Today, I would like to challenge you to spend 1 minute reading your credit card statement. I will show you a couple quick numbers that you can look at to determine if your costs are at the market rate. No more wondering if your rates are too high, you can know for sure in 1 minute (Ok… a little more than 1 minute).
Here are the three simple steps to read your statement and evaluate if you are paying too much.
Step #1 – Identify your total monthly fees. Simply add up all your monthly fees and make sure you include equipment rental fees if you have them, leases, and take any annual fees and divide those by 12 so you get a complete picture of your average monthly cost.
Tip: You can usually find your total fees at the top or very bottom of your credit card processing statement.
Step #2 – Identify your total monthly credit card processing volume. This is at the top of your statement. It will have the various card types like, “Visa”, “Mastercard” “AMEX” and then next to each card type, it will show you the monthly volume. Add all of these numbers up to get your monthly volume.
Step #3 – Now let’s do some simple math. Divide your Total Fees by your Total Monthly Volume and you will get a percentage. In our industry we call this the effective rate. So, if you paid $400 in fees and you processed $10,000 in credit card volume, it would look like this: $400 / $10,000 = 4% Effective Rate
Now that you know your effective rate, you can compare that to the current market rates. If you are an average retail, restaurant or service business which means you process $5,000 to $20,000 per month and your average sale is between $25.00 to $100, your effective rate should be 2% to 2.5%. If you are paying a higher rate, you may be paying too much.
If you would like one of our local experts to come take a look at your statement, fill out the “Find a Local Expert” box to the right and we will send someone out to your business to take a look.
Have a great day!