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Knowing Your Effective Rate For Credit Card Processing Is The Best Way To Not Overpay For Merchant Services

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Rose Holman

Rose Holman

Writer
Rose Holman is a writer, blogger, and educator from Portland, OR with an MA in Teaching from Western Oregon University. She enjoys educating SMB owners about the complicated (and notoriously sketchy) world of payment processing. Since starting at Merchant Maverick in 2016, she has also added eCommerce software to her areas of expertise.
Rose Holman

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8 Comments

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    jorathon

    Need to Be sure here in one step condition, you should not conclude any volume of Amex since the Amex bills merchants directly, that might affect your numbers.

      This comment refers to an earlier version of this post and may be outdated.

      Jessica Dinsmore

      Hi Jorathon,

      We agree that it’s very important to consider how Amex transactions are processed for your account — whether you have a direct agreement with with Amex, or you’re using OptBlue via your normal processor for other cards.

        This comment refers to an earlier version of this post and may be outdated.

        Matthew Levy

        I would love to see a website that shows effective rates that merchants are getting across different industries and sorted by processor. So you can make an educated decision before you sign up with someone.

          This comment refers to an earlier version of this post and may be outdated.

          Emily Hale

          Hi Matthew! That would make things a lot simpler, but unfortunately, it would be difficult to provide an all-inclusive “snapshot” that would be accurate for every business. That’s because one rate structure could affect two businesses (even within the same industry) in pretty significant ways depending on the volume of sales and other factors. That being said, here at Merchant Maverick we focus on helping businesses understand the types of fees they’ll encounter, and we take a deep dive in our reviews to help you determine if a specific processor is a good option for you. The Beginner’s Guide to Payment Processing eBook may be a good option to get you started understanding how to navigate it all. Hope that helps and best of luck!

            This comment refers to an earlier version of this post and may be outdated.

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            Lowell Parker

            We’ve been fighting with merchant service providers for years to give us contracts based on average net effective rate during the term of the contract, but they refuse. This should be an industry standard. Instead, merchant service providers prefer being able to manipulate their fees from one month to the next to squeeze profits out of the merchant.

            Our other gripe relates to chargebacks. When a cardholder claims a charge is not theirs due to fraudulent use of the card, the merchant (who has done nothing wrong) takes the hit by having that revenue removed from his account, despite having provided a product or service that cost money. What about the thieves who steal the cards? Sure, they are hard to find, but who asked credit card companies and their issuing banks to create products that are so easily misused, and who took them off the hook when the actual criminal can’t be found? Charging the merchant is blaming one of the victims. We’ve always wondered if this is written into law, or whether it just works this way because banks own the politicians in Washington?

              This comment refers to an earlier version of this post and may be outdated.

              Guy

              You also need to take into account if processing fees are returned when the merchant issues a refund. Flate Rate processors normally do refund the fees.

                This comment refers to an earlier version of this post and may be outdated.

                Curtis

                Be sure not to include any Amex volume since Amex bills merchants directly, that would only distort the numbers.

                  This comment refers to an earlier version of this post and may be outdated.

                  Merchant Maverick Admin

                  Great point Curtis. I’ll add that to the article.

                    This comment refers to an earlier version of this post and may be outdated.

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