Credit Card Processing for Free, a tech, merchant-service oriented company has found a solution to the growing costs of the standard credit card processing methods. The new technology is patent-pending and will make it possible to eliminate all processing fees. Merchants who have an account with the company will get their unique discount code, which can be shared with other companies through the social networks. When a merchant shares the discount with another company, each of them is entitled to up to twenty percent discount off any processing fees. Discounts are available on a monthly basis as long as both companies are associated with Credit Card Processing for Free. The more a company shares its discount code, the bigger the discount it is entitled to. If a merchant shares it with enough companies, the processing fees are completely eliminated and processing is free.
The company’s Sales Manager Kathryn Hackett explained that since merchants had to accept MasterCard and Visa as means of payment, they were dependent on credit card companies and paid all associated fees. As a result, the profits of a small business can be wiped out, and the fees paid to the big banks increase.
At present, credit card companies charge an interchange fee, which is close to two percent of the total purchase. The interchange fee is determined by credit card networks and further split between credit card issuers and the networks. Moreover, the fee has two components, a per-transaction fee and a percentage of the transaction amount. A number of criteria determine the percentage banks charge such as type of credit card, credit card issuer, the item being purchased, and more.
Mid-size and small merchants are rarely informed that an interchange fee applies. Instead of that, a discount rate or a single base rate is presented to them, which comprises of the interchange rate and any additional fees the service provider charges for transactions. The interchange rate is not revealed, and merchants do not know what percentage of the single base rate will be paid to the merchant service provider. Even when transactions are identical, merchants may be charged at different rates. On top of that, different fees apply, based on 125 interchange categories. A margin is added to the fee that applies, and it can be quite substantial. The fee is negotiable, but only for the big businesses. Size and age matter.
For mid-size and small merchants, these charges amount to hidden fees. They are in the amount of over $40 billion each year. By letting companies keep the money for processing fees, Credit Card Processing for Free takes a stand against standard processing.
Finally, finding a competitive credit card processor is not just something trivial, Forbes notes. For instance, if a dining establishment makes about $2 million in sales a year, some 80 percent of that will be on account. The restaurant will save $24,000 by reducing the processing fee by 1.5 percent.
Comments on this entry are closed.