Question for Diana Knight


First I want to thank you for trying to educate us on how the system works. As others have stated it is very confusing trying to figure out exactly what each potential processor wants to charge you.

My problem is this: I (and everybody here I’m sure) get frequent calls and visits from sales reps for processing companies and all they want is to see copies of your last few statements so they can show how much cheaper they are. My history is from another industry and I did a lot of purchasing and vendor proposal evaluations. I am a firm believer in blind bids. Since the terms of CC processing are so confusing, lets assume we are looking to buy a pump. I tell the prospective vendors what I want and need in the form of an RFQ. They determine what they have available that meets that requirement and then give me the price they are willing to sell it for. Company ABC is willing to sell the pump for $1500.00 whicjh is the lowest bid for satisfactory equipment so I buy it. Now if ABC has access to information that their closest competitor is offering the same pump to me for $1800.00 then they will bid $1750. If they don’t have the competitors info, they will bid what they are honestly willing to sell the item for, in this case $1500. So because the bid process was compromised I would pay 17% more for the same item.

I feel that by giving the processor your statements, you are giving them information that allows them to charge a higher rate than they would if they had to bid blindly and really wanted my business. They say they can not give me any information without reviewing my statements. Is there a way around this conundrum?

The best way to handle prospective suppliers in the merchant services industry is this:

  1. Tell them how much your volume is

  2. How many transactions per month

Then ask them for a first pass “quote”, which should include:

Basis points profit ( if they aren’t talking pass through plus, kick them to the curb)
Statement, batch, transaction, PCI, annual, termination and any other fees that you will see on the contract.

Once you have this information you should be able to determine if you think they can save you money. If you are comfortable with the rep, then provide them with your statement for a full comparison based on the rates and fees they have already provided to you. They should provide you with a comparison that allows you to see side by side what you are currently paying verses what you would pay with them. Never sign up with someone based on just their word, that you will save money. Double check all the fees and costs to make certain they match with what you were given on the first pass.

Once you get your first statement, verify everything, including interchange pass through fees, some processors pad the interchange fees. You have to be vigilant, it is your money, if you aren’t watching out for it, it could cost you.