What is Straight Pass Through?
Not having straight pass through for your merchant account is just plain wrong!
Simply put, straight pass through is receiving all of your merchant account surcharge fees at "true bank cost." This means that when you have a transaction that is not "normal," such as rewards, commercial, business cards or if the card is not present, you have a surcharge added to your base rate. With straight pass through that surcharge has no padding or profit added to it from the merchant account provider.
Let’s look at an example – Visa and MasterCard have set a very specific surcharge of .31 percent for all Keyed or Card Not Present transactions. This surcharge is to be added to your base rate. This .31 percent is TRUE BANK COST. If a merchant account processor charges more than the .31 for this kind of transaction they are not giving you "straight pass through" and you have hidden fees.
Another example has to due with debit/check cards. Did you know when a customer uses one of these cards the merchant is entitled to a rebate? Yes, on retail account the rebate is .51% for Visa and .53% for MasterCard. You may not think you have many of these cards being used but a study from a top five bank revealed that on average 30% of Visa transactions and 18% of Master Card transaction are for debit/check cards. By the way, this rebate does not require the PIN to be entered. Many merchants are receiving just a portion of the rebate. Again you either have hidden costs are you don’t
If you do not have straight pass through, don’t be too upset because padding Visa and MasterCard surcharge fees and with holding rebates is the norm in the merchant account industry. They are basically buying something from Visa, and marking it up to increase their profit. When they are taking profit on one surcharge they are usually inflating them all the way down the line, rendering your attractive "font rate" as just a facade. In fact, the lower your front rate is the higher your surcharges usually are.
So with merchant accounts straight pass through is receiving your surcharge fees at true bank cost. This my company’s niche in merchant account processing. Typically we are able to keep our new clients front rate the same and still give them up to 50% savings just by providing straight pass through to them.
So the question is:
Do you have straight pass through?
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