It’s important for businesses to ensure they understand financial risk and all the potential merchant fees that could be unnecessarily eating away profits. A common complication is that most of these fees can be considered convoluted, simply veiled as beneficial to the merchant with no specification.
We’ve developed some important insights into the most common fees found with payment processing, and how Bespoke Merchant Solutions can help reduce risk for the years ahead.
Financial Risk and PCI Compliance
In simple terms: PCI-DSS compliance is a security measure ensuring customer data protection through a rigorous set of standards. Being either compliant or non-compliant can introduce potentially unnecessary fees.
There are many discrepancies surrounding fees regarding PCI compliance and non-compliance, this is because exact amounts for fees depends on the processor themselves. Visa and Mastercard do not charge businesses themselves, but rather is a varying fee that generates revenue for the payment processor.
The amount of the fee can depend on the circumstances, for non-compliance, in a monthly spread, it can rack up to £100 a month. However, a data breach can induce a hefty fee under investigation if you’re found to be non-compliant. Not only this, but it has significant implications for your brand reputation and potential legal costs.
On top of this, becoming PCI-compliant can be a costly and lengthy process that can often leave businesses in a vulnerable position when starting up.
Minimum Monthly Charges
Minimum Monthly Charges (MMC) are not necessarily a fee, but rather a benchmark or monthly quota given by the payment processor. If the business fails to meet this quota, then they’ll need to pay back out of their own pocket.
The issue here is that it places unnecessary pressure on smaller businesses to meet a monthly quota of transaction rates, regardless of whether it has been a slow month for revenue. In other words, let’s say a business generates revenue of £3000 within a month, and this measures out to £35 in processing fees from all transactions, if they do not meet a £40 quota, they’ll have to pay that themselves.
MMC’s are often justified by suggesting it funds all the services offered by the payment processor. However, it should not be at the expense of business performance.
Chargeback Process
A chargeback is simply a refund that its issued from the consumer directly to the bank, eliminating much of the middle-man communication with the merchant.
Processing a chargeback can build some serious financial costs which can be broken down by the following:
- Transaction fees: when it comes to payment processing transaction rates, if the purchase results in a chargeback, that’s your revenue wasted.
- Marketing: when sales become chargebacks, this can often result in hurting your marketing process and budget
- Base Chargeback fee: there is an understood base penalty fee from your bank – usually anywhere from 15 to 40%
Dealing with chargebacks can often leave businesses vulnerable and can derail business plans in the long run when the budget stretches thin.
Avoiding unnecessary charges is vital for smaller businesses to gain footing in the future.
PCI Compliance has been streamlined and is handled by our Account Managers with any new contract. We do not impose a monthly fee for our additional services nor set a benchmark to reach. Finally, if a merchant comes to us with a chargeback situation, our team can conduct a free investigation into the claim and be supportive during the complicated process.
