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Nov 11 2014

Flat Rates vs. Interchange Plus

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Too Many Fees!

Flat rates of 2.50%-2.90% are all the rave these days. No hassles to set up, no fees to deal with, it’s a no brainer, right? Especially since merchant service providers have a list of fees longer than the menu at Starbucks. Nobody wants to pay all those fees, and since the Durbin Amendment, they just keep added more and more. Well, truth is, even though you’re set up with just a flat rate, you’re already paying them. How do you think PayPal, Google, Square, and all the other came up with their rates? They have to cover those fees too, so they used the law of averages as to what cards you’ll take, to set their rates.

What You Didn’t Realize.

Let’s say you’re a retailer, with a small to midsized average sale. Chances are the majority of the cards you take are debit cards. Also, most likely the majority of the cards you take are “regulated debit” cards, due the the Durbin Amendment I mentioned above. If you’re in a large metro area, like Houston, almost all are regulated. What does that mean? It means the wholesale rate of those cards are .05% $ 0.22. How does 2.75% look now? With the proper pricing method, you could be accepting those cards at under 1/2 of 1%, depending on what a provider offers you. Debit cards are always the lowest card rate out there, and the above mentioned aggregators count on that being most of what you take.

While They Play Elimination.

Over the last few years, very few card rates have gone up on the wholesale, yet PayPal went to 2.90% during that time. I can only guess at why the increase, but I have my suspicions it was due to American Express not giving them a break on the cost, as well as all the new card fees. American Express has now come down, but PayPal hasn’t. Square is still trying to find their way through the industry, and will eventually have to raise, after they make a name for themselves. Amazon has enough diversity to absorb most of this with other sources of income, but that’s what they all use to keep their rates as low as they can. They all have a long fight ahead, to see which comes out on top. I’m guessing it won’t be any of them.

A Short View to Prosperity

OK, so how do you get away from the aggregators, and to a merchant service provider, and get a better deal? First off, there’s only one pricing method to consider. It goes by Interchange Plus, Wholesale Plus, Pass-thru, or True Pricing. I usually tell people to Google Interchange Plus, as that’s the most common name. What you’ll see when you do, is it’s a flat rate tied directly to the wholesale rate of every card. So instead of getting one flat rate to cover over 200 card rates, you get a flat rate added to each cards wholesale rate. Instead of paying a variance in markup like above with a flat rate for all, you get a flat rate for each. This can bring your debit cards down under 1/2 of 1% like I mentioned, and most of your credit rates will be around 1.80%-2.4%, depending on your business type, and the average size of your ticket. If you’re taking mostly debit cards at under 1/2 of 1%, then the over all cost to you, due to the credit cards you take, is pulled way down by the debit cards. Bringing your overall average to well under the 2.50%-2.90%. In some cases, again, depending on the size of your average ticket, to under 2% over all cost.

As You Grow your Business, The Only Way Is Down

How to compare merchant service providers statement to the cost of one of the aggregators above. There’s really only one rate you need to know when it comes to accepting credit cards, your “Effective rate”. This is the rate you actually pay, after everything’s included. Let’s use Square for an example. Last I looked it was 2.75% swiped, but 3.5% & $.15 keyed in. To find out exactly what effective rate you paid, you’d take your total cost that Square charged you any given month, and divide that by the total volume in sales you ran. This is your effective rate, your total cost for accepting cards. It works the same way with a merchant service provider’s statement. So after the long list of fees are added together, and divided by the total sales, you can be a lot lower on your effective rate with a merchant service provider, than you can with one of the aggregators above. So in short, your effective rate is really the only rate that matters, with any type of setup. The more debit cards you take, the lower your effective rate will be.

So even though the flat rates sound good, simple, and less headache, they’re actually costing your business more overall. You could probably use that money elsewhere I’m guessing.

Jan 21 2014

There’s Free, or There’s Good Rates

I constantly now get asked if our terminals are free. Well, they can be, but you’re going to pay for it. Let me explain. The “Free Terminal Program” you see on providers sites now, sounds great. You’ve got enough expense trying to get up and running, or maintain your margins. Free will help you do that. The problem is, when’s the last time you actually saw something that was really free. Especially an item that can run a couple hundred bucks or more.

If your provider has set you up with good rates, and you’re a small to midsized company. It can actually take the provider months just to break even on a “free” terminal. That means they would have to process your cards for nothing, until they can recoup the cost of the terminal. So the first thing to ask, when you get a free offer, “What’s the cost?” In other words, what are the rates compared to another provider that doesn’t offer free terminals.

Free klunkers are all the rave, AND no contract. The only time I’ve seen a free terminal placement, without a contract, comes with a repair agreement. Should the used barely running terminal break down, chances that you signed a repair agreement are pretty good, and guess who’s paying to repair their terminal. Don’t like it? Then send it back, switch providers and pay the rest of the estimated earnings for the life of the repair agreement. In other words, you got stuck into a contract through the terminal, not the merchant account itself.

As I mentioned above, terminals are only a couple hundred bucks. Short of a terminal that runs checks, they pretty much all do the same. So get out cheap. Better still, see if a virtual terminal works for you. They offer so much more, for about the same price. You’re using your PC, so there’s nothing extra to break down. You can also go mobile, give your accounting a login, so no more trips to the accountant, etc. Check them out. Veritrans doesn’t charge a setup for any type of account on a virtual terminal, so how can you go wrong?

May 21 2012

The 5 Best Credit Cards for Business Owners

As a small business owner, you know how important it is to have access to funds when you need them. When you allow your customers to pay on account, you often have to survive without the capital you’ve already earned for as long as sixty days. Since lenders have some of the strictest terms for both new and seasoned small businesses, finding and qualifying for business loans can be extremely difficult.

That difficulty is why small business credit cards have become the most practical alternative to business loans, invoice factoring and other financing options. To help you out, we’ve researched and compiled which credit cards offer the best bonuses and advantages for business owners like you: (read more…)

May 16 2012

Mobile Credit Card Processing is More Affordable than Ever

Here’s a recap of what Jeff had to say about processing transactions without being tied down to a wired terminal:

It wasn’t that long ago when a telephone line and electrical outlet were the two keys to keeping credit card processing fees down. If you were in a setting that didn’t provide access to these necessities, you ended up needing a special wireless terminal. While they were dependable and offered convenient features like printing receipts, many business owners were still turned off by the heftier price tag.

The good news is instead of paying six to eight hundred dollars for one of these terminals, as well as $20 or more a month for the required cellular service, it’s now possible to process credit card transactions with your existing cellphone. This is done through an app, linked to a virtual terminal that’s DSS – PCI compliant. By taking advantage of this feature from eProcessing Network, you can enjoy wireless processing without making a big investment in special hardware.

What’s really cool about this option is it gives you a lot of special features like:

  • The ability to accept a card anywhere, and have the funds in your bank account the next day
  • Allowing customers to use your phone’s screen to sign for their transactions
  • Having customer information, and card on file for marketing and convenience
  • Spreadsheet downloads for tracking sale, or merging with your accounting program.
  • Recurring billing, for maintenance plans, memberships, etc.

Best of all, you get to enjoy this setup for a cost that generally falls below $100.

If going wireless sounds good to you, get in touch with us today so we can help you get up and running in no time!

May 14 2012

How to Ensure Customers Trust Your Website

A solution like a virtual terminal from Authorize.net makes it easy to accept and process online payments. However, there’s still one hurdle you have to overcome. Before visitors to your website pull out their credit card and make a purchase, they have to be certain that their personal and financial information is going to be 100% safe.

The key to preventing visitors from ditching your website before completing a purchase is to ensure they trust you. While this may sound like a tall order to fulfill, the good news is there are actually quite a few ways you can convey the fact that you run a trustworthy business:

Prominently Display a Phone Number

As a technologically adept business owner, you probably stopped drawing a distinction between “online businesses” and “real businesses” a long time ago. However, for a large percent of the population, this is still a significant concern. Luckily, there’s an easy way to show visitors who fall into this category that you’re a real business. All you need to do is prominently display a phone number on each page of your site. Even if visitors don’t actually pick up the phone and call you, knowing they can will make them feel good about your site.

Add Personality to Your About Page

It’s human nature to desire connections with other people. You can leverage this desire by using your About page to create human appeal instead of the impression of a faceless business. Increasing the effectiveness of this page can be as simple as adding a few personalized sentences about yourself or your employees. And if you’re not convinced that anyone actually looks at your About page, checking out your analytics data is quite likely to surprise you!

Include a Recognizable Badge

Multiple studies have confirmed that people feel more comfortable making purchases from sites that include a badge they recognize. Options that fall into this category include the BBB, McAfee Secure and TRUSTe badges. The one caveat to this addition is the studies found that more wasn’t necessarily better, so it’s best to pick the most relevant badge for your specific business.

Use Real Pictures and Testimonials

Given the fact that even smartphones now include quality digital cameras, there’s no reason to plaster cheesy stock photos on your website. Instead, as with your About page, real pictures give your business a face. And while testimonials are very powerful, don’t worry about polishing them to perfection. When news leaked that Zappos used Amazon’s Mechanical Turk service to proofread and correct their customer reviews, the overwhelming response was that this extra step actually decreased the trust levels of potential customers.

By taking advantage of these simple but very effective tips, you can give your website exactly what it needs to close more sales!

May 8 2012

Your Guide to TeleCheck’s Electronic Check Acceptance Service

Electronic check acceptance (ECA) makes it easy to accept checks from customers. One of the special features of this service is the checks you accept can be from customers anywhere in North America, as well as Australia.

The way this TeleCheck service works is when a customer gives you a check, you run it through a terminal. This terminal takes pictures of the front and back of the check and translates the images into a digital format. Another cool feature is the terminal then prints out a receipt that you can give to the customer to sign. Since customers are used to signing the same type of receipt for credit and debit card transactions, this feature allows you to provide them with a familiar experience.

The last leg of the customer and merchant experience comes when you’re able to hand the original check back to your customer. If you’re wondering how that’s possible, it’s because after the terminal captures all the necessary information, it automatically voids the check. What’s great about this aspect of the process is it eliminates the need for you to deal with paper checks piling up on your desk.

Because of the secure manner in which the check information is captured and stored, the funds from that check will be fully guaranteed. This process also makes it possible for the funds to be deposited into your account in just two business days.

Is this Service Right for Your Business?

If you have customers who have wanted to pay with a check but you’ve had to say no to them because of the risks associated with the traditional method of accepting checks, this is the perfect service for you and your business.

Since this service is focused on making it easy for you to securely get paid, as well as providing your customers with a pleasant experience, checking their ID generally isn’t required. And even in the event that you do need to ask for their driver’s license, all you’ll need to do is swipe it through the terminal.

While TeleCheck isn’t the only company that offers this type of service, the reason they stand out is because they’re truly dedicated to making sure merchants like you get paid. In the event that a check is stolen, forged, fraudulent, attached to an account that doesn’t have sufficient funds or is actually closed, you will still get paid without getting stuck in an endless cycle of claims and forms. In fact, if this ever occurs, you won’t even know about it. Instead, TeleCheck will put the funds in your account, and they will take care of tracking down what’s then owed to them.

To top things off, because of the highly sophisticated approval system TeleCheck uses, they make it possible for you to accept checks of any amount. So even if you sell high-priced items like cars that result in single transactions for tens of thousands of dollars, using this TeleCheck service means you can accept checks without taking on any risk.

If you want to accept checks without:

  • Making trips to the banks
  • Paying a fee for every deposit you make
  • Being charged for returned checks,

get in touch with us today so we can discuss which terminal is right for you and help you get started with electronic check acceptance!

May 7 2012

5 Advantages of Recurring Billing

Although it may come as a surprise to others, business owners like you understand that one of the hardest parts of running a company can be getting paid. Even when you’re providing a quality product or service at a reasonable price, there are still a wide range of obstacles that can make it difficult to receive what you’re owed in a timely manner.

(read more…)

May 1 2012

What Merchants Need to Know About Processing Check and Debit Cards

Wondering what options you have for processing debit and check cards? Jeff has the answers:

There are two ways for your business to process transactions from customers who want to pay with a debit or check card. The method you choose can either be based on a PIN or a signature:

PIN

When a customer is ready to make a purchase, they simply enter their personal identification number on a keypad after using their debit card.

Signature

Customers make their purchase by swiping their card and then signing the receipt that’s printed out.

Which One’s Best?

If this was 2002, we would advise you to process all of these transactions via the PIN method. The reason is during that time, it was significantly cheaper than the second option. However, because the last decade has seen changes made to the general pricing structure of these transactions, that’s no longer the case.

About five years ago, the cost to merchants to process signature based transactions dropped. And for the last five years, the cost of processing transactions with a PIN has actually risen. The end result is that for most businesses, using signatures to process these transactions will result in the largest savings.

The one caveat to this scenario is if you’re processing transactions that are over $50, you may save a bit of money by choosing the PIN method. However, that’s going to change in October of this year. The reason is there’s new legislation that will once again impact the pricing structure of how check and debit card transactions are processed.

Since that’s just six months away, if you’re currently deciding how your business is going to handle payments, chances are it’s going to make the most sense to go with signatures.

If you have questions about how October’s changes will impact your specific business, Jeff will be happy to answer them for you.

Apr 23 2012

Answers to Your Questions About Authorize.net Fees and More

If you’re looking for a credit card processor, Authorize.net may be one of the options that you’re considering. With their virtual terminal, all you need to process credit cards is a computer and an Internet connection. What’s great about this approach to processing is it gives you more flexibility than options that tie you to a specific terminal machine.

What Features Does the Virtual Terminal Offer? (read more…)

Apr 18 2012

Your Guide to Researching Credit Card Processing Companies

Choosing a credit card processing company is an important decision. While the right company can help your business grow, the wrong one can create one headache after another. Since you don’t want to base this decision solely on what a company has on their own site, Jeff has some great advice about how to do your research:

Although it may seem too simple to be effective, Googling the name of the processing company you’re considering is actually a very useful tactic. The reason this research strategy works so well is because Google gives a nice mix of information in a single location. From reviews on blogs to customer discussions in forums, you can read real experiences from actual customers. Some of the sites where you can expect to find especially useful information include RipoffReport.com, ComplaintsBoard.com and Scam.com. While some of these sites may appear as a result of just one or two disgruntled customers, if you discover that there are a significant number of negative reviews, it should raise a red flag about that processor.

The reason you owe it to yourself and your business to take some time to research via Google is because the credit card processing industry is filled with a lot of selling practices that are fairly deceptive. Whether it’s sales reps promising more than their company can actually deliver or a company website that doesn’t paint a full picture, reading others’ experiences will help you avoid these costly pitfalls.

Keep in mind that if you’re already working with a company, it’s still worth your time to Google them. Not only can this help you uncover information that may lead to you deciding to make a switch, but you may also find out about a great feature or offer that you would have otherwise missed.

Another quick addition to the research process is to go to a company’s website and see if they have a BBB logo. If they do, actually click the logo so you can go to their BBB information page. This will give you more information about the company, as well as the ability to read any complaints that have been filed.

One other tip is when you type a credit card processor’s name into Google, see what other searches are automatically suggested. If you notice a specific issue, just click the phrase to easily see what comes up about it.

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