One of the questions you’ll be asked on your merchant account application is your monthly processing volume. If your business already accepts credit cards, it should be fairly easy for you to come up with a figure. But if you’re new to credit card processing, you’ll probably have to spend some time working with the merchant account provider’s representative to calculate a rough estimate.
Processing volume is the amount of funds a processor like TransFirst® will allow you to handle in credit card sales on a monthly basis. If you consistently and greatly exceed your declared processing volume, you may discover some new surcharges when your next statement arrives, so it’s better to get the number right upfront than to end up paying penalties down the road.
Luckily, it doesn’t take high-level math skills to calculate your processing volume. And it’s important to remember that it’s better to overestimate your volume than to underestimate it. That’s because while there’s no penalty for not hitting your declared volume, there may be if you surpass it month after month.
Established merchants — that means those who already have a merchant account and documented history of accepting credit cards — can just look at a few recent statements to find out how much they’re processing each month.
New merchants who are applying for their first merchant account should sit down with their sales rep to work up an estimate. A good place to start is with an educated guess of what your monthly gross sales will be for a year. If you’re a seasonal merchant, or holidays are likely to have a big impact on sales, take that into consideration. Once you’ve established your highest grossing month, you’ll need to calculate what percentage of that figure will be credit card transactions.
Obviously, if you run an online or MOTO business, the vast majority of your sales — probably 90 percent or more — are charged to payment cards. Traditional retailers and mobile merchants or service providers are likely to do a lower (but still significant) volume of credit and debit sales, probably in the 30 to 40 percent range.
Once you pinpoint a percentage figure that seems reasonable, apply it to your gross monthly sales estimate and round upwards to the nearest $500 increment. Your sales rep should be able to offer additional guidance in this area.
Since a portion of your credit card processing fees are calculated on your processing volume, it’s important that you come up with as realistic a figure as you can. As time goes by, keep track of your actual gross sales and processing volume figures to determine if you need to negotiate changes to your merchant account.
To give yourself a little leeway, you may want to consider TransFreedom®, a flat-fee package of bundled monthly fees and services offered by TransFirst that’s based on your processing volume. For one low, monthly fee, you receive state-of-the-art technology, easy statement reconciliation and PCI Compliance and Data Breach Security Programs that help keep your credit card processing secure and meet costs associated with a breach.
If you’re a retail or MOTO merchant currently processing $20,000 or less a month, talk to a TransFirst consultant to determine if TransFreedom is right for your business and your budget.