What most merchants don’t realize is that they are significantly overpaying for their existing account. Some merchants may even have a good idea that they are overpaying, but don’t realize how easy it is to switch their account. The more volume you are processing as a merchant, the more you’ll save by switching to a less expensive merchant account.

When you initially researched your merchant account for pricing information, you probably did so looking for the least expensive discount rate or percentage rate. Many advertised rates pull the “bait and switch” where you are drawn in with some insanely low rate only to realize after you start processing that the low rate originally advertised isn’t for you. Most merchant accounts have a qualified rate, a mid-qualified rate and a non-qualified rate.

Getting your per transaction low will affect merchants who process a lot of transactions more than those that process only a few transactions per month. In addition to the regular per transaction fee, there is usually an AVS fee which is also per transaction any time the address verification system is accessed which happens on internet or card-not-present transactions. This can add to the overall per transaction amount. If you process cards on a physical terminal where the transaction is swiped, you won’t have an AVS fee.

If the average sale or average ticket items are small, the per transaction fees will represent a larger percentage of the overall fees than the discount rate. This fee doesn’t get taken advantage of by most merchant processors nearly as much as the discount rate, but shouldn’t be overlooked.

Merchants processing high tickets, the discount rate will usually always overshadow the per transaction fee simply because a $.25 per transaction fee for a $5,000 product is extremely small where a higher discount rate of say .5% higher on that $5,000 transaction represents an increase of $25. So if you process the higher ticket items, you need to negotiate as low as you can the discount rate even if you pay a higher per transaction fee.

If you are ready to switch merchant accounts, you should start by looking at one of your statements and calculating your effective rate. If you’d rather not have to learn anything about rates and fees and simply want to get someone else to do this for you, find a competent merchant services professional who will evaluate your current rates and provide you some data on what it would cost to switch and estimate your savings. Finding someone you trust is critical as merchant services professionals don’t always have the best reputation for integrity thanks to some in our industry that use deceptive practices and are dishonest.

Most merchant accounts have an early termination fee, so the process of switching accounts may have costs associated with terminating your existing agreement. There are a few options here, depending on how much your early termination fee is and the duration of your contract. Some merchants can save $100 or more per month and keeping the existing account open for $25 per month may make sense. You should check with the provider you’re considering to also see if they offer a reimbursement for switching by paying off your early termination fee for you. Some providers will do this, others will not, but it’s worth asking.

Getting new equipment during a switchover often makes good sense because you will literally have no down time. If you choose to keep your same equipment, you will have to reprogram your existing equipment to point to the new merchant account which typically takes about 30 minutes to 1 hour depending on the connection speeds. The terminal will download the new program over the internet if you have a terminal with internet capabilities or it will download the new programming over the phone line.