Less Discount Paid Means Less Money for You

“Less Discount Paid” Defined

Less discount paid” is the term that credit card processing services use to indicate the amount of money that a business has paid in fees throughout a given month. Howeer, in order to determine the total amount paid in processing fees that month, you have to add “less discount paid” to the amount charged at the end of the month.

Follow this link for a detailed breakdown of daily versus monthly discount, including a sample merchant statement that uses daily discount.

There are several counter-intuitive terms in the processing industry that contribute to the confusion surrounding rates and fees. “Discount” is one such term that means the opposite of what you would expect.

In the credit card processing world, the word “discount” refers to the rate that a processor charges. So, when a processor puts “less discount paid” on a processing statement, what they really mean is “less charges paid,” or more clearly, “how much in fees you have already paid.”

Processors bill their clients for credit card processing fees on a daily or monthly basis.

Daily Discount

Daily discount is when a processor deducts their qualified rate prior to depositing funds into a business’s checking account. Then, the processor bills transaction fees, mid- and non-qualified rates, and other miscellaneous fees in a lump sum at the end of the month.

Daily discount hinders your business’s cash flow because credit card processing sales are received as net deposits instead of gross. Additionally, daily discounting is often coupled with tiered pricing instead of interchange plus, making for very expensive rates and fees.

Luckily, both daily discounting and tiered pricing can be easily avoided by using CardFellow to find the best credit card processor.

Monthly Discount

Monthly discount is when a processor charges all of their fees in one lump sum at the end of the month. Monthly billing is generally easier to track than daily billing, and it results in more positive cash flow.

In general, monthly discounting is the best choice for businesses. If you’re already processing and are unsure which discounting method your processor uses, be sure to check your statements. Are you receiving net or gross credit card deposits? Net deposits indicate daily discounting. If you see a total labeled “less discount paid,” that also indicates daily discounting.
However, more important than the discounting method is the pricing model you’re on. If paying less for credit card processing is important for your business, take 2 minutes to sign up for a free CardFellow account to compare pricing from multiple processors quickly and privately.

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