Merchant Services Fitness Test

Answer Yes or No:

Do You have a contract?    Y     N

Do you lease your equipment?    Y     N

Do you get your funds by the next day?    Y     N

Do you know what PCI-DSS fees represents?    Y     N

Do you receive a monthly statement?    Y     N

Do you have an annual fee?    Y     N

Do you know what VSFANF fees represent?    Y     N

Do you know what an “assessment fee” represents?    Y     N

Do you know what the “effective rate” of your merchant services program represents?    Y     N

Do you know what the terms “qualified,” “mid-qualified,” and “nonqualified” mean?    Y     N

Do you know how you are being charged?    Y     N

Do you know the name of your local merchant representative?    Y     N

Has your merchant services program been reviewed/analyzed the past year, & does it include a written report?    Y     N

Do you know what the “batch fee” represents?    Y     N

Do you know what the ETF represents?    Y     N

Are you ready for EMV?    Y     N

Are you happy with your merchant services fees or services?    Y     N


If you answered No to 1 or more questions, it’s time for a merchant services re-assessment.

A contract is the most important item you have. It should explain your rate and the other fees associated with your program. It’s not unusual for a less-than-honest sales agent to make changes on the contract in an effort to please you. You should know that the contract typically prohibits changing it. Secondly, since most sales agents are independent, the processor will claim no responsibility if he/she changes [redlines] anything.

Leasing a terminal involves paying a set monthly fee for a set number of months. For most businesses, leasing is not the best choice – it is extremely expensive for the merchant. Be aware that most terminals cost less than $400. Also remember to cancel the lease when done. It does not cancel itself.

Many merchants must wait 2-3 days or longer to receive their funds. In some cases, merchants can receive their money in 1-2 days through a process called next day funding [NDF]. This includes American Express. This is not applicable to all industries, so be sure to ask.

What business owners do not know about PCI-DSS can hurt them in terms of bankrupting a business and taking personal assets. The data security standards are complex and there are varying standards for different methods of processing. Online processing requires even more security. Small businesses suffer the most breaches because of confusion over security standards. There is a lot to be learned about PCI-DSS compliance. More information is available at: www.PCI-DSSsecuritystandards.org.

A monthly statement is a must. Whether in hard copy or online you need to review each month’s statement. The cost should be no more than $8-$10 per month, and often this fee can be negotiated.

The annual fee is assessed once per year but may also be billed on a monthly, quarterly, or semi-annual basis. This should be less than $100.

Fixed Acquirer Network Fee. This new fee, effective as of April 2012, affects all merchants and is based upon three factors: number of locations, card present or not, and merchant code category.

An assessment fee is set by the card brand [Master Visa/Discover]. It is collected along with interchange fees from the processor and paid to the card brand. Interchange and assessment fees are the ‘true cost’ to the processors. Every processor has to pay these fees and they are always “passed through” to the merchant.

This is an easy way to calculate the true cost of processing credit cards each month. The Effective Rate is a calculation you can easily perform each month to determine what the total cost of your transaction is on a percentage basis: (Total Fees / Total Transactions – Adjustments). Simply put, merchants who calculate an Effective Rate that is 1% above their ‘Qualified Rate’ [lowest available], should consider a new merchant consultant. as they are paying too much. For most businesses the Effective Rate should not exceed 2.25% 2.50%.

The terms ‘Qualified,’ Mid Qualified,’ or ‘Non Qualified’ [sometimes called ‘tiers] are used to base pricing structures. Unfortunately the various processors do not define the categories in the same way, so the use of certain cards is more expensive because of the ‘tiers’ they are placed in for each transaction. The tiers are set up in such a way so as to benefit the processors – NOT the merchants. This fee structure should be scrutinized carefully.


Call Scott Tanker for your Free Assessment today!
Phone (609)-922-0201 • Fax (856) 574-4515 • scott@tankerconsultingservices.com
72 Five Crown Royal • Marlton, New Jersey 08053


Since pricing is most the important factor, you must determine whether you have the “Tiered’ vs the “Cost Plus” pricing. Consider Interchange and Assessment fees as the “Cost” pricing with the “Plus” being the profit to the sales/consulting organization. You will definitely pay less using a Cost Plus fee structure. As explained in #10, the tiers are set up in such a way as to benefit the processors – NOT the merchants..

It should be very useful to have a local representative who is close by to help or simply be a liaison for the merchant when issues arise. If your representative is just a voice at the end of a toll-free line, consider making a change.
You should review your monthly statements quarterly to make sure all fees are reasonable and previously disclosed, and have a third-party review them annually.

The ‘Batch fee’ or ‘Settlement fee’ is charged for transmitting credit card transactions at the end of a business day. This finalizes and authorizes the transactions to be processed by the bank so merchants can get paid.

The Early Termination Fee is a much maligned fee in the industry and it may be with good reason. This is a one-time fee that occurs when a merchant leaves the processor before the contract expires. The contract will spell out explicitly how and when you should terminate the contract to avoid the early termination fee. Remember, even if the fee is redlined on the contract for a lower number by the sales agent, he/she does not have the authority to change the number and the merchant [you] is liable for the full amount on the contract.

The EMV card – which stands for “Europay, MasterCard, and Visa” – is becoming the new standard for plastic-based transactions, and incorporates an embedded microprocessor that provides strong transaction security and other capabilities not possible with the magnetic stripe cards in use today. Already in use in more than 80 countries, EMV cards can stem the recent tide of data breaches…but only when it comes into mainstream use.
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