Merchant Services
If you have been in business for any period of time you have been plagued by the cards, phone calls and walk-in sales people offering to "save you money" on your credit card processing fees.
Knowledge is power.
We take the time to educate our clients on how the credit card processing industry works. When you have a straightforward fee structure that is easy to understand, you are better prepared to deal with the onslaught of offers merchants receive.
SMS is focused on providing the best local service at a very reasonable price. We will share our knowledge of the industry to help make you a more informed merchant, putting more savings in your pocket.
Understanding Rates and Fees
All merchant service providers have the same costs. Be wary of any who claim to "buy direct and avoid the middle-man."
COST
The cost to a processor is comprised of two groups of fees.
Interchange Rates The largest part of your cost, they are set by the payment industry. Each transaction is sorted into categories based on
- The type of card used (credit, debit, rewards)
- The way the transaction is processed (swipe, non-swipe, internet, with AVS)
- The merchant's type of business (movie theater, restaurant, hotel, pay at the pump)
Dues, Fees and Assessments Fees assesed as part of each transaction, they are only a fraction of a percent but are a component of the cost.
Interchange + Dues + Fees + Assessments = Cost
Anything the sales person charges you above cost are profits. A merchant service provider may share the profit with the sales rep in several different ways. Some split 50/50, some offer bonuses and free equipment as benefits.
Pricing is usually offered in one of two formats.
Bucket Pricing All of the transactions are placed into a series of buckets, often called Qualified, Mid-Qualified and Non-Qualified charges. The problem with pricing this way is that you have no idea which charges go into which buckets. A charge that may be Qualified at one processor may be considered Mid-Qualified at another. If you see these fees on your statement please contact us.
Cost Plus Pricing In this method of pricing the sales rep should state their profit above cost. It is usually quoted as Cost plus ___ % and ___cents per transaction. If you use this type of pricing you will know exactly how much you are paying above your processors cost.
The Benefits of Cost Plus Pricing
- Profit stays the same - When the rates change the profit margin of the account stays the same. This keeps your rates from creeping up every year.
- Honesty in pricing - If you use the Bucket System you have no way of knowing which category your transactions fall into. There is no way of telling how much you are paying above cost.
- Easy comparison - if another company offers you a rate comparison you know the profit your processor is making. You will not fall for claims of huge monthly savings if you know what profit is available to begin with.
