How to tell if you are overpaying for credit card processing

Your effective rate keeps climbing and sales have not changed much

Calculate total monthly processing fees divided by total card sales. Do it for several months. If the effective rate has been moving upward while the business and card mix are fairly stable, find out why.

An increase can have a legitimate explanation. Annual fees, more premium cards, more keyed transactions or a change in sales mix can move the number. The point is to identify the cause instead of accepting the higher bill by default.

Nobody has reviewed the pricing in years

Processing accounts are easy to put on autopilot. Once the terminals work and deposits arrive, the statement stops getting much attention. That can leave a business on pricing that was negotiated years ago under very different volume.

If the business has grown, the processor may have more room to improve the deal than it did when the account was smaller.

Small fees have multiplied over time

One $10 or $20 monthly fee is not usually the reason to overhaul an account. A stack of them deserves a look. PCI fees, annual fees, statement fees, gateway charges, account fees and other recurring items can quietly become a meaningful part of the bill.

Before challenging them, figure out what each fee is attached to. Some have a real service behind them. Others may be negotiable or removable.

Nobody can explain the statement in plain language

A complicated statement does not automatically mean bad pricing. It does make it easier for bad pricing to hide. Someone should be able to identify the network costs, processor markup and recurring processor fees without resorting to vague explanations about “the rate.”

If the answer to every question is that all fees are required, ask for a more specific breakdown.

A competing quote focuses almost entirely on one low rate

A lower percentage can sound compelling while leaving out per-transaction charges, monthly fees, card-category differences and network costs. Ask what the proposed pricing would have cost on one of your actual prior months.

If the salesperson will not make that comparison, you still do not know whether the quote is cheaper.

You can check the account without switching processors

A review does not require cancelling anything. Start with the current statement. Separate network costs from processor-controlled pricing. If the processor markup looks high, ask the existing processor to improve it before creating the operational headache of a switch.

If the current processor is already competitive, that is useful information. If it is not, you now have a reason to negotiate based on the actual statement instead of a generic promise.