Switching Merchant Accounts Can Save You Thousands

Business owners often overlook their merchant accounts because it only represents a small part of their overall financial picture. The reality is that merchants are overpaying and often don’t do anything about it because they believe it’s too much of a hassle to switch. Merchants that process transactions on a regular basis can save a significant amount of money by switching and it is significantly less work that most merchants might think.

When you initially researched your merchant account for pricing information, you probably did so looking for the least expensive discount rate or percentage rate. Many advertised rates pull the “bait and switch” where you are drawn in with some insanely low rate only to realize after you start processing that the low rate originally advertised isn’t for you. Most merchant accounts have a qualified rate, a mid-qualified rate and a non-qualified rate.

You have a discount rate that represents a percentage of your overall volume, but you’ll also have a per transaction fee which is a flat fee charged on all transactions. This fee is charged to cover the cost of sending those transactions electronically. This is a revenue center for both the banks as well as the merchant account companies but should still be something you’re aware of as a business owner.

For you merchants who are processing smaller ticket items, the per transaction fee usually represents a larger percentage of the overall transaction amount. Keeping this per transaction low is even more important that your discount rate if you have a low average per transaction.

Business owners that have a higher ticket item should be more concerned with the discount rates they’re paying far more than the per transaction fees as that represents a larger percentage of the overall fees. If you divide the total amount of fees by the gross volume that you process each month, you’ll have your “effective” rate.

Switching merchant accounts is not difficult and should come with an option to make sure that you can back out if the new contract doesn’t lower your overall effective rate. The point of switching your merchant account is to lower your rate and get better services. Find a provider that has a good rates, can lower your rates and has exceptional service.

Most merchant accounts have an early termination fee, so the process of switching accounts may have costs associated with terminating your existing agreement. There are a few options here, depending on how much your early termination fee is and the duration of your contract. Some merchants can save $100 or more per month and keeping the existing account open for $25 per month may make sense. You should check with the provider you’re considering to also see if they offer a reimbursement for switching by paying off your early termination fee for you. Some providers will do this, others will not, but it’s worth asking.

Getting new equipment during a switchover often makes good sense because you will literally have no down time. If you choose to keep your same equipment, you will have to reprogram your existing equipment to point to the new merchant account which typically takes about 30 minutes to 1 hour depending on the connection speeds. The terminal will download the new program over the internet if you have a terminal with internet capabilities or it will download the new programming over the phone line.

I have been setting up merchant accounts for quite a while. I’m promoting a couple of videos on Youtube on this topic. You can find the two videos I’ve done most recently about internet merchant accounts and ecommerce merchant accounts. I’m working to get these videos in the top of the search engines.