The Right Ingredients for a Good Merchant Account Rate
Finding a great merchant account rate is like baking a cake. You wouldn’t expect to make a great cake solely because you have high-quality flour. You need to consider every ingredient if you want a tasty result, just like you must consider every merchant account fee a processor charges to get a good deal. If you want to answer, “ what is a good merchant account rate ?” you should understand just how many there can be.
Kinds of Rates
If you ask a payment processor, “what is your rate?” you are likely to get a teaser rate. This is often advertised as a “one” rate, which many companies use to real in business. It most often doesn’t include the extra monthly fees or surcharges that you’ll find on your monthly statement.
Your actual processing rates are composed of many different types of rates and fees. The root of confusion for most people is that payment processors don’t only charge 1 single rate for a merchant account. There are always going to be other rates and fees you have to look at. You have to dive into the numbers with a knowledgeable and trustworthy payment professional who can analyze the details for you and educate you.
For example, a retail business will have card-present transactions. These kinds of transactions have lower interchange fees (about 1.51% of the transaction plus 10 cents for every transaction). They also enjoy less risk of fraud and that is why the interchange pricing is less.
A card, not present business such as an e-commerce store, however, will have higher interchange fees (about 1.8% of the transaction plus 10 cents for every transaction). This higher interchange rate is because there is more risk associated with an e-commerce transaction than there is with a retail transaction. Besides the higher interchange fees, an e-commerce store will need a payment gateway service to be able to integrate their merchant account with an online shopping cart. But not to worry if you actually have an e-commerce business, we can show you how to remove your payment gateway fees altogether.
An effective rate is the opposite of a teaser rate. The effective rate is the overall percentage that is charged by the processor for processing cards. You can find the effective processing rate on a business by taking their total processing fees and dividing it by their total card sales. When a business owner refers to “a good merchant account rate,” they are usually referring to what industry personnel calls the “effective rate.”
What is a Good Merchant Account Rate For You?
You’ve learned the most important rate to consider is your effective rate, which can be calculated with a trusted qualified representative of a possible card processor. Also, almost every company has a low teaser rate that you should learn to ignore. Lastly, the composition of your actual transaction processing rates are what you’re looking for when asking, “ what is a good merchant account rate?” Search no further with one visit to our pricing page!