“Fee Sweep” – Rate Negotiation Guide by Phillip Parker

Never Overpay for Credit Card Processing Again

Did you know that a Merchant Account contract is one of the most important documents you can sign for your business? Why? Because a bad processor can literally take you out of business. Predatory fees can destroy your profit margins and switching providers can cost you thousands of dollars in cancellation penalties. Many of this industry’s practices are unethical but legally enforceable (for now). You don’t have to be another victim.

In this guide you will learn how to:

  • Avoid getting scammed by deceptive processors and agents.
  • Eliminate hidden and junk fees.
  • Pick a great provider.
  • Negotiate the lowest possible pricing to achieve huge savings.

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Did You Know:

  • Accepting card payments is now the second highest operating cost for most small businesses in the U.S.?
  • A merchant account contract is one of the most important documents you will sign for your business?
  • Merchant account fee quotes are almost never a true representation of the actual rates and fees you will experience?  The quotes are basically lies by omission because they leave out the “hidden fees.”
  • Most merchant account providers sell the exact same service as their competitors?  There is no reason to pay a premium price for credit card processing services unless you are getting something for it. “Fee Sweep” will tell how to get a fair deal.
  • Most credit card processors bury fees in difficult to read contracts to get you to sign up quickly?  Find out which ones so that you don’t get burned too.
  • You can get the same low rates normally “reserved” for multi-million dollar companies?  This secret rate tier can save you thousands in fees, but you have to know how to get it.
  • A merchant account contract can actually work in your favor?  Only if you know what to demand during negotiation.

 

Protect Yourself Today!

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About the Author

My name is Phillip Parker and I sold merchant accounts and credit card processing services as an Independent Sales Agent (ISA) for nearly a decade.  As an independent agent, I could sell the services of any provider with which I had commission agreements.  I will leave out the names of the companies to avoid implying accidental bias, but I sold the credit card processing services of both small Independent Sales Organizations (ISOs) and large direct processors.

Upon entering this industry, it did not take long before I began hearing stories from business owners about the poor treatment they had received from previous credit card processing companies.  Not only had many experienced bad customer service, but most had also lost thousands of dollars in excessive fees.  During my time as an agent, I saw hundreds of merchant account statements from different credit card processors and the common theme among them was that most business owners were grossly overpaying for credit card processing services.  Many were desperate to switch providers but were faced with paying outrageous “early termination” fees if they cancelled before their contracts expired, and this is still the case for the majority of card accepting businesses today.

Most business owners are completely unaware of how credit card processing rates and fees are calculated and assessed.  New business owners often get the worst deals because they are oblivious to the risks associated with credit card processing.  Even seasoned merchants are often clueless on how to get a good deal and often wonder how their current provider is just as expensive as their last, even though their new processor quoted lower rates and fees.

I left the merchant services industry to pursue an opportunity in a different field but felt compelled to write this ebook to help guide merchants through the credit card processing minefield.  In the following pages you will gain knowledge that can literally save you thousands of dollars in fees.  “Part 1” will give you the knowledge needed to get the lowest rates and fees possible, “Part 2” will tell you how to pick a provider, and “Part 3” will give you a step-by-step guide for setting up your merchant account.  Included on the last page of this guide is a cost comparison worksheet to help you keep track of the rates, fees, and final costs of each processor that provides you a quote.  I have also included my email at the end of this guide and welcome any feedback or testimonials that you may have.  Now continue on and prepare to save!

It’s Your Money…

If you process over $10,000 a month in credit card sales, I can promise that the contents of this guide will save you thousands of dollars in merchant account fees in as little as 12 months.  I’m so confident in this statement that I’m offering a 60 day, no questions asked, 100% money back guarantee for the cost of Fee Sweep. If you process less than $10,000 a month, this guide will still save you thousands over the life of your business.

“He took a complicated and confusing subject and made it entertaining, easy to understand and extremely informative.”
-Deb Johnson

 

Download Your Copy Now!

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  1. Click here or the links above to fill out the newsletter request form.
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Read a Sample from "Fee Sweep"

If you are having a hard time believing that Fee Sweep can save you such a large amount in fees, then have a free look at the first few pages:

Introduction to Merchant Services

What You Need to Know

This section is largely informational, but absolutely essential if you wish to avoid getting “scammed” into a costly multi-year contract.

“Pitfall” Isn’t Just an Atari Game

The credit card processing industry is complicated, confusing and unfortunately attracts a lot of unethical sales organizations and agents.  There is very little regulation on what providers and agents must disclose to business owners during the merchant account setup process.  There is even less regulation on how providers must quote rates and fees to business owners, which is the reason this industry is notorious for being known as having “hidden fees.”

Due to this lack of regulation there is almost no uniformity in how different providers structure their rates and fees.  It is almost impossible to truly compare the costs between different providers because the quotes that merchants receive are almost never “apples-to-apples” comparisons.  Nearly all providers purposely do not disclose every single fee that business owners will experience during the signup process, except for in a difficult to understand contract that is left up to the business owner to interpret.  All too often business owners end up experiencing a transaction fee that is almost twice what the agent quoted.  Upon attempting to cancel a merchant account, too many business owners learn about a three to five year contract with a $250 to $1,000+ early cancellation penalty that was never mentioned during the signup process.   As you can imagine, there are a lot of business owners embittered about the credit card processing industry.

Sadly, many unethical sales organizations and agents that take advantage of naïve business owners by duping them into expensive, long-term contracts.  It’s even more common for rookie sales agents to inadvertently sign up business owners for outrageously expensive contracts because they had no more knowledge about what was in the contract than the business owner did.

The following pages of this guide will arm you with the knowledge you will need in your merchant account search.  The information provided in this section puts the power on the business owner’s side and strips away the potential of getting “scammed” into an overpriced merchant account with a long-term service agreement. To make it an easy read, I have included only the details that will matter to business owners.  This is meant to be a simple “how-to” guide, not a textbook on the credit card processing industry.

The $100 Dilemma

Merchant account quotes often look like this: “Only 1.5% + $0.15/per transaction” or “2% + $0.25 per transaction for e-commerce”

Here are some examples found during a quick Google search:

(Advertisement Examples)

merchant account ads on Google

The problem with these types of rate quotes is that they only reveal the lowest of several possible transaction fee rates, which makes them the root of the “hidden fee” problem of this industry.  Before we dive into the rest of the possible fee rates, we need to understand who is getting paid by these fees.

First, we need to define a couple merchant account terms:  A transaction rate usually comes in two parts, the “Discount Rate” and the “Transaction Fee.”  For example; in a quote of 1.5% + $0.15 per transaction, the 1.5% part is the “Discount Rate” (think of it as the percentage being discounted from the money you will get from the sale) and the $0.15 part is the “transaction fee” (a flat fee per sale). To illustrate who is getting paid the fees from the transaction rate, let us pretend that we are examining two separate $100 credit card transactions by the same customer at two different businesses: Bob’s Jewelry Shop and Jane’s Jewelry Store.

Jane got a great deal with her merchant account because she read this guide.  For simplicity, we’re going to say that her $100 sale cost a total transaction rate of 2% for the transaction (combining the discount rate and transaction fee together) and the customer used a Citi Bank VISA credit card. For this sale Jane will get $98 and the remaining $2 will get split three ways:

  • $1.75 will go to bank that issued Jane’s customer’s credit card, Citi Bank in this example.
    • This portion of the fee is called an “Interchange” fee and it varies in cost depending on the credit card that is being transacted
  • $0.18 will go to VISA
    • This portion of the fee is call a “Dues & Assessment” fee and is fixed at 0.0925% for all VISA transactions.
    • MasterCard’s Dues & Assessment fee is fixed at 0.0950%
  • The remaining $0.07 will go to Jane’s merchant account provider as a provider markup, or margin

 

 

Jane’s $2 Transaction Fee Breakdown

Janes merchant account fee breakdownAs for the $100 sale at Bob’s Jewelry Store, unfortunately, Bob did not read this guide and got what most merchants get: an expensive merchant account with no added value over Jane’s.  In other words, Bob pays a lot more for the exact same service that Jane gets.  The $100 transaction will cost Bob 3.5% of the sale, a full 1.5% higher than Jane’s fee.  How could this be?

The answer is quite simple; Bob’s merchant account provider is rolling in Bob’s money.  Not only that, Bob’s merchant account provider uses commission-only sales people who also get a piece of the transaction rate.  The higher the rate they get Bob to agree to, the more they get paid. Of course, Bob is unaware of all of this.  Bob’s rate breakdown looks similar to Jane’s, but with a couple major differences

  • $1.75 Interchange Fee
  • $0.18 Dues & Assessment Fee
  • The remaining $1.57 will go to Bob’s merchant account provider as a built in margin

 

 

Bob’s $3.50 Transaction Fee Breakdown

Bobs merchant account fee breakdownIt doesn’t take an Economist to see that almost 50% of Bob’s $3.50 fee is going to a markup by the merchant account provider.  In contrast, only about 6% of Jane’s fee is going towards a provider markup. Interestingly enough, the provider markup is the only portion of the rate that can be negotiated by the business owner and the merchant account provider.  The Interchange fee and the Dues & Assessment fees are outside of the merchant account provider’s control.  Multiply the difference Bob and Jane’s rate for several years, and Bob will be paying thousands of dollars more in fees than Jane.  Simply put, Bob is getting screwed.

So how does a merchant avoid getting screwed?  It’s not as simple as just asking for a lower provider markup.  To answer this we need to understand which fees merchant account providers are leaving out in their rate quotes.

You just read the first six pages of this 26 page guide.  The rest of the of Fee Sweep will teach exactly what you need to know about rates and fees, and how to get the best services at the lowest costs.  Not only that, included on the last page is the “Merchant Account Cost Estimations Worksheet” which you can use to keep track of how much each provider will cost as you are making your comparisons.

Again, do not sign a merchant account agreement without reading “Fee Sweep” first.  It’s guaranteed save you a huge amount in fees.  If it doesn’t, the cost of Fee Sweep is refundable for up to 60 days – no questions asked.  There is no risk and you have nothing to lose!  Download “Fee Sweep” now!

 

What are you waiting for?

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  1. Click here or the links above to fill out the newsletter request form.
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89 Reviews Leave Your Review Below

  1. Our company uses Global Payments “Global Transport Virtual Terminal” for transactions. I’m about to call our sales rep for fee descriptions which are not available when I log into their VT. Are these types of services covered in your “FEE SWEEP” eBook?
    Thanks,
    MH

    1. Hi Mike,

      “Fee Sweep” covers the underlying processing fees and other common monthly/annual fees associated with all merchant accounts, regardless of the technology used to accept the payment. It’s important to understand how these fees are assessed before approaching the costs of particular services such as using a virtual terminal or Point-of-Sale System. In most cases, virtual terminals have an additional monthly service fee that varies across providers.

  2. Hello Phillip,
    I am an accountant who reconciles Sales, thus credit card processing fees, for clients In NYC as a part of NY State Sales Tax filings.
    I have a couple clients who complain about their agents, especially from EMPS – Express Merchants Processing Solutions and FirstData. I decided to look into the practices of the card processing industry and bought your Fees Swap E-book. Gush, I leaned so much!Thank you. I figured that I could expend my services and become an ISA. Would you give me a hint how to chose an ISO that I would want to develop longer term relationship? Many thanks!!

    1. Hi Phillip,

      This is a great post. I deal specifically with high risk solutions. Some legit businesses like e-cigs and cbd oil cant get with a low risk solutions because major banks won’t take and the underwriters deny. In these cases, rate is much higher usually 5.5-20% depending on the type of business and the merchants trust rating (CB ratio, history etc..). It is important to negotiate rate in these cases but also important to look at other factors especially when dealing with the offshore merchant solutions. Things to look for are the approval ratio as some offshore banks can have as low as 50% approvals for cards. The other thing to look for is trust rating of the PSP as there are a lot of scams and reports of people frauding innocent merchant. Unfortunately, this is what the high risk banking industry has become and more and more industries are becoming high risk. Two examples are tech support and debt consolidation. Most of these types of businesses are considered high risk just because of the service they are offering. This is why it is important to work with an agent who has vast experience and knows the ins and outs of the high risk banking industry

  3. I work in an industry that has several CC processing providers that claim us as a specialty group. One of the most popular, called Guardian Financial is a reseller, which uses Total Merchant Services, which uses Authorize.net, which uses Global Payments. And Wells Fargo is the Member bank. I have two questions here: One is that I don’t see a review for Guardian Financial Services; and Two, that I have no idea who to trust in this enormous chain of folks who carry the CC information from me to the CC companies. I just want a company that takes the transaction and processes it through the CC companies. I don’t need to be paying a lot of middle men to take a slice of the pie before the money gets to me.

    1. Hi Mastodon, We do not currently have a review for Guardian Financial. All merchant account providers will have a member bank and a processor (Wells Fargo and Global Payments in your example); however, you can combine the last three service providers into one or two companies pretty easily. In your case, you have an ISO (Total Merchant Services) a sub-ISO (Guardian Financial), and a Payment Gateway (Authorize.net) in the chain of providers. Most providers use Authorize.net for a payment gateway if you need to accept online payments, but some have their own payment gateways. If you want to cut out Authorize.net, you will need to work with a company that has it’s own gateway. Here are three “A” rated providers on CPO that have their own gateways:

  4. Hi Phillip,

    Since you were so helpful with your fee sweep document for me as a start up back in 2012, I have come back to ask another questions. My business is in the financial services sector. I use Authorize to process my e-commerce transaction. Due to my industry, they indicated that they would not allow us to sign up for billing or recurring billing using their E-Check module.

    Do you have any experience or recommendation specific to E-Check / ACH processors and the financial service sector? If so can you provide feedback?

    Please let me know.
    Thanks

    1. Hi MM,

      If Authorize.net isn’t willing to approve you for E-Check processing, there may be a risk issue that will cause other providers to deny the service as well. E-Check services are not one that we cover on CPO. Just be sure to research the companies you are considering before signing any paperwork. Generally speaking, E-Check providers rarely have the same ethical concerns that you often find in the merchant account industry.

      1. Thanks for the quick reply Phillip. I started scanning through your rated cc providers and note some offer E-Check processing with recurring billing. I will use those providers as a starting point and let you know if any of them pan out and provide service to businesses in the financial service sector.

  5. Hello Sir,

    We are in a bit of a different situation from most people here. Our business has been online since 2004 and with the same “merchant provider” for all that time. We have grown it into a $1million+ per year business. However a few years ago the company we used for CC processing was bought out by someone else. Since then the services has gone down hill very fast. Our own testing has shown massive problems being able to support their clients. We do not get our phone calls returned (instantly go to voice mail), our emails are ignored and the service has dropped badly. (it seems their network/gateway (private) can’t keep up.) So we are looking for a new processor. The problem we are running into is the current process will not provide statements. All the new companies have insisted on statements. But we only get transaction reports. We have tax returns, we have financial statements, we have a chargeback rate of .05%, we have 5 years of 1099Ks and still all the companies have refused to accept our business because we don’t have “statements.”

    All the new companies have said “it’s the law, they have to provide statements” but no one can provide the citation for that law and the current company has 100% refused to provide them.

    Do you know if there is a legal requirement for a merchant account provider to provide the statement?

    Do you know of any merchant provider that will accept our business without “statements?”

    Thank you.

    1. Hi Thomas, it is not a legal requirement to supply statements to a provider; however, some providers may have policies stating that they will not accept merchants that cannot supply statements. Generally speaking, if you are running over $1 million in credit card transactions per year, most providers will require bank statements, balance sheet, profit and loss statement, and proof of business license or incorporation before they will consider such an account. It is also extremely unusual for your former provider to not supply processing statements to you, which may be a red flag with prospective providers of which you are considering.

      I recommend contacting the providers listed on on our Best Providers page. Be sure to let them know about your situation before you take the time to fill out any applications.

      1. Thank you for the reply. But I have a question. Why would the fact that our current provider not supply statements be a red flag against us? A red flag against them yes, but I don’t see how that would effect how a new provider would see that as a negative against us.

        BTW our current provider is one you rate here with an A rating. Our experience with them cannot support such a rating. Their poor quality of service, slow network performance and spotty customer service is the reason we are looking for a new provider.

        1. It is a red flag in that a new provider may think that you are not being honest about your processing volumes since it is highly unusual that your previous provider didn’t provide statements, or a way for you to show your processing volume. A scammer wants to get the highest processing limits possible in order to defraud as much as possible before getting shut down. Claiming that you have high volume but not being able to provide statements looks fishy to underwriters who approve accounts. It’s not a personal strike against you, it’s just something that triggers alarms.

          If you had a poor experience with a provider, I encourage you to leave a review in the comment section of our review. Grades are determined by several factors including merchant feedback.

  6. Is it really necessary to pay for card compromise assistance plan for a small business where I the owner process through web filing. It seems pretty expensive at 34.95 a month . I have never knowingly paid for this in the last 15 years of processing with other companys. The survey form through Trustwave “funny name ” is opting out customers for TSYS processing if you can pass a ridiculous survey regarding our networks & firewalls. I honestly do not think we are at a high risk . Please advise. What is the cost of your monthly newsletter?
    Thanks,

    Joyce

    1. Hi Joyce,

      The card compromise assistance plan appears to be something only imposed by TSYS. I’m not familiar with the program, but it is not something that you likely would pay through most other providers (if any). Our newsletter is free.

  7. We were needing to change merchant service companies recently and after reading Fee Sweep we were so much better off. All the people we dealt with could tell we knew what we were talking about concerning all the fees and rates. The ratings of all the various companies that we read helped a lot in narrowing down the choices. I think we got a great deal with the new company that we signed with. We are getting a great rate and no early termination fee. Thanks so much for all the helpful information.

  8. Hi, Phillip
    Thanks so much for the information regarding merchant accounts. I was completely in the dark about acquiring a provider for services to run my fairly new business. With several of my colleagues raving about what a great concept the smartphone apps are, I wanted to delve into this for my business. After reading Fee Sweep, I am implored to educate my friends and business owners that they need to renegotiate their current merchant accounts. Thanks again for the great information.
    Joe McVay, FinishLine Construction Services, Inc.

  9. Consumers Be Ware. In my experience, the worst company that engages is “bait and switch” tactics and predatory contracts with hidden fees is the Merchant Services arm of Wells Fargo Bank. Their focus is not providing excellent customer satisfaction but strictly signing on small businesses, exploiting them by collecting hidden fees and non transparent agreements.

    1. I have recently had an experience with Wells Fargo ( Merchant Services) and all the hidden fees, horrible customer service from the sales reps, once you’re baited in, no help!!! I am a very small business trying to get started in accepting CCs, I asked for the square but was told that, that was very unprofessional to have, so he signed me up for this wireless CC machine, and later found out about all things ridiculous fees!! I don’t know much about accepting CCs, but I needed to be able to accept them. I need some help in trying to get something without all the fees. Is there any help?
      Also, what can I do about getting out of this 3year contract for this CC machine with First Data? I used the machine 2times after seeing all these fees that came through my account.

      1. Hello, I would encourage you to share your story on our Wells Fargo Merchant Services Review. As for getting out of your contracts, this is a matter best directed to an attorney familiar with contract laws in your state. If you are processing less than $5,000 per month, you may want to consider a smartphone option such as Flint and SparkPay. Niether have long-term agreements or monthly fees, but you will pay a higher processing fee than you would with most traditional providers.

  10. Quick question Phillip. I see that all of your good reviews (ex. Merchant Warehouse) are linked to affiliate links to track leads to landing pages. I think you should tell the public if you are getting compensated by the companies you are reviewing. It made me lose trust in everything I am reading here.

    Don’t be like the scammers you are looking to stop. Most sites place a “advertisement” next to a paid link on a review site. Im sure you just overlooked it. If not your site will be submitted for review by Google, Bing, FTC.

    1. Hi Craig,

      I appreciate your concern. First, it is stated clearly on several pages including our Advertising Page, About Page, and Terms of Use that we accept advertising from providers that have previously scored well in our review. Under no circumstances do we allow advertising to inflate ratings or influence reviews. We comply fully with FTC and search engine rules regarding advertising disclosure.

      We allow advertising from highly rated providers because it helps merchants find ethical companies of which to do business. In fact, there are several dozen “A” rated companies on CardPaymentOptions.com that do not advertise on the site, so advertising is clearly not a requisite for a good rating. Also, there are no “paid links” on the site. Some providers do have affiliate programs that allow us to earn a commission if we have an active link in their review and refer a sale; however, we activate most “A” rated site links in reviews even if they do not have an affiliate program.

  11. Hi Philip,
    Can you provide any links or info as to how to get out of a deceptive contract or “non cancellable” lease on equipment. Specifically, we are in the State of Texas and the ISO is in California. Are there magical dates like 30 days or 45 days that any credit card processing agreement can be torn up ? My friend really got suckered bad on rates (doesn’t look like anything near the savings they promised) AND equipment he didn’t even need (18,000 over 4 years). He has not started processing with them yet, and everything was signed 25 days ago.

    1. Hi Robert,

      Many states have laws that allow customers to cancel service contracts without penalty within a specified time frame. Unfortunately, providers rarely abide by these rules. Below is an article that lists tactics for getting out of a predatory contract. There are no guarantees, but one of them may prove effective. Good luck!

      Cancelling a Merchant Account Without Paying a Fee

  12. Hi I have been reading all the horrible things that have happended and I am now one of those statstics: (I was approcahed by prodigy as a prosseor and since my old account and processor was not working and they had not replaced it i was listening to these two women one keeps you talking the other got on my computer and I have no idea what she did but i was offered a 60 opt out well they never mentioned northern leasing sytems and I signed a paper saying I would pay over$4000.00 for a piece of equipment that is usually free. I wondered about it and its only been two weeks i have since changed my bank account and am contacting a lawyer to write a letter as I am sending the equipment back with his letter stating that I am returning new unueed equipment due to I had no idea I was signing up with them and so here it is and have it certififed and so when they open the box there will be a letter from my lawyer stating i was not in a lease with them and since they recieved the new equipment back new unused the contract is now null and void due to the scamming they are doing or he will word it better but it sounds like the things to do for me I cant beleive I ell for it I feel so dumb and taken advantage of:(( by doing this they will have to contact him not me and I am hoping they will drop and cacel the contract but i can only hope!!

  13. Wonderful booklet! You did a GREAT JOB of clarifying so much of the “mystery” involved in credit card processing! Thank you so much for your hard work & time given up to write this concise little gem and then to offer it free of charge is unheard of in this day & age (truly refreshing!)!!! I believe that old saying “what goes around, comes around” and know that you will at some point be blessed for your gift!!! :)

  14. Thank you SO much for writing this guide! It has been tremendously helpful!

    I wondered if you have any suggestions for negotiating tactics if the sales’ rep isn’t playing ball?

    In my case, she appears to be outright lying to me (or is misinformed herself). For example:

    My PayLeap sales rep is offering me Interchange + .35% and $0.15 per transaction for e-commerce/virtual terminal transactions (these will be 100% of our transactions). Plus a $19.95/month service fee (but contract is month-to-month which is nice).

    Our expected volume is $1M in the first year. But we are a start up, so these are projections—we don’t have the business P&Ls to prove this, etc.

    What is bothering me is:
    1) When I asked for Interchange + pricing, she said “That is the very best pricing we offer, and of course, everyone WANTS it. But we can only offer it to our highest volume customers. Luckily, you qualify.” Which rubbed me the wrong way right out of the gate, given that that directly contradicts what you say in Fee Sweep.

    2) There are a bunch of additional fees (all fairly small, but still) that you say in Fee Sweep are usually easily eliminated or reduced—i.e. Batch Fee, AVS Fee & Chargeback Fee. When I asked her about eliminating these, she told me that AVS fees cannot be removed on interchange Plus pricing, and that Chargeback Fees were fees charged by the credit card companies, and not PayLeap, so those can’t be removed either. She did not even address the Batch fee.

    3) I thought I had a pretty good deal until I read Ray’s June 6th comment about MLS pricing he is receiving for about half of the volume we are predicting. Should I press for a better deal? And if so, any suggestions for how to do that, when she’s trying so hard to make it sound like she is doing me a favor, and telling me fees that should be negotiable are not?

    1. Hi Sharon,

      I’ll address your concerns in the same order as presented:

      1) There is very little regulation regarding pricing in the merchant services industry. Although Interchange-plus pricing is available to all merchants, a provider can choose to either offer a higher markup or refuse the account. Each provider will have its own policies regarding pricing, and most do not want to offer Interchange-plus because it results in a much lower profit margin for them. Your rep may be trained to present pricing in the way that you indicated she did.

      2) Some fees cannot be eliminated because they have a “wholesale” cost to the provider, but they are often marked up quite a lot. The fees that you mentioned will not be eliminated by most providers because they are passed down by the card networks; however, if they seem excessive in comparison with other quotes, you may be able to get them reduced. Providers are also less likely to negotiate other fees when offering Interchange-plus because of the already reduced profit margin.

      3) It sounds like your predicted revenues are speculative, so it’s unlikely that providers will offer you as good of pricing as a merchant like Ray who has a proven processing history. With that said, you may still be able to get a better pricing by leveraging a couple more quotes from other merchant account providers. With your potential processing volumes, it would be worth your time to compare three to four companies before signing up for an account.

  15. I have a proposal from MLS Direct Network.
    They are offering .07 basis points over interchange and .07 cents per transaction 6.75 statement fee.
    My nephew WAS in the credit card business for years, he looked at the contract and told me everything is in order.
    They have given me a signed and recently noterized letter confirming that there can not be any cancellation fees.
    Is this as good as it gets for 50k month swiped ?

    All my other 7 cost plus proposals are more than 10 basis points and .10 cents over interchange.

    Ray

    1. Hi Ray,

      Based on the information that you have provided here, I would say that the quote is very competitive. It is unlikely that many providers would offer such a rate.

  16. does your “free sweep” include credit card processors who do not have hidden fees or commissioned sales personnel?

    1. Hi Pearl,

      “Fee Sweep” doesn’t suggest any providers. It covers how fees are assessed and calculated so that you will know how to negotiate them in your favor. If you are looking for a list of suggested providers, you can find them here.

  17. I was approached today from a company called “National Processing Company”, which is apparently the ISO of First National Bank of Omaha, processing through Retriever Merchant Solutions. They offered a flat rate, not a tiered rate, of .25% over the interchange rate, regardless of what type of card is processed (excluded Am Ex). In addition, they have an .08 per transaction fee (or .05 for a debit card with a PIN entered by the customer), and a $5.00 monthly statement fee. There are no monthly minimums, no annual fee, and they agreed to waive their early termination fee in writing. Is this a good offer, or should I run the other way?

  18. I recently got approached by Axxess Payments for a terminal. He proposed 1.39% qualified transaction + 0.60 for mid-qualified transactions (which he said is rewards cards) + 0.45 for non-qualified transactions. Plus $5 fee/month for online reporting, $79/anniversary fee per year. I know nothing about this as we don’t have a machine but really want to start. Are these legitimate fees since I read that there are so many scams. Also in order to open my account and proceed they want 3 full months of my bank statements.
    Thanks.

    1. Hi Zrinka,

      The quote that the representative gave you sounds deceptive. “Fee Sweep” covers this type of quote in detail. I highly recommending reading it before signing any paperwork.

  19. I came across a Processor that is offering me FIXED RATES at 1.0% Credit + .18 per swipe, Debit is .019 + .10 per swipe, Mid / Nonqual is 1.8%….is this a good deal ? The ISO is direct with First Data. Showing me a savings of $183.00 a month over my current processor. Is there anything else I should be looking at ?

    1. Hi Michael,

      This quote sounds very questionable to me as it would almost guarantee a loss for First Data if they honored it. In my opinion, the agent you are working with is leaving something out. Which ISO is it?

  20. Downloaded and read the Fee Sweep guide. Well done. Accurate and straight-forward. Minimal advertising, maximum solid information.

  21. Hi Philip,

    Thank you so much for making this information (freely) available in such an easy to understand format. I haven’t been able to find anyone (except you) to explain how Merchant Accounts work aside from the sales agents. The business I am starting is considered high risk because of the high value of each transaction.

    The underwriter for one processor is asking for a 10% holdback from each transaction until I build a reserve of $32K and a “Grant of Lien” on the account that appears to give them the right to hold the $32K indefinitely.

    I am being offered a no reserve agreement by the merchant services department of the bank we have been with for years…but I have read terrible reviews about them on your site so I am worried about what I might be getting into…too good to be true?

    1. Hi Max,

      It’s not uncommon for a provider to require Reserve accounts for merchants that are considered as “high-risk.” It can be much easier for a merchant to establish a reserve through a Holdback rather than paying it in entirely up front; however, nearly all contracts give the provider the right to establish the full reserve at any time by debiting the whole amount out of your checking account, or holding 100% of your transactions until its established. Your bank may not require the reserve account to start, but be aware that if you have a Chargeback, or their risk department flags you as a risk, your bank may withhold a large amount of funds from your sales or yank it out of your checking account. I would not give any merchant services company or bank a “Grant of Lien” in exchange for processing services. That sounds like a recipe for disaster.

      Your best bet is to pick a highly rated provider and fully disclose what your business is doing. When you are in a high-risk industry, a reserve may be unavoidable so its best to plan for it even if provider does not require it in the beginning.

      1. Hi Philip,

        Thanks for your response. My high risk industry is a home-based travel agency promoting an international luxury tour. Aside from the high value of each transaction (around $10K) the service isn’t delivered for 90+ days from date of payment. The “Request & Agreement for Secured Merchant Account” (granting them a lien) was made by one of the largest processors out there.

        Based on the reviews on your site I contacted Payline Data – who have said they may require a reserve after they review my application – and I’m also looking into PayPal Pro Merchant Services because that may be the simplest option. I would be grateful if you could you give me your thoughts on using PayPal (to pay for luxury services) and point me to some highly-rated providers?

        1. Hi Max,

          PayPal is probably more likely to place holds on your funds than just about any provider, especially for the type of transactions you have explained. Payline Data is a good choice, and you can also find other providers that I’m comfortable recommending on this page.

  22. Thank you for your ebook, Fee Sweep. It has informed me very well on the types of fees associated with credit card processing. I knew that there were some fees, however, not to the extent of your informing. We are a young company (exterior/interior painting and wood finishing) and unsure of the extent that the card payment option would actually be utilized. However, for certainty, those fees and charges would have been disheartening, especially when no card payment option was utilized for that month. We have received offers for this service, and I was ready to enroll in a particular service, but I decided that there was not enough info and to do some research. Boy, am I glad that I did. Thank you very much!!

  23. To address article written by Mr. Philip Parker- It was extremely well thought out as to value of content and clarity of order of presentation.

    The presention of most facts are so well hidden from customers.

    I used to sell cars and as for the protection of the vendor’s profits there, some of car lot ownership’s profit is represented on the car’s price break-down sticker “ADP”, which means “additional dealer profit”. If a customer asked what that means we were instructed to say, “Oh it is just factor stuff- everybody has to pay.”

    This totally protected at least that much of Dealer’s profit. Which also meant that the “dicker or bargining” room was money taken from salesman’s pocket, as we were guatanteed $100., and often that’s all we got on a sale we worked pretty hard on. Dealer always got “ADP” and most of the actual commission built-in to the sale.

    Of course, that was many years ago, but I doubt owner profit is any less sacred these days.

    Good job, Phil!

    MJ Kolb

  24. Wow. Finding this has been very enlightening. I have been spending weeks trying to compare pricing and now I know why it is so confusing. Time to go back to everyone with my new information and start negotiating all over again.
    Thank you.

  25. we use ipayment. I must say on the whole they’re reasonable. I’ve had a couple of problems but beat them up until they were fixed. My question: when you reference 2% – is that for total costs? So like you take the total charged to the retailers bank account and divide that by total processed sales for the month and it equals 2%? Or, do you also throw in the $40 annual PCI fee and prorate that back to add into the monthly fees to get the 2 percent? We don’t have huge amounts of processed sales, usually less than 20K per month. I’m at 2.23 and that includes every anciliary charge. If I thought I could reduce by .5% and get it to around 1.8 I’d consider switching, but from what you’ve written here that doesn’t seem possible. Is 2 about as low as a small retailer can go.

    1. Hi Anna,

      I include any annual fees and average them across 12 months and then divide the total processed sales for one month to get the effective rate. Of course you can also divide by several months of sales and fees to get a more accurate percentage. If you are at 2.23% and typing in the credit card information (aka: Card-Not-Present transactions), then 2.23% is actually a very good rate. If you are swiping the card though a terminal of some sort (aka: Card-Present transactions) you may be able to to get the effective rate slightly below 2% if you are getting a very good deal. The average Interchange rate that you will experience can vary depending on the types of cards you typically transact. For instance, corporate and rewards card have higher Interchange fees than regular credit and debit cards.

  26. I’m really pleased that I stumbled upon your ebook and will highly recommend it to business colleagues. Just an hour ago I was on the phone with a merchant account provider pushing me to sign up but I got squeamish as I was reading the fine print and discovered several charges we hadn’t discussed. I decided to postpone the decision and do some more shopping but really didn’t understand the industry and how to compare providers. Your book quickly gave me the knowledge I need to negotiate a fair agreement and ensure that I won’t be ripped off. THANK YOU!

    1. Hi Chris,

      There is a second option under the Facebook link to sign up for our newsletter, which will also give you the ebook for free. You can find it at the top of the page.

  27. Hi Phillip. Great information & hopeful direction. Now I know why I get the feeling that each credit card processor promises me something better, and they tend to **always** disappoint this promise. I ran into something like this a year ago online and figured I would look at it more closely when I got closer to the end of my 3-Year Contract. About a year. But then a nice woman came through the door (still 6 months before the end of the contract) and pitched me this really low rate. When I said I may be interested when my current contract ends, she said No Problem, if you sign up with us now, we will just reimburse you for any Early Cancellation Fee. Further, if you sign up with us, there will be no contract period, and you can leave at any time if you are unhappy with no fee or penalty.

    This sounded good, and I wrote it down. But I did not get her to sign it, or be certain that was in the contract. Well, now I regret it. The first company charged me the $295.00 Early Termination Fee and I have that in my records. Every time I call the company about getting reimbursed, they would have some excuse. Oh, you have to wait 6 months, then no problem. Oh, just fax us the details and we will send a check right off to you. But now, 6 months after I signed up they say that I must “qualify” for that rebate by doing at least “5 grand” of credit card business for 3 months in a row. That is 10 times over the average credit card sales, as listed on the sign-up contract. And this is the first time it was mentioned.

    Plus, I now notice that while there is no mention of a time-based contract for using their services in the basic contract, I do see that their Terminal Placement Program, which was agreed to at the same time, says that the Terminal agreement is for 36 months, and renews automatically, plus the fee for early termination of that is $595.00. Yikes!! How did they slip that by me at the same time the woman was telling me there was no contract to worry about, that I could leave at any time with no penalty?

    I am now trying to get in touch with the woman who signed me up, and trying to see if the company will agree to reimburse me as she promised. Any other hints for how to negotiate? I see your steps for filing a complaint and can try to use that for a bit of leverage when it seems like the best time. I just want to get out of this and go on with finding a good processor as you suggest. But it sounds like that will not be easy.

    1. Hi Dick,

      Thank you for the comment. It sounds like you were intentionally mislead by your sales person who purposely failed to verbally disclose important terms of the agreement to you. Unfortunately, this is all too common in the industry. The best course of action would be to let them know that you will be reporting them on this site, the BBB and your state’s Attorney General if they do not honor what was verbally told to you. If that doesn’t do the trick, start reporting them.

  28. Hi Phillip,

    First of all, thanks for hosting this great site of info! My business is considering switching credit card processors to reduce our fees. However, after we got all the paperwork in place and accounts set up for the switch, we find out that the new merchant services organization has put a cap on our monthly processing which is very close to our average per month total. Any amount over the cap that gets processed, the merchant services organization will hold those funds for 180 days before we get them! That seems excessive to me and gives me pause to use them. Your thoughts?

    Thanks,
    JD

    1. Hi JD,

      Thank you for the comment. Processing limits and holds are a very common procedure in the credit card processing industry, especially for businesses with little processing history or that have a higher than normal risk of chargebacks or fraud. It is good that the processor has informed you of this limit ahead of time as too often merchants only find out about it after their money is being held. Generally speaking, most providers will raise your limit after you established a few months of processing history. You will likely have to request raises in your limits, so give them a call once a quarter or so until they are willing to raise it to an acceptable level.

  29. Mr. Parker:
    You should have the name Fee Buster added to your name. As a one man (pop) carpet cleaner I stayed away from modern gizmos. Then I stepped into a neighbor hood bank to open a new business account. When I was told to “get with it” – a credit card processing machine. Well, he must have seen a tiny glitter in my eyes.
    The following day an affilitate called. And, Wham! Bam! Via faxes I was signed up that same day. Had I read your EReport eleven months ago, my response would have been – Thanks, but no Thanks! Well, to cut the chase, pun intended, the shake down started within weeks. My checking was “held up” by this 21 century mob/gangster organization. Within the months of receiving the CPM: fees, fees, and more fees were withdrawn from my account. I then called to querry the plethora of charges with no apparent success. The fees just kept pilling on. Never did i imagine such a financial abuse was about to ensue on the day I signed and faxed back that contract. My now nine month checking account is now on hold to be reviewed. Currently I am unable to make deposits, withdraw at the ATM, get credit for my end of day sales batch. This I found out when my card was denied at other retailers. Consequently, I walked in to a branch to make a complaint. There I was given an 800 number to ask why. If the bank chooses to close my checking, and the leasing company decides to come after me, what do i do to avoid breach of contract fees? What are my options?

    I need some serious help against this unregulated powerhouse.

    Please don’t call me stupid to make such a rush decision. I feel bad enough already.

  30. Fee Sweep is very concise and easy to understand. I highly recommend it for anyone who needs a merchant account; I just wish I had come across it a year ago!

    1. For a merchant with average volume ($10K-$20K per month), I feel that an Interchange-plus pricing markup of 0.30% it fair to both parties. I think a fair maximum markup for low volume merchant is 0.50%. The additional flat transaction fee should be based on the merchants average ticket size so the lower the average ticket, the lower the fee should be. In my opinion, 10 to 20 cents per transaction is fair. Anything lower than those markups is a pretty good deal.

  31. Thanks Phil.

    The link is still not working for me. You have my email. If you can forward a copy to that address that would be helpful. My “like” did register on your facebook page.

    1. Odd.. May I ask what type of computer and browser you are using and what name you used for your Facebook account?

  32. Per the instructions, I liked on Facebook and no link appeared as promised. It is April 23 and your offer expires April 30. An interesting result. Lot’s of good reviews yet I can’t seem to get the download version as promised on this screen.

    Is the offer still active?

  33. I am just starting out in business and have already encountered more than my share of fraud. There are potential nightmares every place you turn. This guide saved me from at least one.

  34. FeeSweep is a great read–not only illuminating, but simply organized and well-written. Obviously not the last word in this kaleidoscopically complex industry, but a great–if sobering–introduction.

  35. Phillip,

    Wow! Thanks for all the time and energy you put into educating me and others. The thousands you are saving us is a gift. Happy to suggest your services to others. I now know how to negotiate a great rate for our new company and save money in the process. Bless you!

    Hans Phillips

  36. Phillip I think you are from the same DNA that I am from :) The difference I had 15 years or so in finance world brokerage, banking, real estate, and so on…..my little bit to help is give the price that IS fair take less and share asking for referrals. Try to live on the twelve dollars a month or twenty dollars a month and have more folks getting that fair pricing. You are correct of course the processor and the interchange make the lions share, they also (some) allow cost plus pricing and the “agent” or ISO or ISO rep can price from cost. I choose to make that difference for everyone and hope that thru referrals I will also be able to continue helping and make enough to have a small business plan support me as well. There are very very few that will do what you and I do. Probably none. Maybe we are the only two. I know for a fact that I price so well I have virtually saved thousands and thousands of dollars for Customers by doing exactly what you wrote about. Pricing interchange (cost -plus) and literally showing maybe $12.00 (24.00) total as I have to pay half to the processor just to do this for folks.

    I wish there was a way to advertise that but there probably is no way except word of mouth., so I ask for referrals. I just this month finally made $600.00 that was it !! The dedication it takes to make a difference is like your book I think it all pays in the end. I need a free one though LOL !!

  37. Phillip,

    Your E-book “Fee Sweep” was very helpful. It is easy to understand, organized, yet very comprehensive. I was able to negotiate a .07 percent + .10 Transaction fee on an interchange pass thru and .25 on debit, and no other fees with the exception of PCI Compliance. In the past I dreaded talking to salemen, now I can speak their language and am at ease – and do they know it! Thanks again for your help.

  38. hi, i wish i had read your book before i opened my merchant account. my merchant account provider did nothing but lie to me. they also attached fees that were not due for another 4 months to my monthly fee hoping that i would not notice it. it wasnt hard to notice since the illegal withdrawal they did caused my bank account to be overdrawn. they admitted fault, told me it was a mistake and that it would never happen again. to no surprise they tried another illegal withdrawal less then 3 days later. my bank quickly took the money back minus the overdraft fees of course because the merchant account company i use admitted guilt. they promised to have the fees deposited into my account within 7 to 10 days. well im still waiting…my bank credited my account and now my bank is going after them for the fees. these merchant account providers are nothing but crooks. i dont understand how any decent person or company could do these types of things to other people. there is just no honesty any where in the world anymore. i remember when i was a kid, my dad used to seal a deal with a handshake and just by looking a man straight in the eyes. now a days people look you in the eyes and tell you a lie, and will use the same hand they shook with you on to stab you in the back.

  39. Hi, Phillip,

    I’m a independent Account Executive for an ISO. Being the ethical and moral person that I am, I want to do good business by the merchants and still earn a viable income. Does your ebook provide any help in this connection?

    1. Hi Wayne,

      Fee Sweep covers how rates are calculated and the tactics the agents/providers use to get merchants into expensive contracts. It then teaches merchants how to negotiate the contract in order to get the lowest fees available in the industry. If you are new to the credit card processing industry and unfamiliar with the differences between bucket pricing and Interchange-plus pricing, you may find the book helpful in understanding how to be fair with merchants.

  40. Thank you very much for your enlightening and thorough book. I own a wellness center and have a multi-practitioner retail set up. I have had people in the industry try to explain this whole thing to me many times – and now I finally understand it from your clear explanations. I have been through the process of gathering quotes from many providers in the past and felt completely confused and frustrated. Now I can negotiate with confidence and speak their language. Thank you so much ahead of time for your help in getting all of us here “Interchange” pricing. I didn’t realize that was available to all merchants and not just higher volume businesses, which is what I was told in the past. It’s great to know what is reasonable to ask for and feel confident in moving on from a processor that doesn’t give me something reasonable.
    +1

  41. Mr. Parker,

    I stumbled upon Fee Sweep while “googling” for information that would aid me in making an informed decision concerning credit card processing. I hit the gold mine when I found your nugget! I had quotes from three providers and, as you mentioned, they were all structured differently. Once I got all of them in Interchange Pass-Through format, I used the worksheet on page 22 to make an apples – to –apples comparison. I agreed to continue processing with our current provider but not before they significantly reduced the fees that they were charging me. I’m on line to save $17,000.00 yearly – thanks to your e-book! For the first time ever – I feel like I negotiated a great deal for credit card processing.

    Sincerely,

    Keeda Pfingsten

  42. Mr. Parker has done a wonderful job in thoroughly explaining the very complicated subject of credit card processing in a way that any business owner can understand. His insights and advice will surely have an impact on the merchant services industry as more and more businesses read this book. After reading this book, there is no doubt that I have been overpaying for merchant card processing for a very long time, and I feel pretty burned now knowing that I could have been saving a lot of money the whole time. The amount of money these processors take from us is sickening, especially considering how little they do to earn it. I will be actively promoting Mr. Parker’s book to all of the businesses I work with.

  43. Thank you for writing Fee Sweep.

    This will help me write better deals for my merchants.

    I recommend it not only for business owners looking to process but for merchant services sales agents like myself looking to learn how to write up good customized deals for my customers.

    Thank you,
    Lori

  44. Thank you very much for your enlightening and thorough book. I own a wellness center and have a multi-practitioner retail set up. I have had people in the industry try to explain this whole thing to me many times – and now I finally understand it from your clear explanations. I have been through the process of gathering quotes from many providers in the past and felt completely confused and frustrated. Now I can negotiate with confidence and speak their language. Thank you so much ahead of time for your help in getting all of us here “Interchange” pricing. I didn’t realize that was available to all merchants and not just higher volume businesses, which is what I was told in the past. It’s great to know what is reasonable to ask for and feel confident in moving on from a processor that doesn’t give me something reasonable.

  45. This book has some great info, thanks. Very tired of feeling like I am getting ripped off every time I talk to a provider. I feel like I am much more prepared and not playing on “their” terms.

  46. Very glad I read this before the holidays. Now I have time to switch providers and get much lower rates before the rush kicks in. This ebook is well worth the money!

  47. Excellent ebook! It covered everything and was easy to read and understand. It was well written with in-depth clear information and I feel confident to deal with setting up my first Merchant Account. Definitely worth the money!

  48. I was skeptical at first that this book could really save me on merchant account fees. I’ve heard it a million times from telemarketers and door-to-door salesmen how they could save me 50% or more, but after changing processors a couple times the savings were always minimal or non-existent.

    I was paying almost $6,000 a year in merchant processing fees. I bought this book three months ago and then called my current provider and threatened to cancel my account because this book opened my eyes. These merchant companies take advantage of people! I told them what they needed to do to keep my business based on what I learned from the book and after two months of statements I’m on track to save over $3000 over the next 12 months. Nothing, and I mean nothing has ever saved me this much is one phone call! I normally don’t leave reviews, but the results were so dramatic that I felt like I should spread the word so that other hard working business owners could fight back. Seriously, read it.

  49. This guide is surprisingly easy to read! He really does a great job of keeping it simple and easy to understand. Everything else I found online about credit card processing was confusing and left me with more questions than I already had. Not so with this guide. I now feel completely confident that I won’t get scammed with my next merchant account and will be using Phillip’s instructions very soon.

    Thanks so much Phillip! You’ve done a great thing by writing your book.

  50. After reading this guide I immediately decided that I needed to switch credit card processors. There was so much that I didn’t know! I was getting the same high rates that Phillip says most people get, so I followed all of his instructions for picking a provider and negotiating rates. Even though it cost me a $150 cancellation fee, I switched providers because I was able to get the type of rate Phillip’s guide told me I could. After one month I can already see that I’m going to save over $700 a year. Where I’m from $700 goes a long way. This is a must read and well worth its price! Thank you so much!

  51. I was clueless when it came to credit card merchants. After doing research on the subject for my employer, I was lost. Luckily, I stumbled upon this page and purchased “Fee Sweep”. It was so easy to follow (unlike most other websites and manuals) and extremely helpful. He took a complicated and confusing subject and made it entertaining, easy to understand and extremely informative. I saved my boss tons of money and was able to explain it with ease. I recommend this to anyone new to merchant services that doesn’t want to get screwed.

    1. Hi Deb. I work in merchant processing and it is nice to hear about educating yourself in this subject. I know all too well about merchants being screwed over. There are more talking points being used by sales reps in this industry that its sickening. This isnt a sales pitch, but more of a congrats. Im a salaried rep not a commissioned rep. Good for you by helping the company.

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