How to Get the Best Price for Credit Card Processing

by Andrew Ackerman

Whatever you think you are paying for credit card processing, you are probably wrong. We will get back to this in a moment.

Getting a credit card to pay camp expenses is a relatively straightforward process. Setting up your camp to access credit cards as a form of payment, is a little more complicated. To take credit card payments in person or over the phone using a terminal (viz. boxes with keypads and swipe slots), you need a merchant account. (Taking credit card transactions through your camp Web site is more complicated.)

When a charge is made, the money is deposited in this account, less a small fixed charge per transaction and/or a small percent of the sale. Typically the merchant account will "sweep" the funds into your camp's checking or savings account at the end of the day. Most big banks can set up a merchant account without too much hassle.

Credit card processors like to quote a single low rate in their ads but you actually pay that rate far less often than you think. Your merchant account statement is designed to hide surcharges and fees. Even if you checked a particular processor's references—and you are checking references, right?—these items are so well disguised that many happy customers are completely unaware of them.

Understanding Fees

Don't be surprised if you have to pay a one-time, set-up fee. You can sometimes get this waived, especially if you are switching to a new processor and can show them a history of large payment volumes, but if this is the first time you are applying to take credit card payments, you should expect to pay something around $100 to get started.

Note: This is a set-up fee, not an application fee. You should not have to pay anything to simply apply for a merchant account.
A "statement preparation fee" is what you pay for the privilege of getting your monthly statement. Sometimes you can get this waived if you agree to receive statements exclusively via e-mail; sometimes there's no avoiding it. If all the other costs quoted by a particular processor are reasonable, it might be worth it to accept a $5 statement preparation fee.

Monthly Minimums
Many merchant accounts have monthly minimums. If all the payments you have taken in a given month do not generate enough charges for the merchant account provider, they automatically charge you the difference. If your camp consistently receives (or expects to receive) enough payments, this may be irrelevant; however, if like most camps your revenues are seasonal, you will likely be hit with this minimum in the slow months. As a rule of thumb, multiply your total monthly credit card revenue by the rate the credit card processor assigns. If that number is lower than the minimum on any given month, expect this minimum fee to kick in.

Transaction Fees
Your merchant account statement includes a line that looks something like this:

AT ....... .300000

What this line really means is that you are paying $0.30 for every sale, refund, and authorization that you process. If you process only a few, high value transactions each month, this $0.30 per transaction fee may not be very meaningful. But if you process many, smaller transactions these fees add up. On a $10 transaction, this fee adds 3 percent to the credit card processing costs.
You will also find lines like these on your merchant account statement:

COM VI ... ###

WLD MC ... ###

These are sales where the customer used a business credit card or other "rewards" type credit card (e.g., frequent flyer miles, cash back). Visa and MasterCard charge your processor 40-80 basis points (100 basis points = 1 percent) more to process these "nonqualifying" credit cards than they do for a regular "qualifying" credit card. Your processor passes these costs on to you, the merchant.

What is worse, your credit card processor knows that you are not looking carefully at this part of your statement so they often mark these surcharges up significantly. It is unfortunately not unusual to see some of these nonqualifying credit card surcharges run as high as 175 basis points!

Since all you are shown is the number of transaction (viz. ###) and the total of these surcharges, it is hard for you to figure out exactly what these markups are, but you can estimate it. Your credit card statement probably includes your average sale value (e.g., "average ticket"). At the very least, it shows you the total number of transactions ("tickets") for that month and the total dollar amount which you can divide out to calculate your average sale value. If you multiply the number of nonqualifying transactions of a certain type by your average sale value, you get an estimate of the total dollar amount of those charges. You can then divide the surcharges by that total to find out how many basis points above that "great low rate" you are actually paying on these sales. I guarantee you will be surprised.

It is not just surcharges they are adding on that are costing you. There are also savings that they are not sharing. Take a look at these two typical lines from a given day:

dd/mm/yy ... VISA SALES DISCOUNT .25000 DISC RATE TIMES .... $$$$
dd/mm/yy ... VISA DEBIT SALES DISCOUNT .25000 DISC RATE TIMES .... $$$$

Here at least is the rate you were promised (2.5 percent in this example). Ignore for the moment your credit card processor's use of the word "discount" to mean the money it takes from you to process this transaction, and these lines almost make sense: multiplying your rate by the daily total dollar amount ("$$$$") yields the cost of processing those transactions (excluding the fees and surcharges we discussed earlier, of course).

"Sale" Versus "Debit Sale"

What these lines hide is the difference between a "sale" and a "debit sale." A debit sale is when the customer uses a debit instead of a credit card. Debit cards are cheaper to process by as much as 10-20 basis points, but, as mentioned earlier, many credit card processors charge you, the merchant, the same rate and pocket the savings. What percentage of your customers use debit cards varies from camp to camp, but it is not unusual for debit cards to make up over 10 percent of the total charges. This can add up to several hundred dollars a year in additional credit card processing costs.

Remember also that your discount rate is not set in stone. As your charge volume grows or even as you accumulate more of a credit card processing history (and become a lower risk as far as your provider is concerned), you can get a lower discount rate . . . but don't expect to get it automatically. You have to ask your merchant account provider for the lower rate. If it has been more than a year since your discount rate was set, it is time to call your provider. Don't be afraid to mention those "great low rates" you are being offered from other merchant account providers when you call.

Andrew Ackerman is the chief operations officer of provides password-protected, one-way camper e-mail and online photo galleries. Bunk1 also provides staffing services, custom Web site design, and the Bunk1 DB online registration and camper management system. For more information regarding this article or Bunk1, please contact or call 888-465-CAMP.

Originally published in the 2006 September/October issue of Camping Magazine.