Another very common tactic used buy the fraudulent credit card processors in the industry is their enticing merchants to sign quickly before they have a chance to do adequate research and become educated.   They do this by advertising and quoting extremely low, below market credit card processing rates.  The problem is, just like the free credit card machine scam, the merchant is only being told about one third of the fees that will apply to their credit card processing account.  So while the merchant might be getting a good deal on the front end fees such as the qualified discount rate, the transaction fee, and the monthly statement fee, they are being charged almost triple for all of the other credit card processing fees that apply to the account.  And to top that off they are signing a long term contract, with a severe cancellation fee and a monthly minimum.  The following are credit card processing fees which are commonly hidden:

• MID QUALIFIED SURCHARGE
• NON QUALIFIED SURCHARGE
• MONTHLY MINIMUM
• PIN BASED DEBIT CARD NETWORK FEES
• WIRELESS TRANSACTION FEES

In this section we discuss these very important fees that apply to every credit card processing account in the industry.  No bank or credit card processor is exempt.  If you are a merchant who is new to the credit card processing industry, this will educate you completely so you can make an informed decision when choosing a merchant account.  If you already have a credit card processing account, study this anyway and have a look at your statement. And if you cannot understand your statement call your credit card processor and ask them about each and every one of these credit card processing fees.  We bet you’ll be surprised.  See below for a detailed description of the commonly hidden fees mentioned above.  If you require further explanation please call Toll Free: 877-964-1622 or inquire online.  We will take as much time as needed make sure you understand completely.

MID QUALIFIED SURCHARGE:   Pay careful attention to the word “Surcharge” because it is, in fact, just that.  It is a credit card processing fee that is added to, on top of, your qualified discount rate. Don’t be fooled by a sales representative who tells you otherwise because it is a fee that every single credit card processor in the industry does have and they will charge it to you, the merchant.  And if you call 10 credit card processing companies, 9 won’t mention it.  If you are savvy enough to ask, about 9 out of ten credit card processors will purposely explain it in a way to mislead you into thinking their rate is lower than it actually is.  For instance, they will say “My mid qualified fee for credit card processing is 1.5%”.  And if you compare that to the credit card processing industry average mid qual rate of 2.49% you might think you are getting a great deal; an entire percentage point below the average.  But what the 1.5% mid qual credit card processor neglected to inform you is that the 1.5% is, in fact, their surcharge and it will be added to their qualified discount rate of 1.79%.  So now the grand total you will pay for every mid qualified credit card processing charge is 1.79% + 1.5% = 3.29%, which is almost an entire point higher than the industry average.  So let this be a lesson to you.

What exactly is a Mid Qualified Surcharge?  The mid qualified surcharge is a higher credit card processing fee charged to merchants for Rewards Cards, Mileage Cards, Signature Cards, Benefits Card or any other cards that offer the cardholder incentives for use.  The credit card companies are spending a significant amount of money in the form of travel, gifts, cash back and other incentives in order to entice the cardholder into using their card.  The increased costs of these credit cards are passed on to the credit card processing banks and providers.  The credit card processors in turn pass the higher fees over to the merchants in the form of a mid qualified credit card processing surcharge.  And as discussed this credit card processing fee is, in fact, a surcharge, that is added on top of the qualified discount rate.  The type of credit cards that will fall into this bin represents 30-40% of a merchant’s credit card processing, a significant cost on the merchant account. This is the reason why these fraudulent credit card processing companies can sell below market and below cost qualified discount rates.  They simply charge 2-3 times more for the mid qualified credit card processing fees to cover any loss they incurred. As you can see, it is extremely important for merchants to know that they will be charged a mid qualified credit card processing fee and they need to be sure they know exactly what is being charged. 

If you require further explanation please call Toll Free: 877-964-1622 or inquire online.  We will take as much time as needed make sure you understand the Mid Qualified Credit Card Processing Surcharge completely.

NON QUALIFIED SURCHARGE:   Here is again. Just like the Mid Qualified Credit Card Processing Surcharge, pay careful attention to the word “Surcharge” because it is, in fact, just that. And don’t be fooled here either by a sales representative who tells you otherwise because this is also a fee that every single credit card processor in the industry does have and they will charge it to you, the merchant.  It is another credit card processing fee that is added to, on top of, your qualified discount rate. This, too, is a credit card processing fee that 9 out of 10 companies will not mention.  And buyer beware because if you do ask, the credit card processing reps will purposely explain it in a way to mislead you into thinking their rate is lower than it actually is.  For instance, they will say “My non qualified fee for credit card processing is 2.5%”.  And if you compare that to the average non qual rate in the credit card processing of  3.5% you might think you are getting a great deal; an entire percentage point below the average.  But what the 2.5% non qual credit card processor neglected to inform you is that the 2.5% is, in fact, their surcharge and it will be added to their qualified discount rate of 1.79%.  So now the grand total you will pay for every mid qualified credit card processing charge is 1.79% + 2.5% = 4.29%, which is almost an entire point higher than the industry average.  So let this be a lesson to you.   This same trick is used in conjunction with the mid qualified credit card processing surcharge which is discussed, in detail, above. 

What exactly is a Non Qualified Surcharge?  The non qualified surcharge is a higher credit card processing fee charged to merchants for Business Cards, Corporate Cards, Government Cards, International Credit Cards or any transaction that does not have the correct Address Verification and Fraud Prevention Data entered properly. These types of cards represent an increased cost to the card processors due to the fact that businesses and governments most often do not carry balances on credit cards and as a result the card companies do not earn the interest they normally would. To make up for this lost revenue, the card companies charge higher fees to the processor and the merchant.  And the cards that have improper AVS and Fraud prevention data present a much higher credit card processing risk so merchants are charged a higher fee to mitigate that risk.  And as discussed the non qualified credit card processing fee is, in fact, a surcharge, that is added on top of the qualified discount rate.  The type of credit cards that will fall into this bin represents 30-40% of a merchant’s credit card processing, a significant cost on the merchant account. This is the reason why these fraudulent credit card processing companies can sell below market and below cost qualified discount rates.  They simply charge 2-3 times more for the non qualified credit card processing fees to cover any loss they incurred.  And when they combine this dirty trick with the same on the mid qualified surcharge, the processors have now fraudulently boarded an account that will generate about 5 times more revenue than a standard, competitively priced merchant account.  As you can see, it is extremely important for merchants to know that they will be charged both a mid qualified and a non qualified credit card processing fee and they need to be sure they know exactly what is being charged.

  
The 1st step to protect you from this scam is to understand that every company in the credit card processing industry does have these fees and must list the fees on their merchant application.  Be aware that the processor might even get more tricky and try to call it something else other than a mid qualified or non qualified surcharge, but there will in fact be additional credit card processing surcharge fees listed somewhere on the merchant application.  Secondly, now that you are aware that this fee does apply to all accounts, immediately discard the information from any credit card processor who neglected to mention it to you.  Their neglect was intentional, I promise you.  And finally, do not simply take the word of the sales representative as to what their mid qualified and non qualified credit card processing surcharges are.  Scrutinize their merchant application. Read the fine print.  Make sure you understand what the total credit card processing surcharge is, meaning add it to the qualified rate.  If it contradicts what the representative told you, shred that companies information too because they scammed you intentionally. 

If you require further explanation please call Toll Free: 877-964-1622 or inquire online.  We will take as much time as needed make sure you understand the Non Qualified Credit Card Processing Surcharge completely.

MONTHLY MINIMUM:   If you come across processors offering “Free Credit Terminals”, “Credit Card Processing Accounts with No Monthly Fees”, or “Retail Merchant Account Rates at 1.15%”, make sure you are aware of and fully understand a credit card processing monthly minimum because you are going incur one.  One thing you need to understand is credit card processors incur extensive costs when boarding your account. Aside from the cost of pulling your credit and maybe a D & B report, they are also charged a set up fee from the bank, the acquirer, and the wireless carrier, if applicable, for any approved credit card processing account.  Now add that to their cost on the credit card machine ranging from $100-$1000 depending on the type, and the processor has now suffered a significant up-front loss to board your credit card processing account.  Don’t forget their assumed risk that you might take that free terminal and disappear forever. And if they are giving you an absurd credit card processing retail rate of 1.15%, well below cost, the credit card processor will lose money on many sales you process.  On top of all of this, every credit card processor is charged a monthly fee for each merchant on board.  Based on all of this information it doesn’t take an accountant to understand that it would be impossible for these credit card processors to allow you to have a credit card processing account with no monthly fees, and/or with free equipment. If just wouldn’t not make any sense.  What if your business plan did not work out and you did zero credit card processing business?  On top of the up front loss the credit card processor will make nothing or even lose more money if they signed you with a below cost rate.  But despite all of this, you still see credit card processors all over the industry offering these deals which would seem to be a losing endeavor.  But the truth is, they are not losing because they have secretly had the merchant sign and agree to a monthly minimum which guarantees the credit card processor a monthly credit card processing income whether or not the merchants processes at all. 

A credit card processing monthly minimum is one of the dirtiest tricks a credit card processor can play on you.  99% of the time they will not mention it to you.  If you ask about it, and they are forced to tell you, you will be notified that your credit card processing monthly minimum is $25(Sometimes as high as $35).  The average merchant will here this and say, “Oh, no big deal. I can do $25 in credit card processing with my eyes closed. That is less than 1 sale.” Well guess what.  This is the exact response for which the credit card processors are searching.  The reason being is a $25 credit card processing monthly minimum is not just one sale of $25 spread across all 4 major credit cards.  It is actually a $25 qualified credit card processing requirement on Visa and Master Card Credit cards only.  So if your qualified discount rate is 1.69%, you would have to do approximately $1480 in Visa and Master card credit card sales to meet your monthly minimum $1480 x 1.69%= $25.01.  So instead of the one $25 sale you were anticipating, now you are looking at almost $1500 in sales to hit the credit card processing monthly minimum. What happens if you do less than $1500 in sales?  Let’s assume you did $1000 in Visa & Master Card sales.  That would represent $16.90 in credit card processing ($1000 x 1.69% = $16.90).  At that point the processor would tack on an additional $8.10 to achieve the $25 credit card processing monthly minimum.   With this guarantee it ensures the processor will make at least $25 a month, $250 per year and $750 over the life of each credit card processing account so they play their games and offer below market rates, free equipment, and no monthly fees.  So read every merchant application the program guide in detail.  The credit card processing monthly minimum is there, and sometimes it is purposely hidden in very fine print. If you don’t see it and you mistakenly agree to it, you will be bound to the $25-$35 credit card processing requirement for the life of the account. BUYER BEWARE!!

If you require further explanation please call Toll Free: 877-964-1622 or inquire online.  We will take as much time as needed make sure you understand the Credit Card Processing Monthly Minimum completely.

PIN BASED DEBIT CARD NETWORK FEES:  There are 2 types of debit cards and check cards in the credit card processing industry.  Most of them have the Visa, Master Card or Discover logo. As long as they have the logo, these cards can be accepted with the standard credit card processing set up. No Pin pad is required.  The merchant will simply swipe the card through the machine and it is processed just like a credit card according to the qualified credit card rates or off line debit card rates, if applicable.  The other type of debit cards and check cards do not have a Visa, Master Card or Discover logo. These represent about 10% of the debit cards and check cards in the industry and cannot be accepted through the standard credit card processing set up.  To accept these cards without a logo the merchant must have a credit card processing account set up with Pin Based debit.  A Pin Based Debit credit card processing account can be used through a credit card terminal with an internal or external pin pad.  Upon swiping of the card, the cardholder is prompted to input their personal identification number into the Encrypted Pin Pad to complete the transaction. Pin based processing can also be used for debit cards and check cards with the Visa, Master Card or Discover logos.  It has the lowest risk of fraud and chargeback in the credit card processing industry and as a result costs the least to process.  Therefore merchants get a preferred rate when processing these cards using this method.  But a merchant must be very careful because one of the dirtiest tricks in the industry is to mislead merchants into thinking they are getting a better pin based debit card rate than they actually will on the credit card processing account. Please see below for details.

Credit card processing accounts that have pin based debit card services typically carry an additional monthly service fee, over and above the standard monthly statement fee and monthly minimum, if applicable. This monthly fee ranges from 5-10 dollars, so be on the look out for it. It is rarely disclosed.  But even more important than the monthly fee is the additional transaction fee and the back end network fee that will apply to all pin based debit card and check card transactions on your credit card processing account.   You might be saying, “What, a back end network fee? No one ever mentioned that.”  This is very common and it is also one of the dirtiest tricks in the credit card processing industry.  The fraudulent credit card processors purposely neglect to mention these back end fees to make their credit card processing deal seem much more appealing.  They will quote you pin based debit card processing rates ranging from 15 cents to 35 cents but will never mention anything else.  They are hoping you will hear low rate and sign the credit card processing application immediately without doing ample research and scrutinizing their application.  And most merchants fall for this trick because they overlook the fine print on the credit card processing application, the program guide and the merchant agreement.  On the application you will find a section stating the pin based debit card transaction fee which will be very obvious, but in extremely fine print there is a clause that specifically states “Plus Applicable Network Fees”.  If you look further into the 30-40 page credit card processing program guide and or merchant application there is a section that elaborates on the “Network Fees”.  In an nutshell, each one of the debit card networks STAR, INTERLINK, NYCE, ACCEL, MAESTRO, PULSE, SHAZAM, AND JEANIE will all charge you their own additional transaction fee, a percentage, and a switch fee if you use their network for a debit or check card authorization.    The additional transaction fee ranges from 5 cents to 20 cents, the switch fee ranges from 2 cents to 4 cents, but worst of all the additional percentage ranges from ½% to 1 ½ % of the sale amount.  So the merchant that thought he had a credit card processing account with a flat pin based debit rate of 25 cents, actually has the best case scenario of  32 cents transaction fee and will incur a minimum of ½ % of the sale.  The worst case scenario on a credit card processing account with pin based debit can be as high as 49cents per transaction and 1.5% of the sale.

 
The combination of the processors transaction fees and the additional back end network fees can make the credit card processing account with Pin Based Debit much less cost effective than one without.  So make sure you crunch numbers and do your math.  Understand that all banks and processors are subjected to these additional back end network fees.  If they actually gave you a credit card processing account with a pin based debit flat transaction fee of 25-35 cents, they would be absorbing all of the back end network fees and losing a fortune.It doesn’t take an accountant to understand that is would be impossible.  If you speak to a processor and they quote on a credit card processing account with a flat pin based debit rate know, that they are purposely not being forthcoming and outright lying to you.  BUYER BEWARE!!

If you require further explanation please call Toll Free: 877-964-1622 or inquire online.  We will take as much time as needed make sure you understand the Credit Card Processing Account with Pin Based Debit completely.

WIRELESS TRANSACTION FEES:  Be highly aware of this credit card processing fee because it is another sneaky little trick used by the fraudulent merchant service providers.  If you are a merchant and looking for a wireless credit card processing account then you are going in incur a wireless network access fee in addition to your standard monthly bank statement fee.  Much like a cellular phone, your wireless credit card processing device will be connected to one of the wireless data networks, either CDMA, GPRS or Mobitex The processors have a cost with each of these carriers ranging from $10 - $20 and these costs are carried over to the merchant in for form of wireless credit card processing fees.   If you get a competitive quote, you will be looking at monthly fee ranging from $15-20 depending on the network.  Most companies, even the fraudulent ones, will quote you like this.  With the wireless credit card processing quote from the honest companies this will be a flat monthly fee, with no roaming, no long distance, and unlimited use.  But the fraudulent companies will sneak in something called a wireless transaction fee without ever mentioning it.  This credit card processing fee is in addition to your standard transaction fee and it is typically around 10 cents.  So now every time the terminal connects to the system to process any kind of a function, the merchant will not only be charged the standard transaction fee of 25 cents, but also the additional wireless fee of 10 cents bringing the grand total for credit card processing to 35 cents.  This is an extremely high fee and can add up quickly especially you consider it will be assessed for any sale, refund, void, batch, basically any credit card processing function whatsoever. If you speak to any credit card processing company about a wireless account scrutinize the application for the fine print specifically stating the additional wireless transaction.  If you find it and they neglected to mention it, understand that it was intentional, they lied to you and you have been victimized.  Stay away from that fraudulent credit card processing company.   BUYER BEWARE!!

If you require further explanation please call Toll Free: 877-964-1622 or  inquire online.   We will take as much time as needed make sure you understand the Wireless Transaction Fees completely.

If you require further explanation please call Toll Free: 877-964-1622 or or E-Mail us.