This week, we headed on over to Chase Bank to look into a merchant account. We quickly found out that Chase Paymentech uses one of the most common credit card processing fee structures – the three-tier system.
The first tier is known as the Qualified Rate, which is when an individual swipes their credit card in your retail location in person. This is the best rate, and it is almost always the one advertised by merchant providers to small businesses to lure you in with a low rate.
When a customer is using a rewards credit card or if the card is keyed into your cash register or computer instead of being swiped, plan to get charged at the second tier, or the Mid-Qualified Rate.
But, here’s when your rate really starts to skyrocket:
- When your customers gives you a corporate credit card.
- When a customer’s address and zip code don’t match what’s on file.
- When your sales aren’t sent through the terminal within 24 hours.
In these cases, you’ll be charged the third tier pricing, which is the Non-Qualified Rate of 3.44%. Although Chase clearly indicates what the rates will be at each tier, how will you know which transaction will be charge which rate? The only way you’ll really find out is when you receive your monthly statement and they deduct it from your bank account.
In reality, Chase Paymentech is not being transparent with how much they’re pocketing at each tier.
Let us be the first to tell you…three-tier pricing from Chase is the worst possible fee structure for small businesses!
Three Tough Questions to Ask Chase Paymentech
Chase Bank is trusted by many, and they’re counting on this trust to dupe you into signing up for a merchant account. By saying “yes”, you’ll literally being buying an overpriced service. Click the image to the right to download a pdf of Chase Paymentech’s latest pricing.
- Why are you charging me a $100 setup fee?
This is an instant $100 in the pockets of Chase for no other reason than the fact that they can. Don’t just hand it over without asking why.
- Why are you pocketing an extra 1% on all my debit card transactions?
Up to 60% of all small business transactions involve a debit card. What you may not know is that the wholesale rate passed along by Visa/MasterCard is .62%. If you Chase’s lowest rate which is 1.62%, they’ll be pocketing a full 1% from that transaction. This may not seem like alot, but it really starts to add up! They’re not really looking out for your small business, are they?
- Why are you demanding a 23 cent fee
for every transaction?
Think of it this way. For every four transactions, Chase will be taking almost one dollar out of your pocket! That doesn’t even include the Qualified, Mid-Qualified, or Non-Qualified Rate that will be charged on the amount of the transaction. It may seem small, but it really adds up.
Go ahead and call Chase Paymentech right now at 800.708.3740 to ask them the tough questions. As a hard-working, small business owner, you deserve to know why someone is trying to overcharge you. Just because you bank with a large company doesn’t mean that they’re going to give you the best pricing on your merchant account. Do your homework!