Although I don't come across this issue often, it does come up every now and again. If you are a business owner and you are reluctant to show a merchant services provider your statement, I completely understand. This industry is riddled with unethical companies and less than truthful reps who would say almost anything to sign you up. However, I will say that it matters WHO you show your statement to. In a previous blog post entitled "4 Things You Should Expect From Your Merchant Services Rep", I talk about making sure that the person you are working with is Experienced, Trustworthy, Detailed and Available. I would start there to decide whether or not to provide merchant service statements to a representative or not.
Here are just some things I look for when I’m provided multiple statements to do an audit for a business owner's merchant services:
1. I look for whether you are on the American Express Opt Blue program or not. This information can be found by looking to see if your Amex fees are broken out on the statement or not and whether they are deposited by the processor or not. If you are on the Opt Blue program, I look at the Amex rates to make sure you are registered with the correct Industry Type to get the rates you deserve. There could be a .15% fee savings on your Amex volume if your industry type is incorrect from your current processor.
2. I look for any annual junk fees (usually charged in the winter months of your statements). Quarterly junk fees could also show up on your statements and these could be pure profit for the processor. Since these fees are only taken every 3 months, some business owners don't notice them.
3. I look to see whether your fees are taken daily, monthly or both. You’d be amazed how many businesses don’t know that their fees are taken daily before the batch is deposited.
4. One thing that is truly important is what kind of pricing model you are on. Some of my potential clients are on tiered pricing, some are on Interchange Plus pricing and others could be on a bundled "flat rate" with surcharging. There are dozens of pricing models but the most transparent and the one you want to be on is "Interchange Plus" pricing.
5. Another very important piece of information is chargebacks and refund percentages. If you go above 1% of your volume in chargebacks or above 10% of your volume in refunds, the Card Brands can actually shut off your merchant account. I can give recommendations of how to better process if I see any of this or if you are nearing these percentages.
6. If you are on a pricing model other than Interchange Plus, I break out your qualified rate and your non-qualified rate or surcharges to show you what part is cost and what part is profit for the processor. This calculation not only takes experience but it requires an intimate knowledge of processor statements.
7. When I'm given multiple statements, it allows me to see whether your rates have been increased or not. Recently, I audited multiple statements for an Electrician Company and I found that for the first 3 months of 2018, they were paying .10% in profit to their processor but on April 1st, 2018 their processor raised them to .41% in profit. This is a huge increase and had this client not provided me with multiple statements, I would not have caught that they were paying lower rates in the earlier part of the year.
Many processors are raising rates right now due to expensive acquisitions, the need to make their numbers look better to investors and frankly, many of them are getting away with it because they don't think that their clients look at their statements. So trust me, you want an expert to look at your merchant service statements!
Anytime a processor raises rates, they know that they will lose a certain percentage of their clients but they are ok with that because they know that 15% attrition still equals 85% non-attrition that they will make extra money on.
At Ark Payment Solutions, we are always happy to answer any questions you may have about your new or existing business. If you are looking for a detailed analysis and proposal, feel free to email us at info@arkpaymentsolutions.com or call us at 702-257-8295. We would love for you to join the Ark Payment Solutions family!