Merchant Account Processing Rate Comparision
Processing Effective Rate

Comparing rates offered by many merchant service companies very is difficult. The simplest and most accurate way to compare cost is to compare the Processing Effective Rate.

Figuring out the Processing effective rate is simple. If you have an existing merchant account all you need to do is divide your processing costs by your gross sales for a given month and then convert the result into a percentage. For example, if you had $10,000 in sales and paid $250 in total fees, divide the $250 by the $10,000. The result is .025 or 2.5%. So, on average, you’re paying $2.50 for every $100 processed. Once you know your processing effective rate, you can shop around for a lower processing cost. Please note that, if you’re on a daily discount, make sure you add all your daily fees plus the month-end charge to come up with the total expense.

To avoid any surprises with hidden fees and abnormal rate increase, business owners should calculate the processing effective monthly to ensure it falls within the normal monthly averages. When sign up for merchant account service, merchant should reserve the right to cancel the service at any time without any cancellation fees. It must be in writing and acknowledged by the merchant service company, not by the agent. Agents sometimes promise certain items without the approval from the companies.

Remember, the freedom to take business away to another processor at any time will guarantee lower price and better service. New merchants may use sample statements as guide to estimate Processing Effective Rates