CC Transaction Fee questions

Hey guys, I’m having trouble understanding my cc fees and such. I’m currently with MPS.

An example of my last months statement showed:

Deposit Totals : 36,740.60
Settlement/Discount: 889.77
Surcharges: 202.46
Other Fees: 66.96

Total Debited = $1159.19

This gives me a % of 3.15%

This seems really high to me, what’s your take on this? I’m having a hard time understanding my statement and would like to figure it out before I talk to other companies.

I’m at cost plus 8 cents per transaction which translates to be very close to your rate. Over 85% of my credit cards are for delivery (keyed) which are more expensive than swiped transactions. If yours are primarily deliveries I would say you are doing fine, no need to change for changes sake. If yours are mostly swiped, you can easily save some money elsewhere.

I have no delivery, 99.9% are swiped.

Get set up with a cost plus basis. Mine is cost plus 8 cents, no statement fees. It’s the only way I would do this. It’s the only way to make the process transparent. Otherwise you are likely paying too much.

lol, join the club.

Cost Plus is the only way to go for any food establishment. Contact me if you would like a quote for your business.


Best of Luck

If your net price is 3.15% of the gross then you maybe in the right range.
Visa & MC are usually the same rate. AMEX is higher as wells as Discover.
Also do you have electronic checks that go through the same processor??

They don’t make it easy for you to understand and they never will.

Discover is the same as VISA/Mastercard now.

Your rate is quite high for 99% swiped. We are paying less than that with about 70% keyed in for delivery. Our other business (unrelated to pizza) is about 95% swiped and our rate comes to 1.9%.

Cost plus is the way to go. In our pizza store we are at 6 cents with HPS. Since we have so much delivery, our charges come to 2.9% all in.

Credit card fees are very complex. I think it’s that way intentionally. I’m a big fan of Dilbert and it’s creator Scott Adams. I read a post on Scott’s blog a few days ago that hits it right on the mark: … rediction/

It’s tempting to try to simplify the whole mess into a “cost-plus” bucket. This makes it seem like the processor is cutting you an amazing deal and taking little or nothing for themselves. Do not allow anyone to propose a switch without detailing the total cost. This means breaking down your activity for several months into all the components - swiped, keyed, business credit cards, reward cards, transaction fees, statement fees, terminal fees and anything else they can dream up. If you find a lower total cost, give your current processor the opportunity to keep your business.

One more detail: My feeling is that you should not sign a years-long contract with any processor. You never know when your business will change and you’ll get a better opportunity elsewhere. That great deal you think you got might evaporate in high termination fees.

When I owned my own pizzeria I attended a seminar presented by Big Dave. In it he talked about operators who spent all their time wringing their hands about cheese prices. His recommendation? Get a price you can be comfortable with, then forget about it and run your restaurant. Credit card fees can be as annoying as high cheese prices, but it’s a business reality. Raising your prices 4% won’t hurt anyone and more than offsets the credit card fees.

But it create transparency to a system that commonly takes advantage of the customers ignorance of the process.

Raising your prices 4% won’t hurt anyone and more than offsets the credit card fees.

If I thought I could raise my prices by 4% and not affect the number of orders or the amount of food that was ordered then I would go ahead and do so without regard to my credit card fees. That doesn’t negate the fact that I will pay $20,000 in credit card fees this year. Don’t ever forget that part of running your restaurant consists of managing costs. Spending hours a week searching for a cheaper credit card processor would not be smart, but to forget about the costs and not check for a savings and or improvement of service from time to time would be extremely foolish.

I don’t think any business owner can afford to ‘forget’ about ANY cost at all in their business. Sure don’t spend all of your time comparing prices so that your not running your business, but you should always keep and eye on costs and review costs frequently. Definitely if there is more than one supplier available.

I have re-negotiated several ‘fixed’ costs over the years based on finding alternative suppliers quoting much less (normally I do stay with my existing provider) and saved myself a significant amount.

As to ‘Raising your prices 4% won’t hurting anyone’ - which market are you looking at currently??? Have you not see the many many threads about people CUTTING costs not increasing them!!! finger on pulse???

But it create transparency to a system that commonly takes advantage of the customers ignorance of the process.

Credit card processors aren’t going to come up with a way to reduce their own revenue and allow other processors to easily compete with them. Credit card processing is a commodity and not easily differentiated so they want to keep every advantage they have. Read the blog link in my post.

I didn’t say don’t explore any opportunity you have to save significantly on cost. Just don’t try to compare two things that are not identical. Your current convoluted discount rates are not the same as cost-plus. Simpler does not mean less costly. Require a cost comparison so you can get a real understanding of the difference. Apples to apples.

My previous reference to the Big Dave seminar was in the context of a prime vendor agreement. He recommends reviewing them periodically; it’s definitely not a set it and forget it thing. I was encouraging the idea of resisting devotion of a large amount of time to allowing credit card salespeople to keep you in a lather about rates. You and I both field calls every week promising reduced credit card fees.

? :roll:

Clarity of credit card charges or clarity of quotes - as you say its hard to compare as they are confusing aren’t they??

I am seeing more and more restaurants and other retail establishments offering cash discounts, minimum purchases, and other incentives to reduce credit card usage… regardless of what their merchant account agreement may say. Here is some verbiage from one I found online.

[i]"Merchant shall not, through an increase in price or otherwise, impose a surcharge on a Cardholder who elects to use a Card in lieu of payment by cash, check or similar means. Merchant may offer discounts for the purpose of inducing payment by cash, check, or other means not involving the use of a Card, provided that the discount is offered to all prospective buyers.

Merchant shall not establish minimum or maximum transaction amounts." [/i]

Clarity of credit card charges or clarity of quotes - as you say its hard to compare as they are confusing aren’t they??

They are absolutely confusing. I know more than I want to know and I am very confused.

What I meant is that a potential processor should be able to look at a few of your monthly statements and give you exactly what they would have charged for every category. Categories include card present, keyed, MOTO (phone orders), Ecommerce (web orders if you do online ordering), business cards, reward cards, combinations of these and everything else on your statement. With a proposal like this it’s easier to see the real differences. If a sales rep won’t do it you should probably keep looking.

Make sure you get the difference in total cost, not just a difference in discount rates for each category. A lower discount rate in one or two categories where you have little activity will not make a significant difference in your costs and can easily be offset by transaction fees, terminal fees, statement fees and any number of other ancillary costs.

Did the agreement mention the penalty for doing this?

I don’t remember. I thought they just yanked your account. But I think many are doing it anyway because they are sick of the fees. As the credit card companies have an oligopoly, they are making a fortune.

Per the card associations rule you can’t assess a surcharge for a Visa/MC transaction even if it is a debit transaction. The first non-compliance notice is a call or visit from your representative. The second notification is by mail, and the third is a notification of the fine of up to $5000.00 and the merchant is put on the Terminated Merchants List. Which means you can never accept cards again under your business/owner name.

You can discuss back and forth all the different effective rates that each of you are “receiving” under your current processing plan, it means nothing to another merchant unless that merchant is doing the exact same volume $$ and the exact number of transactions. This is the reason we always want to do an apples to apples comparison based on each merchants activity. It is easy for someone to walk through your door and say " Hey, I can save you $500.00 each month on your processing", words are cheap, the proof is in the numbers. Anyone who says they can do it, better be able to prove it. That is why you get our guarantee, if you don’t experience the savings we give you in writing, we will help you get set up with any other processor, no charge, no cancellation fee.

See what an oligarchy gets you? If there were real competition, they would not be able to put you on a blacklist.