Switch Your Merchant Account To Save Thousands

Posted by Brian Armstrong

September 10, 2009

Business owners often overlook their merchant accounts because it only represents a small part of their overall financial picture. The reality is that merchants are overpaying and often don’t do anything about it because they believe it’s too much of a hassle to switch. Merchants that process transactions on a regular basis can save a significant amount of money by switching and it is significantly less work that most merchants might think.

When you initially researched your merchant account for pricing information, you probably did so looking for the least expensive discount rate or percentage rate. Many advertised rates pull the “bait and switch” where you are drawn in with some insanely low rate only to realize after you start processing that the low rate originally advertised isn’t for you. Most merchant accounts have a qualified rate, a mid-qualified rate and a non-qualified rate.

There are per transaction fees for every merchant account. Sometimes this fee is not charged if the merchant has history and does a flat rate on just the discount rate. But even if the fee doesn’t show up on the statement, the merchant account provider and the bank still have this fee. They simply make it up in the discount rates. Flat rate pricing has one advantage and that is simply for accounting. It may be easier to know that every transaction is subject to a flat rate, either a flat per transaction or a flat percentage or discount rate.

For merchants processing smaller ticket items, such as fast food restaurants or convenience stores, the per transaction fee usually represents a larger percentage of the overall transaction and can significantly increase the overall percentage you’re paying for accepting credit cards.

If you process large transactions, the discount rate will affect your fees much more than your per transaction fee. For those processing retail transactions where the card is physically present at the time of the transaction, an important note to remember is that if you process Visa and MasterCard check cards, they should process at a lower rate than your “regular” credit cards. This is where most of the savings occur for the majority of business owners that choose to switch their merchant account.

Switching your merchant to a new provider is easy. Generally it only takes a few minutes to complete an online application and a few minutes of verifying your prices and fees to know that you’re saving money. Although the time span for switching to a new account isn’t quick, the actual time you personally spend is typically less than 30 minutes.

One of the reasons many merchants won’t switch their merchant accounts is because they have an existing contract for which they have an early termination fee. The irony here is that for most accounts, the savings on switching to a lower priced account far exceed the early termination fee. Some merchant account providers even offer a waiver or reimbursement to provide incentive for merchants to switch so if you find the right merchant account provider to go through, you’ll have that early termination fee with your existing processor covered.

If your equipment is not PCI compliant, this may be a great time to switch to a new account. For most merchants, your equipment is most likely already PCI compliant. Many merchant service providers now offer free equipment for new merchants including those switching over from another provider. Reprogramming your existing equipment is also an option and most merchant service providers will give you the reprogramming for free as well.

I have been helping merchants establish their ecommerce merchant accounts for about 7 years. I specialize in Authorize.Net gateway accounts as well. If you are interested in learning more about internet merchant accounts you can visit my Youtube channel on the topic at youtube.com/merchanthotline or my website MerchantHotline.com.

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