In the world of credit card processing and merchant services, rates are not a one size fits all. Typically merchants are looking for a rate right away without understanding what the program includes. It is always important to know what type of processing that your business requires. Merchant services are not the same for every merchant. Customers and customer needs differ as much as businesses do. Rates are definitely a factor by all means, but when it comes to determining the type of merchant services solution that your business requires, there are a number of factors that come into play.
First, understand that Visa and MasterCard have rate categories, also known as interchange, for every type of credit card that is issued. And these rates are assessed to the merchant each time a transaction is processed. For the most part, merchant services programs can be separated into a couple different boxes if you will. Interchange plus or a fixed interchange program.
Interchange plus basis points offers the merchant true costs from Visa, and MasterCard. The basis points are the above costs that are added on to each transaction by the merchant services provider to cover helpdesk, network fees and overall support to you as a merchant. Interchange plus is most common in card present merchant services, wherein the cardholder is present during the transaction, unlike an online transaction, which is card not present.
Fixed rate merchant services is very common when it comes to online processing. This is because each transaction is card not present, meaning there is no cardholder that is inserting their card into a payment terminal. A fixed rate program is highly beneficial to online merchants because they are guaranteed a rate regardless of which type of card is used on their website. It could be a range between a Visa Classic, to a high-spend corporate MasterCard. Your rate will never change, and it is much easier to keep track of your transactions when you as a merchant know your rate.
What is best
There is better of worse program when it comes to dealing with interchange plus or a fixed rate merchant services program. Both are different and both have their benefits, it simply all comes down to your business needs. As mentioned above, it is most common to have a fixed rate program for your online business, but that does not mean that you cannot have interchange plus for your merchant services. And vice versa for your payment terminal. Just because you have a brick and mortar location doesn’t mean that you cannot have a fixed rate merchant services program,
On top of the interchange fees, there will always be accompanying monthly fees, whether it is an account management fee, batch fee, item fee etc. All processors are different, and some bundle those fees into 1 fee in order to make it easier for your monthly reconciliation. Again, this is all a matter of doing your homework, and getting to know the merchant services provider that you are dealing with.
Each merchant services provider is different, and each business is different. Take the time to go through what your needs are, and ask the right questions when looking to contract with a merchant services provider. The merchant services provider that will stand out from the others will take the time to go over the fine print and details that set them apart from the box in one providers. There is no such thing as a one size fits all solution, and if you are being sold otherwise, it is time for you to go back to the drawing board.