Toronto Merchant Account Services

If you are in business in Toronto then it is no new news that you require merchant accounts and an up to date payment processing solutions to help maintain the sales of your business.

There are many merchant account providers to choose from in a major city like Toronto and many of them are aggressively marketing their services as soon as your doors open.

The question is how can a small business owner know they are not being ripped off and learn how to tell the good providers from the bad providers…? One the biggest mistakes many merchants make are not asking these two major questions:

1. What is the “qualified” credit card discount rate?

2. What is the “non-qualified” credit card discount rate?

It is not enough to just ask what the discount rate is. Many payment processing providers will only quote you the “qualified” rate which means ‘card-present’ transaction rate, so the deal seems more attractive.

However, this is usually not your only rate and you need to do an analysis of your business and determine the percentage of sales that will have ‘card present’ transactions vs. the ‘card not present’ transactions.

If after you do your analysis you discover that 50% plus of your transactions are going to fall under the “non-qualified” rate then you will want to know and understand these rates and what that means expenses wise for your card processing services.

Example:

Company 1:

Card Present Rate (a.k.a. qualified): 1.95%

Card Not Present Rate (a.k.a. non-qualified): 2.70%

Company 2:

Card Present Rate (a.k.a. qualified): 2.15%

Card Not Present Rate (a.k.a. non-qualified): 2.15%

Let’s say your credit card monthly business volume is $10,000 to keep the numbers simple. And your ‘Card Present’ ratio to ‘Card Not Present’ ratio is 50%. So it is a $5000 for each qualified and non-qualified.

Company 1:

1.95% X $5000 = $97.50

2.70% X $5000 = $135.00

Total monthly fees: $232.50

Company 2:

2.15% X $5000 = $107.50

2.15% X $5000 = $107.50

Total monthly fees: $215.00

You would think that the 1.95% rate would be less expensive then the 2.15%, but it is not in this case due to the ‘card-present’ vs. ‘card not present’ ratio and rate difference. That is why it is so important that Toronto small business owners understand these merchant account questions:

1. What is the “qualified” credit card discount rate?

2. What is the “non-qualified” credit card discount rate?