So you did it! You decided on opening a new business! Congratulations. Momentum is building; the check marks are being made on your “To Do” list. Two weeks to go before the doors open for business and it dawns on you….How do I get a credit card processing account? You begin searching through the file where you placed all of those mailers you received about credit card processing three months ago for understanding and direction. Does this sound familiar? If so, be prepared to answer these five questions right off the bat:

1. What is the name of your business?
2. What does your business do?
3. What is the average sale?
4. Do you currently accept credit cards?
5. If no, then how would you process cards? on a machine?

Based on your answers, the company will be able to put a program in place for you. The key item you will want to focus on is the RATE. When the processing company provides a rate, always ask, “Is that the only rate I will have to pay?” More than likely there will be surcharges ranging from 0.75% to 2.99%. These surcharges will be applied on top of the rate they provided. There will be other fees (sales transaction, authorizations, batch/settlement, statement) that are standard across the board however the rate is the difference between a company with integrity or a company that wants to take advantage of a new business owner.

Remember, you have the upper hand, you are the customer, you have the option to buy the service or not. Allow yourself ample time for research and ask a lot of questions. Good luck with your new endeavor and more importantly good luck choosing the right credit card processing company for your new business.

Self Regulate  or Face the Consequences.  The best aspects of America are Freedom, Democracy and Capitalism.  However, when capitalism is abused, the result is the current financial mess that our country is in.  The SEC didn’t properly oversee Wall Street, executives abused their positions and privileges and now we are suffering the consequences.  The banking industry didn’t follow common sense rules about lending; instead its executives made decisions based on “Hey if the other guy is driving up their share price by doing more negative amortization loans to people who have no business purchasing a home, then by golly- let’s do more of those loans too!”   Thanks IndyMac, Washington Mutual and countless others who are now….oh, that’s right…no more.  Now that’s leadership!  It’s like little Billy in 1st grade who says “I only called Sally names because everyone else was calling her names.”  Smart.

Memo to the Credit Card Processing Industry: you better get with the program and come up with appropriate training standards for those in the business.  The ETA (Electronic Transaction Association) has already begun a study to determine the feasibility of developing an industry-wide certification or training program for those selling merchant services.  I strongly suggest this be supported.  The insurance industry has standards for when insurance policies can be replaced and when they can’t.  I’m not proposing we do away with competitive pricing.  But I am saying that those of you pointing 80% of your merchant’s transactions to that 4.99% Tier III bucket are in serious need of an ethics and integrity gut check.

All eyes are distracted on the current economic crisis.  But lets not be the next target in line with the Federal Government for investigation and possible “nationalization”.  Let’s self regulate and keep the government out of our wonderful industry because the alternative is clear: if we don’t, they will.

Just want to make sure those of you shopping for credit card processing rates understand 3 Tier and other tiered pricing structures.  First, you need to always ask for the signature debit tier to be carved out.  With VISA retail debit rates as low as .62%, the Processor who is charging you 1.59% as your qualified discount rate is cashing in. So there shouldn’t be 3 Tier, there should be 4 tier at a minimum (debit tier, qualified tier, mid and non qualified tiers).  Second, did you know that most processors can determine which cards will fall into which tiers?  Now that’s dangerous.  Do you think they will stack the tiers in your favor or in their favor?  You know the answer to that.  So when you have 3 Tier rates of 1.64%, 1.64% and 4.99%- DANGER DANGER, BRIDGE OUT AHEAD!  Can you guess what tier most of your card types are pointed to?  Yep- 4.99% is right.

Large Corporate Pricing eliminates the guesswork and also prevents the Processor from stacking the deck in their favor.  With Large Corporate Pricing, all card types pass through at the wholesale fee level established by VISA and MasterCard respectively.  This can’t be manipulated by the Processor and these rate tables are also published on the VISA and MasterCard websites.  In the Large Corporate Pricing structure, the wholesale fees are passed on to you “as is” and the Processor then adds a nominal mark-up.  The good news is that when you get your statement, you receive a complete accounting of every card type and transaction cost associated with it.  With 3 Tier pricing you get: Mid Qual Fee= $500 and Non Qual Fee = $1000 with absolutely no accounting of how they came up with those numbers.

Buyer beware.  You have been appropriately warned.

OK…I’m getting a little frustrated right now knowing what those “other guys” are offering and knowing that people are actually going with them. What’s the deal people? So you want to accept credit cards. OK…What if I offered you to pay me a $10 statement fee AND pay me $500 for a credit card terminal AND pay me 1.64% to 1.19% on every transaction you process? Does this sound like a good deal to you? Absolutely NOT! Where are the savings? Where’s the deal? I know that merchant processing can get a little crazy. But listen, what it boils down to is you want to find a credit card partner, not a credit card processor. That’s why we’ve come up with packages that make sense for everyone. Why should the big companies get all the savings just because they process more? Every merchant is important regardless of volume. That’s the purpose of large corporate pricing for everyone. Who doesn’t like to save money? And the way things are right now…who doesn’t NEED to save money right now? Why would you pay $10 for a statement fee and purchase a costly credit card machine? Wouldn’t you rather pay $20 a month for a brand new terminal and be done with it? No monthly statement fee…No high out of pocket cost. That’s it! Just $20 a month! On top of that, you get a fantastic rate that’s lower than those other guys…guaranteed! Do we have packages for you on credit card terminal upgrades to meet your specific needs? Of course! Listen, do your homework…shop around…it would be negligent of you not to look into all aspects of payment processing. But you won’t get a better deal. We want to work with you…not work you into the ground.

Raise your hand if you think the world of credit card processing is confusing. Just for the record, my hand is raised. I have been in the industry for a little over 4 years and it seems like every month I am learning something new in the credit card processing world. Nevertheless, it’s all exciting.

Last week I had a call with the “Tech Guy”, you may remember him from a previous blog I wrote. God Bless his heart, he is one of the most patient guys I know. He explained all the credit card terminals we offer to our credit card merhcants…. Wireless, WiFi, dial up, IP, multi-merchant, single merchant, and the list went on and on. During the call, he mentioned something about a retail tip vs. a restaurant tip line. HUH? I can picture the merchant on the phone confused, just as I was. I can also picture the merchant saying, “I only want a merchant processing account, sign me up, provide me with a merchant number, and send me a credit card terminal.” Right? I was asking myself, why is this important? Why would I ask a merchant this question? What is the difference? To my surprise it was a simple explanation….

Retail Tip – the merchant has to ask the customer, “Would you like to include a tip?” prior to the credit card getting swiped to the credit card terminal. The credit card terminal will then prompt the merchant a series of questions depending upon how the credit card terminal was programmed. The total amount, tip included, will appear on the receipt and the merchant simply signs his/her name.

Total ____________

Customer Signature__________________

Restaurant Tip – the merchant swipes the credit card to the credit card terminal and the receipt will print out* the following:

Total ______________

Tip________________

Total______________

The merchant will have to adjust the dollar totals prior to settling or batching the credit card terminal.

I know the world of credit card processing can be a confusing one, however, the best way that I learned the business was to ask a lot of questions. Just remember, the person on the other end of the phone had to learn about merchant services at one point in their life. Right?

* Receipt print out will vary depending upon terminal and programmed that was downloaded.