You’re making sure your merchant account is running as efficiently as possible. That’s why you are probably a top executive. Working with numerous clients, we have found that optimizing your merchant account, in 3 different ways, can increase your company’s bottom line even further.
We want to share these profit optimization strategies with you:
1. Ensure Your Cross-Border Transactions are Handled Properly to Reduce Extra Fees or Extra Assessments
Cross-border fees are charges incurred when a cardholder from a different country makes a transaction or uses a different currency card on your merchant account.
Why is this important?
It is important to be aware of these charges, and how they work, since every merchant account includes foreign fee charges, which are often overlooked. At first glance you may think these charges have minimal impact, so you just sign the relevant contracts and proceed. But it’s important to understand once your foreign transaction volume begins increasing, whether, through tourist shopping or US business, you really start seeing an increase in costs.
These extra fees can take a toll on your bottom line. So, keep your eye on these charges, especially if you have foreign customers. If the charges are for one-off transactions, there is no need to worry, as costs are nominal. If you only accept domestic cards, once again, there is no need for concern, as these charges won’t apply to your account; they are still included in your contract, just in case this type of transaction occurs. However, if you are accepting payments from foreign customers, it’s important to know different countries outside North America will have different rate structures for businesses. The processors have their mark-up on top of the published rates, so it’s important you review your foreign volume and make sure you understand what rates are being charged to your account.
Avoiding Cross-Border Fees
Canada and the US are used here as examples. If you accept US credit cards in Canada, you can consider opening a US-dollar, USD-based account. Keep in mind you will need a US address, a US business number, and a US bank account, otherwise, this strategy will not work. Depending on your company’s set-up, you either have these in place already or can consider setting these up in order to eliminate cross-border fees. Make sure you weigh the costs of both options. If you have an eCommerce account, you should code your API to identify US web traffic to your US account, and Canadian web traffic to your Canadian account.
Ask yourself if you are going to accept US business; if so, how much, and how often?
If it is a matter of few sporadic transactions, this may represent a relatively negligible total of under $5.00 per month in fees. If you’re processing over $100,000 per month in foreign volume, consider changing your set-up. Another way to offset these charges or create a new revenue stream is to consider implementing Dynamic Currency Conversion (DCC). This product allows cardholders to perform transactions either in the merchant’s currency or in the cardholder’s currency; the choice is provided at the time the transaction is made. When an exchange is made, the cardholder is charged the exchange rate. A few processors have the ability to split the conversion spread with you, which creates a profit center to offset any cross-border charges, or simply creates another revenue stream for your business.
If you already have this account, review the foreign section part of the statement (usually under “Other Fees” or “Non-Qualifying Transactions”). These will appear in the form of line items such as “V FGN,” “MC FGN STD,” “OTHER FEES,” “CROSS BORDER ASSESSMENTS,” etc. Review and assess whether they will help you increase your bottom line or not. Every penny counts. Our auditing team at Merchant Broker can quickly review this for you. We are here to help you identify the volume, fees and appropriate set-ups for your merchant account efficiency.
2. Reviewing “Other Fees” or “Other Charges”
Don’t you hate “Other Fees”? These fees probably make you feel like you’re being taken advantage of. And what are those Other Fees, anyway?
In the world of payment processing, there are so many “other” fees. These fees can include monthly account maintenance, statement fees, authorization fees, WAT fees, settlement fees, access fees, etc. You get the picture. In reality, the majority of these fees are cash grabs, made up to drive the processor’s revenue. You can give processors credit for their creativity in coming up with these fee titles, which seem to sound important, but it’s time to see things as they truly are. These fees add up, and become costly. They are charged either per-transaction, or as a monthly fixed cost. Why lose money every month on charges that can be waived or significantly reduced?
The Other Fees, or Other Charges, is part of the merchant account statement that is not related to when you receive your report (by mail or online), and therefore processors often get away with them. When you initially sign up, if you see a rate of $0.10 per transaction for authorizations on your contract, it may not seem like much; but when you multiply that sum by 5,000 transactions per month, this equals $500 per month, or $6,000 per year in extra costs. What this can also do is increase your cost of processing on a percentage basis, and therefore kill your margins. In this particular example, $0.10 on a $10.00 transaction is 1%, and so if your total effective rate was 2.5% it’s now 3.5%! By looking at a per-transaction basis vs. a percentage in the above example, a decreased percentage rate occurs if the transaction totals a higher dollar amount, and an increased percentage rate occurs if a transaction totals a lower dollar amount.
Here are several other types of fees, as well as the ranges the processor usually charges:
- Authorization fees: $0.03 – $0.25 per transaction
- Monthly statement fees: $1.00 – $20.00 per month
- Access fees: $0.03 – $0.20 per transaction
- Push fund fees: $0.03 – $0.20 per transaction
- Settlement fees: $0.05 – $0.20 per transaction
- Refund fees: $0.03 – $0.15 per transaction
- WAT fees: $0.01 – $0.15 per transaction
- Monthly minimum fees: $5.00 – $60.00 per month
- Account maintenance fees:$5.00 – $25.00 per month
And there are a few other fees that are quite comical, including “Integrity fees” ($5.00 – $50.00 per month).
Terminal fees are also included in these other fees, typically ranging from $15 – $45 per month, per machine, depending on the terminal.
Processors generally include an average of four of the above fees on your account.
How to Eliminate Other Fees or Other Charges
You’ll usually see these miscellaneous fees listed on the last page of your monthly merchant statement, typically under Other Fees or Other Charges.
Keep in mind processors attempt to manufacture explanations as to what they mean, or claim the fees are part of their cost; but after further investigation, most of these other fees turn out to be just a profit center. The tricky part is every processor uses slightly different terminology. We have enough experience to know who charges what, and whether the fees charged actually represent a cost or not. Review your merchant statements for these fees, and contact your processor to inquire what they mean. Ask if they can do anything to reduce these fees. If you encounter difficulties, contact your Merchant Broker representative. We’ll handle the inquiry, and let you know what the fees actually mean.
Set up a call, and have your merchant statements ready for review. Let’s eliminate this money grab from your bottom line.
3. Ensure Your Business is PCI Compliant to Remove Non-Compliance Fees
PCI non-compliance fees are charges billed by the payment processor if your business is not PCI compliant. PCI compliance (PCI-DSS) stands for Payment Card Industry Data Security Standards, a framework which allows your business to be protected from potential credit card data breaches. For example, consider Home Depot and Target, recently in the news for data breaches, and how several hundred million credit card transactions were compromised because of vulnerabilities in their payments systems. The main issue in PCI compliance is protecting your cardholders from credit card and customer information theft. Given the numerous breaches that have occurred over the past five years, processors have started charging companies non-compliance fees. This means your business has to go through a connection scan (determining whether your payment systems are connected to a phone line, IP wires, integrated systems, or online with an eCommerce platform), pass a vulnerability test, and complete a questionnaire. If you don’t pass this test, you must perform the IT adjustments to your infrastructure, as recommended by a certified Qualify Security Assessor (QSA). The QSA is a third party which performs the PCI compliance test. Once all adjustments are made (if they were required), you are awarded a Certificate of Compliance, which will be forwarded to your processor to remove any type of non-compliance fees. If you don’t pass, your processor may charge you non-compliant charges.
Here’s why this is important:
Non-Compliance Fees can be costly, and it’s important for your infrastructure to be secure. Certain payment processors charge for non-compliance, while others do not. Some providers charge more than others; each provider has a different cost structure. Only one provider refrains from charging for PCI non-compliance, but this can change at any time due to the trend followed by other providers. If you are not PCI compliant and your business has a data breach, your business can be fined by the card brands directly (Visa, MasterCard, AMEX, etc). So, ask your QSA about the details regarding fines from card brands.
Fines are usually in the sum of $10,000 per occurrence, or higher, depending on the size of your organization and the extent of the data breach. Fees can range from $25.00 – $100.00 per month or per quarter, representing 0.05 – 0.30% on your credit card processing volume, or $0.05 – $0.10 per transaction. We sometimes see all three of these charges billed to a business, adding up to a few thousand dollars per month! PCI compliance can seem like an inconvenience but is quite easy to achieve if you have the right guidance and support. The challenge is that PCI compliance is not always easy to understand. Merchant Broker has a simple roadmap to help your business streamline the process, and help eliminate these fees. This may require you to make a few changes to your IT infrastructure, but it’s worth it. In the end, PCI compliance results in lower fees and stronger security.
How to Ensure You Are PCI Compliant
To ensure you are PCI compliant, you must contact your payment provider and verify your status. Your business will receive a certificate from the QSA that conducted the vulnerability scan for you. Make sure your provider has a record of your certificate on file in order to ensure that any non-compliance fees are removed from your billing. Also, ensure your business reviews your monthly merchant statements to identify any PCI non-compliance charges. These fees will have descriptors such as “Non-Compliance Fees,” “NONCOMP FEE,” “Monthly non-compliance,” etc. There are many different terms for PCI compliance that can mask this fee. And each processor has different ways of charging these fees and handling PCI compliance.
If you want a fast path to ensuring you’re PCI Compliant, talk to Merchant Broker about how to identify and remove these fees, understand the complicated wording, and ensure the best path to becoming PCI compliant. Ensure your payment system is secure, cost-effective and friction-free.
Now that you’re familiar with the three ways to increase your merchant account’s bottom line, if you want to make sure you increase your bottom line month after month, call 1.888.668.0733 or email: firstname.lastname@example.org to speak with one of our advisors.