Monthly processing statements are the ultimate math-classes and by getting anything wrong, the bad mark inflicted will not leave you for quite some time. Your monthly processing statement is basically your trove of information and comprehensively summarizes all your credits and charges, and outlines any balances and fees you incurred for the month. The statement even signals of any frauds in case of unusual transactions. However, there is a secret of even getting more from your payment processing; carefully scrutinizing and understanding your merchant discount rate, does it spark an idea? Breaking down your monthly statement from your payment processing provider will give you a gist of all the items.
Before we delve into the practical tips in this guide, it is important to understand that different types of credit cards come with completely different requirements and an equally different interchange rate on your monthly processing statement. This makes it even harder to understand how payment processing can really benefit your business, and this necessitates you to know how to read your processing statements. With the consistent increase of credit cards being released by MasterCard and Visa, it gets very difficult to understand the amount of fees that you are being charged as a merchant. Yes, there is a way to build your monthly processing fees into your business model, if you know how to break down your monthly processing statement. Payment processing should not come out of your bottom line every month.
Importance of this guide
Pushy payment processors will use their salespeople to lure you into a contract and end up with charges that you did not decipher at first, but this guide is about a team of professionals who will clear the cloud about what the actual costs of your payment processing is. In addition to going through your statement, you will also receive sound advice on how to incorporate the statement into your services and products. Subsequently, you will be able to price your products and services accordingly. Below are some tips that will come in handy.
1. Interchange Rate
Interchange fee is the minimum fee that Visa and Mastercard charge in order to accept specific cards for payment. The different types of credit cards, infinite, high-spend business, corporate card etc all carry a different value or interchange rate, that as a merchant you will pay when accepting that card.
The best advice is to find a payment processor that offers a solution, which breaks down each card type, and interchange fee prior to signing a contract. These interchange fees come directly out of your sales, meaning it is very important to know what you are paying every time you accept a credit card.
2. Foreign Card Fee
When accepting foreign cards, your monthly statement will show an interchange fee for that type of credit card, and additionally it will show a foreign transaction fee, or a foreign card fee. If you are continuously accepting foreign cards because you are in a high tourist area, or near a boarder, look into a solution that offers multicurrency pricing. You will be able to offer your customers the ability to pay in their home currency, while you settle in CAD.
3. Item Fee
Not every payment processor charges an item fee, but if you have an item fee on your monthly processing statement, that is simply a charge for every time you swipe a credit card, or manually enter a credit card through your terminal or eCommerce solution. It has nothing to do with interchange or the type of card. It is simply a fee per transaction that you do for credit card only.
4. Admin Fee/Statement Fee
This fee is typically set aside for online billing, receiving paper statements, managing your account and ensuring that you are taken care of when there is a problem. It is very common for this to be bundled into a different service, but it is in every monthly processing statement somewhere
5. Pick the best solution
Understand your business’ needs and leave the finding of your solution to a qualified payment processor. Monthly processing statements can be tough to decipher on purpose from the payment processor, however, very few payment processors are proud to break down your costs and fees for you right from the beginning. No surprises, means no problems down the road. Understand your business needs is important. Take the time to find the right payment processor and never have to worry about a confusing monthly statement again.