Let’s Reveal The Newest Secret Credit Card Processing Fee Scam
The credit card processing industry is notorious for inflated fees, fake fees, and constant fee increases. However, there is a new fee that is increasing in popularity, and almost no one is catching it. What’s the worst part about it? It’s a new fee for something that doesn’t even have to do with accepting the cards. Also, it’s something that’s been a default-free service for more than 15 years.
Comparing the Daily Discount Fees vs. Monthly Discount Fees
Credit card processors offer business clients two ways to pay for their services. The first model is known as daily discount, where the credit card processor keeps a small percentage of each daily sales batch, and further fees are billed at the beginning of the following month. For example, if you have $100 in total sales for the day, your credit card processor may deposit $98 or 99 into your business checking account after deducting their fees. The second model is monthly discount or month-end discount where all of the fees for the month’s processing are taken in the first week of the following month. In the previous scenario, the $100 in sales would be deposited into the business checking account.
Which Payment Program Should I Choose?
For many years, credit card processors have defaulted to monthly discount. It is so popular today that sales representatives rarely even offer daily discount programs. Why do business clients prefer monthly discount programs? Whether your business accepts credit cards online, over the phone, through an app or in person, you receive reporting for your daily sales in the form of a batch report. When tracking sales, it is preferred for the same dollar amount in the batch report to show up as a future bank deposit. When deposits come in “short,” it causes headaches and cash flow reconciliation nightmares for bookkeeping. We always recommend that our clients use monthly discount programs unless there is an extenuating circumstance.
What’s the Fake Fee?
For many years credit card processors have offered monthly discount programs at no extra charge. After all, credit card processors have thousands of other potential fees, why charge for the default payment method? Well, now, some major credit card processors are starting to charge for the default monthly discount program. It isn’t even a flat fee but, but rather an extra percentage of sales. That’s right, you’re being charged for the privilege of paying your bill. Some credit card processors have explained that the fee is designed to cover their risk in case a business client closes their doors without paying. They explain that floating future fees for present services rendered is like a short-term loan. However, if that were the case, this fee would have been universal during The Great Recession, and that is clearly not the case. The credit card processors are charging a vig for the same service they’ve offered for decades. Leaving this fake fee unchecked could cost your company thousands of dollars each year.
Now that you know about the latest credit card processing fee scam, what are you going to do about it?
Don’t Take On The Credit Card Processors By Yourself
Since 2009, IdealCost.com has offered small business help and small business services to hundreds of companies nationwide reduce their merchant account fees through identifying and fixing hidden profit, overcharges, fake fees, and billing errors. Clients have saved $300-$20,000 per month on their credit card processing fees without going through the hassle of changing their processing vendor, bank, or equipment. Switching credit card processors should be a last resort, only reserved for funding delays, poor customer service, or technical difficulties. Before you consider switching credit card processors, see if you qualify for our small business services monthly savings program. Upload your most recent merchant statement for a free analysis. You’ll receive an estimate within 24 business hours.
If you are opening a new credit card processing account or switching credit card processors, feel free to contact us for a free consultation and small business support. IdealCost.com can help secure the best terms and fees based on your specific needs.