Merchant Processing Audit Services | P3 Cost Analysts

Our merchant processing audit service helps businesses that accept credit cards for payment.

Many businesses accept credit cards and most understand how to negotiate their base fee.

If you are a business owner and have looked at your statements and bills though, you may not be surprised to know that there can be a litany of other fees that dot your credit card processing statements as well. How these are calculated is often shrouded in mystery and can be very difficult to understand. These fees often contain errors and overcharges as well.

Furthermore, there are a variety of factors that go into determining how and at what amount these fees will be charged.

Overall, your buying power is increased when you involve a third party because companies as a group can receive lower prices versus a single enterprise. Plus the convenience enjoyed by referring sales people, quotes and billing questions to us means you have more time to focus on your business.

Our team of merchant account experts has decades of inside industry knowledge and expertise having worked for and even run credit card processing companies previously.

Our offer is simple, we apply that expertise on our clients’ behalf to save them money. If we can, we simply share in the savings 50/50. If we can’t there is no fee.

If you are spending more than $50,000/year on merchant processing fees you qualify for our risk-free credit card processing audit. Contact us today to get started.

P3 Merchant Processing Auditing:

The Ultimate Guide to Reducing Your Merchant Processing Costs

Reducing Your Merchant Processing Costs

Any business that accepts credit cards or other electronic payment methods works with a merchant processing provider. Also known as payment processing providers or credit card processing providers, these third-party entities are the middlemen between you (the merchant) and card-issuing banks.

Without knowing any better, most businesses shop around for the best processing rates and think that’s all they can do to minimize costs in this area. But, only around 20% of possible savings for customers come from negotiating better processing rates.

The real savings on merchant processing services can only be uncovered through a detailed merchant processing audit.

To better understand how you can start cutting merchant processing costs, we’ll take an in-depth look at the moving parts of this industry, why there are savings to be found, and how P3 Cost Analysts bring these savings to our clients.

Merchant Processing Industry Overview and Pricing

The merchant processing industry is foundational for the facilitation of credit/debit card and other electronic payment transactions across the world. There is a vast amount of merchant service providers, and depending on the size of your company and the tools or services the providers oﬀer, some will be a better ﬁt for your business than others.

Though the services oﬀered by merchant processing providers are pretty similar across the board, fees vary from provider to provider, and so does the level of customer service. Both factors need to be considered when choosing a provider you can rely on.

The Role of Merchant Processing Providers

Any time a business accepts a card payment, the card information gets sent to the merchant processor who then directs the transaction data to the card-issuing bank (the customer’s bank) for approval. Once approved, the processor receives conﬁrmation and directs funds to your merchant account within the acquiring bank.

As you can imagine, this transaction process involves many data exchanges between banks, card companies, and merchant processors. As we’ll see, each link in this chain has criteria by which they base their charges and fees. By understanding how you are charged for these services, you can start to optimize spending in this cost category.

Main Pricing Variables

Merchant Processor Transaction Fees:

The transaction fees charged by a merchant processor are what most customers think of when considering fees in this cost category. Whenever a business takes payment that needs to be processed, there is a fee that is paid to the merchant processor. The merchant processor sets these rates based on the margin of
proﬁt they want to receive after they’ve paid out interchange fees to
card-issuing banks.

Interchange Fees:

An interchange is a set of qualiﬁcations and categories that credit card companies use to deﬁne the fees and rates for various types of card transactions. There are many factors that determine these interchange fees including, but not limited to:

The size of your business
The type of business you operate Size and volume of transactions The types of cards you accept
The types of payment gateways you use
Your Standard Industrial Classiﬁcation (SIC) Code

To clarify, these interchange fees are set by the card associations and not the merchant processing providers. The merchant processor initially pays these fees to the card-issuing banks, but then these costs ultimately get passed on to the merchant by the processor.

Why There are Savings and How P3 Brings them to Customers

Interchange Optimization

The most signiﬁcant possible savings in this cost category comes from interchange optimization. With so many diﬀerent interchange categories and other qualiﬁcations, it’s common for merchants to be functioning within categories that have higher rates than they actually need to be paying.

At P3 Cost Analysts, we look for situations where merchants can qualify for incentivized or reduced interchange programs based on their SIC code. We seek out solutions merchants can implement that will help them qualify for the lowest interchange possible. Furthermore, we know what the bare minimum margin tolerance merchant processing providers will accept, giving us the insight needed to get the best interchange rates possible.

For Example:

If you own and operate a ﬁtness studio, you have a speciﬁc SIC code for that type of business. But, since you also teach at that studio, you qualify for a special educational interchange category that can reduce your interchange costs.

The average owner would not know they qualify for this interchange because it’s not directly communicated to the owner by the merchant processing provider.

Another way we can optimize interchange fees is by prescribing better payment gateways for merchants. A gateway is a device merchants use to take payment, and each type of device sends certain kinds of data. This data is deﬁned as level 1, level 2, and level 3, with level 3 being the most detailed kind of data. Every time you can process higher-level data, you get a reduction in interchange fees.

With the right gateway, merchants could potentially process level 3 data when they were only processing level 1 or 2 data previously.

Example:

We worked with a B2B construction materials company that was only clearing transactions at levels 1 and 2. We were able to help them implement an oﬀ-the-shelf level 3 solution that ended up saving them over $30K per month in transaction fees without having to change their merchant processing provider.

Merchant processing fee negotiation:
Since we have deep knowledge of industry benchmarks and pricing, we are typically able to negotiate better rates with merchant processing providers. As mentioned earlier, these negotiations only make up about 20% of possible savings.

Eliminating fake fees:
In some cases, merchant processing providers add on fake fees and costs that can be disputed and reimbursed to merchants.

Chargeback fees:
If a merchant has a lot of disputed transactions, these chargeback fees can start adding up quickly. With our expertise, we are able to work with the merchant to reduce the losses from these chargebacks.

Prescribing alternative payment methods:
In cases where the merchant has a lot of recurring transactions, we can implement ACH solutions that clear transactions at a much lower cost than credit cards. This is a good way to eliminate certain credit card transactions and reduce spending.

In rare cases, we’ll help merchants use an aggregator such as PayPal or Square, instead of a traditional merchant processing provider when it makes sense.

Spotting and correcting padded interchange fees:
Some merchant processors will pad their interchange fee, meaning they are adding additional fees on top of the actual interchange costs. We are able to catch this practice in action by looking at a list of the published interchange categories and comparing them to the merchant processor pricing.

The P3 Merchant Processing Auditing Process

After the execution of our shared savings agreement, we gather invoices and contract information from clients about their merchant processing provider. In this category, we are often able to obtain this information from the vendors directly, further saving the client time.

During the audit phase, we do a thorough assessment of our client’s interchange categories and merchant processing provider fees. Applying decades of expertise in this industry, we run all client expenses against our database of vendor benchmarks to be sure our clients have best-in-class pricing.

About 4–6 weeks after our initial meeting, we come back to the client with our ﬁndings and recommendations.

Once our ﬁndings are approved, we work with the merchant processing provider to secure new agreements and set up the most cost-eﬃcient program.

Once negotiations are complete, we implement our recommendations and then share in the cost savings with our clients.

During this phase, we monitor our client's invoices each month to ensure savings stay intact and providers honor the agreements and pricing.

Average Client Savings

With the help of P3 Cost Analysts, our clients are able to save 15%–20% on merchant processing costs.

Take a look at some of our previous case studies across various industries and locations:

Information Services Company – New York
Investment - $0
Increased Monthly Cash Flow - $40,000 (avg per month) No change in processors required

Wholesale Construction Materials Company – KY
Investment - $0
Increased Monthly Cash Flow - $25,000 (avg per month)

Heavy Construction Machinery Equipment Sales, Service, Parts and Rental – Texas
Investment - $0
Increased Monthly Cash Flow - $4,000 (avg per month) No change in processors required

Commercial Truck Sales, Parts & Leasing - Pennsylvania
Investment - $0
Increased Monthly Cash Flow - $8,000 (avg per month)

Software Development Firm – Virginia
Investment - $0
Increased Monthly Cash Flow - $9,000 (avg per month) No change in processors required

Health Care – TX
Investment - $0
Increased Monthly Cash Flow - $6,000 (avg per month) No change in processors required

Industrial Tool Supply - Washington
Investment - $0
Increased Monthly Cash Flow - $6,200 (avg per month) No change in processor required

Trade Show Display Company – MN
Investment - $0
Increased Monthly Cash Flow - $3,000 (avg per month) No change in processors required
No change in pricing required

Accredited Online Business School – California
Investment - $0
Increased Monthly Cash Flow - $8,300 (avg per month) No change in processors required
No change in pricing required

Non-Proﬁt Organization – California
Investment - $0
Increased Monthly Cash Flow - $17,000 (avg per month) No change in processor required

Caterpillar & Heavy Machinery Sales, Parts & Repair – Tennessee
Investment - $0
Increased Monthly Cash Flow - $5,500 (avg per month) No change in processor required
No change in pricing required

Commercial Truck Sales, Parts & Repair – South Dakota
Investment - $0
Increased Monthly Cash Flow - $3,100 (avg per month) No change in processor required
No change in pricing required

Technical Trade School - Florida
Investment - $0
Increased Monthly Cash Flow - $4,700 (avg per month) No change in processor required

Plastic & Reconstructive Surgery Center – Minnesota
Investment - $0
Increased Monthly Cash Flow - $4,700 (avg per month) Processor change required

Wholesale Janitorial Supply – New Jersey
Investment - $0
Increased Monthly Cash Flow - $1,700 (avg per month) No change in processor required

Online Sales Collectibles – Wisconsin
Investment - $0
Increased Monthly Cash Flow - $6,300 (avg per month) Processor change required

Educational Training – Minnesota
Investment - $0
Increased Monthly Cash Flow - $1,100 (avg per month) No change in processor required

Construction Material Supply Company - California
Investment - $0
Increased Monthly Cash Flow - $1,300 (avg per month) No change in processor required

Industrial Bag Manufacturer and Wholesaler – North Carolina
Investment - $0
Increased Monthly Cash Flow - $2,200 (avg per month) No change in processor required

Plumbing Company – California
Investment - $0
Increased Monthly Cash Flow - $1,700 (avg per month) No change in processor required

Objections about Working with P3 Cost Analysts

In some cases, clients don’t think they’ll understand the savings we bring and therefore are uncertain about moving forward. We respond by highlighting the fact that we sit down with all of our clients to explain what the savings are and how we found them. We would never make you pay a savings invoice that you don’t understand or agree with.

Other times, clients worry that they’ll lose a sense of control over their systems and providers. They think that we could make decisions that they don’t agree with. We respond by making it known that we will review any implementations or action steps with them before moving forward with our recommendations.

Lastly, some clients think working with us will take too much time. This has never been the case in our many years of merchant processing auditing. In fact, our clients typically spend less than two hours of their own time throughout the entire merchant processing audit.

Real Savings are Possible with a Full Merchant Processing Audit by P3 Cost Analysts

If you are a business or organization with a high volume of credit card or other electronic payment transactions, the only way you can effectively save on these costs is to hire someone in-house that has a tremendous amount of experience in the industry, or to outsource to professionals.

If you’re interested in having P3 Cost Analysts take a look at your merchant processing bills and see what our auditors can uncover, reach out to us on our website, by filling out our contact form, or calling 1-877-843-7579, and we’ll be in touch.

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