Knowledge of credit card processing pricing models can save your business money. In this article we describe the Interchange Plus Pricing model for merchants. We'll compare it briefly to other models, state its advantages, disadvantages and give a practice example.
Why do some businesses get lower credit card processing costs than others? In this video David explores the criteria that cause some businesses to get lower rates than others and techniques that you can use to reduce your processing costs.
It is extremely frustrating for merchants to be notified of an increase to your credit card processing rate. In many cases, these increases may be unfair and add unnecessary additional expense to your business. Fortunately, there are protections in place that can help protect your business should this happen to you.
David breaks down the current interchange rates for e-commerce merchants in Canada for 2023. These figures were taken directly from the Visa and Mastercard Canada interchange tables. These interchange rates apply not just to e-commerce transactions but also virtual terminal and other card-not-present type transactions.
Visa and Mastercard charge a very small fee called a card brand fee (also sometimes called an assessment fee). We will explore these costs and explain when they are incurred. Learn more about Visa and Mastercard assessment fees.
Some payment processors have a 'standard practice' of raising credit card processing costs on merchants. This is dishonest and unethical. In this video David explains when rate increases are reasonable (which is very, very rarely), and how to fight back when it does occur.
Some merchants that use Shopify express frustration over the Shopify percentage based fees that are charged per transaction. In this video David explains why payment processors charge percentage based fees (because of interchange fees and chargeback risk), and why most shopping cart software providers charge a monthly fee, but don't charge percentage based fees. He also discusses some options that some merchants have used in an attempt to lower their Shopify processing costs.
In this quick video, David explains the simple math to help you figure out what your discount rate will be per month.
How often can you ask for a rate reduction?
(Slightly edited from video transcript for greater readability)
Key Takeaways
1
It's acceptable to ask for a rate reduction periodically
You can ask for a rate reduction anytime you want.
2
Rate increases are never acceptable
Outside of increases in the interchange rate from Visa and Mastercard rate increases are not acceptable.
Need help with this topic? Or a rate quote?
Whether its questions about this article, or you want to see how we can lower your costs. Don't hesitate to contact us.
Hello, David here Merchant-Accounts.ca. I'm going do a super quick video and it's on rate reviews. It's how often can you ask for your rate to be lowered?
Rate Reductions
A lot of merchants might be sitting there thinking, wow, I didn't even know I could do that. Well, yes you certainly can. You can ask for a rate reduction anytime you want. At some point it becomes unreasonable. If you recently asked for a rate reduction and you didn't get one, it's probably not a good idea to ask again unless something has changed about your situation. You don't want to ask once every few months. However, if you've been a long-term client of your credit card processor and you don't have chargebacks, it is completely reasonable for you to reach out and say: "Hey guys, we were going through our financials. I've been with you for a few years, I love your service. I would just love to get a bit of a break on a rate. I'm a pretty good customer. Would you help me out?"
At Merchant-Accounts.ca, if somebody reaches out to us and they've been a really great customer, we will usually try to accommodate them. Can we always do it? No. Sometimes we can't. Sometimes maybe their trading volumes are not very high or it's truly based on the circumstances of that business. Two points. One, don't be shy about asking for a rate review once in a while. There's nothing wrong with it. However, definitely do not ever accept rate increases from your credit card processor. Your rates should never go up, never. If interchange goes up from Visa and MasterCard, then the processor can't stop it, that's different. There is no reason for a credit card processor to go jacking your rate up that is unethical. It's just not right.
Conclusion
This was a very short video, but very good advice. If you've been a good merchant, you don't cause problems, you don't take a lot of support, you've been there a long time, and you're not going anywhere, ask for a rate review. When you do it, explain why they should consider it. You've been a long-term customer. You do a lot of volume. Your volume's grown from when you originally started. If you are not being treated right by your credit card processor and you would like a rate review from us and maybe consider switching to us. Please do reach out to us Merchant-Accounts.ca, we would love to hear from you. Thanks for watching. Have a nice day there. Bye now.
Knowledge of credit card processing pricing models can save your business money. In this article we describe the Interchange Plus Pricing model for merchants. We'll compare it briefly to other models, state its advantages, disadvantages and give a practice example.
Why do some businesses get lower credit card processing costs than others? In this video David explores the criteria that cause some businesses to get lower rates than others and techniques that you can use to reduce your processing costs.
It is extremely frustrating for merchants to be notified of an increase to your credit card processing rate. In many cases, these increases may be unfair and add unnecessary additional expense to your business. Fortunately, there are protections in place that can help protect your business should this happen to you.
David breaks down the current interchange rates for e-commerce merchants in Canada for 2023. These figures were taken directly from the Visa and Mastercard Canada interchange tables. These interchange rates apply not just to e-commerce transactions but also virtual terminal and other card-not-present type transactions.
Visa and Mastercard charge a very small fee called a card brand fee (also sometimes called an assessment fee). We will explore these costs and explain when they are incurred. Learn more about Visa and Mastercard assessment fees.
Some payment processors have a 'standard practice' of raising credit card processing costs on merchants. This is dishonest and unethical. In this video David explains when rate increases are reasonable (which is very, very rarely), and how to fight back when it does occur.
Some merchants that use Shopify express frustration over the Shopify percentage based fees that are charged per transaction. In this video David explains why payment processors charge percentage based fees (because of interchange fees and chargeback risk), and why most shopping cart software providers charge a monthly fee, but don't charge percentage based fees. He also discusses some options that some merchants have used in an attempt to lower their Shopify processing costs.
My name is David Goodale, CEO at Merchant Accounts.ca. I launched our business in 2001 and have over 20 years of expertise in the field of online payments. If you have a payments related question or project, and especially if it relates to multi-currency or international e-commerce don't hesitate to contact me. I'm always happy to help with an honest opinion, and enjoy chatting with folks from interesting businesses.
