Getting the Most From Your Merchant Account

Think you’re maximizing your merchant accounts? Think again. Here are some tips to help you optimize your contracts.
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Credit cards can be a mixed blessing for retailers. While they help promote higher revenue and cement customer loyalty, they also carry significant baggage in the form of costly service charges. In many cases, processing costs reach levels that can obliterate your bottom line. There’s good news on the payment front, though. The Independent Service Organizations that sell credit card accounts are more willing than ever to strike deals favorable to retailers. That’s a direct result of a marketplace affected in fundamental ways by the recent recession. “The merchant-account industry is maturing and becoming more competitive, which means pricing is becoming cheaper,” explains Paul A. Rianda, an Irvine, California-based attorney specializing in the bankcard industry.

REDUCE COSTS

More ISOs, in other words, are chasing fewer retailers. And that’s all for the good. Lower merchant service costs can make a huge difference to your bottom line. “Suppose you are making $100,000 in annual transactions,” says Ronnie Lynch, regional sales director for ISO Enablepay in Albertson, New York. “If you can trim two percentage points off your merchant costs, you’ll get $2,000 more that you can use for extra marketing.” While pursuing a better deal, though, be aware that due diligence is as necessary here as anywhere else in the business world. “Many ISOs who offer good merchant service schedules make their real money in surprise fees,” warns Lynch. As with banks, ISOs are peppering their bills with added charges, such as Payment Card Industry compliance fees, for example. They may be levied to cover the cost of making sure the retailer complies with federal regulations for data security. “The merchant shouldn’t be the one who pays for that,” says Lynch. Then there are regulatory fees to cover the cost of preparing the U.S. Treasury’s 1099K forms, which report annual card transaction totals. “Over the past year, we have started seeing regulatory fees of maybe $4.95 to $9.95 a month,” says Lynch. “Charging such amounts is exorbitant pricing. All that data is already stored in the ISO databases. All they have to do is print out the forms.”

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