Confusion About How Fees are Charged, Resulting in Costly Downgrades
The Problem: Credit card processing fees are confusing. It would be nice if there was one discount rate and one transaction fee, but that's hardly the case. With a typical tiered pricing structure, transactions can fall into three different categories and each qualified, mid-qualified or non-qualified category results in a different charge. This confusion leaves many businesses paying mid and non-qualified surcharges when they don't have to.
The Solution: Different processors can downgrade transactions differently. Contact your representative to find out why your transactions are downgrading and what can be done to remedy the causes. If downgrades can't be lessened, get quotes for a new credit card processing account where transactions won't downgrade as often.
Failure to Read Credit Card Processing Statements
The Problem: Even though credit card processing represents a substantial portion of overall business expenses, some business people still don't read their statements. Along with indicating the monthly charges, processors use statements to tell businesses about rate increases and other vital information. Businesses that don't read their statements don't know when their rates are increasing or even how much they're paying to accepts cards.
The Solution: Read your processing statements every month. Pay special attention to the area of the statement (usually on the front) where important updates such as rate increases are listed.
Don't Understand Credit Card Processing Statements
The Problem: Statements are notoriously confusing. To make matters worse, each processor has their own way of structuring their statements which makes general tutorials on the subject impossible. Failing to understand your statements can prove very costly.
The Solution: Call your representative and have them teach you how to read your statements. The time it takes to learn your statements may save you a substantial amount of money.
Failure to Regularly Compare Rates
The Problem: Credit card processing rates can fluctuate over time. Changes can come directly from VISA and MasterCard or from individual providers. Credit card processing accounts aren't something to forget about. Failing to regularly compare rates may leave your company at an expensive competitive disadvantage.
The Solution: Periodically check the market by getting new processing quotes. If you're rates are higher than the quotes that you receive, it's time to make a money-saving switch.
Downgrades due to operator error
The Problem: Credit card transactions downgrade (charged a higher rate) because of things that the person does or doesn't do when charging the card. Certain requirements must be met in order for a credit card transaction to fall into the lowest rate category. Failing to meet any of these qualifications will cause the transaction to be charged at a higher rate. If you don't know what these requirements are, you may be wasting a lot of money on something that's easy to fix.
The Solution: Learn about the qualifying requirements for your credit card processor and your specific type of merchant account. Different types of merchant accounts have different requirements. The easiest way to learn about the requirements that affect you is to call your credit card processing representative.