davidjohn6366
103 posts
Nov 14, 2022
1:59 PM
|
Figuring out how much a merchant account will cost your business in processing fees starts with something called the effective rate. The term effective rate is used to refer to the collective percentage of gross sales that a business pays in credit card processing fees.
For example, if a business processes $10,000 in gross credit and debit card sales and its total processing expense is $329.00, the effective rate of this business's merchant account is 3.29%. The qualified discount rate on this account may only be 2.25%, but surcharges and other fees bring the total cost over a full percentage point higher. This example illustrate perfectly how focusing on a single rate when examining a merchant how to become a payment processing company account can prove to be a costly oversight.
The effective rate is the single most important cost factor when you're comparing merchant accounts and, not surprisingly, it's also one of the most elusive to calculate. When shopping for an account the effective rate will show you the least expensive option, and after you begin processing it will allow you to calculate and forecast your total credit card processing expenses.
|
