efore signing up merchants for processing services, it's important to understand where they're coming from. All too often, mistrustful merchants will want a rate quoted, either in person or over the phone, regardless of whether you have any knowledge of what they currently pay.

If you're the gambling type (I know I saw quite a few of you around the blackjack tables at the 2005 Electronic Transactions Association's Annual Meeting and Expo in Las Vegas), go for it. But if you're serious about winning merchants' business, you'll have to earn it by investigating their current processing statements.

The best way to get access to merchants' current statements is by telling them the truth: In order to offer the best deal possible, you need to understand how much they process a month, what types of transactions they most frequently process and what they pay to process those transactions.

In addition, because so many merchants don't carefully review their statements, offering discounted fees for certain services or eliminating extraneous fees might also save them money.

By clearly explaining this to merchants, odds are good that they will agree to sit down with you and review a few past statements in detail. Once you have access to the documents, it's time to "break the code." When reading merchant statements, do the following:

Always Calculate Discount, Mid and Non Rates

Some statements clearly break down these fees, which makes it easy to determine what percentage the merchant pays the processor and card Associations for each type of transaction.

However, it's not always so simple. Not all processors openly list their rates at the top of statements. But by making a few calculations, you can always figure out the percentage; this will determine if your processor can offer merchants a better deal.

For example, say a merchant's monthly total for non-swiped transactions (those in which merchants key in the numbers, whether the transaction took place in person or over the telephone or Internet) is $889.59.

Next to this total is the amount the processor charged for these transactions; in this case it's $15.34.

Divide the amount charged by the amount processed to find that this merchant currently pays a non-swiped rate of 1.72%. Now that you know what percentage this merchant pays and how much of the business relies on non-swiped transactions, you can make this merchant an offer he can't refuse.

(In this case, since the merchant takes quite a few orders where the card is not present, also suggest other options to further decrease costs, such as opening a mail order/telephone order account or using a wireless terminal.)

Investigate to Find the Transaction Fee

Every processor charges merchants a transaction fee, which it assesses each time the merchant processes an electronic payment.

In order to determine this fee, find it on the statement. That's not always as simple as it sounds. Processors also call transaction fees "per-item," "inquiry," "call" and "authorization" fees, to name only a few.

Carefully check and double-check every fee listed on the statement to determine which one is the transaction fee.

If you locate a number that seems too good to be true (say, $0.05 per transaction) it probably is. It's likely that the processor has bundled the transaction fee by dividing the transaction fee cost by the average ticket, so investigate that carefully.

By bundling, processors offer merchants what seems like a very low transaction fee, but nine times out of 10, merchants make up for it in the discount rate.

Also, make sure that the processor assesses the transaction fee only once. A transaction fee and per-item fee on a merchant's statement usually indicate that the processor double-charges them every time the merchant dials out for authorization on a sale.

By eliminating one of these charges, you immediately cut the merchant's cost per transaction.

Determine if the Processor Assesses Additional Fees

Here's a great opportunity to really educate merchants. They often have no idea that many of the additional fees (on top of the discount rate) the processor charges every month are not standard industry fees. Instead, the processor sets them.

By eliminating or lowering some of these fees, you'll likely save every merchant some money.

Look for the following types of additional fees to lower or eliminate:

• "Batch header" fee. Merchants pay this every time they close down a register and "batch out" for the day. Processors assess the fee at least once a day for most merchants and assess it multiple times a day for extremely busy ones. It's also called a "settlement," "ACH" or "batch deposit" fee.
• "Statement" fee. This fee covers the cost of generating, calculating, printing and shipping merchants' statements each month. Pricing for this fee varies greatly from processor to processor, so you'll often have a great deal of flexibility when setting it. Processors also call it a "monthly access" or "customer service" fee.
• "Online access" fee. Processors that allow merchants to view their statements and other financial information online assess this fee. If merchants pay both a statement fee and an online access fee, you can probably save them money by eliminating one of them.

By understanding the lines of numbers on merchant statements and clearly communicating their meaning to prospective clients, you'll end up with a win-win situation: satisfied customers for the ISO (profit for you) and better educated merchants saving money on their credit card processing (profit for them).

Danette Smith is the Manager of ISO Support for Cynergy Data, a merchant acquirer that provides a wide array of electronic payment processing services while continually striving to develop new solutions that meet the needs of its agents and merchants. In addition to offering credit, debit, EBT and gift card processing, along with check conversion and guarantee programs, Cynergy Data offers ISOs the ability to borrow money against residuals, have Web sites designed and developed, provide merchants with free terminals and benefit from state-of-the-art marketing, technology and business support.

Founded in 1995 by Marcelo Paladini and John Martillo, Cynergy Data strives to be a new kind of acquirer with a unique mission: to constantly explore, understand and develop the products that ISOs and merchants need to be successful, and to back it up with honest, reliable and supportive service. For more information on Cynergy Data e-mail Nancy Drexler, Marketing Director, at nancyd@cynergydata.com .