The Real Effects of 0% Processing Fees

From My Vantage Point

Addressing processing fees are a headache for business owners, there’s no way around that. But with the rise of zero fee progrrams, the landscape is changing, and the impact on the bottom line is becoming increasingly clear. With no interchange fees and no confusing statements, the benefits of zero processing fees are undeniable. I’ll show you what that looks like in a moment but first, let’s look at what 0% really equates to in practice.

Markups Explained: Some Hidden Truths

Historically, the jouney to acheiving zero rates has been convuluted at best. Processors tend to favor implementing interchange programs due to their simplicity and marketability. However, these programs come at a cost to the business owner in the form higher effective rates, where processors add their markup to basis points creating merchant margin. The added basis points are the processors profit, plain and simple. While this is a common practice in the marketplace and nothing novel, business owners are smart and aware there are fundamental flaws in these markups.

At a high level, a business processing 50k a month with an effective rate of 3.5% is paying $1,750 in fees before PCI compliance kicks in and any other fees associated with equipment leases are applied. 3.5% casted annually would add up to $21,000 just to process payments.

Insert the Edge program. Not to be confused with surcharging, Edge models are 50 state compliant and would return all $21,000 back to the bottom line without adding service fees to the customer receipts, or being forced to increase prices in efforts to offset markup. Businesses on Edge program models see a statement and a software fee relative to their particular equipment and setup. That’s it - problem solved.

At a granular level, there’s much more to a statement than en effective rate. There’s transactional costs, compliance fees, equipment absorption, card categories, in person rates versus card not present, gateways and optimizations … the list goes on and on. Our job is to simply processing and help businesses preserve capital at all costs. And we do it well - let’s have a conversation if you could benefit from a no obligation statement analysis.

Removing Interchange: No Variants or Step Increases

Building on the granular layers baked into interchange, we can look deeper and see the true value of cost savings in 0% rate processing to discover a landscape where interchange variants and step increases no longer cast their shadow over merchants' financial well-being. As someone deeply entrenched in the nuances of processing, I've witnessed firsthand the complexity and unpredictability that traditional fee structures impose. They are akin to unwelcome guests that periodically invade a merchant's profit margins, leaving uncertainty and frustration in their wake.

In stark contrast, the Edge processing model is predictable and simple. By discarding the convoluted web of fees and installing a pass through structure to the cardholder, we not only liberate merchants from the grip of fluctuating expenses but also empower them with the ability to steer their bottom line with unwavering confidence. The beauty of this model lies in its straightforwardness; what you earn is unequivocally yours to keep. This straightforwardness is not just about enhancing profitability—it's about restoring control to merchants, enabling them to plan, invest, and grow with clarity and purpose.

The absence of interchange variants and step increases under Edge programming means that merchants are no longer at the mercy of complex billing structures and card categories. The traditional processing environment is notorious for its lack of transparency, often leaving merchants scouring over statements and rates that shift with the seasons. April and October, in particular, usher in the arrival of step increases and rate adjustments. Although incremental, the increase add up over the life a a merchant agreement. We remove these problems with Edge.

Since offering cash discounting programs like Edge, I've observed the relief and newfound optimism among businesses who've installed zero rate processing. Freed from the cycle of anticipation and adjustment, they now operate with a stability that was once deemed elusive. This transformative shift is not just about numbers on a balance sheet; it's about instilling a sense of security and anticipation of growth in merchants, who can now channel their energies into innovation, expansion, and service excellence without the looming specter of hidden fees and unexpected increases, without the fear of increasing interchange rates. Our clients win and we get the fulfillment in knowing we helped facilitate something tangible the helps increase their bottom line.

Get in touch with us if you need help moving away from interchange.

From my desk to yours,

Take care & be well.