By: Alyssa Miller
A business with three locations didn’t find out it had overpaid a million dollars in processing fees over six years. It had to go looking for the number.
That story, says Jimmy Moore, co-founder and CEO of FLO Business Solutions, an Inc. 5000 honoree, isn’t rare. It’s typical. Jimmy has spent more than two decades in payments, first at Heartland Payment Systems and NCR, and now leading a fintech firm that processes over $1 billion in annual volume. Throughout his career, he has helped onboard more than 20,000 businesses. His read on why small businesses overpay isn’t the one most people expect. It isn’t about getting quoted a bad rate. It’s about what happens after the contract is signed and nobody is checking the math anymore.
“We stumbled into a business just forty-five days ago,” Jimmy says. “They had three locations. They hadn’t been paying attention, and it had crept up to over eight percent effectively. They did the math, they were processing $100,000 at each location, and over the last six years they had paid a million dollars in processing fees.”
Most owners would assume a story like that starts with a bad deal. Jimmy says it usually doesn’t. It starts with a decent deal that nobody revisited.
The Rate Isn’t the Risk. The Drift Is.
Ask most business owners how they chose their payment processor, and the answer is almost always about price: who quoted the lowest rate. Jimmy says that’s the wrong question to ask first, because a quoted rate and an actual cost are two different things, and the gap between them is where businesses quietly lose money, one statement at a time.
He breaks the decision into three places where a business can go wrong, and says most owners only think about one.
“I believe there’s looking at selecting the right vendor, where the mistakes can be made,” Jimmy says. “Then there’s setting up the right price and cost structure, where mistakes can be made. And then there’s this conglomerate of software and CRM and POS, with all the third-party integrations. So what software do I use? How do I price it? And who do I do it with and through? There are mistakes at all three of those levels.”
Vendor selection is the one businesses skip fastest, because it’s the hardest to put a number on. Jimmy’s advice runs against the instinct to treat processors as interchangeable commodities.
“Choose someone that they like and trust, that has a footprint in the marketplace and a proven track record,” he says. “That can go a long way, because then you’re avoiding some regret in your decision-making process.”
The Number Nobody Is Checking
The tool Jimmy keeps coming back to is effective rate, and it’s simpler than most business owners assume.
“You just take your total fees and divide it into your total sales,” he says. “No different than your food cost, your labor cost, your cost of goods. Fees into sales, that’s the effective rate.”
He offers rough benchmarks by business type. “Most folks are trying to manage their business, if it’s card-present, to below two and a half points against sales,” Jimmy says. “Card-not-present, professional services, pay links, e-commerce, a lot of those folks are trying to manage their business to below three and a half, three and a quarter to three points. Once it gets above those numbers, especially above four, it’s time to take a hard, fast look at every level.”
The three-location business that had drifted to eight percent wasn’t unusual because the number was high. It was unusual because it took six years for anyone to calculate it.
A second number catches businesses off guard for a different reason: they don’t know it’s on their statement at all. Every business that accepts cards must complete an annual PCI compliance survey. Skip it, and processors typically start charging a monthly non-compliance fee.
“Every business in America needs to be PCI compliant,” Jimmy says. “Those monthly fees will creep up; we’ve seen them as high as $200 a month from certain vendors, per site. That can add up very quickly to $2,400 a year.”
Jimmy says he’s seen this play out at scale, not just with individual merchants. “There was a large publicly traded company, I’m not going to name it, where about seventy-four percent of their clients were receiving a monthly non-PCI-compliance fee just a few years ago,” he says.
The Obvious Objection
The counterargument writes itself. Isn’t fighting for the lowest quoted rate still the right instinct? Shouldn’t price be the first filter, not the last?
Jimmy’s answer is that the businesses getting hurt worst aren’t the ones who negotiated poorly on day one. They’re the ones who picked whoever was cheapest or most convenient in the moment, then had no relationship to fall back on when the statement started changing shape. A low headline rate with nobody minding the account tends to cost more over time than a fair rate with someone who flags the drift before it becomes a six-year problem. The rate is a single data point. The relationship is what determines whether anyone catches it when that data point moves.
The Decision Rule
Jimmy’s practical advice isn’t complicated, which is part of his point. Pull the last three months of merchant statements. Calculate the effective rate: fees divided by sales. Compare it against the benchmarks for the business type. If it’s climbing, or if there’s a fee on the statement nobody can explain, that’s the moment to ask questions, not twelve months from now when the number has compounded.
It’s a habit, not a project. The businesses that avoid the eight-percent scenario aren’t the ones with the best original deal. They’re the ones who looked at the statement more than once.
About FLO Business Solutions
Jimmy co-founded FLO Business Solutions in 2021 on a people-first model spanning payment processing, POS systems, payroll, HR, and small business lending. The company has been named to the Inc. 5000 list of fastest-growing private companies. Before FLO, Jimmy held regional and division-level roles at Heartland Payment Systems and served as VP of Sales for NCR across the Southeast and Eastern U.S.
Disclaimer: This article is for general informational purposes only and does not constitute financial or business advice. Individual results and processing costs vary. Readers should evaluate their own circumstances and consult a qualified professional.
