In today’s modern world, it’s nearly impossible to keep a business going if you don’t accept credit cards. People just don’t use cash that much anymore and who carries around personal checks these days? Whether it is debit or credit, it’s more often than not its a bankcard world when it comes to paying for items or services. We’ve established the need for credit card processing, but how does a business proceed while getting the best pricing for merchant services? To understand this, an explanation of basis points is necessary.
Basis points are used in calculating credit card processing fees. The definition of a basis point is a unit of measurement that is equal to 1/100th of one percent. When a payment processing company gives you an interchange plus quote for merchant services, it’s often done in basis points, or “bps” for short. To figure out the amount you may pay in fees, convert the number of bps to a decimal amount and multiply this number by the dollar volume of transactions. For example, if a processor offers 20 basis points, the decimal would be 0.0020 or 0.20%. If you had $50,000 in volume, the calculation would be 0.0020 times $50,000, resulting in a fee of $100.00.
Your business keeps you busy enough already, so do you really want to spend time doing calculations to try and validate that your fees are what they are supposed to be? The answer should be no, and if that is the case, think about demanding interchange plus pricing instead. Interchange Plus pricing is a simpler way of calculating and paying for credit card processing. This pricing model allows for the merchant to be charged the interchange rate plus an additional fee that is sent to the processor. The additional fee may be charged against volume or amount per transaction. Interchange plus pricing is beneficial because you know exactly what you’re being charged per transaction – it’s very transparent and in utilizing this model, your business is protected from hidden or unexpected fees.
Interchange plus pricing usually includes two components – one being the basis point, and the other the authorization fee charged by the card brands. The Interchange rate isn’t negotiable because it comes from companies like Visa, MasterCard, and the bank who issued the credit card in the first place. There is no avoiding or modifying Interchange cost and it is the rate that is charged across the board. To learn more about Interchange read our article on “What is Interchange” here. The basis point, however, is what a payment processor charges and you should look for one who offers a competitive rate but also has the service level and products your business needs. Once this rate is locked in, the pricing is set per transaction and there are no hidden surcharges or fees. This often results in substantial savings on processing fees and more money in the your pocket.
Bankcard Brokers is a payment processor with a team of ETA Certified Payment Professionals who offers true interchange plus pricing. Transparency and honesty are important to Bankcard Brokers and when you receive a quote for interchange plus pricing, what you see is what you get. There are no additional fees and this translates to a clear understanding of what exactly your credit card processing costs are.
If you’re looking for the most competitive interchange plus pricing from an honest and trustworthy processor, give Bankcard Brokers a call today! Or simply use their simple and secure online application today!