NBS Agents >> Merchant Account Agent and ISO Programs

This is for actual store owners/merchants. I am trying to get a better feel for what a good deal is for Credit Card transactions and with companies like PayPal and others offering the service for between 1.9% (over $1 mill) to 3% (0-$1000), I need to know if that is a good deal.

Geek is right – you only have part of the picture. But there is more to it than even he let on.

Let’s start by saying that what you should try to gauge is the EFFECTIVE RATE. The effective rate is the total percentage paid in fees for your credit card transactions over a given period of time. Your target for your effective rate will vary depending on your average ticket, total volume, method of processing and card assortment.

Your average ticket plays a big part in targeting your effective rate. A smaller average ticket will be impacted more by per transaction fees than a larger average ticket.

Example with 2% rate and $0.25 total transaction fee:
$5.00 transaction-
($5.00 X 2.00%) + $0.25 = $0.35 or 7%

$100.00 transaction-
($100.00 X 2.00%) + $0.25 = $2.25 or 2.25%

Example with 3% rate and $0.15 total transaction fee:
$5.00 transaction-
($5.00 X 3.00%) + $0.15 = $0.30 or 6%

$100.00 transaction-
($100.00 X 3.00%) + $0.15 = $3.15 or 3.15%

This tells us two things. First, the smaller your average ticket the higher your effective rate will be. Second, with a higher average ticket you should be more concerned about the rate and less about the per transaction fee while the opposite is true if you have a lower average ticket.

Once you have determined what your expectations should be based on your average ticket then the total volume, card assortment and method of processing come in to play. For starters, it is important to note that Visa and MasterCard (the card associations), and not merchant services provider, receive the majority (over 75%) of the fees that merchants pay for their processing services. The remainder of the fees, or the margin, is what the merchant processor receives. What this means is if you pay $10,000.00 annually in processing fees, over $7500.00 of this goes directly to the card associations and is non-negitiable by you or your merchant processor. The card associations have also designated over 240 different card categories that each merchant processor must recognize and process. Every merchant processor, no matter how big or small, is charged the same rates and fees by the card associations and every merchant processor differentiates each card category utilizing exactly the same card category name as designated by the card associations.

The card categories are designated in the following manner:
1.)Industry – Retail, Restaurant, Hotel, Government, Utility, Service Industry, Gas Station, Supermarket, etc.
2.)Type of Card – Personal Visa or MasterCard, Visa or MasterCard Debit, Visa Rewards, MasterCard World, Commercial Visa, Corporate MasterCard, etc.
3.)Method of Processing – Face-to-Face (swipe), Mail Order/Telephone Order, Key Entered, E-Commerce, etc.
4.)Processing Efficiency – Address Verification, Authorization/Settle Match, Timeliness of Settlement, etc.

These categories are as diverse as they seem. If a cardholder uses the same card to buy something from a retail establishment, lunch at a restaurant and pay their electric bill, all three of these transactions will be designated as a separate card and rate category. If a retail establishment accepts two different types of cards (ex. – a Visa Debit Card and a Visa Rewards Card) for a purchase of the exact same amount, both of these transactions will be designated as a separate card and rate category. The same is true for a Face-to-Face transaction as opposed to a telephone order. Furthermore, if a merchant does take a telephone order and doesn’t enter the required cardholder information, the transaction will be downgraded to a higher priced card and rate category than a properly executed telephone order.

Sure, some merchant processors offer a simplified statement format with bundled categories, but only to keep from disclosing individual rates. The simpler the statement format the less a merchant knows about what their true credit card processing costs are or should be. A simple statement also makes it very difficult to perform an accurate comparison to other programs. For many merchant processors, their most successful customer retention tool is their customer’s complete inability to understand their services. If you ask all of the right questions you will certainly be able to make an educated pricing decision.

There are some additional things to consider when making your merchant processing decision:

*Service, support, integrity and education-
Many merchants make their choice solely based on price. Be sure to ask questions about the service platform. The web is full of stories from merchants who have had horrible issues with a processor that they went with for a perceived $5.00 monthly savings.

*Leased equipment-
Always, Always, Always a bad deal. I have never spoken to a merchant who is happy that they did this. Do the math.

*Term agreements-
Avoid if possible and check the buy-out. Look for a processor who will sign you to an at-will agreement so you will always have open options.

*Beware "FREE" anything-
Free setup. Free equipment. Free software. These things cost the processor money and their margin is incredibly small – especially with small businesses. Ask yourself the what, when, why and how of your business giving away something for free and try to figure out what the benefit is of a processor doing it for you. If it is too good to be true……..

If you have any additional questions, feel free to contact me at (920)993-9433 or jbordeaux@windriverfinancial.com.

I’ve had this happen to me with all my credit card transactions I did in Japan (although I noticed my Malaysian transactions were pretty quick to process). They’ve come onto my credit card up to 3 months after the purchase was done, and subsequently, putting my credit card over the limit – even though I had funds in my card when I made the purchase! Plus on top of that, my bank charged me an Over limit Fee for it! I think that sucks, as I had money on the card when I was in the store – I didn’t ask for the transaction to take so long to process.

Is there anything I can do to stop this from happening in the future?
(Besides using my card overseas).

Would the same thing happen if I were to use a Debit/Credit Card instead?

Each one uses his/her redit card differently. I use mine to spend my money, -not theirs- and never have a problem.
If you want to do the same as I do, as soon after you have made the transation, get into your internet banking account and pay that money from your bank into the card.
That’s it.
I understand that if you are abroad for a month and you don’t want to use internet cafes, then it might take a month before you do this, so you could transfer the money you are thinking of spending BEFORE you leave for your trip.
Yes, this beats the point of -borrowing- but I said it at the beginning what I do, I don’t see any point in borrowing as such..

Can a merchant charge your credit card but delay processing your order?
I placed an order a number of days ago through EBGames with overnight shipping, I have yet to receive my package. The sights saids usually ships in 24 hours. But my card was charged days ago and the order still has not been processed. So I called them up and they are trying to tell me it takes up to 72 hours to process my order because the shipping and billing addresses differ. I have never heard of this. They said they got to call and verify, yet I was on the phone with them and they had already billed me for the items that are in stock.
I was under the impression you cannot bill a customer like this with a credit card until your actually processing the order.

This could be a Christmas season ploy (i.e. very busy processing orders). Unless you work with the company, it is hard to tell if this is true or not. Go with the first recommendation of contacting some sort of customer service head, then try to cancel the order. Usually companies do not charge your card until the item is ready to ship (within one day) or had shipped.

I was offered the below rate to add a merchant account to my website.. is this a good rate? Also, do you have any recommandation on companies I should check out who can do online credit card processing for my website?

HERE IS WHAT I WAS QUOTED

-Your statement fee is $6 per month.
-Your Web Terminal fee is $6 per month.
-Your Total Monthly Investment will be $12 per month.

-2.19% + .25 per transaction. This is the COMPOSITE RATE INCLUDING ALL FEES ( Our processing rate is 1.94% which is the rate that every other company will advertise on their websites thereby omitting the additional fees associated with each transaction). NO additional hidden fees, surcharges, avs, batching, merchant,processing, 3rd party ect.

-Reward Cards: 2.25% but it can be as high as 2.50%

-Corporate/Business Cards: 2.59% but it can be as high as 2.84%

-Debit Cards: 1.94%

-$99 Annual fee billed at the end of 1 year from setting up account (waivable)

-NO set up fees

-NO application fees

-NO Contracts and NO Cancellation fees!!!

-funds deposited within 24 to 48 hours

-Free check software

-Free search engine submission

-Free Shopping Cart

I haven’t compared merchant rates in a long time, but it seems reasonable. I would make sure that they waive the $99 fee. I don’t know how much business you are going to do with them and what the avg sale will be, but it doesn’t look out of control. But you should always get another quote!!!!!!!!!

I am shopping around to find the best solution to charge my customers (in store) who pay with credit cards, and the cheapest too.
I was looking at Quickbooks credit card processing software, and it seems like a good deal. But do I have to have a merchant account in order to use it?

Thanks

It is actually illegal in some states to charge for paying with a credit card. To get around that, give a discount to people who pay with cash. Make sure your state allows charging extra for CC use.

I don’t know what part of my operating costs will be until the end of the month. My merchant processing acc’t calculates credit card processing fees at the end of the month – it’s calculated by taking a percentage of my sales. Problem is, I don’t know what my sales will look like until the end of the month – and that is when I’ll get the fees for mercant acc’t. I’m ultimately trying to figure out my markup. How can I solve this problem. I NEED a figure for my operating costs but part of my operating costs remain unknown until the end of the month. HELP!

If you are working with a solid merchant processor you will have information about the rates that you pay for all of your different Visa and MasterCard categories and you should also know your AMEX and Discover info if you process these cards.

Because the assortment of cards you process (VISA Debit, VISA Consumer, VISA Rewards, VISA Business, MasterCard Debit, MasterCard Consumer, MasterCard World, MasterCard Corporate, Face to Face, Key Entered, etc.) will vary, it will be very difficult to know your exact costs each month. What you can do, however, is learn your expected effective rate and use your month-to-date sales to make an accurate fee assumption.

Many of my customers use the online tracking tool that we provide to do this. It allows them to prepare for the fees that will be deducted from their account. Your processor should offer this service as part of your standard processing package.

Work with your current processor to find out how you can use their support tools to manage this aspect of your business. Feel free to contact me if you have any questions.

http://www.CharlesBaratta.com http://www.businesscreditcardprocessing.com Merchant Accounts and business credit card process frequently asked question Three. Merchant Services Group and Charles Baratta, New York City, Miami, Chicago, San Diego, Seattle and Atlanta offer you the 20 most asked questions regarding merchant services accounts and credit card processing.

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If anyone can give the percentage of annual income from each sub-catogory or link from where I can get this data. .
If you can give in the below format it will be great.
Interchange fees(1.77%)
Processing fees(2.00%)
Over limit fees(10.9%)
Merchant fees(
Late & Overdue fees
Others( annual fees)

Call Simple Payment Systems, ask for the sales dept and have them give that to you.Or call your processing company.

If you’re in the US, and not an emancipated minor – none. A minor child cannot legally enter into a binding contract.

http://www.merchantcashadvance.com best credit card merchant account, merchant cash advance, online payment processing, fast loan, unsecured small business loan.

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