Merchant Account Fee Comparison

Do I have a good deal here, or am I paying through the nose?

[joestern]

Here's what I pay for credit card acceptance:

V/MC: 1.99% plus 27c
Amex: 2.90% plus 10c
Discover: 2.14% plus 18c

Unqualified V/MC: 3.30% plus 31c

If you want to post your own rates, please do.

First question: Is there any way to tell in advance whether or not a V/MC card is "qualified" or not? Those "unqualified" ones get expensive.

Next: It sounds like my Amex rate is pretty much set in stone on a sliding scale based largely on my volume and my business area. Has anyone found a way to negotiate with Amex? Does anyone try to persuade customers to use other cards?

And the big one: Has anyone found a reliable lower rate for V/MC?

Thanks!

[phantombookman]

Not sure how it works in the US but here in the UK your rates are based on your turnover.

Many people don't seem to realise you can keep checking with your merchant provider and asking for a rate review. If your turnover increases to the next level then you qualify for a lower rate.

Regards
Rod

[joestern]

Does turnover mean volume?

The Amex rate I have is tied to volume, but the V/MC is locked as I get it through Costco. They claim it's the lowest around for internet retail accounts . . .

[Phillyrich]

Joestern, If you are an on-line merchant the best you can expect is a mid-qualify. A fully qualified transaction is a card present one. It also has to do with how long it takes you to submit the transaction. The batch must be closed the same day as the transaction or it will be downgraded. As for AMEX I have never had any luck in getting them to move on their buy rate. It looks to me that your rates are actually very good for an Internet Merchant. I hope this helped, off topic.

Richard

[edited by: DaveAtIFG at 7:55 pm (utc) on Sep. 8, 2004]
[edit reason] No specifics please [/edit]

[SkyDog]

The actual card discount rates are better than average. What's the statement fee? And the gateway fee?

[Essex_boy]

Turnover = Sales made

[brandyace]

If you are actually paying 1.99 for MC/Visa on an internet account, it's an unbelievably good rate.

More likely, though, you're paying a "mid-qualified" rate which is a card not present classification on the interchange tables.

Take a very close look at your statement. If you need help interpreting it, would be happy to assist.

[joestern]

Right - I pay 1.99% on the majority of my V/MC charges, but 3.30% on a portion (about 20%).

So is there any way to know ahead of time which way a card will fall? I'd like some way to learn in advance if I'll get hit for the 3.30% instead of the 1.99%. I've looked at the transactions in Authorize.net and I can't see and distinction.

By the way, the rate is through Costco and Nova. I think it's available to everyone who is a Costco Executive member ($100/year).

[alika]

Are those the rates even if for card not present, such as an ecommerce transaction?

Amex is really expensive.

[joestern]

Yes - I do exclusively web and phone orders (and the phone orders just get placed by us on our website). Amex is brutal. I've changed the order of the icons on my website to show Amex last - and I might make the Visa and MasterCard logos larger . . . I also take PayPal, and that's even better than Amex.

I called Amex to complain, but it sounds like they have rigid tiers of pricing. When I compared their rates to V/MC rates, they gave me the corporate line about "these are different products" and such. Nonsense, but no way around it, except for dropping Amex, as far as I can see.

[zomega42]

I suggest leaving AMEX off of your list of credit cards at checkout. Instead, put "Other credit cards". Make the buyer click "other credit cards", then allow them to choose AMEX.

That way anyone who can't live without AMEX can still make an order, but most people won't bother clicking "other".

[joestern]

Not a bad idea. Mine is in a drop-down list - so I'm not sure how to configure that. Do you have an example on your site?

[JonR28]

I would disagree with that. Is your profit margin really heavily affected by 1.01%? Some people (like my dad for instance) only have an Amex card and are dedicated to it, they won't order if there is no Amex option and making them click something else will just confuse them. I don't know about you but 10% of my orders appear to be Amex so its worth it for me to keep processing them at 3%.

Your rates are good, mine are higher because I'm lower volume & high risk (no credit due to my age). Compared to 4.5% or whatever 2CO was chargin me its great.

[ecommerceprofit]

I just called American Express and immediately asked to speak with a manager. They tell me that there are different rates for different industries. I am paying 3.5% and have been in business for 7 years - my sales have gone up 2000% since then. I asked him to send me the charts that they use to come up with everyone's rates - he says that they don't give those out. I don't think it's fair that they are secretive about their rates. "my opinion" is that they charge high rates for some people and lower rates for others.

[babushka99]

You're not paying through the nose. Rates seem fairly reasonable, any discounting you might get in VISA/MC will make very little difference to your bottom line and just noticeable difference if your sales are $300,000+ per year.

Compared to what we pay to 2checkout - 5.5% plus 45 cents per transaction and not to mention 5% reserve held for 3 months.

You got a good deal going.

[Later2]

I refuse to offer Amex and none of my customers has complained. Have I lost sales? I have no idea. I probably have, but I bet most of the customers in my demographic group have more than one type of card.

[edited by: Later2 at 7:08 pm (utc) on Sep. 10, 2004]

[Later2]

Overall my WorldPay transactions cost about 5%.

[joestern]

It does sound like I'm much better off than the WorldPay and 2CO crowd.

What I really want to do is push Amex users towards the other cards. I'll still take Amex - I don't want to push so hard that they go to a competitor. But I'd like to push anyone where it's all the same to them.