Credit card processing continues to be complicated by new fees, technology, and regulations. We know that all changes can overwhelm you.
As a small business owner, you will be inundated with offers from credit card processing companies promising to save you money. Usually, most offers start at a low price. Each merchant service provider tries to beat the other with these lower prices to win your business. If you've been in business for a while and changed your processor, you may have noticed that these great deals aren't always available.
In fact, between 2000 and 2010, the average consumer credit card processing rate rose from about 2.00% to 2.66%, excluding additional costs such as bank statements, bulk fees, and PCI fees. This increase is in spite of the large decline in debit card prices and the increasing use of debit cards. Why increase? Gift cards are one of the main culprits. Banks pass these fantastic gift prices on to merchants, airlines, etc.
The second main reason is the lack of training on the part of the dealer. Traders are trained by banks to respond to low-interest rates. The problem is that there are 440 Visa/MasterCard/Discover rates and the bank will only show you the lowest transaction rate.
The real question is not "what is your percentage?" but "What is your effective interest rate?" The effective interest rate takes into account all possible Visa / MasterCard / Discover categories that the transaction may qualify for. Knowing the actual price will help you better estimate the true cost of your processing. You can find your effective interest rate using a simple formula.