Leo Townsend, owner of International Payment Solutions, LLC, has been educating dentists for the last six years about credit card processing. Credit Card Processing 101 has been a huge assistance in the education of merchants about true costs. Credit Card Processing 102 will show you how the math really works and enable you to recognize obviously misleading quotes.
Credit card processing costs are dictated by Visa/MasterCard but controlled by the profit margin requirements of each processing company. Each card type is assigned a price based on the risk associated with the card type. The manipulation of the card types is how processors can increase their profit.
The lowest risk card is a check/debit card. The risk is obviously low because the money is drawn directly from the customers’ checking account. The cost for these types of cards is approximately 1 1/8% plus a .16¢ transaction fee. This is how companies are able to quote a 1.29%. The only cards that will fall in to that 1.29% are the check/debit cards. The lowest cost credit card is a Visa Consumer Card at 1.63% plus a 10¢ transaction fee and the MasterCard WorldCards are at 1.83% with a transaction fee of 10¢. If you think you are getting a 1.29% on all your transactions do you think the bank is going to take that big of a loss? You must ask yourself what is your real cost. The best way to ascertain what your real costs are is to divide your total fees in to your total processing volume which will determine your effective rate. We see merchants’ statements where the only rate shown is 1.49% but their effective rate is over 3%. What happened to the 1.49%?
Does your current processor take their fee on each transaction every day, or do they take it all at the end of the month? If they take it each day you are on daily settlement. So you must add the fees they have already taken to the fees they take at the end of the month to get a true effective rate. If you are taking thousands of dollars in processing but only see approximately 1% in fees on your monthly statement you are probably on daily settlement. This is an accounting nightmare and one of the main reasons merchants don’t really know their true effective rate!
The biggest difference between International Payment Solutions and other processors is the separation of Rewards & World Cards. These are the cards your customers use to get bonus miles and money back and are over 40% of all credit cards in use today. Over 90% of processing companies separate these cards without informing you during the sales process. IPS does NOT separate these cards out. No one is immune to taking these cards and we have seen merchants paying over 6% for these cards but never realized it. This is why International Payment Solutions requires a statement be faxed for review so that we may assist you in understanding what you are currently being charged and show you where you can save money on your credit card processing. Leo Townsend talks to CFOs of major corporations that do not know how to read their statement. In fact, most merchants don’t and many don’t even look at it! If you think your Dental Association knows how to negotiate a good deal for you, the fact is they usually know even less than you do and they are generally going with whoever pays them the most money.
Our policy requires a statement be faxed for review as opposed to just throwing numbers at you. This is why our national average is a 21% reduction in cost and we have had merchants where we have cut their cost by over 90%. How would you like to never have to switch your processing again and receive honest and wholesale pricing? This is our promise to you and we hope you would give us a chance to earn your business.
Please call Leo Townsend, President of International Payment Solutions, LLC at 866-522-1169 or fax your statement directly to Leo at 815-273-2133.
