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 spend weeks negotiating the truck prices, dumpster cost, insurance, fuel, repair, payroll, software subscription, and advertising cost. However, it is ironic that very few entrepreneurs from this industry review their merchant processing statements.
Let me explain this to you 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, it will be $3,000.
Now, let us look at the larger players processing $200,000 per month. You know, many businesses in this industry 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 can reduce their processing cost to 2.8%, then they will only be paying $5,600 per month. If you calculate it on a monthly basis, they are saving about $1,400, and in a year’s time, the difference will be $16,800. That amount of money is enough to buy an 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 their effective payment processing rate is, whether they are paying interchange plus, or whether 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 that I noticed is that two dumpster processing companies were processing similar volumes, and they had a dramatic difference when it comes to processing cost, just 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 comparing the notes here. Feel free to contribute.