How CNP Merchants can Better Process Visa & MasterCard

1. Discounts and High Average Ticket Values (ATVs):

Most merchants are quick to congratulate themselves on securing a “low” percentage discount rate from their payment processor. Unfortunately, these merchants don’t always pay attention to the fundamental mathematics behind the average price of the products they are selling. For instance, 2.1% sounds like a great discount rate, and in fact often times it is. If you happen to sell high-ticket items, however, percentages can eat into profits in terms of absolute dollars. Compare two merchants: one selling power adapters for $15.00, and another merchant selling computer for $500.00. At 2.1%, the first merchant would pay approximately $0.32 per transaction, while the second merchant would pay about $10.00 per transaction. While it might make sense that a processor is entitled to earn higher fees on a more expensive product, merchants should negotiate to minimize the absolute fees they are paying. Merchants with high ATVs should therefore scrutinize percentage-based processing fees.