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Hey everyone. I was speaking to a friend of mine who worked for First Data (and is still in constant contact with many of her former co-workers). I had her look over the terms of the merchant account I signed up for through the CCPro recommendation (LinkPointCentral) and the first thing she said to me was literally "You're getting hosed." She explained that the rates we were signed up at are much higher than they should be, and there should be no extra charge for having American Express added to the account (there's a certain program that accepts every major card with no extra fees).

She's in the process of helping me convert my account to have lower rates (less than 2% per charge and $0.10 per authorization instead of $0.25). I've also asked her write up an information sheet to help better explain Merchant Accounts. If anyone else is interested, I can pass it along once it's completed. If anything, having lower rates and smaller authorization fees will save us money in the long run.

Take care,

John Pangere

Hi John,

Can I offer a different point of view, just food for thought...I have been in the bankcard industry for more than 20 years, and pricing is relatively competitive among the providers. You can negotiate lower rates with FDR (First Data) or other providers, but the cost savings will most likely not be significant due to our business type (i.e. keyed/non face to face transactions). For example on a $400 ticket at 2% the fee is $8.00, where as if the rate were say 1.7% the fee would be $6.80. Generally for our business type were not going to see rates significantly lower than 2%. As far as transaction fees...and this is just my opinion...On an M1 purchase, the $.15 difference wouldn't make much of a difference to our bank balances. As for the addition of card types i.e. American Express, most providers do not charge additional fees for activation, however depending on how the provider is structured with American Express, you may pay different rates for American Express transactions and potentially have different funding times. On a side note, I can't recall, but I believe FDR pricing for CCP may have a monthly fee associated with it, different than that of the rate and transaction fee, if so, that maybe the fee you want to negotiate down if your looking for cost savings.

I hope this was helpful, if I can provide any additional information or answer any additional questions please let me know.

Take care
Carri

Carri,

I appreciate the response. I do have another business where the fees and percentages will come in to play much more than with WMI, and if WMI plans on collecting payment directly from our team members/customers and then distributing our commisions to us, having a merchant account is a moot point. I'm not sure about anyone else, but I watch my finances like a hawk, and any way I can save money to be used for other expenses is helpful.

I'll give a quick example for everyone of why this may be helpful. Currently, the rate I'm being charged now is 4.34%. To make this simple, I'll use 4% and ignore the authroization fee since it is a very small fraction. If I were to have 1 M1 sale per week ($2000 for this example), that would equate to $80x4=$320 in fees at the current rate. At 2%, that amount gets cut in half. Since the monthly fee is currently $56 (which I was told should be much lower, possibly even no fee), that extra $160 with a lower rate could be used for 3 monthly payments. Say I sell double the amount of M1s per week, I would save $320, and so on. My point is, I'd rather have the extra money to be used elsewhere, or drop down to my bottom line at the end of the day.

Again, I appreciate your response, and I'm not disagreeing with you that it may not matter, but anywhere I can save on expenses puts more money in my pocket. Even if it's a small amount, I'd rather take home that savings at the end of the day and compound it into much more than I had before.

Take care,

John Pangere

Hi John,

Thanks for the feedback, feel free to disagree, that's how we learn, grow, and develop different perspectives. I appreciate your response, certainly an adjustment from 4% to 2% absolutely makes sense financially, where as in my example the 2% to 1.7% does not yield a significant change unless it is a high ticket item. Great response, thanks again for sharing. Monthly fees are definitely negotiable with most providers, many of them just label those costs differently in the form of statement fees, monthly minimums, customer service fees, account maintenance fees, etc. and the higher your processing volume the more negotiable rates and fees become, with some providers even offering interchange pass through, which in essence is the card association fees passed on to the provider + some modest other fees associated with the processor. Keep me posted and let me know if there is anything I can assist with in the future.

Take care
Carri