Credit Card Processing Expense Reduction

The "Status Quo" is the Credit Card Processor's Best Friend

2011-02-03T13:24:00.002-06:00

How many months have you gone through your mail, looked quickly at your credit card processing statement and said to yourself, "I need to do something about these costs."

Of course, you have many priorities in your business and many fires to put out. If you are like many business owners or financial professionals, the scenario will play itself out the next month again. It is likely that a nagging feeling that "you need to do something" will accompany your processing statement each month. In our experience in dealing with hundreds of businesses regarding this issue, there are a great deal who continue this cycle of inaction literally for years, continually paying more for a service than is necessary, sometimes substantially more.

It is unfortunate, but true, that doing nothing is extremely common for many businesses today that accept credit cards. Many businesses know that their costs may be more than is necessary, but it seems like such a small amount on each transaction that it hardly seems worth the time. The credit card processing industry is profiting greatly as a result. It is estimated that, of the $80 billion that is paid by businesses today in credit card processing fees, over 25% could be avoided with the proper knowledge and action.

Businesses that continue to procrastinate on this expense are the credit card processor's best friend. Each month that goes by is another month of excess profits in their pocket. They love to continue to siphon excess dollars on every credit card transaction your company accepts.
It is understandable why many businesses do not relish the thought of analyzing this expense. Businesses get bombarded almost daily from processors promising lower rates and huge savings. Of course, each processor prices things somewhat differently, so it is very difficult to detemine if they are really going to save you money. Many times, switching processors means a number of changes with your POS system or your accounting software and nobody looks forward to going down that road. Plain and simple, switching processors to achieve savings is often a guessing game whether you will actually reduce your costs and it can be a painful transition for your business just to switch.

There are smart ways to truly minimize this cost without going through endless sales presentations and taking multiple follow-up calls from aggressive processing sales representatives. Financial Mitigation Services is not a credit card processor, but we are experts in reducing processing expenses. Our organization works collaboratively with your current processor to achive the lowest cost possible for your organization. We have the knowledge and expertise to work with your current processor to achieve meaningful expense reduction. We work completely on a contingency basis, so there is no risk to utilizing our services. If we are not successful, your business receives our expertise and efforts free of charge.

We think our service and the value we provide is extremely beneficial for any company that accepts credit cards. If your business qualifies, you allow us do the work on your behalf and you start saving immediately on every transaction you accept by credit card. You do not have to analyze multiple bids and meet with multiple processing salespeople or brokers. You do not have to field multiple calls wondering if you have made a decision yet. You do not have to wonder if your choice of processors is correct. You do not have to analyze your statements monthly to determine if your transactions are being routed properly. You do notthing but save money and have an expert on your team to help you reduce costs significantly.

Whatever you determine to do in regards to credit card processing costs, it is very likely worth your time to look into this expense category. Most of our clients are surprised and shocked at the amount of savings that we are able to achieve on their behalf. These are not small amounts of a few dollars each month, they are substantial amounts that impact your business operation very positively.

Lowering processing costs is not all about the rates

2010-11-06T12:54:00.002-05:00

For many businesses that want to decrease costs in credit card processing, the best alternative often appears to be negotiating their "rate". While negotiating rates is an important first step in decreasing costs, there are other factors in processing costs that are often more important than the rate structure.

Simply asking your current processor to lower their rates or getting several bids to try and lower costs is an inadequate strategy for truly minimizing these costs. The manner in which transactions are categorized and setting up the base rate parameters for each business can be far more critical to the cost than the "rate" that has been negotiated.

Financial Mitigation Services analyzes thousands of processing statements a year and we are experts in devising strategies for businesses to decrease their costs by working collaboratively with the current provider. We have worked with hundreds of businesses that have been convinced they have negotiated the lowest possible rates for themselves, only to find that we can achieve substantial savings for them by working with their current processor.

Processors, either by by lack of knowledge or purposefully, often set up their clients incorrectly and the result is excess fees and substantially higher costs than is necessary to process credit cards. Truly minimizing processing costs is not difficult, but it requires a specialized expertise in this area and a monthly focus on your transactions.

As a small example among hundreds of possible scenarios, a common mistake we often see is a business that has a great deal of card not present transactions that should be set up as a card not present merchant with a base rate from Visa of 1.85%. Many times, the business is set up incorrectly as a Card Present merchant, which has a base rate of 1.54%. It appears on the quote that you have just decreased your rate by 17%. In reality, all the downgraded transactions will be charged at a higher rate as well as have stricter parameters to get the transaction to qualify for the lower rate. This "mistake" almost always costs the business far more while giving the illusion of a lower cost.

The above example, along with hundreds of other possible scenarios, is why so many businesses change processing companies with the promise of decreasing their costs only to find later that they have not decreased at all. Alot of effort to change processors is put in by the business to chase a lower cost and the benefit is never realized.

There are currently over 300 unique Interchange cost categories that businesses can be charged for accepting a credit or debit card, each with its own unique set of parameters. Simply negotiating a "great rate" with your processor is only a small part of the puzzle when it comes to decreasing your costs in this expense category for your business.

Merchant Account Pricing Strategies

2010-03-05T07:47:00.000-06:00

Most business owners are excellent negotiators. They negotiate with vendors and business partners every day. Because of the skills they have in this area, a majority of businesses negotiate their merchant account processing fee structure completely on their own, often with little research done prior to the negotiation process. Credit card processing fees are as confusing and convoluted as anything a business ever pays and a majority of businesses end up unknowingly and unnecessarily paying too much for this service.

One of the primary difficulties with trying to negotiate credit card processing is that it has become extremely complicated and difficult to determine what the proper costs are for your business. Very few business owners or finance administrators can truly understand this expense category without a tremendous amount of research and time. As an example of the complicated nature in this cost category, in the 1990's there were eight (8) different Interchange Categories that Visa and MasterCard assessed to businesses that accept credit cards. Today, there are over 300 Interchange Categories that a business may be charged when accepting a credit card. The explosion of fee categories, business and rewards cards and the ever expanding billing options for credit card processing companies has made it virtually impossible for a business owner to fully understand this cost.

There are numerous ways for a processor to achieve the revenues and profits they want to make on a particular account even if they are forced to give their client a seemingly great program up front. If it were as simple as negotiating a "better rate" and then walking away, processing costs for businesses that accept credit cards would not have increased at 8 times the rate of inflation since 2001.

For businesses that accept credit cards, there are far more considerations than simply "processing rates" to consider when looking at the profitability of a merchant account. Every major processing company has teams of pricing specialists whose sole responsibility is to price proposals to current clients looking for reductions and potential clients that are coming to them for a proposal. From a processor's perspective, every single pricing proposal is looked at from the standpoint of "How can we maintain as much profitability on this account as possible?".

For those that have negotiated merchant account pricing and have experienced the frustration of going through this exercise, you know that the first thing a processor asks for is copies of your previous statements with all of your current pricing included. The processor claims that the reason they need this information is to see what type of programs you may qualify for. The real reason is that they want to see what type of pricing you have so they can be sure to slightly undercut this pricing, but not by too much. The goal of any processing negotiation, from a processor's standpoint, is to gain or retain the business while still maximizing their profits on your account. In many cases, these profits are substantial.

Below are some questions a business owner or financial professional in charge of this cost category may want to ask themselves prior to negotiating a new merchant services agreement.

• Do you know if your business qualifies for any emerging market interchange programs that significantly reduce the cost of processing?

• How much time do you plan to spend each month reviewing interchange qualifications and downgrades?

• Do you know exactly what you are looking for to identify Interchange downgrades and alert your processor?

• Do you have a solid understanding of all the alternative payment acceptance methods available to your business and know which may fit your given situation to cut costs even lower?

• Virtually every Fortune 500 retailer has an expert or team of experts on staff whose sole responsibility is to manage this cost category daily because they realize the importance of it. Does your business have someone on your staff that has the expertise to do this?

• Do you know the exact terms to insist on when talking to your current processor or a prospective processor?

• Do you know the exact profit margins your account represents to a prospective processor?

• Do you know which contractual pitfalls that should be avoided in every situation?

• Do you have time to gather bona-fide back up proposals with clear pricing goals to show your processor that if they don't give you the exact terms laid out, somebody else will?

• Have you ever had a credit card processor lower your costs after you have signed an agreement with them?

• Have you ever had a credit card processing company call you and offer a rebate or a refund on overcharges they have charged your company?

The bottom line is that when businesses do their research and get their information primarily from processors themselves (or brokers representing processors), there is one common denominator that these advisors all look at when talking to your business - "How much profitability can we achieve from this account?" Remember, there are literally 100's of different ways to achieve profits on a merchant account from the processor's perspective. Each month represents a new profit opportunity for a processing company.

There are alternatives to going the traditional route of talking to several different processors and attempting to negotiate the best pricing structure for your company. Companies like Financial Mitigation Services are truly independent experts that are not compensated by credit card processors. Advice from an independent expert can save businesses substantially of dollars over the term of your merchant services agreement and there is no need to change from your current processor to achieve these savings. Research indicates that businesses using an independent expert in this cost category pay as much as 20% less than comparable companies that negotiated on their own.

There are literally thousands of instances happening every day around the country where a business owner or finance administrator is busy patting themselves on the back because they have just negotiated a new processing "rate" for their company in which they are told they are going to be saving substantially! Meanwhile, the merchant account salesperson that signed them up is in the back office getting "high fives" from the processing company for bringing in a hugely profitable deal for their company. This happens every day to businesses all over the country because of the difficulty of determining true processing costs and the often erroneous advice business owners receive from processing salespeople or brokers.

Credit card swipes can add up to big bills for businesses

2010-01-28T14:09:00.005-06:00

Credit card swipes can add up to big bills for businesses
by Laura Adelmann THISWEEK NEWSPAPERS

Businesses charged credit card processing fees are likely paying much more than necessary for the service.
Complex and confusing, monthly bills to businesses accepting plastic often include overcharges, excess fees and errors, said Jeff Zellmer, president of Financial Mitigation Services, Burnsville.

FMS offers detailed analysis of hundreds of unique cost categories, which can vary greatly depending on the type of card used and the item purchased, to uncover these unnecessary processing costs. If little or no savings opportunities are discovered, the review is free.

But if the review unveils significant savings, as 75 percent of their reviews do, FMS offers to recover those funds, accepting a percentage of the money the business saves as payment for the service. “We are independent and processor-neutral,” Zellmer said, meaning his company is not paid on commission, and doesn’t suggest businesses switch processing companies. “We work with their current processor. Most businesses prefer not to switch because they have a system in place. We can come in and allow them not to switch and to pay the least amount for processing,” Zellmer said.
Merchant complaints about interchange fees, charges to the business accepting credit, have increased recently, with many calling for new legislation governing how fees are imposed. The changes in credit card rules that are set to be employed this year don’t regulate the swipe fees businesses pay, and they vary widely, ranging from 1.5 percent to 4 percent of each transaction cost.

According to a November 2009 study by the Government Accountability Office, those fees have increased 24 percent since 2005. Many businesses negotiate lower processing rates, but ignore other ways to cut their bills. For example, depending on the contract, retailers may be eligible for emerging market discounts or other discounts that they are unaware of.
And Zellmer said FMS examiners often find the large processors have provided swipe discounts for various types of entities, such as utility companies or schools, but those were not passed on to the business. While some businesses have protested the fees by offering cash-paying customers discounts, accepting plastic makes shopping more convenient for their customers who may spend more when not using cash.

Zellmer said accepting credit cards also helps business access cash immediately while avoiding handling costs and trips to the bank. He said his company can help businesses keep more of that cash they earn. “(Processing companies) are putting money in the business’s bank account, so basically what we do is we get them to put more money in the business’s bank account,” Zellmer said. “Our goal is exactly the same as our clients’.”

For more information, visit www.financialmitigationservices. com or call 952-224-8972.

http://www.server-jbmultimedia.net/DakotaCountyTribune/sitebase/data/basecontent/dakota_27012010.pdf

Mastercard & Visa Planning Price Increases in 2010

2010-01-25T13:59:00.001-06:00

Similar to our nation's tax code, the Interchange Rates and qualifications for businesses that accep credit cards will continue to increase in 2010, adding to the complexity and confusion in credit card processing costs.

Some of the scheduled changes for April of 2010 include a 15% increase in Mastercard's Assessment fee from a current level of 0.095% to 0.11%. Mastercard is also revising the qualification criteria for Commercial Face to Face and Commercial Data Rate II transactions, making it more difficult for businesses to qualify for preferred rates in these categories.

The changes above and the continual addition of new rate categories, ever-changing qualification procedures and the resulting increase in costs to businesses is why Financial Mitigation Services is greatly appreciated by our clients. Each month, our analyst team performs a detailed analytics review of our clients' processing charges and protects our clients from paying more than they should to process credit cards. A vast majority of businesses will be unaware of these changes and how they affect their costs. Financial Mitigation Services clients will be armed with the tools and knowledge to combat these price increases.

To learn how Financial Mitigation Services can help your business minimize the cost of accepting credit cards, visit our website at www.FinancialMitigationServices.com or call us at 1-800-797-5642.

Best Credit Card Processing Pricing Practices

2009-12-15T16:23:00.002-06:00

There are so many options and variables in pricing for businesses that accept credit cards, it is no wonder that Financial Mitigation Services's studies show that over 70% of businesses in the U.S. are paying unnecessary and substantial fees that they do not need to pay.

One of the reasons for the amount of overpayments that a majority of companies pay for credit card processing is that nearly everyone who is giving businesses advice in this area are people or companies who are being paid by credit card processors themselves.

Type in "credit card processing consultant" in Google or any major search engine and you will find a great deal of web sites and businesses that will claim to help their clients reduce the fees they pay to process credit cards. Many of these companies go out of their way in their sales literature and sales presentations to appear that they are simply doing a "free analysis" and are giving "free advice" to their clients out of the goodness of their hearts. Some of these companies perform "reverse auctions" for credit card processing and tell you what the low cost provider is. The truth is that nearly every one of these companies, consultants or auction houses is actually paid by the credit card processors to bring new business to them. While they might not bill clients directly for their "advice", make no mistake that they are being paid for convincing their clients to switch to a new processing platform.

More often than not, they will ask to see a potential client's recent statement simply for the purpose of seeing a business's current pricing structure so that their processing partner can slightly undercut the pricing and gain their business. Once they convince their client to switch processing platforms, they will often get a large "landing bonus" from the processor and then a healthy monthly residual payment as long as that business is with the processor.

Who pays for these "landing bonuses" and "ongoing residual commissions" that the consultant receives? The business pays for these commissions. At times, there are literally several layers of commissions being paid to banks, independent sales organizations, brokers and consultants all on the same business account. There are so many mouths to feed on some of these accounts, the business ends up paying far more than is necessary to process credit cards.

Financial Mitigation Services is not paid by credit card processors. We go straight to the source for our accounts and uncover unnecessary fees, excess charges and even billing errors that we recover for our clients. Financial Mitigaiton Services is not a credit card processor, we are not a broker and we are always paid by our clients based directly on the results we achieve for our clients. We perform our services behind the scenes on behalf of our clients and work directly with the credit card processor themselves to obtain the lowest possible pricing structure for every client that we have.

EMAIL for more information

Interchange Rates Are Not All Alike for Businesses

2009-11-16T16:28:00.003-06:00

Many companies wrongly assume that they have little bargaining power when it comes to credit card processing rates they are forced to pay. Most companies incorrectly assume that the more volume that they do in credit card processing, the lower the rates they will be forced to pay. Although this is a factor, it is a very minimal factor in the total scope of credit card processing costs a business must pay to accept credit cards. In addition to transaction costs, gateway fees, communication costs and various other fees, the bulk of credit card processing costs is in Interchange Rates charged per transaction.

Interchange Rate is a term used in the payment card industry to describe a fee that a merchant’s bank (the “acquiring bank”) pays a customer’s bank (the “issuing bank”) when merchants accept cards using card networks such as Visa and MasterCard for purchases. In a credit card transaction, the card-issuing bank in a payment transaction deducts the interchange fee from the amount it pays the acquiring bank that handles a credit or debit card transaction for a merchant. The acquiring bank then pays the merchant the amount of the transaction minus both the interchange fee and an additional, usually smaller fee for the acquiring bank or ISO (Independent Sales Organization), which is often referred to as a Discount Rate, an add-on rate, or pass-thru rate.

There are really four main factors that determine Interchange rates applicable to a given transaction:

* Merchant category—Both Visa and Mastercard identify merchants according to the line of business in which they are engaged. Interchange rates vary for different merchant categories. For example, because the supermarket industry tends to have very low profit margins, the networks set Interchange rates lower to encourage supermarkets to accept cards. Also, the method in which a merchant authorizes payments can affect the extent to which a card network’s system is used. Additionally, some merchant types may qualify for special incentive Interchange rates if a card network determines the merchant category has growth potential for card acceptance. For example, schools and utility providers receive lower Interchange rates to encourage them to accept cards.

* Type of card—Different Interchange rates apply to different types of cards. For example, both MasterCard and Visa have separate Interchange rates for general purpose consumer credit cards, reward credit cards, commercial credit cards (issued to businesses), and debit cards. The rates vary because the costs, risks, and revenues associated with these different card products vary for issuers; they also reflect the networks’ goal of providing incentives for both issuance and acceptance of cards. Reward cards or Business cards involve higher Interchange fees for a number of reasons.

* Merchant size (transaction volume)—Both MasterCard and Visa set lower Interchange rates for merchants in some categories that conduct high volumes of card transactions over their networks. For example, according to Visa’s default Interchange rates that were in effect as of October 2007, supermarkets that conducted a minimum of about 7 million Visa card transactions in calendar year 2006 qualified for lower rates than supermarkets that conducted fewer Visa transactions. This is not as big of a factor in pricing that most people assume.

* Transaction Type —Interchange rates differ greatly depending on how a card transaction is processed. For example, transactions that occur without a card being present, such as an over the phone transaction, carry a greater risk of fraud and higher Interchange rates apply to these transactions. Conversely, accepting a card through a card terminal, rather than key-entering the account number, provides more information to the issuing bank to verify the security of a transaction; therefore, swipe transactions are assessed a lower Interchange rate.

Based on the factors above and the fact that Visa and Mastercard both have literally thousands of different Interchange Rate combinations for every single transaction, it is extremely difficult for the average business owner to truly know if what they are paying to process credit cards is correct or the lowest rate possible. For example, it is the Independent Sales Organization (ISO), not Visa or Mastercard, that determine if the savings associated with special incentives to emerging markets will be reflected on the processing costs a business client pays. Many processors simply keep the resulting discount from Visa and Mastercard as profits for their own ISO rather than passing on to the customer. The client has often already agreed to a higher rate in their contract, so the processor is not obligated to pass on any savings from Visa or Mastercard that they may be eligible for. These lost savings opportunities and multiple other common situations in billing procedures can cost a company thousands of dollars.

Financial Mitigation Services knows and understands the credit card processing cost structure intimately. FMS clients receive the benefit of comparative cost data from thousands of similar businesses nationwide. Financial Mitigation Services has helped business clients across the country uncover millions of dollars in excess fees, errors and overcharges that they have been paying unnecessarily for credit card processing.

Call us today for a free analysis of your credit card processing costs. 1-800-797-5642

http://www.financialmitigationservices.com/

Businesses Not Getting Relief from Credit Card Processing Fees

2009-11-09T09:12:00.007-06:00

As unemployment rates move past 10% and the economy is in the throes of the worst retail spending rates in our lifetimes, there is one business segment that continues to increase their profits. Credit Card Processing companies continue to thrive on increased earnings and growth during every year of the recession

MasterCard - "For the quarter ended Sept. 30, MasterCard reported earnings of $452.2 million, or $3.45 a share."

Visa - "Net operating revenues in the fourth quarter were almost $1.9 billion, a 10% increase over the year-ago period."

Heartland Payment Systems -

"Net revenues for the first nine months of 2009

were $315.1 million, up 11.1% compared to the first nine months of 2008."

"First Data Corp today reported its financial results for the second quarter ending June 30, 2009. Retail and Alliance Services reported revenue of $1.3 billion, up 8%."

The major credit card companies and processors continue to enjoy strong results despite lower retail spending, high unemployment and a stagnant economy. Part of the reason for their strong performance in this economy is that retailers and those businesses that accept credit cards continue to pay unnecessary fees and excess charges to process credit cards.

Financial Mitigation Services helps companies lower the cost of accepting credit cards without having to change processors or banks. We analyze our clients' cost structure in this area and recommend changes to recover these excess fees and put it back into our client's pocket, where it belongs.

Give us a call today at 1-800-797-5642 or email us at info@financialmitigationservices.com.

Mastercard Lowers Interchange Rates

2009-11-04T23:09:00.005-06:00

Mastercard recently announced a new program aimed at encouraging small and medium sized business owners to pay for their utilities using a credit card. Under this pilot program, the cost to process credit card transactions for a utility has dropped significantly.

Visa and Mastercard often offer these types of emerging market discounts in Interchange Rates in order to encourage businesses and consumers to use credit cards.

Unfortunately, many businesses that could benefit from these credit card processing rate reductions are unaware of their existence and do not benefit. Their credit card processing vendor does not pass these savings on to them, instead using these rate reductions as increases in their own profit.

Financial Mitigation Services employs a team of experts that work on behalf of our clients to reduce the cost of accepting credit cards WITHOUT changing from your current processor.

Why do businesses overpay for accepting credit cards?

2009-10-27T12:00:00.005-05:00

Financial Mitigation Services assists companies in lowering the cost of accepting credit cards without changing from their current processor.

Of the last 1,000 companies that FMS has analyzed, over 70% are paying substantial unnecessary fees to their processor. Why do businesses continue to pay unnecessary merchant account fees when there is a simple alternative?

1. The credit card industry has an extremely convoluted and confusing billing structure. Most businesses do not have the time or resources to fully understand how and why they are being billed the way they are for accepting credit cards.

2. The credit card processing industry is largely unregulated. There are thousands of processing companies each charging a different profit percentage for their services and billing in a different manner than their competitors. It is extremely difficult for the business owner to compare plans from two different processors.

3. Businesses do not have time to fully analyze this cost category on a monthly basis. Because of the complex billing structure, it is very time consuming for a business to determine if they are being billed correctly or if there are alternative billing plans that would be advantageous to them.

TIME - EXPERTISE - EXPERIENCE

These three items are the primary reasons that businesses across the country are substantially overpaying to accept credit cards.

Financial Mitigation Services focuses on the credit card processing industry exclusively. It is all that we do. We compare plans from thousands of businesses across the country to make certain our clients are below market level rates. We interface with processing companies several times a day. We spend hours every month on behalf of our clients analyzing their costs and looking for savings potential.

If you are paying to process credit cards in your business, it will pay to have FMS analyze your cost structure - guaranteed.

Understanding Merchant Account Providers

2009-08-11T10:13:00.006-05:00

The majority of the companies selling merchant services are resellers, independent sales agents, or referral agents who act as agents for large payment processors. According to The Nilson Report, the top 7 payment providers processed over 90% of the Visa and MasterCard credit and debit sales in 2007.

These large processors such as First Data, Elavon, Chase Paymentech, Heartland and others dominate the U.S. market through their own sales organizations and a network of resellers, bank partners, and referral relationships with various associations and organizations.

There are approximately 2,000 registered resellers in the United States. All of these resellers are paid based on a compensation model that is similar. They add a profit to the base costs that Visa and Mastercard charge. The pricing levels on rates, fees and other costs can vary greatly from one processor to the next and one customer to the next. These resellers are called ISOs (Independent Sales Organizations) or MSPs (Member Service Providers or Merchant Service Providers) and are typically registered with one of the “Big 7” to sell merchant services under the ISO’s or MSP’s name. Many of these ISO's have several brokers and referring companies beneath them as well.

Based on having 2,000 resellers in the U.S. and most of these resellers employing teams of commission based sales representatives, businesses across the United States are bombarded with credit card processing offers and cold calls on a daily basis.

These resellers calling businesses every day can take on varying degrees of involvement in their merchant services portfolios. Some resellers perform sales, underwriting, customer service, terminal deployment and support, and manage a degree of liability if the merchant goes out of business. Some resellers also provide valuable services that may not be found at a large payment processor – such as support of proprietary software systems. Most resellers, however, are simply sales offices or brokers with all the back-end functions being handled by the sponsoring processor.

Also, there are somewhere around 15,000 banks of all different sizes in the U.S. Most of the large banks exited the merchant services business over the last 15-20 years, and simply refer all of their clients to their processing partner. In fact, less than 1% of the banks manage merchant services internally. They have a referral or resale agreement with a third party. For instance, Citibank and SunTrust refer all of their merchant business to First Data, and Wachovia and KeyBank refer all of their merchant business to Elavon. In return, the banks get a small percentage of the payment processing profits. Banks in essence act as exclusive sales distribution arms for large payment processors and are not typically involved in the sales, service, or support of merchant services.

Faced with a dizzying array of pricing models and under constant bombardment by credit card processing salespeople, many businesses dread the thought of “analyzing their credit card processing costs”. Navigating through high pressure sales tactics and different interpretations of data, many businesses spend weeks or months evaluating these costs trying to sift through all the information that is being presented to them.

Financial Mitigation Services (FMS) is NOT a credit card processor, a reseller or a broker. FMS is an independent third party firm that specializes in credit card processing cost reduction for our clients. FMS has inside knowledge and relationships with all of the “Big 7” processing companies and we stay up to date on emerging pricing trends that can help our clients. Our primary goal is to uncover unnecessary fees, overcharges and errors in our clients’ processing costs and recover these dollars for our clients.

Give Financial Mitigation Services a call today at 1-800-797-5642 or visit our website at www.FinancialMitigationServices.com to learn about our Free Analysis of your processing costs.

Credit Card Processors and Profit Margins

2009-08-07T12:26:00.006-05:00

Excerpts from one of the nation's largest credit card processor's Second Quarter 2009 earnings call:

2009 2nd Quarter REVENUES
"Transaction processing volume continues to reflect economic weakness. Same store sales were negative for the fifth consecutive quarter this quarter down a record 9.7%."

2009 2nd Quarter MARGINS
"Although revenue growth slowed in the quarter, margins rose sequentially to 14.7%."

Doesn't the above story tell it all? If you are relying on your credit card processing company to analyze your statements and recommend the best possible pricing plan for your business, you may be making a costly mistake. Call Financial Mitigation Services today at 800-797-5642 and have our team of expert analysts review your credit card processing fees.

Visa/Mastercard Rate Adjustments

2009-08-06T09:05:00.005-05:00

Visa and Mastercard charge the credit card processing companies for each Visa and Mastercard credit or debit transaction. The credit card processing companies then pass on these charges to the business owner with a markup. The amount that they mark-up is completeley up to each processor.

There are now over 150 different combinations of Interchange Rates and/or transaction fees that are determined based on a variety of factors for each transaction:

- Business Industry Type
- Card Type (Standard, Rewards, Debit, etc.)
- Time between authorization and settlement
- How the card info was entered (swiped or hand keyed)

Typically, in the months of April and October, both Visa and Mastercard publish new Interchange Rates for the processing companies. Some of the rates in the 150 plus categories are adjusted upwards, some are adjusted downwards and some remain the same. Depending on how the individual processing company treats these new rates can impact the business owner tremendously in their credit card processing costs.

Some processors take full advantage of these rate adjustments to raise prices on all interchange categories across the board rather than just the categories that have been impacted. Some processing companies even increase the prices on Interchange categories that have been decreased by Visa and Mastercard.

Typically, businesses are informed of this by a simple notation on the previous month's statement or a letter that is included with the statement packet. The note may say something like: "Visa and Mastercard increases to Interchange Rates will go into effect October 1, 2009. Effective October 1, 2009, you will see an increase of 0.004% or X basis points on your pricing."

The note makes it appear that Visa or Mastercard are the entities increasing rates on all transactions and that the processor is powerless to stop this action. Rather than a slight increase in some categories and a slight decrease in others, many businesses receive an increase in credit card transaction costs across the board. The actual costs that the processor pays Visa or Mastercard may have remained the same or even gone down, yet the client's costs are increased.

Do business owners, CFO's, Controllers or others at an office have the time to continuously evaluate credit card transaction costs to the degree that is necessary? Is any business owner able to stay informed on exactly what Visa and Mastercard are doing in the pricing arena, or are they simply relying on their processor to inform them? Our research suggests that a great majority of businesses simply rely on their own processor or competing processors for this information.

The bankcard processing industry is on pace to be a $100 billion dollar industry in the United States soon. The cost of processing bankcards impacts your bottom line. There are ways to decrease these costs without going through the pain and hassle of switching prociders. Simply gaining the knowledge necessary can save your company thousands of dollars.

Financial Mitigation Services employs a team of expert analysts to review ALL of your processing costs on a monthly basis. We initially perform a detailed audit of every factor that impacts your credit card processing costs. Then we will formulate a plan for your business to recover excess fees and possible overcharges.

Give us a call today. You may be able to put thousands of dollars back into your business without changing your processor, without changing any of your procedures and without spending alot of time to accomplish this.

Call Financial Mitigation Services today at 1-800-797-5642

FMS Merchant Services, Credit Card Processing Consulting

2009-08-05T15:00:00.004-05:00

Each FMS Cost Reduction Recovery engagement includes an in-depth analysis of hundreds of unique cost categories that impact your credit card processing fees. Using comparative data from businesses nationwide, our analysis targets the optimal costs in each of these categories and then we help our clients implement the proper fee levels for each of these cost categories. We have developed a process of specific steps to take that are guaranteed to lower merchant account fees for our clients.
Call Financial Mitigation Services today at 1-800-797-5642

Businesses Across USA are paying too much to process credit cards

2009-08-05T14:40:00.003-05:00

In 2007, businesses in the U.S. paid over $60 billion dollars for the privilege of processing credit cards. This is a staggering 133% increase since 2001. Not only are more people and business clients using credit cards and bank cards to purchase items, the average cost per transaction is steadily rising. Just in 2008 alone, the two major credit card companies each enacted significant increases to business owners.

What does the typical business do about this? Many go out and solicit quotes. Many have competing processing companies "analyze" their statements to see if they have a good rate. Some call their current vendors and ask for a lower price. What all of these methods of cost control lack is the necessary knowledge to truly know what a competitive cost is. Sure, you can compare with your buddies that own businesses, but they often are in a completely different business model and the rates they receive have no bearing on your business.

Most credit card processing statements are filled with a dazzling array of fees, cost categories and charges. For a great majority of business owners, the reasons behind these charges are not readily known. The typical business owner, CFO or Controller does not have the time to understand one of the most convoluted billing structures ever devised. Credit card processing is one of the most complicated and least understood invoices that any business ever pays.

The beauty of the credit card processing business is that no one ever has to "pay" for the charges that are assessed them. Business owners nationwide trust their processors so much that they allow the processors to pull the money direct from your bank account before they send you an invoice. What if there is a mistake? Will you catch it? What if certain categories of charges were wrongly categorized into the wrong billing rate, costing your business thousands of dollars? Would you know? Is your rate for a specific type of rewards card competitive? Is the fees you are paying for each transaction the same, better or worse than your competitor?

Despite having a convoluted billing structure, the merchant account processing business is fairly simple. The credit card processors simply take the rate that they have to pay the major credit card companies and then add a profit to themselves. Do you know how much profit your credit card processor is making on your business each month? Do you want to know?

In most transactions that you undertake within your business, you have a general idea of what the profit margins are for your vendor. In the credit card processing industry, that knowledge is known by very few businesses.

The facts above are the reason that Financial Mitigation Services (FMS) is in business. Financial Mitigation Services helps business clients across the country uncover excess fees and overcharges on their credit card processing costs.

FMS is not a credit card processor. We are an independent expert with over 20 years of executive level experience in the credit card processing industry. We help our clients put specifc plans in place with their current processor to achieve the lowest possible costs in this industry.

Do you know how if your business is paying excess fees or overcharges that are not necessary? Call FMS to find out - 1-800-797-5642