by Trisha Echols
If you are a merchant and currently subscribe to credit card processing service, you might have experienced paying extra charges in your processor’s fees. For example, if you signed up for an expected $150 total monthly processing fee, you would be surprise when you end up paying $200 or more. It’s not because your processor suddenly raised their fees. It’s simply because, without your realizing it, you incurred penalties or extra charges.
But here’s the good news. You can avoid incurring those additional fees. Knowing your merchant agreement and sticking with its terms eliminates a lot of these surcharges.
Here are some of the extra credit card processing penalty charges you can avoid.
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RIGHT MERCHANT TYPE
If you are a retail merchant , ensure that you sign up the contract with the right merchant type. Read the contract and find the word Retail Merchant. This gives you lower processing fees. You see, Mail Order/Telephone Order ( MOTO) and online merchants have higher fees. If you are retail and, without examining your contract, you are quoted as online merchant, then you could be paying extra fees.
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ANTICIPATE MONTHLY SALES VOLUME
Let’s say you engage in effective marketing strategies that increases your sales. While you are happy for the added revenues, your process is not. Any significant increase in your sales volume is considered a risk and be meted out with corresponding fine or penalty charges. You can usually avoid paying additional fees for this when you inform your processor in advance about your marketing plans and the expected increase in your sales volume. Otherwise, you would end up paying additional charges. In extreme cases, your processor could freeze or even terminate your account altogether.
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SETTLEMENT PERIOD
You should batch or settle all your credit card transactions within 24 hours or at the close of day. Failure to do so can lead to penalties. The longer you complete batching process, the stiffer will be the penalty surcharges. You can set the computer program to batch in automatic mode. Or send you periodic reminders so you can always do the batching process on time.
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PROCESS ALLOWABLE CARDS
If your processing agreement permits you to process only Visa and MasterCard, then by all means, stick to this agreement. Don’t attempt to process any other cards not stipulated on your contract. If you do, you will surely incur stiff penalties.
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GET ALL THE CARD INFORMATION FOR PROPER PROCESSING
Some cards provide 3-digit security code. This, among other security features, will enable merchant to determine the authenticity of the credit card. When you fail to get this 3-digit, it could lead to pay penalty fees. Visa and MasterCard use AVS or Address Verification Service where the billing address should match the delivery address of a cardholder. If you will not use this service, MasterCard or Visa can levy you with additional processing charges.
Credit card processing benefits merchants. It dramatically increase sales volumes to your existing business. But if you are not familiar with your merchant agreement, processing could lead to excess merchant fees and other unnecessary surcharges. Consequently, it can result to diminished profits. To avoid paying these extra fees, you should know the terms of your credit card processing agreement and then stick with it.
(Trisha Echols currently is a long-time financial consultant with established consultancy offices in Amsterdam, Halifax, Malaysia and other key cities. Her clients belong to the top 500 companies in England and in the United States. Miss Echols serves as business consultant to a selected credit card processing companies, among them www.creditcardprocessingexperts.com.She does lectures on strategic business practices and also writes for various magazines on business matters.)
