Loved to be lied to? Payment processing and teaser fees

Posted by on in Blog
  • Font size: Larger Smaller
  • Hits: 4775
  • Print

Most of us are familiar with the phrase “there is no free lunch”, yet, when it comes to payment processing, business owners or their decision makers easily believe THERE IS. Falling into the trap of teaser fees, they sign contracts and realize only when it’s too late that their “free lunch” costs twice or three times as much as they were led to believe....

Of course, what I am speaking about relates to the fees that some payment processing providers regularly advertise: “Our rate as low as 1.25%”! Really? Unless you believe that companies want your business in order to lose money, this rate is nothing but a teaser fee.

Teaser fee is what I call a payment processing fee, which is often quoted to you as a merchant, only to get you into the door and then lock you to an effective rate that is at least double. Why? Because 1.25% is lower than the base cost published by the Credit Card Associations. This cost, known as Interchange Rates, is what Visa, MasterCard and Discover charge the providers of payment processing.

When you are quoted a payment processing fee that is lower than the Associations published rate, it means that in order to make money, another component of your cost structure (and there is always one...), must be upped significantly. It is usually the very item that you overlooked or was not communicated to you.

So next time you’re offered an incredibly low rate for your payment processing – ask for a full contract BEFORE you sign anything. I bet you’ll find the component I’m speaking about here...

If you want to learn more about interchange and how it affects your payment processing cost, tune up


  • Jimmy Staveris (Dunn's Famous) +

    After 20 years in the restaurant business I can honestly say that Nordex Solutions provides me with the one on one service that is hard to find these days. Friendly, knowledgeable staff and business model based on a passion for customer service. Keep up the good work! Jimmy Staveris (Dunn's Famous)
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7