There’s an old saying: That which gets monitored, gets managed. Your electric bill, the amount of ice cream left in the freezer, your gas gauge. Credit card processing companies know this and act accordingly. They make your business’s statement for taking plastic so hard to read, the only thing people look for is how much they sold.
Back in the day when I first went out on my own, I got in front of a great potential client that processed about a million a month in credit cards sales. Needless to say, I was excited. It took a bit just to be able to get through and really be able to build a proposal, because they thought they were paying a discount rate (the main percentage fee for taking credit cards) of 1.60%. In fact, they were paying 2.23% and it was now costing them nearly $23,000 a year in extra fees that they didn’t have to pay. That’s right everyone. Bigger makes mistakes too.
I had two jobs going into that meeting: 1) get the account, and 2) make sure the main bookkeeper didn’t lose his job for not knowing how to do mine. I explained that they probably didn’t have such a rate a couple of years ago, and the rate had been creeping. Creeping UP. We got the account, and best of all, the man’s job was never in jeopardy as they were a very ethical company and a joy to work with. Besides, they now had a team (my team) that would constantly watch their rates for them, and teach them how to do it themselves. We’ve had them ever since.
You see what confuses people is they think they are signing a contract that locks them in at a specified rate. This is not the case. It’s not a lease on an apartment. They are signing a contract agreeing to the terms of MC/Visa and the credit card processors. The rate on the contract is their rate at that moment, and it can and will go up.
The bad thing, is that no matter how good a rate you sign at in the beginning (and it can be a bad rate to start), if you don’t watch it, it will go up. This is because everyone up the food chain makes more money if it goes up. The only person who loses is the business owner.
My father fell into this category with his dry cleaning chain (sure it only had two links in the chain, making it the smallest possible chain, but still). When he finally let me review his account I had to tell him he was over-paying a couple of thousand dollars extra a year. He didn’t understand as he had gotten this ‘incredible’ rate. He did. Two years before. Since then it had literally doubled to the point as if he were an online purveyor of adult products, which obviously he wasn’t and my firm won’t represent anyway.
“You didn’t sign an apartment lease,” I had to tell him. “You signed a contract giving your business a merchant account (credit card processing account), and then promptly never really analyzed your statement over time. They’ve been going up.” All of a sudden his son seemed like he knew what he was talking about instead of still being the kid using a towel as a cape. Don’t think that your rate will stay the same. In this case, assume it is going up and watch it over time. As my grandmother used to say, “Just because you’re paranoid, doesn’t mean they’re not out to get you.”