The Processing Game -
What No One Wants You to Know
We frequently encounter Merchants who tell us they don't need our services - or don't want to have us check their pricing - because they have a "great, low rate." While there is a chance they do in fact have a great, low rate, the odds are otherwise.
When a merchant service provider quotes you a straight rate, such as 1.2%, it sounds great. Merchants often take the deal, signing a multi-year contract with cancellation fees.
They often discover later, much to their chagrin and after their provider has disappeared, that the "rate" they were quoted - and which prominently appears on their contract - is not the rate they are actually getting.
Why? It is because what we call a "rate jockey" has failed to educate the Merchant. Few Merchants understand how rates actually work and apply. This is not the Merchant's fault - it is the fault of their provider. Providers simply don't want Merchants to know about something called "tiered pricing."
Tiered pricing reflects the simple fact that Visa and Mastercard do not treat all credit cards, or transactions, the same. Different kinds of cards are classed as different types of transactions and different rates apply.
When merchants look at their statements and cannot figure out why the rate they were quoted and that appears on their contract does not seem to apply, it nearly always is because of tiered pricing.
Indeed, merchants sometimes find that less than 10% of all their transactions actually fall into the "too good to be true" rate category that appears on their processing agreement.