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The Truth Behind Merchant Accounts Rates
 

The Truth Behind Merchant Accounts Rates

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Here is a presentation I created for a potential client that was promised a discount below cost - 1.19%. How can this be? Watch to find out.

Here is a presentation I created for a potential client that was promised a discount below cost - 1.19%. How can this be? Watch to find out.

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    The Truth Behind Merchant Accounts Rates The Truth Behind Merchant Accounts Rates Presentation Transcript

    • Merchant Account Rate Reality Robb Lejuwaan - US Merchant Services
    • Presentation Outline
      • Where do merchant account rates come from?
      • How is a merchant account rate built?
      • Rate cost examples
      • How were you offered a rate below cost?
      • A look at my price model
      • Who is US Merchant Services?
    • Where do the rates come from?
      • They come direct from Visa and MasterCard
    • Where do the rates come from?
      • They come direct from Visa and MasterCard
      • The official name for these rates is INTERCHANGE
    • Where do the rates come from?
      • They come direct from Visa and MasterCard
      • The official name for these rates is INTERCHANGE
      • Here are links to the web sites with this information:
      • Visa Interchange Guide
      • MasterCard Interchange Guide
    • Key Point
      • ALL MERCHANT ACCOUNT PROVIDERS
      • HAVE THE SAME COST
      • FROM VISA AND MASTERCARD
    • Key Point
      • ALL MERCHANT ACCOUNT PROVIDERS
      • HAVE THE SAME COST
      • FROM VISA AND MASTERCARD
      • THERE IS NO SUCH THING AS A
      • “ Wholesale Rate”
    • How a rate is built
      • Example #1
      • Transaction Type: Card Swiped
      • Normal Visa Consumer Card: 1.5400% + $.10
      • Visa Acquiring Fee: .0925%
      • Cost for this transaction: 1.6325% + $.10
      • Normal MC Consumer Card: 1.5800% + $.10
      • MC Acquiring Fee: .0950%
      • Cost for this transaction: 1.6750% + $.10
      • These are considered to be the BASE RATES
    • How a rate is built
      • Example #2
      • Transaction Type: Visa Rewards Card Swiped
      • Visa base rate: 1.6325% + $.10
      • Rewards 1 Surcharge: .11%
      • Cost for this transaction: 1.7425% + $.10
    • How a rate is built
      • Example #3
      • Transaction Type: Visa Commercial Card Swiped
      • Visa base rate: 1.6325% + $.10
      • Commercial Card Surcharge: .66%
      • Cost for this transaction: 2.2925% + $.10
    • How a rate is built
      • Example #3
      • Transaction Type: MC World Key Entered
      • MC base rate: 1.675% + $.10
      • Commercial Card Surcharge: .47%
      • Cost for this transaction: 2.145% + $.10
    • But, you have a 1.19% rate!
      • Currently, you have a rate that is
      • .4425% - 1.15%
      • lower than cost?
      • How is this possible?
    • But, you have a 1.19% rate!
      • Currently, you have a rate that is
      • .4425% - 1.15%
      • lower than cost?
      • How is this possible?
    • How do you have a 1.19% rate?
      • If you would have paid that rate in August of 2007
      • The merchant account provider would have lost $179.42
      • on your account!
    • How do you have a 1.19% rate?
      • I call this type of rate a “Hollywood rate,”
      • it has a great looking facade
      • but with out all the makeup it is scary!
    • How do you have a 1.19% rate?
      • I call this type of rate a “Hollywood rate,”
      • it has a great looking facade
      • but with out all the makeup it is scary!
      • Here is how it works…
    • How do you have a 1.19% rate?
      • The 1.19% rate is for swiped, regular,
      • consumer card transactions
      • Then there is a another rate for “mid-qualified” transactions, maybe 3.25%
      • Card transactions such a swiped rewards cards and keyed in regular consumer cards
      • fit into this category.
    • How do you have a 1.19% rate?
      • Then there is a another rate for “non-qualified” transactions, maybe 4.25%
      • Card transactions such a corporate cards and Visa EIRF fall into this category
    • How do you have a 1.19% rate?
      • Let’s see the numbers on this comparing the 1.19% rate to 1.95% using your July Merchant account statement…
    • July 2007 Category 1.19% 1.95% Qualified $146.66 $240.33 (1.19% vs. 1.95%) Mid-Qualified $244.26 $155.40 (3.25% vs. 2.06%-2.10%) Non-Qualified $267.13 $161.37 (4.25% vs. 2.61%) Totals $658.05 $557.10
    • So the 1.19% rate does not lower costs It causes them to go up $100.95!
    • $100.95 Loss? How can this be?
    • It is very simple They make all their profit by padding the surcharges from Visa and MasterCard We, on the other hand, offer “ straight pass through” which means we pass through the surcharges from Visa and MasterCard at cost, without any padding.
    • So even when our base rate is .76% higher than our competition our fees are still considerably lower Their “mid-qualified fees are 1.15% higher and Their “non-qualified” fees are 1.64% higher than our rates
      • Merchant account providers
      • have conditioned merchants
      • to focus on the base discount rate…
      • … when there actually two price points to focus on:
      • Base rate
      • Surcharges Fees
    • So What Is Our Offer?
      • Base Rate – 1.95%
      • Surcharges – at cost from Visa and MC
      • Here are some surcharge examples:
      • Visa swiped rewards - 1.95% +.11% = 2.06%
      • Visa card not present - 1.95% +.31% = 2.26%
      • MC Comm. Face to Face - 1.95% +.47% = 2.41%
      • Visa debit card swiped - 1.95% +(.51%) = 1.44%
      • MC debit card swiped - 1.95% +(.53%) = 1.42%
    • Who Is US Merchant Services?
      • US Merchant Services is a Registered Member Service Provider for MasterCard International and a Registered Independent Sales Organization for Visa USA through Fifth Third Bank.
      • 14 Years in business.
      • BBB member with a “AAA” rating.
      • $1.8 Billion in annualized volume (new business) in 2006.
      • Reprogram 200-250 merchants per month.
      • 5 th 3rd Bank – 145 years old; over 1100 locations.
      • T-SYS – The original Visanet, created by Visa. Now owned by Total Systems, is the largest single payment platform in the world.
    • Who Is US Merchant Services?
      • US Merchant Services provides the following processing solutions:
      • Prioritized 24/7 Customer Service.
      • No Hidden Fees.
      • Full Visa/MasterCard Check Card Rebates.
      • A Straight Pass-Through from Visa/MasterCard on Surcharges and Interchange Reductions.
      • Premiere 24/7 On-Line Reporting.
      • Discount Charged Monthly, Not Daily.
      • No Switching Costs.
      • Full Disclosure of all Processing Fees.
      • Easy to Understand Monthly Statements.
      • An Account Executive Permanently Assigned to you.
    • Want More Information?
      • This was a presentation created for a specific client that had been offered a rate of 1.19 %. If you have “mid-qualified” and “non-qualified” fees on your merchant account and you want to get rid of your hidden fees please click the link below and fill out the form.
      • Get a Straight Pass Through merchant account