How to Save Money on Credit Card Fees... without Changing Processors, Equipment or Processes
Posted: Wednesday, December 09, 2009
by Jeff Hardesty
JDH Group, Inc.
Interchange Fees are 70-90% of the transaction fee but have very little to do with negotiated Merchant Rates'.
Merchant Service Providers acquire new clients with the promise of lower costs and better service, but that promise is in direct conflict with the organizations' revenue objectives.
The more an MSP actually helps lower costs for a merchant, the less the MSP profits.
How little do I have to give up in order to acquire a merchant, and how highhow fast can I raise the costs without losing clients?
Every April and October MasterCard and Visa make adjustments to the Interchange Rates.
When they do, MSP's develop new campaigns that leverage the rules to their advantage. Either to get more profit from their current merchants, acquire new merchants or both.
All too often merchants switch with the hope of lower costs and better service, only to find that once they go through the pain of switching, service levels go down and costs go up.
The credit card act of 2009 has been in the news lately, formed to help businesses from an unregulated credit card industry.
Meanwhile the banks and credit card processors continue to find ways to protect their margins and hide fees.
So they know you won't know where to look for those hidden fees, how to stop paying for them or how to prevent them.
As a result, Merchants paid over 37B in unnecessary fees last year.
It's not a coincidence. It's by design. So what can be done?
You can wait to see what happens in Washington with the lobbying efforts on behalf of the retail merchants that are funding the Banks and their advertising efforts. The problem there is, there's a bigger more powerful lobby on the other side of the equation
Or, if you're a Fortune 500 Company billing out over 15M dollar transactions per month, you can afford to hire a few Interchange Rule Experts'. The going rate on these folks is about 300k per year.
So what about Plan C? There are specialized consulting companies that will actually interface with your current credit card processor on your behalf.
They reducing the core processing costs for our merchant clients by working with the merchants current processor not competing against them. The changes are made at the Processor' level so there is not effort on the Merchant's part, nor do they have to change their current credit card processor, equipment or internal processes.
Here are a few things to check out before signing up with one of these Cost Reduction consulting firms.
- Make sure they work under a Pay-for-Performance' model. You should not have to pay anything up front, but pay only for results, then a pre-determined percentage of the cost savings.
- Make sure they show evidence reports each month. You want repetitive transparency to your costs and cost reductions in line with the credit card processing fees.
- Ask for a Capital Recovery Analysis to define potential cost reductions before singing on.
- Receive a Guarantee to assure an exit strategy if you are not satisfied.
Jeff Hardesty is President of JDH Group, Inc. specializing in Cost Reductions for businesses. To receive a No Cost Capital Recovery Analysis of your credit card interchange fees, contact him @ 888-534-4768 or email jeff.hardesty@kvmanagement.com.
Click HERE for the Rate Lock Protection Program and Cost evaluation:
www.jhardesty.kvmgt.com/rate-lock-program.html
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