That is NO WAY to do business. Basically, what they didn't fully explain about your agreement was that there are three tiers those credit card transactions can go into.
Qualified were the "normal" cards with your orginally quoted rate. However, if you got a card that was from a different kind of bank or had some third party affiliation or even had a rewards system on it for the customer, that transaction got thrown into the mid or non qualified bucket. If it was hand keyed in, it was charged the most. Somewhere in the agreement, they stated there would be an aditional 1% for mid and 2% total for non qualified cards. This was shady and really produced a lot of bad feelings between merchants and there merchant processing companies.
Fortunately, there is now Interchange plus. Although there are a hundred different cards and each one has it's own true cost associated with it, it ends up being much less expensive for the business owner.
A typical visa/mastercard transaction costs 1.03% and .06 cents. If the merchant processor charges just .4% and .06 cents above cost, then the total for that transaction would come out to 1.43% and .12 cents. That may look higher than the 1.35% and .25 cents on the tier system, but when you put a card that costs 1.6%, like many rewards based cards, then your rate through Interchange plus is +.4%, which = 2.% total. In the tier system, another 2% could have been added and the business owner pays 3.35%. Not so bad if your only doing $1,000 a month in processing, but once you hit $10-40k a month, that extra 1.35% makes a big difference.
Example: Customer buys $25 worth of product
Tier system: 1.35% and .25 cents = .59 processing fee.
If Non-Qual 3.35% and .25 cents = 1.09 Fee
Interchange Plus: (at .4% above cost)
1.06% .06 cents =.52 cents
1.6% .06 cents = .65 cents
That's a savings of .44 cents in just one transaction. If you are doing 30 transactions a day, that's an extra $400 a month!
You could lease out a brand new Mercedes Benz for an employee at that price. All for doing nothing different.
Let Business Payment Systems take care of your credit card processing needs for your small to large business. With over 10,000 clients strong, and the best attrition rate in Texas, it truly is a no-brainer.