Advanced deposits and extended delivery timeframes can significantly affect your risk for chargebacks.  A chargeback occurs when a customer contacts their bank and requests the credit card charges to be reversed.   

The construction industry provides a good example of advanced deposits and extended delivery timeframes.  The general rule of thumb is that the longer it takes to complete a job, the higher the chances that a customer will change their mind, dispute the charge, and request a chargeback.  Assume you remodel kitchen counters and a typical job takes 2-3 days.  In this scenario there is a small chance that your customer would change their mind and request a chargeback for the initial deposit within the 2-3 days that pass between the initial deposit and job completion.  However, assume you do extensive remodels that take several months.  In this scenario there is a considerably higher risk that the customer will change their mind and request a chargeback. 

Recently I setup a fishing boat charter with payment policies designed to minimize chargebacks.  The merchant books fishing trips up to 4 months in advance.  And although the credit card information is collected at the time of the reservation, there are no upfront deposits charged until 48 hours prior to departure.  Charging the card up to 4 months in advance leaves a wide window for the customer to change their mind and request a chargeback.  By waiting until 48 hours prior to departure this merchant has ensured that only those who are committed to the trip will have their credit card charged.  This merchant is at a very low risk for chargebacks.

Some protective measures you can take up front to avoid chargebacks are making sure your customers clearly understand you refund policy as well as getting all agreements in writing.

Imprinters are the “old school” way of processing credit card purchases. Some of you might remember going shopping with your folks and the sales person would fill out a slip, place it in a contraption, push something from right to left on the contraption and your parent’s credit card information would magically appear on the slip? That’s an imprinter.

Now imprinters are obviously not that magical, so let me explain how they work. Imprinters are metal plates that contain your merchant information. The metal plates are attached to an imprinter machine. When you need to complete a transaction, you place the customer’s credit card on the imprinter machine and insert an imprinter slip on the very top. You slide the imprinter handle from right to left thus copying the engraved information from the imprinter plate and the customer’s credit card information onto the imprinter slip via carbon paper inside the imprinter slip. See? Not that magical.

What are the benefits of the imprinter machine? If you experience technical difficulty on your terminal, an imprinter machine is a great back up. You will need to call in and get a phone authorization in order to accept the transaction, but you continue business as usual. You can still provide a receipt to your customer because the imprinter slips have a customer copy available.

So when all else fails, you may want to consider the imprinter as a back up in case of a terminal breakdown or even in case of a power outage. Ask your credit card processor how you can obtain an imprinter.

Hands down this is a difficult industry to understand. Each processor has their different rates and fees. The tricky part is knowing the type of rate you are being charged. Some merchants use ERR pricing, others use Tiered pricing, and yet others use Interchange. In addition, there are fees that get tacked on to the processing fee such as batching fees, settlement fees, account on file fees, etc. How do you know when you are getting the best rate possible in order to maximize your savings? My advice is to research the trends out in the market. Who is offering what rate and what type of pricing is attached to that rate?

ERR and Tiered pricing look at the type of card that is being swiped or entered. Is the card a rewards card? Is it a corporate card? Is it a normal credit card? Although the type of card your customer presents is out of your control, the credit card processing companies charge you on this factor regardless. A regular card is considered to have a Discount Rate. Rewards cards are considered to have Mid-Qual Rates. And the corporate cards are considered to have Non-Qual Rates. Discount Rates tend to be the lowest rates while the Non-Qual Rates tend to have the highest rates. Again, the types of cards being used are out of your control, but you will be charged the applicable rate. You as a merchant need to be aware of the types of transactions your customers are most likely to do.
• What is your average transaction? Is it more likely for your customers to use rewards cards or regular credit cards? A typical consumer is more likely to use a rewards card on transactions over a certain dollar amount. My belief is that if your average transaction runs around $200, the majority of your transactions will be either Mid-Qual or Non-Qual Rates thus yielding you high processing rates.
• What types of items do you sell? Do you sell office supplies or office equipment? If so, most of your clients will most likely use corporate cards to purchase their items. These Non-Qual Rates tend to be the most costly rates when you are locked into an ERR or Tiered type of pricing.

Interchange pricing, however, charges you one flat rate for all transactions regardless of the card being used. The rate that you agree to when you sign your contract is the rate that you will be charged per transaction. The Visa and MasterCard charges are simply passed through to the merchant. This pricing structure is simple. There are competitive Interchange Rates out in the market, so make sure you do the research and price out the competition.

Finally, make sure you read the rates and fees schedules. Don’t be fooled that all you’ll be charged are the processing rates. If a processor is trying to tell you otherwise, they are most likely lying. Make sure there aren’t any hidden fees in the schedule. Ask for full disclosure prior to signing anything. Typical fees include batching fees, monthly minimums, statement fees. All these fees are negotiable, especially if you are a high volume merchant.

Read the fine print, shop the competition, and ask for full disclosure on rates and fees. Don’t be afraid to ask questions and/ or suggestions specific to your company so that you get the best pricing structure available to you.

Earlier this year my husband and I decided to change banks. We pulled our funds and moved them to a more secure financial institute. I completely forgot that we had a few bills tied to that account until a letter came into the mail notifying us that we were past due. I got on the phone and immediately notified all vendors and update our information.

The same is true with credit card processing. Below are a few vendors that merchants will need to notify:
- The company you choose for merchant processing (MasterCard, Visa and Discover)
- If you decided to lease a terminal, the leasing company
- If you have electronic check processing like Telecheck, you will need to notify them as well
- If you decided to build customer retention with gift cards, then the gift card company
- Amercian Express – they are a third party vendor to all merchant processing companies

I hope this helps and that you won’t be caught off guard like I was when I saw that letter that said PAST DUE.

At Best Merchant Rates we assist many customers who run their business out of their home.  It is often the most cost effective way to operate a business. 

When the bank receives a home based application they do check to make sure that a home based business makes sense for the industry.   For example, it is very customary for an Internet merchant to operate as a home based business, especially if all inventory is kept with suppliers or at a warehouse.

But sometimes the distinction is not quite as clear.  I remember one application for a home based flower shop processing with face to face transactions.   An Internet or telephone home based flower shop would not be that unusual.  However, a home based flower shop with face to face transactions was certainly out of the ordinary.  Were customers coming to merchant’s house to buy flowers face to face?  I spoke to the customer to clarify and it turns out this particular flower shop consisted of a cart that the merchant setup at a downtown intersection every day.  The cart had no physical address, and transactions were conducted face to face with a wireless terminal.   It would have also made sense if this merchant grew the flowers at their house, made deliveries, and charged customers upon delivery using a wireless terminal.

The point is that whether you are an Internet merchant operating out of your house or a merchant who sells flowers from a cart downtown Best Merchant Rates has the expertise and equipment to get your account properly setup.

Hands down this is a difficult industry to understand. Each processor has their different rates and fees. The tricky part is knowing the type of rate you are being charged. Some merchants use ERR pricing, others use Tiered pricing, and yet others use Interchange. In addition, there are fees that get tacked on to the processing fee such as batching fees, settlement fees, account on file fees, etc. How do you know when you are getting the best rate possible in order to maximize your savings? My advice is to research the trends out in the market. Who is offering what rate and what type of pricing is attached to that rate?

ERR and Tiered pricing look at the type of card that is being swiped or entered. Is the card a rewards card? Is it a corporate card? Is it a normal credit card? Although the type of card your customer presents is out of your control, the credit card processing companies charge you on this factor regardless. A regular card is considered to have a Discount Rate. Rewards cards are considered to have Mid-Qual Rates. And the corporate cards are considered to have Non-Qual Rates. Discount Rates tend to be the lowest rates while the Non-Qual Rates tend to have the highest rates. Again, the types of cards being used are out of your control, but you will be charged the applicable rate. You as a merchant need to be aware of the types of transactions your customers are most likely to do.
• What is your average transaction? Is it more likely for your customers to use rewards cards or regular credit cards? A typical consumer is more likely to use a rewards card on transactions over a certain dollar amount. My belief is that if your average transaction runs around $200, the majority of your transactions will be either Mid-Qual or Non-Qual Rates thus yielding you high processing rates.
• What types of items do you sell? Do you sell office supplies or office equipment? If so, most of your clients will most likely use corporate cards to purchase their items. These Non-Qual Rates tend to be the most costly rates when you are locked into an ERR or Tiered type of pricing.

Interchange pricing, however, charges you one flat rate for all transactions regardless of the card being used. The rate that you agree to when you sign your contract is the rate that you will be charged per transaction. The Visa and MasterCard charges are simply passed through to the merchant. This pricing structure is simple. There are competitive Interchange Rates out in the market, so make sure you do the research and price out the competition.

Finally, make sure you read the rates and fees schedules. Don’t be fooled that all you’ll be charged are the processing rates. If a processor is trying to tell you otherwise, they are most likely lying. Make sure there aren’t any hidden fees in the schedule. Ask for full disclosure prior to signing anything. Typical fees include batching fees, monthly minimums, statement fees. All these fees are negotiable, especially if you are a high volume merchant.

Read the fine print, shop the competition, and ask for full disclosure on rates and fees. Don’t be afraid to ask questions and/ or suggestions specific to your company so that you get the best pricing structure available to you.

These days, there are many options for credit card processing; wireless terminal, dial-up, ip, or virtual. You name it, it’s available. Last week I took a much needed vacation to Hawaii. After settling in on the plane, I have this ritual of finding the magazine that tells you what movie they will show before I decide on what activity I will be conducting on the flight; iPod, book or sleep. I opted for the book.

Shortly after take off, I hear a flight attendant say, “We will begin serving drinks, snacks, headsets and media players. We will not be accepting cash, just credit cards.” Does anyone remember back in the day, when you had to have cash to purchase an alcoholic beverage? I recall it being something like $4.00 for a beer and on occasion you would hear, “Does anyone have change for a ten or a twenty?” For this particular airline, those days are over. No cash, just credit cards.

Being in the credit card process business, I had to inquire about the terminal. I thought if I purchased a snack they might be more inclined to give me a tutorial. I proceed to purchase some chips. I handed her my card. She swiped it, handed me a receipt with my card along with my snack. I asked, “How does that terminal work?” I explained that I worked in the industry and that was the first time I saw a terminal being used on a plane. She said, “When we land, we plug in the terminal to a phone line and it will download the transactions for the flight.” She also mentioned they had an increase in sales because of the convience for their passengers. What a great idea. When, I got back from vacation, I started conducting a little bit of research on this feature. Some of you may be asking, “Do all credit card terminals have that feature?” Off the top of my head, I can only think of the brand –Verifone or Nurit. They have a feature that is called, “store and forward.” The teminal will allow you to swipe the credit card and hand the customer a receipt. That is the “store” portion of the feature and when you have an opportunity to connect to a phone line, you will be “forwarding” the credit card transactions for approval. Grant it, there is some risk involved because you may get a decline however it your transactions are less than $15.00, the risk will be minimal.

These days, things are changing so quickly. How we receive information is crazy with all the media outlets that are available to us. However, I think it’s great that manufactures are keeping up and are able to offer the solutions we need to conduct our business our way.

It is common for several different merchants to process using a single terminal. The most common example is a hair salon with multiple stylists, all of whom are independent contractors. In this example each Stylist will be assigned a unique account number. All transactions for each Stylist will be processed under their own account number, and funds will be deposited directly into the business bank account for each Stylist. In this example each Stylist will need to complete a separate application in order to be added to the terminal.

Another example is when two separate businesses share the same physical location. Both businesses can be assigned a unique account number and be added to the same terminal. Funds will be deposited into the appropriate business bank account for each business. This can help save costs by only requiring the use of one credit terminal instead of two. And in this current economic environment every dollar saved is worth pursuing!

Every year during the weeks leading up to the 4^th of July we get many calls from  merchants who will be operating firework stands.   This is a great opportunity to remind everyone about seasonal accounts.  A firework stand is an excellent example of a seasonal account.   Other common seasonal accounts are Tax Preparers, Halloween stores, Holiday themed stores, and seasonal sports or resort operators such as skiing or white water rafting.

Once your operating season is complete it’s as easy as calling our Customer Service department and requesting a freeze to be placed on your merchant account.   And we can start it up again whenever you are ready. 

Have a happy and safe 4^th of July!

Internet Processing is a popular choice for many merchant’s and is one of the specialties here at Best Merchant Rates.

I speak with many of our customers who are applying for Internet Processing.  One of the most common questions is whether someone can be approved to accept Visa and Mastercard over the Internet before their website has been officially launched.   I am happy to report the answer to this question is “Yes”.

First, if a “test” or “backdoor” website is available this can be used to approve the account. 

Also,  mock or sample copies of the web pages can also be used.  Often times these are presented in a Power Point presentation or similar format.

If your website is up and running at the time of your application it should meet the following guidelines:

1)     The business name on the website matches the business name (Doing Business As or “DBA”) or legal name on the application.

2)     Provide a clear description of the product or service being sold.

3)     Both the address and phone number provided on the website should match the application.

4)     Shipping policy (if applicable)

5)     Return policy (if applicable)

6)     Refund policy (if applicable)