Chances are the answer to that question is ‘yes’ when it comes to your credit card processing fees and charges. Back in March we discussed the different levels of processing, how they work and how the rates vary.
Admittedly it’s a dry subject so you may have wondered what the big deal was around Level 3 processing. The big deal in a word: money. Lots of money. But how do you really know? This one question will help you determine if you are leaving money on the table and what to do about it.
Who set up your original merchant account?
If you are like most companies you probably looked to your bank to establish a merchant processing account. Your existing relationship made the bank a convenient option. However, banks typically do not have the expertise to set up Level 3 commercial processing. What we often see in the marketplace is that companies with bank provided merchant services are set up with Level 1 or 2 retail rates which are significantly higher. Check to see if your rates are in the 6-7% range. If so, you are probably set up as a retail account. At Level 3 your rates should be in the 3-4% range.
To be fair most banks set up merchant accounts at the retail level because it’s a one size fits all approach that works for them. They may not have the in-house resources with the knowledge or expertise to set up and manage the account based on your specific needs.
An Impressive Money Saving Story
We thought a recent success story from one of our clients would be a great way to demonstrate what we mean by cost savings. A local family owned business decided to bring in a controller to help manage their company’s growth. The new controller began evaluating all financial aspects of the company and asked Evolve Systems to conduct a competitive analysis of their merchant services account. Our analysis revealed that they were being charged retail processing rates. Once we converted them to a Level 3 commercial account they realized just over $20,000 of savings in the first year. The best part of this story is that it cost them nothing to convert to Level 3 processing.
It’s pretty common for us to uncover cost savings of this significance when given the opportunity to conduct a competitive analysis. And because we’re entering our fourth year as a Level 3 merchant services provider we have the in-house expertise to make a transition seamless for our clients. In our next article we’ll address another topic that could impact your bottom line: How PCI compliance could jeopardize your insurance coverage.
Post a comment below and give us your thoughts on this topic. We welcome your comments!