credit card processing, merchant services, merchant accounts, payment systems, merchant processing, payment processing


What is your True Cost of Processing?

Finding your true cost of processing services in today's credit card processing maze is not an easy task. The challenge for business owners is sorting through multiple offers from credit card processors, all claiming to be the best deal. Which is better a small transaction fee or a bundled rate? Is a monthly fee less expensive than an annual fee? What about equipment, should you lease, rent, or purchase? The answer is it all depends.

Every business has its own unique set of circumstances that must be considered when making a financial decision like choosing an electronic payment services provider. For example, whether a bundled discount rate or a rate plus a transaction fee makes better financial sense depends primarily on the dollar volume your business processes each month and the average transaction amount. The lower the average transaction amount, the greater the percentage of the sale a transaction fee represents. The same is true for equipment needs; there are benefits to all three equipment financing options.

But one factor that can be easily determined is what you are really paying for your processing services one all additional fees and charges are considered. This is not always as simple as it may seem, since just about every credit card processor prices their services differently. To truly asses your cost for credit card processing, you must look beyond the discount rate you are paying, and instead calculate the effective rate. The effective rate takes into account all fees paid for the month in relation to the total dollar volume processed. It is the most accurate measure of what you paid.

The effective rate is found by dividing your total processing charges for the month, including discount rate amount paid, transaction fees, and monthly fees, by the total credit card sales volume for the month. This calculation gives you a comprehensive measure of program cost as a percentage of sales. Once this amount is known, multiple offers can be meaningfully compared, even if they have widely diverse pricing.

Why is this so important? Because a lower discount rate does not necessarily mean a lower effective rate. The following example illustrates the importance of making an accurate comparison:  


As this simple example shows, a lower discount rate does not necessarily mean you will save more money. Obviously there are other factors to consider when choosing a processor, such as the ability to provide personal service and a comprehensive suite of quality products that meet all of your transaction needs. Considering these factors together with an accurate indicator of price helps you make an informed decision.

Your COCARDĀ® office is on hand to answer all of your processing questions and help you calculate the effective rate for your current processing.


1.)  How long does it take for the funds to reach my account?
The funds will be in your account at your bank in 2 business days.

2.)  How long will it take to get an account set up?
The application approval is 24-72 hours.  Once the account is approved, the equipment is then programmed and shipped.  It usually takes 3-5 days to reach the merchant once it is programmed.  Thus, please allow 8-10 business days.

3.)  How do I pay my fees for the processing charges?
All fees are ACH (auto clearing house) from your account.  You will receive a monthly statement showing your sales and the charges.

4.)  Do I have to get an electronic credit card terminal or can I just call in the cards?
The terminal will make the authorization of the transaction more efficient at a much lower cost.

5.)  Do I need a dedicated phone line for the equipment?
The authorization terminal will share your existing phone line.  It will need a single phone line and not one set for the multi-phone lines.  The terminal will also only work on analog phone service and not on a digital phone line.

6.)  Do I receive any training on the equipment and software?
Training is an integral part of the service and it will be provided in print and in person as well as online support after the account is activated.


Authorization/Capture: The submission of credit card transaction to be processed by the merchant provider. This is used to check the fund's availability on the credit card submitted. The authorized transactions are held in the terminal until the terminal is settled.

Batch: A collection of authorized transactions that have been made in a single day or time period

Manual Batch: The merchant may initiate a settlement anytime on the terminal. A manual batch settlement will take any transactions in the terminal and submit them for payment into the merchant's account. The merchant may want to batch after each shift thus sending multiple deposits to the bank in a single day.

Auto Batch: The terminal is programmed to communicate after midnight to the host/mainframe computer at the processing center. The authorized transactions are sent for settlement to the merchant's bank account. Even if the terminal is set to auto close a manual batch may be done at any given time to empty the authorized transactions.

Charge Back: This is a charge declined from a customer or credit card holder. Your customers credit card issuer will handle the matter and you must show some proof that the services and/or products were delivered in the manner you both agreed upon. If the card holder wins, then the money is taken out of your merchant account.

Credit Card Fee (Discount Rate): This is the fee that is charged by Visa, MasterCard, Discover or American Express. The card associations have in excess of twenty interchange rate structures. We blend the rates into three categories: Qualified, Mid Qualified, and Non Qualified.

Qualified Discount Rate: This is the lowest possible rate. These transactions are swiped and it is the most secure form of transaction as the data is captured from the magnetic strip on the back of the card and sent with the transaction.

Mid Qualified Discount Rate: This transaction will occur when it is hand entered (non swiped, but with AVS/address verification service), settled after 24 hours of authorization, or a swiped level II corporate card.

Non Qualified Discount Rate: All non swiped corporate cards, paper based merchants, or transactions not settled with in 48 hours of authorization.