Credit Card Merchants - who provides best service and rates

I was responsible for negotiating merchant accounts a couple of years ago at Encover ($20+M in annual activity on cards), and then worked with my Treasurer at Magellan for our website sales. As for 'advice', I have used FirstData, Chase (Paymentech), MerchantExpress, and Quicken (I have not used Costco) and can say they're all about the same in areas like "avg approval rating", cust service access, acct setup time, reconciliation support, etc. Depending on your business volume and customer type (i.e., consumer vs business customer) you should compare the Average Discount Rate (internet vs retail), transaction fees (internet vs retail), and assess any other fees associated with things like Address Verifications, "card not present" swipes, etc. Also determine whether there are any required monthly fees, fees for gateway access, statement fee (a fee like a monthly subscription), and monthly minimums. Last, check to make sure they support all credit and debit card types, and if business-to-business, what additional fees they charge for procurement cards. Hope this helps

We've had a bad experience with Elavon (Nova). They charge us the wrong discount rates, the Virtual Merchant was difficult to implement, and they are slow/uncooperative in solving problems. My dogged persistence over the course of months is the only reason our issues with wrong discounts rates got any attention. We are currently looking at moving to JP Morgan Chase - the Chase Paymentech.

Why should your business accept credit cards?

Why Accept Credit Cards? Every Business needs to accept credit cards for payment in today With a troubled economy consumers want choices when it comes making payments. All to often businesses lose customers when they don't accept credit cards as a from of payment. Let's take a closer look at this: A dry cleaning customer does $200.00 per month in dry cleaning their suits. The Dry Cleaner does not accept credit cards and tells the customer there is an ATM machine across the street; the customer never goes to that try cleaner again. Here are some of the excuses that businesses have for not accepting credit cards and when you think about it the business owner is stepping over a $200.00 sales just to save .40 cents.

'All my customers know me and I've never accepted credit cards"; "Credit cards acceptance is cost to much my customers pay cash" OK, you get the idea that accepting credit cards is an important door to your cash flow ad growing your business. By not accepting credit cards your business can only lose money and customers.

Now lets understand the process of accepting credit cards correctly and cost effectively.

There are two parts to accepting credit cards:

1) Your need a way to accept and process the credit card: ( Credit Card Machine, Online Processing, Virtual Terminal)

2) Their is a Rate you pay fro each transaction ( example : 1.69% and .19 Cents)

First let's take a detailed look at number 1

The Credit Card Machine:

There are many types of credit card terminals on the market today. Many of them are used, refurbished and Non PCI Compliant. My advice is to only get a brand new credit card terminal that is 100% PCI complaint. Here are the best terminals that are PCI compliant FD100 FD100ti FD200 FD300 FD400When you operate an old terminal you risk the terminal not qualifying the credit cards correctly resulting in penalty surcharges up to 5% on top of your rate. All it takes is a burnt out magnetic stripe reader to cause you to get a higher rate with out you knowing about it.  Also if your terminal doesn't prompt you questions like - address and Zip code' for keyed in entries you will receive a penalty surcharge. Just know that your old terminal that you've had for many years which works just fine may be causing you to pay higher rates.

Rate:

Rate is the most confusing part of accepting credit cards, the goal of this information is to explain things in a easy to understand way, so I will keep it simple.Visa and Master Card are an association and they set the interchange rates on every card type. Your credit card processing company must pay those fees on your behalf.  So let's say the interchange rate for a Visa Corporate Card type 1 is 2.25% and .10 your credit card processing company will mark up that rate by a certain amount of basis points and that's called the discount rate. So you might see that for a Visa Corporate Card Type 1 your credit card processing company charged you 4.00% and .25 for the transaction. The end result is the credit card company made 3.75% and .15 in profit on that corporate card transaction. So how do you know what is the profit on each? You don't unless you really know how to read a credit card processing statement well. Good luck! It's really confusing to read a credit card processing statement and all statements are designed differently and again unless your more than a pro you will have a hard time trying to figure out your rates.

The easiest way to get an idea of your bundled rate is by dividing the your fees by the amount your processed and move the decimal point two to the right.

ExampleTotal Fees $800 Total Amount Processed = $20000 800 divided by 20,000 = 4% (which is a very high rate)

There are 3 ways credit card processing companies will usually set your rates up. Lets take a look at them. Most of the time believe it or not the business is set up incorrectly causing the merchant to pay high surcharges and fees. This is usually due to an inexperienced sales rep. most sales reps are poorly trained and hit the feild without knowing what their doing, it's important to have a knowledgeable sales rep. If they can't read your statement and explain to you where it really makes sense then chances are you will pay more than you should.

Rate Type 1: Rate Plus Transaction:

Rate Plus transactions is perfect for your business if you process monthly up to $50,000 and most of your cards are swiped at your terminal. Since there are many different card types out there and you have no control over which credit card type your customer will pay you with their will be a enhanced bill-back for cards that are not qualified If your business type is a retail store this is perfect for you.

Type 2 3 tier

Qualified Rate - Cards that are considered qualified ; present and swiped ( locked into a rate)

Mid Qualified Reward Cards and Keyed in entries ( locked into a rate)

Non Qualified ; Corporate cards, cards your old terminal did not qualify correctly due to the magnetic reader -or just Non Qualified.

Type 3 - Interchange Plus -

Interchange Plus is for business processing over $100K per month.  example 40 basis points over the interchange rate. There are also Visa and MC assessment fees added in.

That's the basics of accepting credit cards. Please go to www.completemerchantservice.com to get more information on credit card processing

What I have found that in dealing with processors that are bank related is that you have to use their bank accounts, you can't direct your DDA to other banks and they are not as flexible on rates.

And whomever you deal with, it never hurts to keep asking for a discount as most will in order to prevent you from leaving, or offer you newer equipment to keep. you

We are a lender and we have many relationships with many CC processors. If you would like you can give us a call and we can see if we can help.

Visit our website and drop us a line if you wish.

www.katalystfp.com