Credit Card Processing

Playing the Credit Card Processing Match Game

by Ben Dwyer

I get it. It’s easier to have your current credit card processor match lower pricing than it is to go through the application and set up an account with a new processor. But, like it or not, there’s no way to win the credit card processing match game, which is why no one ever does.

The best you can hope for is a slight reduction in cost over a short period of time. As soon as you turn your back, it’s a return to business as usual for your offending processor as fees creep back up. By the time you notice you’re being overcharged (again), you’ve already lost hundreds or thousands of dollars.

It’s a never-ending game that’s stacked in the processor’s favor. Yet, many people play it over and over again thinking each time will be different. It never is.

The only productive course of action is to ditch the current, expensive processor for the company that offers the more competitive quote, and here’s why.


The Bigger Issue

A processor’s pricing practice stems from its organizational culture. Catching a processor in the act of overcharging is not going to teach it a lesson, and allowing it to do the same thing to your business again and again will simply reward the negative behavior at your expense. Why give a company a second (or third or fourth) chance to continue to rip off your business?

What’s being matched?

Credit card processing fees are complex. There are different pricing models, rates, fees and terms that collectively determine the overall cost and value of a processor’s quote. Asking one processor to match the “best rate” offered by another processor is just one piece of the puzzle. You’ll need to consider several variables.

Pricing Model

There are several different pricing models that processors use to assess charges, and matching one model to another will produce completely inaccurate results. For example, many processors use tiered pricing, also called bundled pricing. If you are attempting to match pricing between two processors using tiered pricing you will not only need to know each processors rates, but you will also need to know each processor’s interchange qualification matrix used to route interchange. That is, you’ll need to know which transactions will be routed to the “qualified” rate and which transactions will go to the “non-qualified” rate. However, processors can change that criteria at any time, making it almost impossible to get a price match for any length of time.

Base/Wholesale Cost Overages

Another type of pricing called interchange-plus pricing is often touted as the end-all to high credit card processing fees because it has the ability to be low-cost and transparent. Unfortunately, this is often not the case. Interchange plus can set the stage for low cost pricing, but it does nothing to ensure that price matching is accurate.

Even if you are attempting to match processor pricing between two companies using interchange-plus pricing, there is no standard that dictates how a processor must handle the base costs of interchange and assessments.

For example, your current processor may offer to “match” a more competitive quote from a processor offering an interchange-plus markup of 0.25%, but then charge you 0.19% for Visa and MasterCard assessments, instead of the actual cost of 0.11%. This will allow your processor to “match” the new pricing while still upping fees through a “hidden” markup on assessments. We see this happen all the time when we analyze statements here at CardFellow. This article explains the dangers of staking your money on an interchange plus pricing model.

To ensure a proper price match on interchange plus pricing, you will have to check that each processor is passing the cost of interchange and assessments at true cost and not building a hidden markup into these components.

How long will the match last?

An ever-important question with price matching is how long the match will last. Let’s assume for a moment that it’s a perfect world and your current processor is able and willing to truly match a more competitive offer. How long will your processor keep to the new pricing before fees begin to creep back up? Unfortunately, it won’t be long before your processor is back to the same old game of overcharging.

Are the terms the same?

A competitive credit card processing solution isn’t all about cost. The terms that govern a merchant processing agreement are important as well. For example, how long is the contract term? Is there a cancellation fee? Are both processors using the same discount method?

Attempting to match processing quotes based on just price is almost as bad as trying to match quotes based on “rates.” There’s a lot more to it.

Will you know when prices increase?

This question has an inevitable answer, which is “no.” You’re busy running a business, and if you’re like most people, you don’t look at your credit card processing statements each month. You’re probably lucky if you look at them in detail more than twice a year.

You will spend time haggling with your current processor for a price match and then move on to other tasks. Your processor will eventually increase pricing, but you won’t catch the increase for six months or a year when you will have to start haggling all over again.

There’s an Easier Way

CardFellow’s clients have enjoyed the lowest-cost credit card processing since 2006. Our credit card processing marketplace delivers instant quotes based on the most competitive pricing model, fees and terms, and we monitor our clients’ accounts to ensure the competitive pricing remains locked for life.

End the match game with your current processor and use CardFellow’s free service to find a truly competitive processor once and for all.

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Ben Dwyer

BY Ben Dwyer

Ben Dwyer began his career in the processing industry in 2003 on the sales floor for a Connecticut‐based processor. As he learned more about the inner‐workings of the industry, rampant unethical practices, and lack of assistance available to businesses, he cut ties with his employer and started a blog where he could post accurate information about credit card processing. As the blog gained in popularity, Ben began directly assisting merchants in their search for a processor. Ben believes in empowering businesses by providing access to fair, competitive pricing, accurate information, and continued support. His dedication to transparency and education has made CardFellow a staunch small business advocate in the credit card processing industry.

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