High Volume Merchant Accounts

High volume merchants have a distinct advantage over other businesses when searching for a merchant account provider. Their high volume and proven processing record will allow them more leverage to bargain for better rates.

Merchants that are processing a high volume of funds have an advantage when shopping for a merchant account provider for a few different reasons.

High Volume Processing Power

For the same reason that a high volume retailer like Wal-Mart is able to sell products at a lower price than smaller retailers, a high volume merchant will be able to obtain merchant services at a lower rate. When a merchant is processing a large amount of funds, the merchant service provider will not have to raise the discount rate very much to turn a profit on the account.

For Example (a very simplified example):

If a merchant service provider has a published discount rate of 1.7%, and their buy rate is 1.55%, they would have a gross profit of .15% on the account.

New, lower volume merchant accounts are a gamble for providers. If they give a discount rate that is too low, and they don't have a mark-up on monthly fees, they stand to break-even or lose money on the account.

Established, high volume merchants have proof of processing volume that a provider can consider as they formulate merchant account quotes. A provider stands to make a profit off of a high volume merchant even if they offer the merchant a low discount rate.

Applied Discount Rate in Relation to the Buy Rate

Using the figures from the example above (discount rate = 1.7% and buy rate = 1.55%) the following is a breakdown of how higher processing volume affects a provider's profit margin on an account.

The following example is simplified, and assumes that all transactions qualify at the lowest merchant account rate.

Business A.)
Has a discount rate of 1.7%, and processes $1,500 a month. The processor has a 0.015% mark-up on this merchant account.

Business B.)
Has a discount rate of 1.62%, and processes $20,000 a month.

The gross profit made by the provider for business A is $22.50 (0.015% X 1,500 = 22.50).

The gross profit made by the provider for business B is $140.00(0.007% X 20,000 = 140.00).

Conclusion:
Even though the merchant service provider has a smaller mark-up on Business B, they still made more money on their account because of the higher processing volume.

Established business

There is often a correlation between business age and processing volume. Most new businesses do not start off processing $10,000 a month, but instead get to that point over time. An established business history along with a proven high processing volume is something that a merchant service provider loves to see, and they will do their best to earn your business.

Hint: When researching for a merchant account, don't be afraid to supply a prospective provider with past merchant account statements if/when you're asked. Past processing statements are proof of high processing volume, and they will only help you to substantiate your business's processing strength.

Using your bargaining power wisely - Don't bargain too much

The merchant services industry is very competitive. In order to earn your business a provider may quote rates that they will not realistically be able to offer for a prolonged period of time. Having rates and fees raised shortly after you start accepting credit cards will leave you searching for another provider very quickly, and will waste valuable time and energy.

Bargain tough, but be fair. Understand that merchant service providers have bills to pay as well, and they cannot provide free merchant accounts.

Credit Card Machines
Usually, the first and easiest price to have waived or lowered is the price to purchase new processing equipment, or the fee that is often charged to have existing equipment reprogrammed. Keeping in mind that the provider did have to pay for the equipment themselves, it may not be possible to have the credit card machine given to you free, but it should be fairly easy to have the price lowered. Of course, this all depends on what kind of volume your company is processing. If you have very high volume and can prove it, you may have a good chance at getting a free credit card machine. Reprogramming fees will almost always be waived for a high volume business if requested.

Waiving Fees
Pay attention to the fees that are important to you as a high volume business, and work at having the relevant fees lowered. Remember, negotiation is a game of give-and-take. If you have a high average ticket, and you would ideally like to obtain a merchant account with a lower discount rate; suggest a higher per transaction fee and a lower discount rate as an account option to your sales representative. Similarly, don't waste time debating a merchant account monthly minimum fee of $20 a month if your business consistently processes in excess of $20,000 a month. The minimum will never affect you.

Statement Fee - If your prospective provider is a reseller, they usually have to pay a monthly fee to their processing bank regardless of if they charge you one or not. However, if you have a high processing volume the provider may be willing to waive or lower this fee.

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