Are 1% Processing Rates Offered Really 1%?

The payment processor world is a highly competitive world. At JLE Business Consultants we know that. Getting new clients and holding on to current clients is the goal of every payment processor and we are no exception. When it comes to a payment processor trying to attract new clients there are a lot of promises made and one of the most common is that they promise you a sub-1% processing rate. It is tempting to jump on that but is it really that good of a deal?

Can I Get A Sub-1% Rate

Of course no one really likes their processing rate. No one really likes having to give some of their money so that they can get their money and we understand that. Unfortunately payment processors are necessary to make the modern payment system work and reputable processors try to keep it as low as possible.

But every now and again you might get an offer from someone telling you that they can offer a sub-1% processing rate for you. It seems awfully tempting as that has the potential to save you a lot of money but, despite that person’s confidence that rate is not possible and in the end you might be the one paying for that.

Not On Your Interchange Fee

When most people hear this offer they immediately think of their interchange rate but this is not true. The interchange rate is pretty much set in stone and that is the cost of accepting credit and debit cards. This rate is non-negotiable as they are set by the issuing company (Visa, MasterCard, etc…). These rates are also not secret and are publically available to view (here are Visa’s). If someone offers you a sub-1% interchange fee hang up as they will not be in business long.

If someone offers a sub-1% rate they actually mean the processing fee, which is a fee tacked on top of the interchange fee. This is how the payment processor like JLE makes money and stays in business and there is another component as a set price is also typically tacked on to this as well in the form of a few cents. 

This Can Work For Some Merchants

That person that offers you a sub-1% rate may up that second part. Instead of only charging 5 cents per transaction they may up that to 50 cents. If you have large transactions that may not actually be so bad but if your transactions are a few dollars at a time that will take a huge bite out of your profits. The processor that offers you this will be getting their money in another way and it may be at your expense.

Now, could this work for you? If you sell large ticket items and take in large transactions yes, this could potentially save you some money. Chances are though this is not your business. A sub-1% rate may sound very tempting (and the salesman trying to get you on board knows that) but there is more to payment processing than just that. When you sign on with JLE Business Consultants we go over all of this with you so there will be no surprises when you get that first statement. We may not always be able to offer you the best rate but if you know what else goes into payment processing you will find that JLE may be just what you are looking for. We are up front and honest and if you need us we are only a phone call away. Can that other processor say that?