Category Archives: Fees

ABT_3Reasons

3 Reasons Your Current Credit Card Processor’s Monthly Statements Are So Huge

Let’s face it: With the upcoming holiday shopping season, the EMV roll-out, and a number of other developments changing the way customers pay, your business has its’ hands full. So full, in fact, that you might be missing some of the fine print in your credit card processor’s statement.

If you did wade through the pages of numbers in your monthly statements, you might be surprised to learn that many processors have been gradually hiking up your monthly rates, by tacking on hidden fees. At Abtek, we’re onto what our competitors are doing with those multi-page statements covered in small print and we strive to be up-front. After all, we only win when you win.

So in the spirit of helping you win, we wanted to give you three reasons why your current processor’s monthly states are so huge:

Reason #1: The longer the statement, the less likely you’ll read it.

ABT_3Reasons_Icon1 Odds are, you’re too busy to sit down with a calculator and try to figure out what all those numbers mean. You may put it aside with intentions of getting back to it later. But will you have time to do a full line-item analysis every month? It’s not likely.

Reason #2: It’s easy to hide a needle in a haystack.

ABT_3Reasons_Icon2 These hidden fees are like a bunch of needles, too. Sure, you were given a quote when you first signed on with your processor, though does that quote still hold? Many processors sneak in incremental price increases and while a 1% increase here or there may not seem like much, month after month, those numbers begin adding up–and eating away at your business’ hard-earned revenue.

Other processors specialize in luring a customer in with below-market rates, before selling your account to a larger operation. And that larger processor? They won’t necessarily stick with the lower rates you were promised. As the rates keeps going up, $100 here and $150 there, eventually you will be paying significantly more than you expected.

Reason #3: Transparency serves you more than it serves your processor.

ABT_3Reasons_Icon3 At Abtek, we’re very up-front about the fact that 85% of the fees associated with our accounts go directly to the credit card companies. We receive about 15% of the total that our clients pay. Our mission to serve our customers first is exemplified by our high chargeback win rate (89% with Abtek vs. 28% with our competitors) – we’ll go to bat for you. We’re also just a phone call away – so when you dial us up, there’s no phone jail, just one of our friendly, knowledgeable, dedicated customer service team members waiting to help you.

Are you tired of page after page of numbers in your monthly statement? Don’t pull your hair out. Get in touch with us and we’ll set you up with an Abtek account. Your statement will be easy to understand and the fees you pay for our service will be predictable and easy to understand. We know a thing or two about transparency.

 

Share and Enjoy

  • Facebook
  • Twitter
  • Delicious
  • LinkedIn
  • StumbleUpon
  • Add to favorites
  • Email
  • RSS
ABTK-SM-Blog-aggregatorpart2-hero

Aggregators vs. Merchant Banks, Part 2: The Costs of Payment Aggregators Adds Up

We’ve been exploring what makes merchant banks a better solution for merchants than aggregators.
Previously: Part 1 – PCI Compliance 

You may have considered a payment aggregator for credit card processing of transactions from customers. Yet, you may wonder about the difference in costs between merchant services providers such as PayPal and Square when compared to a traditional bank merchant account. A critical difference for many businesses comes down to costs associated with credit card processing.

Pricing

Many aggregators such as PayPal and Stripe charge a flat rate price, Aggregatorpart2-01and this method has become increasingly popular for their merchant services. Simplicity attracts business, and their POS systems offer quick and trouble free set up. The flat rate price structure is easy to understand and saves time for the merchant who can avoid reading through complex and lengthy processing statements. The method appears to improve transparency between the aggregator and merchant. However, despite the straightforward POS systems, the costs of using an online payments servicer can mount quickly.

The Illusion of Flat Rate Pricing

While flat rate pricing is attractive in its simplicity, it is a marketingAggregatorpart2-02 strategy designed to appeal to business owners who wish to focus on sales rather than accounting. Because of the complexities involved in credit card processing, it makes charging a competitive flat fee nearly impossible. Each transaction processed through a merchant incurs three charges:

  • A fee to the card brand, such as Visa or Mastercard.
  • A fee to the issuing bank.
  • A fee to the credit card processor.

The interchange rate is not fixed cost, and it can range from 0.05 percent to higher than 3 percent. Aggregators must account for all potential interchange rates, thus the flat rate must be high enough to cover the highest interchange rates. This can cost a merchant up to 20 percent more in processing costs.

PayPal and Stripe charge a fixed percentage of 2.9 percent plus $0.30 per transaction. For businesses that rely on lower price point merchandise and transactions, that additional $0.30 can cut into profits quickly. Mobile merchant accounts to facilitate ecommerce have become increasingly popular. Yet, they remain expensive alternatives.

Funding

Additional processing costs associated with flat rate aggregators Aggregatorpart2-03include the funding timeline. It is not cost effective for payment aggregators to maintain an appropriate reserve to pay their customers in a timely way. PayPal can take up to 48 hours, and Stripe may take a week. This can cause significant burdens to cash flow and create complex accounting problems.

Moreover, aggregators process payments through the umbrella merchant account instead of individual accounts for each merchant. Because of this, the money is technically the property of the aggregator. This arrangement alters the risk and liability arrangements between merchant services providers and businesses, and it may cost more to the business long term.

Another crucial limitation that directly affects costs is that networks have a $100,000 yearly limit for individual businesses using a payment service provider. Businesses that do more may have to consider additional options.

Additional Costs

In general, an aggregator will have an easy process to set up an Aggregatorpart2-04account, although your business must have a link to an online bank account. The online merchant bank account will most likely have the following fees:

  • Annual and monthly fees
  • Merchant service fees
  • Minimum monthly balance fees

These charges will be in addition to the aggregator’s fees. Thus, while using an aggregator may be quick and easy, the additional capital fees will add up when compared to a traditional merchant bank account. The bank will make money from the merchant service fee; however, a provider such as PayPal will make a sizeable percentage plus a flat fee on every transaction.

Choosing between a merchant account and an aggregator will depend upon current business requirements and budgets. The POS systems are attractive, yet many businesses that take a little time to compare will find a merchant account is less expensive in the long term.

Read more in this series :

Aggregators VS. Merchant Banks, Part 1: PCI Compliance

 

Share and Enjoy

  • Facebook
  • Twitter
  • Delicious
  • LinkedIn
  • StumbleUpon
  • Add to favorites
  • Email
  • RSS