As a provider of integrated merchant accounts or credit card processing services, Sintel Systems is always working to bring value to our customers. Here is a quick explanation about credit card fees:
– – Do you know why integrated merchant account fees cannot be guaranteed?
– – Or why merchant account fees seem to have gone up?
– – Merchant Account providers control very little of the fees . All fluctuations experienced by merchants are due to the other parties (VISA, MasterCard, banks, regulatory agencies, etc.) Fees charged by merchant account providers does not fluctuate.
Surprisingly enough, you may want to point the finger at every person who uses a credit card and “boasts about getting points.” We all use these cards, but never ask who is paying for our points.
Merchant account fees: If you are a store, you want to pay the lowest fees on processing credit cards. But do you know what really effects the fees you pay? The answer is most likely in your wallet. Do you have a credit card that pays you rewards points or cash back? Some offer 1 point for every dollar spent, others give you 2% cash back while other pay back up to 5 percent on purchases from certain stores. And those debit cards with Visa/MasterCard logos place an automatic $0.22.
As an example, the U.S. Bank Cash+™ Visa Signature® Card offers the following:
*5% cash back any two categories that customer chooses (department stores & restaurants are the most popular.)
*2% cash back on choice of gasoline, groceries or drug stores
*1% cash back on everything else
So, when you use your credit card at your favorite frozen yogurt store and are promised 2% cash back like above, who is paying for that? If you think it is Visa, MasterCard, or your credit company (Bank of America, Chase, US bank, Capital One, etc.) then you are very wrong. It is the merchant who is paying for it. The merchant not only has to pay the associated processing fees, but also your points on top of it.
Do the Math: Let’s assume that your favorite restaurant or pizza shop has a base on 1.65% they were promised by their merchant account provider and then you place an order over the phone. You pay with your 2% rewards card over the phone. Now the pizza shop owner has to pay 1.65% + 2% + another 1% for card not present fee and they end up paying 4.65%. After all this, if the merchant went for the “lowest fee hook,” then they are probably getting poor service on top of it. If the merchant is using a premier processor with good service and fast processing and your average customer is getting 2% cash back, then the merchant is naturally paying about 4.5 % in fees
This is reminiscent to matter that many of us might be more familiar with. Interest rates. Why can’t a bank or the economy offer low mortgage interest rates and high interest rates on savings accounts at the same time. We all want low home mortgage rates, but also high interest rates on our savings accounts. The math does not work, because low interest rate markets effect all sectors of the investment arena.
The heart of this matter is that “There is no such thing as a free lunch.”
But all is not lost, most business owners want to know the average effective rate they pay on the credit card transactions. The paramount factor in determining factor is your average receipt. If your stores average transaction is around $10, then the effective rate is form the high 2 percent to the mid 3 percent range.
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Sintel Systems is quality provider point of sale systems to the entire retail and service industries including juice and smoothie shops. Its clients include major franchise and chain operations.
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Questions or Comments: Contact us 855-POS-SALES
