Hidden Fees That Can Cost Merchants and How To Avoid Them
February 07, 2021
Warning to Business Owners: Beware of Hidden Fees
On the Payment Experts blog we often talk about the many confusing parts of the payment industry because we want our merchants to understand exactly what they are paying and why. We pride ourselves on our transparent pricing and long-term relationships with our clients. However, this is not common practice in the payment processing industry and when you do not have a dedicated Payment Expert, it is easy for hidden fees to be added over time.
What Kind of Hidden Fees?
One of the reasons we have such great relationships with our clients is our transparent pricing policy. Many long-time business owners will tell horror stories of losing outrageous portions of their earnings on credit card processing. Of course, most merchants do not sign up with a card processor that they think is going to be very expensive and they often feel blindsided by the large fees.
So why do merchants end up paying more than they expected? Did they misread the processor’s advertisement: “rates as low as 1.20%”? It turns out that flashy advertised “low rate” is just the starting point and many business owners are unaware that most credit card payments will not qualify for that rate. This is because the advertised rate is usually only applicable to a specific card type. All other card types are then marked up by the processor and the merchant gets hit by a non-qualified discount rate that drives up their bill.
On top of the advertised rate and these surprising non-qualified charges, the processor may charge additional fees that merchants should look out for. These include large assessment fees, mark-ups, online payment charges, authorization fees and new fees that are instituted every year.
What to Do?
Send Payment Experts a copy of your merchant processing statement and we will comb through it to identify any hidden fees you might not have noticed!
What About A Brand-New Business?
Whether you are a brand-new business owner or a lifetime merchant, you must be wary of payment processors overcharging you simply because they can. The best way to combat this is through education on the topic. If you know what to look out for there is a much better chance that hidden fees won’t slip by you.
Unfortunately, whether or not you are a new or old business owner does impact the likelihood that you will be approved for payment processing. New businesses are usually high risk for an acquirer because they do not have a credit history to submit. That is why small business owners often go to payment aggregators like Stripe or PayPal that make it easy for small merchants to get card processing. These companies take on the extra risk but charge high fees to offset it.
What to Do?
Before agreeing to pay the higher fees of one of these aggregators, talk to Payment Experts about your business and how we can tailor a payment solution to fit your unique needs. Our Experts have successfully worked with hundreds of new businesses that had never accepted Credit Cards before, helping them get up and running without having to pay excessive fees.
Check out more of our blog posts to learn about the payment processing industry and how to navigate it.