7 steps reducing your card processing cost

7 Steps Reducing

Your Card Processing Cost What Every Merchant Must Know

James Lee M. 917.930.3945 F. 718.661.0014

[email protected] www.Clearent.com

James Lee M. 917.930.3945 F.718.661.0014 [email protected]

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Are you frustrated with high costs from your current merchant account provider even if you have been switching to several processors?

One of the most confusing aspects of obtaining a merchant account can be understanding the dizzying array of fees involved.

Then take a time to read until you know 7 essential key knowledge Enables you to Reduce Your Card Processing Cost

You will get explanation of all the various fees you may run into when obtaining a merchant account, as well as some hidden fees and other junk fees you need to look out for.

Step One: Know Who can have the best pricing on payment processing

Step Two: know Key Elements of Processing fees you pay

Step Three: Know Processing Fees Detail

Step Four: Know Three Pricing Elements of Your Processor

Step Five: Know What is best type of processing pricing Models for you

Step Six: Know Who can bring the best profits

Step Seven: Do it to sign up free pricing consultation

These copies were created by James Lee and opinions expressed here are the personal opinions of James Lee, an account execut ive of

Clearent. Content published here is not monitored or approved by Clearent before it is posted and does not necessarily represent the views

and opinions of Clearent.

7 Steps Reducing Your Card Processing Cost What Every Merchant Must Know

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Step One: Know Who can have the best pricing on payment processing We meet so many merchants fed up with the services fee for payment processing and a lot of merchants don’t really understand the merchant service business or are at least confused by some aspects of the industry – we don’t blame them as it can be very complex and sometimes intentionally misleading. This is really hard to figure out and the credit card processors would like to keep it that way. There is almost no uniformity in the way credit card processors charge for the payment services and present their monthly statements. This of course makes it difficult to compare pricing and the processors work this to their advantage. There is no regulation of this industry so merchants must always review their monthly merchant processing statement for new fees and rate increases. Unfortunately, most merchants don’t understand the confusing monthly merchant statements and for that reason they don’t review them. First there are different pricing plans and you are either in the Tiered Pricing Plan (a/k/a 3-Bucket Plan) or the Interchange Pass-Through Plan.

That’s why we created 7 Steps Reducing Your Card Processing Cost

What Every Merchant Must Know

A merchant services is a type of bank services that allows businesses to accept payments by payment cards, typically debit or credit cards. A merchant account for merchant services is established under an agreement between an acceptor and a merchant acquiring bank for the settlement of payment card transactions. In some cases a payment processor, independent sales organization (ISO), or member service provider (MSP) is also a party to the merchant agreement. Whether a merchant enters into a merchant agreement directly with an acquiring bank or through an aggregator such as PayPal, the agreement contractually binds the merchant to obey the operating regulations established by the card associations.







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To get the best card processing rates, you will need to do your homework well. Research thoroughly for the most affordable terms and conditions, but make sure that the company is reputable, as you don’t want to be stuck with poor customer service, especially when their service is costing you money! Things to factor into the equation when estimating your card processing rates include your average number of transactions per month, your profit margin, your average order size, and how often you’ll be accepting credit cards from your customers. Obviously, high-volume retailers will want to focus on reducing their discount rates and per-transaction fees more so than their monthly fees and so on, where small businesses with a larger order size – but less transaction volume – can be more flexible with reducing credit processing rates. Talk to other shoppers and compare the credit card processing rates they found with your own research. Accepting credit cards should be a profitable investment – and free of exorbitant credit card processing rates – if you choose the right service.

Just call at 917-930-3945 to sign up free consultation,

For the best result, email at [email protected] or fax us (718-661-0014) two consecutive processing statements and we’ll give you an honest comparison Then we will show you exactly how our rates compare to what you are paying now and show how much you will save when you work with James Lee to properly establish your credit card processing.

The other easy way is to find some one who is real reliable payment consultant like James Lee and ask to do it for you Special Pricing could work very well - your fee schedule will be designed to fit your unique business through a reliable payment processing consultant like James Lee – 18 years payment industry expert with considering all of pricing factors

Pricing factors make the processing cost different












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Step Two: know Key Elements of Processing fees you pay A Merchant Account has a variety of fees, some periodic, others charged on a per-item or percentage basis. Some fees are set by the merchant account provider, but the majority of the per-item and percentage fees are passed through the merchant account provider to the credit card issuing bank according to a schedule of rates called interchange fees, which are set by Visa, Discover, and MasterCard. Interchange fees vary depending on card type and the circumstances of the transaction. For example, if a transaction is made by swiping a card through a credit card terminal it will be in a different category than if it were keyed in manually. In the merchant industry, sometimes it’s not as simple as comparing apples when you’re comparing credit card processing rates. There is a plethora of different card processing rates, fees, and billing structures, making it hard to understand how one service compares with another. As a merchant, you can really benefit by researching the terms and conditions of the fee structure associated with your prospective merchant services. Make sure to ask the companies to forward you their terms and conditions, and understand them fully before taking the plunge:

Initial set up cost such as application fee The Pricing Model applied including discount Rate and total cost of each sales transaction(transaction fee+ item fee +

authorization fee),

Monthly and annual recurring Fees: Read the terms and conditions and look for specific sections addressing fees,

hidden Surcharges structure: PCI compliance fee etc

Cancellation Fees: If you don’t want to be locked into a contract, look for a company that allows you to cancel at anytime.

Equipment pricing: Learn who owns equipment if you quit processing with your provider, and about a replacement cost if

the equipment is damaged. In addition to those factors, shop around to find the best processor like Clearent if you want to get the best possible credit processing rates. There are many options, pricing plans, and incentives available for setting up a merchant account; find out which one suits you the best. Some don’t charge installation fees, while others will charge a one-time overall fee but give you other perks free.

For one example of how interchange functions, imagine a consumer making a $100 purchase with a credit card. For that $100 item, the retailer would get approximately $98. The remaining $2, known as the merchant discount and fees, gets divided up. About $1.75 would go to the card issuing bank (defined as interchange), $0.18 would go to Visa or MasterCard association (defined as assessments), and the remaining $0.07 would go to the retailer's merchant account provider. If a credit card displays a Visa logo, Visa will get the $0.18, likewise with MasterCard. Visa's assessment is fixed at 0.1100% of the transaction value and MasterCard's assessment is fixed at 0.0950% of the transaction value. On average the interchange rates in the US are 179 basis points (1.79%) and vary widely across countries. In April 2007 Visa announced it would raise its rate .6% to 1.77%.







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Step Three: Know Processing Fees Detail Discount Rates The discount rate comprises a number of dues, fees, assessments, network charges and mark-ups merchants are required to pay for accepting credit and debit cards, the largest of which by far is the Interchange fee. Each bank or ISO/MSP has real costs in addition to the wholesale interchange fees, and creates profit by adding a mark-up to all the fees mentioned above. There are a number of price models banks and ISOs/MSPs used to bill merchants for the services rendered. Here are the more popular price models

Types of Transaction Fees Below is a list of credit card transaction fees with a description followed by the name various processors typically use to refer to each type of fee.

• Authorization fee The Authorization fee (actually an authorization request fee) is charged each time a transaction is sent to the card-issuing bank to be authorized. The fee applies whether or not the request is approved. Note this is not the same as Transaction fee. The authorization fee is the most widely publicized transaction fee, and it's often what a processor refers to generally as its transaction fee. Authorization fees are often referred to on processing statements as: POS AUTH , AUTH FEE , DISC P/I , Authorization Fee Or Auth The

• Per Item Fee Per items fees are charged each time a business's equipment contacts that processor to get or give information. A per item may be charged in place of or in addition to other transaction fees such as authorization fees. Per item fees are often referred to on processing statements as: Item Fee Item Rate Per Item Rate Trans Fee

• Transaction fee Transaction fee is charged when you accept your authorization. This fee only applies to an authorization that is accepted without error

• Return Item Fee A return item fee is charged each time a business issues a refund on a previously authorized and settle transaction. Return item fees are often charged in addition to per item fees

• Communication Fee A communication fee is charged each time a business's processing equipment dials the processor's toll-free phone number to get or give information. Communication fees are often charged in addition to authorization and per item fees. Communication fees are often referred to on processing statements as: WAT, WATS, POS WATS or GLOBAL WAT

• Batch fee A batch fee (also known as a batch header fee) can be charged to a merchant whenever the merchant "settles" their terminal. Settling a terminal, also known as "batching", is when a merchant sends their completed transactions for the day to their acquiring bank for payment. Some providers perform this automatically. It is important to close a batch every 24 hours or a higher rate will be assessed by Visa, Discover or MasterCard. The term "batch header" originally came from processing pre-electronic terminal era, when each batch of credit card receipts was turned into the merchant's local bank for deposit. The batch header was a mini report summarizing those receipts bundled within.

• Address Verification (AVS) Fee An AVS fee is charged each time a business accesses the address verification system when processing a card not present transaction. Retail businesses typically perform AVS when keying in a transaction, and e-commerce businesses perform AVS on every transaction. For this reason, e-commerce and card not present businesses must take into consideration that an AVS fee will be charged in addition to an authorization or per item fee on every transaction. AVS fees are often referred to on processing statements as: AVS, AVS AUTH FEE, AVS AUTH or GLBLEDCAVS

• Return Item Fee A return item fee is charged each time a business issues a refund on a previously authorized and settle transaction. Return item fees are often charged in addition to per item fees.

• Address Verification (AVS) Fee An AVS fee is charged each time a business accesses the address verification system when processing a card not present transaction. Retail businesses typically perform AVS when keying in a transaction, and e-commerce businesses perform AVS on every transaction. For this reason, e-commerce and card not present businesses must take into consideration that an AVS fee will be charged in addition to an authorization or per item fee on every transaction. AVS fees are often referred to on processing statements as: AVS, AVS AUTH FEE, AVS AUTH or GLBLEDCAVS







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Recurring Fees and other fees Gateway Fee A gateway fee is charged each time an e-commerce business passes information to its gateway service provider. Gateway fees are charged in addition to authorization and per item fees. The gateway fee may also be charged in addition to the AVS fee, although many processors charge the gateway fee in place of the AVS fee for e-commerce businesses.

Wireless Service Fee A wireless fee is charged each time a business passes information to its wireless service provider. Wireless service fees are charged in addition to authorization, per item and AVS fees.

Statement fee The statement fee is a monthly fee associated with the monthly statement that is sent to the merchant at the end of each monthly processing cycle. This statement shows how much processing was done by the merchant during the month and what fees were incurred as a result. Many times, the statement fee is not directly linked to "paper" statements but rather general overhead. This means that a provider would not waive this fee if a merchant chose to have a "paperless" statement.

Monthly minimum fee The monthly minimum fee is a way to ensure that merchants pay a minimum amount in fees each month to cover costs from the provider to maintain the account. If a merchant's fees do not equal or exceed the monthly minimum they will be charged the difference up to the monthly minimum. Example: A merchant has signed a contract with a $25.00 monthly minimum fee. If all the fees for the most recent month of processing total (CLARITY: this is only for processing costs, so it does not include monthly fees, chargeback fees, etc.) only $15.00, this merchant will be charged an additional $10.00 to meet their monthly minimum requirements. Sometimes there are fees that are charged that are not a part of the monthly minimum, such as statement fees. It is industry standard to charge a monthly minimum, though not all acquirers charge this, nor do all that do charge it for every agreement.

Customer Service fee The customer service fee (also known as a maintenance fee) can be charged by some providers to pay for the cost of customer service. Also referred to as a "merchant support fee", "customer support fee", or simply, "service fee" by some merchant providers.

Annual fee The Annual fee can be charged by some providers to pay for costs of maintaining the merchant's account. Sometimes these fees can be quarterly. The fee can be from $79–$399.

PCI Compliance Fee Annual PCI Compliance Fee Non PCI Compliance Fee

Chargeback fee The chargeback is the largest risk that is presented to banks and providers. This is not to be confused with a refund, which is simply a merchant refunding a transaction. In the Visa, Discover, and MasterCard rules, the merchant's processing bank is 100% responsible for all the transactions that the merchant performs. This can leave the provider open to millions of dollars of potential losses if the merchant operates in an illegal or risky manner and generates many chargebacks. The providers pass this cost on to the merchant, but if the merchant is fraudulent or simply does not have the money, the provider must pay all the costs to make the card holder whole. The chargeback risk is the largest part taken into consideration during the contract application and underwriting process. Some banks are much more stringent than others when assessing a merchant's chargeback risk.

Early Termination fee - Cancellation fee The early termination fee can be charged by some providers if the merchant ends the contract before the end of the contract term. While contract terms of 1–3 years are typical, some providers have terms of up to 5 years with a one year prior notice to cancel or the fee will be assessed. Some providers also assess all statement fees and monthly minimums remaining when the contract is terminated. Some providers may also assess a "lost profit" fee based on an assumption of profits they concluded they would have earned during the full term of the contract.

Step Three: Know Processing Fees Detail






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Step Four: Know Three Pricing Elements of Your Processor 1. Interchange Fee Interchange fee is a term used in the payment card industry to describe a fee paid between banks for the acceptance of card based transactions. Usually it is a fee that a merchant's bank (the "acquiring bank") pays a customer's bank (the "issuing bank") however there are instances where the interchange fee is paid from the issuer to acquirer, often called reverse interchange. In a credit card or debit card transaction, the card-issuing bank in a payment transaction deducts the interchange fee from the amount it pays the acquiring bank that handles a credit or debit card transaction for a merchant. The acquiring bank then pays the merchant the amount of the transaction minus both the interchange fee and an additional, usually smaller, fee for the acquiring bank or ISO, which is often referred to as a discount rate, an add-on rate, or pass-thru. For cash withdrawal transactions at ATMs, however, the fees are paid by the card-issuing bank to the acquiring bank (for the maintenance of the machine). These fees are set by the credit card networks, and are the largest component of the various fees that most merchants pay for the privilege of accepting credit cards, representing 70% to 90% of these fees by some estimates, although larger merchants typically pay less as a percentage. Interchange fees have a complex pricing structure, which is based on the card brand, regions or jurisdictions, the type of credit or debit card, the type and size of the accepting merchant, and the type of transaction (e.g. online, in-store, phone order, whether the card is present for the transaction, etc.). Further complicating the rate schedules, interchange fees are typically a flat fee plus a percentage of the total purchase price (including taxes). In the United States, the fee averages approximately 2% of transaction value.[ The file link below contains tables that set forth the interchange reimbursement fees applied on Visa financial transactions completed within the 50 United States and the District of Columbia. Visa uses interchange reimbursement fees as transfer fees between financial institutions to balance and grow the payment system for the benefit of all participants. Merchants do not pay interchange reimbursement fees; merchants pay “merchant discount” to their financial institution. This is an important distinction, because merchants buy a variety of processing services from financial institutions; all of these services may be included in their merchant discount rate, which is typically a percentage rate per transaction. • Visa U.S.A. Interchange Reimbursement Fees – April 2013 (PDF, 106 KB) • Interlink Interchange Reimbursement Fees – April 2013 (PDF, 45 KB)

2. Dues/Assessments and Direct Fees to Card Brands Also called acquirer brand volume fees (ABVF), these are imposed by card brands to cover operating costs and are determined by the purchase price of a product or service. Currently Visa’s assessment fee is .0925 percent (but will increase to .11 percent on July 1, 2010), MasterCard’s is .11 percent, and Discover Network’s is .0925.

3. Processing and Service Fees Authorizing and/or settling credit/debit/prepaid cards and routing money and data to complete transactions incur this fee. Charges vary among processors, and often what may appear to be a “good deal” is not. Your quote may be based on a low rate for a specific kind of transaction, yet neglect to point out that only a small percentage of your transactions actually qualify for that low rate. The remaining transactions are charged at a fee that could be as much as double or triple that low rate. Know what you are paying to your card processor above what is being paid to the issuing bank and card brands. Recognizing these interchange markups and avoiding them is critical to your profitability.







http://usa.visa.com/download/merchants/visa-usa-interchange-reimbursement-fees-april2013.pdf




http://usa.visa.com/download/merchants/interlink-interchange-reimbursement-fees-april2013.pdf




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Q5: Which Processing Pricing Models Would be the best for you? There are several pricing models that processors use to charge merchants for their payment processing service You should know which pricing model is better for you and at first, which one will be applied for your processing when you apply new payment services. Because the actual your charge will be totally deferent between those models. Every processor creates their one pricing model in deferent way to bill you for the services But bellow 3models are most common type of pricing model. By understanding these 3 pricing models, you will be able to determine whether you have a great pricing or worse one by your self. Enhanced Bill-Back Enhanced Bill-Back is another deceitful pricing model used in the merchant service industry. It has some variations but the basic concept is that the merchant pays one set rate for qualified cards then is billed back for mid or non qualified cards. Merchants will be charged the qualified rate for all of their transactions. Then, for the transactions that are mid or non qualified, you will be charged again for the difference of the qualified rate (the rate they gave you) and the interchange rate(cost) plus a surcharge. There are two reasons this is called bill back. You are billed one rate and then billed back another. Also because you will typically see the surcharges on the next month's statement. It requires a great deal of time to research the actual cost per transaction with the bill back system. Example of BILLBACK/ERR: Bill Back pricing: 1.79% + 0.50% surcharge-buy rate difference + enhanced bill back surcharge-surcharge for down grade (0.99%-1.39%: whatever fee agreement made) Your account was set up to use Enhanced Bill-Back and your rate to be 1.79% + $0.20/item as Card Present Application such as Retail, Restaurant & In-store business. It means credit your processors buys at interchange rate at 1.39%+$0.10/item and sell you at the rate of 1.79%+$0.10/item) If you ran $1000 and you keyed in a regular credit card this pricing model at 1.79% + $0.20/item (processors buy at interchange rate at 1.39%+$0.10/item and sold you at the rate of 1.79%+$0.10/item), that is not considered as qualified because you did not swipe it. So extra-surcharge will be applied. this sales Interchange for a keyed credit card is 1.8%. The difference of the interchange plus the surcharge is 0.55%. Below is how it would look on your bill. $1000 X 1.79%= $17.90 Base rate $1000 X 0.50%= $5.00 The deference between Key transaction rate(1.89%) and card swipe rate (1.39%) $1000 x 0.99%-1.39%)=$9.90 - $13.90 enhanced bill back surcharge-downgrade TOTAL= $(17.70+5+9.90 up to 13.80)+$0.20 item fee This merchant thanks he has a flat rate transaction fee on all sales at the time they are accepted as payment, and then billed again at the end of the month for all rewards, business, and corporate cards. Let’s say for the sake of example the flat rate is 1.99%. The merchant thinks, “Well, 1.99% sounds pretty good – OK, I’ll take it,” however at the end of the month additional surcharges are levied for all non debit card charges that the merchant accepts. These additional monthly charges are usually listed in separate sections of the statement to appear as if the merchant is being charged the promised 1.99%. In reality, there may be an additional charge of 2% or more. One last component of Enhanced Billback is that the flat rate of 1.79% plus $0.20 in the above example is often taken out of the merchant’s daily batch total. For example, if you had $1,000 in one sales item and then batched out at days end, only $981 would be deposited into your account. Then when you are billed at the end of the month for all the surcharges, it will appear as if those were the only fees for the month, as the rate of 1.79% plus $0.20 is often disguised on the monthly statement. There are other variations of these pricing models that are utilized. They are almost always aimed at confusing or complicating the process to hide the fact that the merchant is paying more than they were initially led to believe. We’ve seen hundreds of examples of different statements from dozens of different credit card processors and we know how to cut through the noise and determine exactly what you are being charged. As you study, Enhanced bill back pricing model is most profitable to processor so that they offer this model to most of small business to obtain their revenue thru surcharges which is the major part of hidden fee.

Step Five: Know What is best type of

processing pricing Models for you There are several pricing models that processors use to charge merchants for their payment processing service You should know which pricing model is better for you and at first, which one will be applied for your processing when you apply new payment services. Because the actual your charge will be totally deferent between those models. Every processor creates their one pricing model in deferent way to bill you for the services But bellow 3models are most common type of pricing model. By understanding these 3 pricing models, you will be able to determine whether you have a great pricing or worse one by your self.

Enhanced Bill-Back Pricing Model

Enhanced Bill-Back is another deceitful pricing model used in the merchant service industry. It has some variations but the basic concept is that the merchant pays one set rate for qualified cards then is billed back for mid or non qualified cards. Merchants will be charged the qualified rate for all of their transactions. Then, for the transactions that are mid or non qualified, you will be charged again for the difference of the qualified rate (the rate they gave you) and the interchange rate(cost) plus a surcharge. There are two reasons this is called bill back. You are billed one rate and then billed back another. Also because you will typically see the surcharges on the next month's statement. It requires a great deal of time to research the actual cost per transaction with the bill back system.

Example of BILLBACK/ERR:

If Your account was set up to use Enhanced Bill-Back and agree your discount rate (best rate) 1.79% + $0.20/item as Card Present Application such as Retail, Restaurant & In-store business. It means credit your processors buys at interchange rate at 1.49%+$0.10/item and sell you at the rate of 1.79%+$0.10/item) If you ran $1000 and you keyed in a regular credit card this pricing model at 1.79% + $0.20/item that is not considered as qualified because you did not swipe it. So extra-surcharge will be applied. this sales Interchange for a keyed credit card is 1.89%. The difference of the interchange plus the surcharge is 0.40% - your processors buys at interchange rate at 1.49%+$0.10/item and sell you at the rate of 1.79%+$0.10/item) Below is how it would look on your bill. $1000 X 1.79%= $17.90 Base rate $1000 X 0.40%= $5.00 The deference between Key transaction rate(1.89%) and card swipe rate (1.49%) $1000 x 0.99%-1.39%)=$9.90 - $13.90 enhanced bill back surcharge-downgrade TOTAL= $17.90+$5+ ($9.90 up to $13.90)+$0.20 item fee Actual your services fee for this transaction: 1.79% + 0.40% surcharge-buy rate difference + enhanced bill back surcharge-surcharge for down grade (0.99%-1.39%: whatever fee agreement made)

Please take a look at Fee Processing Flowchart Example of Enhanced Bill-Back Pricing Model at next pages







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This Flowchart explains why the actual bill is higher than merchants think.

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The surcharge Rate

. The Master Card Best Rate that is the rate you agreed to pay for the master card sales to your processor for qualified sales. Such as 1.79%+$0.20

•This chart shows 5 of requirement to qualify for best rate that allows master card sales transaction is qualified for best rate Such as 1.79%+$0.20 without surcharge because no downgrade occurs.

•If this sales transaction did not meet the 5 of requirement, it will be applied surcharges. At the Example Case, Key entry surcharge 0.40% was applied.

•Also it shows how much surcharge occurs when it downgraded and why it is downgraded.

•Most of Merchants are looking for lowest rate and applies to who gave the lowest rate. Because most of merchants thinks the low rate is equal to the low fee.

•But , above this fee, merchant realized there are many of the additional fees and merchants wonder why? But no one tell you why clearly.

•Normally, the big portion of card sales does not meet these requirement and get the downgrade. This means the additional fees -billback surcharge is occurred. It cause merchant pays more as additional surcharge for the portion of downgraded card sales at the top of qualified sales fee.

Fee Processing Flowchart Example of Enhanced Bill-Back Pricing Model

Key Entered .40%

Step Five: Know What is best type of processing pricing Models for you / Learn about Enhanced Bill-Back Pricing Model Continued


MasterCard Downgrades-Basic Surcharges

Form Merit III to ….. Downgrade Amount

Key Entered 0.40%

Merit I 0.50%

Corporate T & E Rate 0.90% - $.10

Corporate T & E Rate II 0.70%

Standard 1.25%

Corporate Standard 1.25%

T & E Rate III 0.60%

World Card 0.80%

*Note: These Amounts is basic surcharge and it do not included any Enhanced Billbacks. - Extra penalty type surcharge-surcharge for down grade (0.99%-1.39%)

whatever fee agreement made)







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Services Fee Processing Chart for Restaurant-MasterCard Sales


Surcharge amount here is not accurate. It was base on old version of MasterCard interchange rate and create to show you how it works






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This merchant thinks he has a flat rate transaction fee on all sales at the time they are accepted as payment, and then billed again at the end of the month for all rewards, business, and corporate cards. Let’s say for the sake of example the flat rate is 1.99%. The merchant thinks, “Well, 1.99% sounds pretty good – OK, I’ll take it,” however at the end of the month additional surcharges are levied for all non debit card charges that the merchant accepts. These additional monthly charges are usually listed in separate sections of the statement to appear as if the merchant is being charged the promised 1.99%. In reality, there may be an additional charge of 2% or more. One last component of Enhanced Billback is that the flat rate of 1.79% plus $0.20 in the above example is often taken out of the merchant’s daily batch total. For example, if you had $1,000 in one sales item and then batched out at days end, only $981 would be deposited into your account. Then when you are billed at the end of the month for all the surcharges, it will appear as if those were the only fees for the month, as the rate of 1.79% plus $0.20 is often disguised on the monthly statement. There are other variations of these pricing models that are utilized. They are almost always aimed at confusing or complicating the process to hide the fact that the merchant is paying more than they were initially led to believe. We’ve seen hundreds of examples of different statements from dozens of different credit card processors and we know how to cut through the noise and determine exactly what you are being charged. As you study, Enhanced bill back pricing model is most profitable to processor so that they offer this model to most of small business to obtain their revenue thru surcharges which is the major part of hidden fee.



Surcharge amount here is not accurate. It was base on old version of MasterCard interchange rate and create to show you how it works







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Tiered Pricing Models There are about 400 different rates that a merchant can be charged on an individual transaction. This is based on the card brand, card type, card present status and amount of security information obtained at the time of use. The card processors have an Interchange rate or cost for each different rate and add their profit to determine your cost. The tiered pricing model takes the whole matrix of Interchange and boils it down to usually three or four categories. Those categories are generally called “qualified,” “mid-qual,” and “non-qual,” and sometimes there is an additional category for debit transactions. If you see those terms on your monthly statement, then you know you are being charged based on a tiered pricing model. . A possible drawback from the merchant's perspective, is that these "tiers" or "buckets" are variable from one processor to the next prohibiting any direct comparison from a Tier 1 provided by one provider to a Tier 1 provided by another provider.

3-Tier Pricing The 3-Tier Pricing is the most popular pricing method and the simplest system for most merchants to understand, if not the most transparent. The newer 6-Tier Pricing, including additional tiers covering debit, business, or international cards is gaining in popularity. In 3-Tier Pricing, the merchant account provider groups the transactions into 3 groups (tiers) and assigns a rate to each tier based on a criterion established for each tier

• First Tier - Qualified Rate A qualified rate is the percentage rate a merchant will be charged whenever they accept a regular consumer credit card and process it in a manner defined as "standard" by their merchant account provider using an approved credit card processing solution. This is usually the lowest rate a merchant will incur when accepting a credit card. The qualified rate is also the rate commonly quoted to a merchant when they inquire about pricing. The qualified rate is created based on the way a merchant will be accepting a majority of their credit cards. For example, for an internet merchant, the internet interchange categories will be defined as Qualified, while for a physical retailer only transactions swiped through or read by their terminal in an ordinary manner will be defined as Qualified.

• Second Tier - Mid-qualified Rate Also known as a partially qualified rate, the mid-qualified rate is the percentage rate a merchant will be charged whenever they accept a credit card that does not qualify for the lowest rate (the qualified rate). This may happen for several reasons such as: A consumer credit card is keyed into a credit card terminal instead of being swiped A special kind of credit card is used like a rewards card or business card A mid-qualified rate is higher than a qualified rate. Some of the transactions that are usually grouped into the Mid-Qualified Tier can cost the provider more in interchange costs, so the merchant account providers do make a markup on these rates. The use of "rewards cards" can be as high as 40% of transactions. So it is important that the financial impact of this fee be understood.

• Third Tier - Non-qualified Rate The non-qualified rate is usually the highest percentage rate a merchant will be charged whenever they accept a credit card. In most cases all transactions that are not qualified or mid-qualified will fall to this rate. This may happen for several reasons such as: A consumer credit card is keyed into a credit card terminal instead of being swiped and address verification is not performed A special kind of credit card is used like a business card and all required fields are not entered A merchant does not settle their daily batch within the allotted time frame, usually past 48 hours from time of authorization. A non-qualified rate can be significantly higher than a qualified rate and can cost the provider much more in interchange costs, so the merchant account providers do make a markup on these rates.

6-Tier Pricing As a result of the Wal-Mart Settlement and to compete against PIN-based debit cards (which are processed outside of the Visa and MasterCard networks), Visa and MasterCard lowered the interchange rates for debit cards well below those for credit cards. Some providers can pass on the lower cost of these cards directly to merchants. Consequently, the 3 tiers programs have added 2 classifications for debit cards that are processed without a PIN or with a PIN for a total of 6 rate classifications.

Step Five: Know What is best type of processing pricing Models for you / Tiered Pricing Models








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Tiered Pricing Model Review: Better Than Enhanced Bill-back But The Problem With Tiered Pricing The concept of tiered pricing models are not inherently bad and most of case better than Enhanced Bill-Back, as it attempts to take a rather complex matrix and simplify it greatly. The problem lies with how processors utilize tiered pricing. The main problems are continual rate increases and the processor only shows what you are being charged, without disclosing true cost from processor profit. A tiered model will always set the tiered price so that it is higher than the actual cost of the most expensive card type allowed within that tier. In other words, there are many card types that fall under the “mid-qual” tier with interchange rates that range from 1.65%-1.74%. Processors often set the price of that tier between 2.25% and 3.25%, plus an additional $0.20-$0.35 per transaction. Case Study One sneaky tactic that many sales agents use is to set a qualified rate that is lower than interchange. These agents and their processors might set a qualified rate as low as 1% and then do their best to convince the merchant that this is the rate they will see for all their transactions. In reality, depending on the business and their industry, the merchant may have only a few, if any, of their total transactions fall into that “qualified category”. The remaining transactions fall into the mid- and non-qual categories, which are priced at a significant mark-up over Interchange. When the deception is brought to the merchant’s attention, they often face a hefty cancellation fee to get away from that processor. We see this time and again at the free consultation with us, but thankfully the savings we generate with our approach more than offsets the costs of cancellation.

The Best Option With Tiered Pricing Model Special Tiered Pricing could work very well - designed to fit your unique business through a reliable payment processing consultant like James Lee – 18 years payment industry expert with considering all of pricing factors making you fees different.

Step Five: Know What is best type of processing pricing Models for you / Tiered Pricing Models










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Interchange Plus Pricing There is only one approach that you should ever accept in your business and that is Interchange plus pricing, which represents the “true cost” set by Visa and MasterCard. Most of processors allows to offer Interchange Plus Pricing to large sales volume merchants only because this pricing model is less profitable than other type of pricing models. Some providers offer merchant account services priced on an "interchange plus" basis even if small card volume merchants.. These accounts are based on the "interchange" tables published by both Visa Interchange and MasterCard Interchange. This type of pricing creates a discount rate by adding interchange rates plus a percentage and authorization fees. This is a common pricing model for very low and very high average tickets.

Why interchange pricing model is the best for your business? Aren't you sick and tied with your surcharges that eats your profits every single sales? Surcharges, bill-backs, and tiers are often inexplicable and are potentially pure expense with no value. Interchange is a large matrix of rates set by Visa and MasterCard that is associated with each and every credit card type in circulation. These rates are charged as a percentage against the total sale as well as a flat fee per transaction. Additionally, the Interchange rate differs for each specific card type depending upon if it is swiped or keyed in. The image above is an excerpt of the multi-page Interchange chart for Visa as of October 2011 (Interchange updates every April and October). Interchange represents the true cost of a merchant accepting a credit card as payment. For one example of how interchange functions, imagine a consumer making a $100 purchase with a credit card. For that $100 item, the retailer would get approximately $98. The remaining $2, known as the merchant discount and fees, gets divided up. About $1.75 would go to the card issuing bank (defined as interchange), $0.18 would go to Visa or MasterCard association (defined as assessments), and the remaining $0.07 would go to the retailer's merchant account provider. If a credit card displays a Visa logo, Visa will get the $0.18, likewise with MasterCard. Visa's assessment is fixed at 0.1100% of the transaction value and MasterCard's assessment is fixed at 0.0950% of the transaction value. On average the interchange rates in the US are 179 basis points (1.79%) and vary widely across countries. In April 2007 Visa announced it would raise its rate .6% to 1.77%.

Interchange pass thru is Best Pricing Model but The problem remained As you learned, Interchange pass thru is better than any other pricing models but the problem on Interchange Plus Pricing is: "there are many other processors create the tricky way to add up surcharges.“ “Many of them increase the portion of their services fees – Never Locked” At Next Page, You will learn how to resolve it!







http://usa.visa.com/download/merchants/Interchange_Rate_Sheets.pdf

http://usa.visa.com/download/merchants/Interchange_Rate_Sheets.pdf

http://www.mastercard.com/us/merchant/pdf/MasterCard_Interchange_Rates_and_Criteria.pdf

http://www.mastercard.com/us/merchant/pdf/MasterCard_Interchange_Rates_and_Criteria.pdf

http://en.wikipedia.org/wiki/File:Gao-report-on-interchange.gif

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Here Is The Key Benefits Overview On Your Processing Cost With Clearent’s Pricing. Real Interchange plus pricing -No hidden fees, No middlemen, No surprises on your processing fees We give you the clearest, most detailed statement in the industry so You can make sure Clearent delivers real true interchange pass thru. There is no way around that if processor provides your clear statement showing each transaction detail like Clearent. Clearent's reporting system called Compass shows clean detail of transaction and fee description how to be applied on each sales transaction.

• No hidden fees - Clearent delivers real true interchange pass thru. No hidden fees without

trick at all.. So you’ll know the true cost of every card that comes through your business with full disclosure into how much you’re paying us and how much goes to the card brands. Plus, we pass through any interchange reductions or increases that may occur. So there are no surprises.

• No Sales Volume Restriction - Clearent delivers True wholesale pricing for any size

merchant without higher volume of card sales requirement to be applied by interchange pricing model such as over Million dollar card sales merchant only.

• 3 Year Price Guarantee - you do not need to worry about your fee increasing because we

give you 3 Year Price Guarantee - no price increases every April & October like other processors • Competitive Rate & Pricing –Skip the middleman and avoid unnecessary, costly fees by

working with a direct processor for Visa°, MasterCard°, and Discover°. We offer you the industry’s most competitive rate

• Free PCI - Absolutely no fees for merchants who complete our free PCI questionnaire • Free to Go – No Early Termination fee will by applied with Written Notice. If you don’t want

to be locked into a contract, look for a company that allows you to cancel at anytime like Clearent.

7 Steps Reducing Your Card Processing Cost

What Every Merchant Should Know

You are sick and tired of hidden surcharges eating your profits every single sales, are you?

Clearent is the key to stop your loss and help your business more profitable.






Sign up For free consultation, Contact James Lee at 917-930-3945

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You are sick and tired of hidden surcharges eating your profits every single sales, are you? We will stop your loss and help your business more profitable.

Turning to Clearent, Your Benefits On Processing Never End..

Easy to Switch – Paying your cancellation fee with Cost-free Application.

Free to Go – No Early Termination fee will by applied with Written Notice

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1. 917.930.3945 [email protected]

Advance Your Business With James Lee At Clearent

YOUR GREAT ADVANTAGES WITH US • Perfect Processing Solution Fit Your Business • Reduce Your Overall Cost More Than 25% Less • Increase Your Sales And Your Business Safety….

More Than 25% Of Average Cost Reduction On Payment Processing

3 Year Price Guarantee - no price increases every April & October like other processors

• Competitive Pricing –Skip the middleman and avoid unnecessary, costly fees by working with a direct processor for Visa°, MasterCard°, and Discover°.

• Competitive rates - Our rates are among the industry’s most competitive

• No hidden fees - We give you the clearest, most detailed statement in the industry

• Free PCI - Absolutely no fees for merchants who complete our free PCI questionnaire


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A Complete Payment Solution Tailed to Your Business Needs. we enable your business to make the sale - grow your sales with every payments anywhere, anytime

Regulatory Compliance Assistance protecting your business such as PCI Security Compliance Program and Regulatory reporting program such as helping merchant avoid Backup withholding the card sales settlement at a rate of 28% base on IRS backup withholding requirement

3 Year Price Guarantee - no price increases every April & October like other processors No cancellation fee - when you give us a 45 day written notice. You can sign up for our service with no obligation

or risk, and you’re not locked into a long-term contract. You can cancel your service at any time, for any reason, with no penalties or early termination fees when you give us a 45 day written notice

Next day funding including weekend - get your money the next business day including getting your weekend batches on Monday morning when you batch before 10:00PM CST with Express Funding

Superior Customer support - Our friendly, responsive customer support experts are ready for you 24/7/365 Daily updates on Online Reporting - Easy, stress-free reconciling with online reporting that’s updated daily A Complete POS Solution - Despite what you may have been told, POS systems are not all proprietary to one

merchant processor. We can seamlessly integrate with these POS systems and more: Digital Dining, Future POS, MICROS, Comtrax, Aloha, Harbortouch, POS Lavu, POSitouch, Supermenu POS, NCR, Ingenico, Aldelo Systems, Squirrel Systems, Datacap Systems, Dinerware, SilverWare, Restaurant Manager, Halo, Focus, ShopKeep, QuickBooks

When you turn to Clearent, Your Business Will Grow With The Perfect

Payment Solution And Instant Profit On Your Payment.

Discover How to Make Your Business Even Better With Clearent!

Ever wonder what sets one processor apart from all the others in such a crowded field? Well, wonder no more. When you turn to Clearent for all your processing needs, you’ll discover that we provide a unique experience, with benefits such as:

Your Business Advantages with Clearent will never end…..In stark contrast to processors that offer rigid systems built on

outdated technology, spotty customer service and high PCI fees, we deliver interchange plus pricing - which is wholesale pricing that identifies the true cost of every card that comes through your door, true next day funding, no cancellation fee, and the industry’s absolute best customer support.

That’s not all! We also deliver fast approval times and Compass , our unrivaled online reporting system. You need a processor that’s stretching and growing - not one who’s standing still. How else will you be able to take advantage of the latest trends in credit card processing? At Clearent, we’ve experienced triple-digit growth rates for the past four years, and we just made our second straight appearance on the Inc. 5000 list of fastest growing companies! This proves that we’re not content with just looking at the here and now - we’re focused on the future!

Clearent Announces Record 2013 Results Clayton, MO – January 29, 2014– Today Clearent announced its 2013 processing companies in the payments business. Clearent processed $4.4 billion in transaction volume last year, marking a 61% increase over 2012. The company now serves approximately 20,000 businesses .


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Reducing Your Credit Card Processing Costs

1. Competitive Pricing – Skip the middleman and avoid unnecessary, costly fees by working with a direct processor for Visa®, MasterCard®, and Discover®.

2. Competitive rates - Our rates are among the industry’s most competitive

3. No hidden fees - We give you the clearest, most detailed statement in the industry

4. Free PCI - Absolutely no fees for merchants who complete our free PCI questionnaire

James Lee M. 917.930.3945 F. 718.661.0014




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A COMPLITE CARD ACCEPTANCE

CREDIT

Fast and easy acceptance of Visa®,

MasterCard®, American Express®, and

Discover® cards is the mark of a strong merchant

services provider, as is quick, no-hassle

settlement. Clearent delivers both!.

SINATURE OR PIN-SECURED DEBIT

A rapidly growing payment option for consumers,

debit cards can reduce your processing costs. With

Clearent, you can accept PIN-based debit cards

from all of the major debit networks

EBT - Cut down food stamp processing time and eliminate

potential fraud with our Electronic Benefits Transfer service. Your customers have full access to their funds and we help you to examine eligibility and determine the solution that best suits your business!

CHECKS - We offer a wide array of electronic check and ACH services, including check conversion, guarantee, remote deposit capture and ACH debit. No cash? No problem!

A COMPLETE VALUE ADDED

PROGRAM

GIFT CARDS AND LOYALTY CARDS

Begin selling your own gift cards or launch a customizable, card-based customer loyalty program in as little as two weeks. Real-time, online reporting makes managing your program a breeze.

Gift card spend can result in up to a 50% higher average

ticket. With 9-out-of-10 people purchasing or receiving at

least one card in the last 12 months, consumer demand

has expanded prepaid well beyond retail.

Loyalty Card Program which allows you to easily (and

frequently) create and track promotions to incent repeat

business and reward your best customers. Double

points, buy-10-get-1-free, whatever you have in mind...it’s

automatically managed through your credit card terminal.

REWARD 4 YOU - There is no easier and faster

solution for enrolling a mass number of customers into

your loyalty program and that includes mobile app only

solutions.

THE PERFECT SOLUTION

FITS YOUR BUSINESS

IN STORE

Switch to high-speed processing to potentially save

money on every transaction. Add a PIN-pad for additional

savings on larger purchases. Use your existing

equipment or your Clearent Account Executive, James

Lee can recommend the right terminal for your business.

ONLINE OR OVER THE PHONE

Securely sell online or take payments over the phone.

Login to the Virtual Terminal to accept payments through

your computer. Add a mag-stripe reader to secure more

favorable card-present rates.

ON YOUR WEB STORE -Accept payments on

your web store with e commerce credit card processing

from CLEARENT. The fast, safe, and secure way to run

your business

ON THE WAY

Wireless terminals and cellphone applications mean

you’re free to accept payments practically anywhere.

A Complete Payment Solution

Products and Services Tailed to Your Business Needs

WE ENABLE YOUR BUSINESS MAKE THE SALE - GROW YOUR SALES

WITH EVERY PAYMENTS ANYWHERE, ANYTIME

At Clearent, we help our customers eliminate barriers to success so you can win the day. Our customers’ satisfaction on our

unique combination of value pricing and excellent customer service have put us on the fast track for growth and helped us land at #904 on the Inc. 5000 list of fastest growing companies!


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http://reward4businesses.com

Flexible Point-of-Sales Solution:

Terminals, virtual terminals, payment gateway, POS Software, wireless, mobile and IVR/touchtone…. We make integration easy by offering POS software for brick-and-mortar retail ... Wireless connectivity makes mobile commerce (m-commerce) possible. ... Mobile Phones ... service turns your touch-tone phone or cell phone into a robust POS device. We can seamlessly integrate with these POS systems and more: Digital Dining, Future POS, MICROS, Comtrax, Aloha, Harbortouch, POS Lavu,

POSitouch, Supermenu POS, NCR, Ingenico, Aldelo Systems, Squirrel Systems, Datacap Systems, Dinerware, SilverWare, Restaurant Manager, Halo, Focus, ShopKeep, QuickBooks

Recurring Payments - Automate the management and collection of scheduled payments. Set up daily, weekly or monthly plans that charge your customer’s credit card or checking account Clearent customers also have 24/7 access to a toll-free Automated Voice System (AVS) to secure a credit card authorization

James Lee M. 917.930.3945 F. 718.661.0014




http://www.clearent.com/blog/news/record-breaking-performance-lands-clearent-on-inc-5000-list/




http://reward4businesses.com/




James Lee M. 917.930.3945 F. 718.661.0014



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Why sign up free pricing consultation? You are sick and tired of hidden surcharges eating your profits every single sales, are you? You do not have to

stay on it. We will show you how to stop your loss and help your business more profitable when we talk together.

Time is money. The more delaying , The more loss of your profits.

Sign Up Free Consultation To learn more how our payment and credit card services can help control your cost while providing safe,

convenient payment transactions for your business.

You will discover how to maximize your benefits on your payment processing with Clearent-The real best

value provider

Step Seven: Do it to sign up free pricing consultation

Sign Up Free Consultation

It helps protect yourself while accepting credit cards for your business and to have the best pricing on your payment processing.

Just call James Lee - your reliable payment processing consultant at 917-930-3945 For the best result, email to [email protected] or fax us (718-661-0014) two consecutive processing statements and we’ll give you an honest comparison with best pricing for you.

These copies were created by James Lee and opinions expressed here are the personal opinions of James Lee, an account execut ive of Clearent. Content published

here is not monitored or approved by Clearent before it is posted and does not necessarily represent the views and opinions of Clearent.











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7 steps reducing your card processing cost

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