of revenue. So why are small businesses losing money? A lot of it comes down to confusion regarding the fees associated with card use.

If you’re like many business owners, the amount you pay for card transactions probably has a rate associated with different types of cards and a number of items that are included in that rate, such as PCI certification, IRS fee, membership fee, etc. The bottom line is, it’s not clear what exactly you’re paying for when a customer swipes their card. All that’s clear is that a certain percentage of the sale is being taken away from you and given to the company that processes the transaction. Let’s see where your money is actually going.

Interchange rate

Theinterchange rate is the baseline fee charged by Visa, MasterCard, Discover, or Amex that is applied to every card use. The fee varies based on the type of card used, with debit cards charged around 0.05% plus 0.20¢per transaction and credit cards charged around 2% plus 0.10¢ per transaction. However, the rate also changes based on whether the card is retail or ecommerce and rewards or non-rewards.Even the type of product that is being purchased affects the rate.

That’s right, you may have a different rate selling a certain amount of furniture than your friend selling the same dollar amount of computers.

Bottom line: The interchange rate is something that you can’t change and is going to be added to any purchase regardless of the card processor being used.

Why don’t businesses just pay the interchange rate?

When businesses agree on a rate presented by a salesmen, they aren’t agreeing to terms set by MasterCard or Visa. Instead, they are agreeing to the rate set by the card processor, or the Independent Sales Organization (ISO).

The problem is that most ISOs lump the interchange rate with their own rate, which includes markups and hidden fees, making the final rate a confusing bundle of charges. This extra rate can be as high as 2% on top of the interchange rate and can change based on what you are selling, just like the interchange rate.

The trick, then, is to find the ISO with the most reasonable rate.

How about 0%?

At 99 Merchant Account, with membership at $99 or less monthly plus 10¢ per transaction, there is no extra rate added to the interchange rate, allowing members to pay less.

You can’t beat 0%.

Stop losing money today. Sign up here.


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