Introduction
Navigating the complexities of card processing fees and ensuring cost-efficiency requires vigilance and understanding of how to effectively manage these expenses. This comprehensive guide offers insights into the nature of card processing rates and provides a structured approach to conducting regular rate reviews.
Understanding Rate Reviews and Their Importance
Nature of Card Company Rates
- Rate Increases: It's common for card companies to raise rates over time, starting with low rates and gradually increasing them.
- Negotiation Potential: Despite these increases, you can often negotiate for lower rates, especially if your provider has a rate matching program.
Applicability of Rate Reviews
- Variable Rate Agreements: Rate reviews are crucial if your agreement involves variable rates.
- Exclusion in Flat Rate Plans: If you’re on a flat rate pricing plan, these reviews may not apply as your rates are fixed.
Why Rate Reviews Matter
- Financial Savings: Regular reviews help in preventing 'rate creep', ensuring cost savings.
- Suggested Frequency: Conducting rate reviews every six months, or following significant organizational changes, is recommended.
Step-by-Step Guide to Conducting a Rate Review
Step 1: Preparation
- Gather Financial Statements: Collect your card processing statements for review.
- Identify Queries and Offers: Note any queries about your current rates and fees, and prepare any competitive offers you've received.
Step 2: Initiating Contact
- Contact Your Provider: Reach out to your merchant service provider and express your intent to conduct a rate review.
Step 3: Conducting the Review
- Discuss with the Representative: Go through each point on your statement with the representative and present any competitive offers as leverage.
Step 4: Negotiation and Decision Making
- Negotiate Better Rates: Use the collected information and offers to negotiate.
- Evaluate and Decide: Assess the proposed solutions and decide whether to continue with your current provider or switch to another.
Step 5: Post-Review Actions
- Document and Monitor: Ensure any agreed changes are documented and reflected in future statements. Regularly review your statements to confirm this.
Additional Insights on Card Processing
Interchange Plus Processing Plans
- Cost-Effective and Transparent: These plans separate interchange fees from the processor's markup, potentially offering savings and clarity.
Tips for Effective Rate Management
- Stay Informed and Analyze: Keep up with industry trends and thoroughly analyze your processing statements.
- Consult Experts: Consider seeking advice from payment processing experts for an in-depth understanding.
Conclusion
Effectively managing your card processing fees through regular rate reviews is key to maintaining your business’s financial health. By understanding the dynamics of card company rates and actively engaging in rate reviews, you can ensure you're not overpaying for these services.