I was recently reviewing a few dumpster rental businesses and their payment processing statement, and I noticed something very interesting. Many of these business owners, they spend weeks to negotiate the truck prices, dumpster cost, insurance, fuel, repair, payroll, software subscription, and advertising cost, but it is an irony that a very few entrepreneurs from this industry review their merchant processing statement.
Let me explain you this by utilizing a simple example.
If your business processes about $50,000 per month in credit card payments, then at the rate of 3.5%, you are paying $1,750 per month. At the rate of 3%, you will be paying $1,500 per month. The difference is $250 per month, and if you calculate it for the year time, it will be $3,000.
Now let us look at the larger players processing $200,000 per month. You know, there are many businesses in this industry that process even more than that, but let’s consider a volume of $200,000.
At the rate of 3.5%, such businesses spend $7,000 per month. However, if we get to reduce their processing cost to 2.8%, then they will be only paying $5,600 per month. If you calculate it on a monthly basis, they are saving about $1,400, and in a year time, the difference will be $16,800. That amount of money is enough to buy additional dumpster, hire more staff, increase the advertising budget, increase the insurance coverage, and also invest in another truck for the business.
What surprises me most is that many operators in this industry don’t actually know what is their effective payment processing rate, whether they are paying interchange plus or they are on a flat rate model with their payment processor.
Many don’t even know if there are any hidden monthly fees attached to their statement, whether they have any gateway fees, whether they have a PCI fee, or whether they are paying for chargeback protection that they might not need. Some merchants are not even aware that their processor is marking up reward cards in an excessive manner.
The even more surprising thing which I noticed is that two dumpster processing companies, they were processing similar volume, and they had dramatic difference when it comes to processing cost. This is because they signed up with different providers.
So my question to you today is, how much volume do you process each month and what is your actual effective credit card processing rate after all the fees that are included in your statement?
I’m also curious to see what the real market looks like today for a dumpster rental, roll-off, junk removal, and hook lift operators. I look forward to compare the notes here. Feel free to contribute.