Understanding The Differnce Between Surcharging And Convenience Fee

More and more I am asked about the following. There is much confusion on this subject.  We hope this will help to clarify it for you.

CONVENIENCE FEES

A convenience fee is associated with an "added value" that the cardholder receives in connection with a non-face-to-face card purchase in the form of an alternate payment channel outside of the merchant's customary payment channels. For instance, a movie theatre is permitted to charge a convenience fee to cardholders that purchase movie tickets for a future showing through the Internet. This alternate payment channel offers the cardholder added convenience since they do not have to be physically present to complete this transaction, thus a convenience fee is allowable. The movie theatre (this would be their customary payment channel), however, may not levy a "convenience fee" at the ticket counter.

Visa and MasterCard define a Convenience Fee as a fee assessed by the merchant to the cardholder for payments processed through an alternative payment channel. A convenience fee cannot be assessed to the payments received in the customary, or standard, payment channel since there is no added convenience to the cardholder.

The standard convenience Fee rules are:

- Convenience Fee can only be charged in an alternative payment method.
- Non face to face transactions only.
- Disclose it is for using an alternative payment method.
- Has to be flat or fixed amount, not a percentage of the sale.
- Applicable to all alternate payments accepted including cash and check.
- Included in the transaction total.
- Disclosed prior to the completion of sale.
- Cannot be charged by a third party.
- Cannot be added to a recurring transaction.
- Cannot be assessed by e-commerce only merchants.
- The Fee must be clearly and conspicuously disclosed to the cardholder and afford the cardholder an opportunity to opt out of the sale.
- The fee should not be advertised as a fee assessed by MasterCard or Visa.
- The fee cannot be advertised or otherwise communicated as an offset to the merchant discount rate.

Offering the customer the option to pay with a credit card is not considered an added convenience, and merchants may not assess a convenience fee for any transaction completed through the customary payment channel.

SURCHARGING

A surcharge is a fee charged to the cardholder for using a credit card to pay for goods and/or services. Any merchant is able to implement a surcharge as long as they follow the guidelines.
The surcharge amount may not vary with each customer/transaction
The surcharge amount must be consistent, whether a flat fee or percentage is charged.
The MAXIMUM Surcharge Amount is 4%, however the surcharge must be in-line with the Discount Rate, i.e. effective rate of cards currently accepted. Merchants should calculate their effective rate for the past 6 months, and then take the average to obtain their surcharge amount.
Merchants must register and wait 30 days before implementing the surcharge.
Merchants must disclose at the Point of Entry to the store that they surcharge.
Merchants must disclose at the Point of Sale (checkout) that they surcharge.
Merchants must disclose the dollar amount surcharged on every receipt. Currently the only terminal certified with First Data to support surcharging are Dejavoo terminals.
Merchants MAY NOT surcharge any debit cards, signature, prepaid, or pin. Surcharging is for Credit Cards only.
Merchants who surcharge may still be liable for fines if they mistakenly surcharge a debit card.
Merchants who surcharge will not be able to accept American Express.

If you have questions about this subject or other concerns related to Point of Sales Systems or credit card processing, contact us anytime via email info@tampabaymerchantservices.com or call us at 727-916-7294

This article was written by Megan Best of Electronic Payments and reprinted with permission.  All Rights Reserved.

Your Business Needs A Gift Card Program, Why? How about more revenue!

You know you have a great product you offer to customers, then why not let them purchase a gift card to give to a friend? Build loyalty too. Promotional give away.  Use for refunds, instead of cash.

Here are some hard numbers.

93% of US consumers either buy or receive a gift card every year. The fact is, if you don’t have gift cards, you’re losing a huge revenue opportunity. A large portion of this 93% are going to buy a gift card no matter what, because it’s the simplest and most flexible gift to give someone—they’ll be setting out on their shopping trip intending to buy a gift card from one place or another. If you don’t have gift cards, these consumers will look elsewhere for them, and that’s lost revenue for you.

72% of people use more than the value of their card—on average, people spend 20% more. It almost seems as if the number should be higher—anyone who uses a gift card for a store almost certainly has to go over by some small amount. But what’s really important is the second half of the stat—the 20% figure shows just how much extra revenue beyond the gift card you can get, and that’s not including the potential for repeat customers.

55% of gift card recipients go to a store more than once to use the entire gift card balance. This is an aspect of gift cards that has long-term effects—a customer who attends your store twice is already likely to come back again afterward. The next time they’re thinking of buying a product that you carry, the image of that product sitting on your shelves will pop into their head.

There’s plenty of other stats, of course, but these three capture the core value of gift cards—nearly all customers want to give or receive gift cards, recipients will return to your store multiple times to use them, and they’ll very often choose to spend beyond the value of the gift card. The benefits are clear, and the numbers support it—without gift cards, you’re missing out.

Contact us via email or call for details on a free gift card program. 727-916-7294

Visa and MC Settlement Update: Appeals Court Overturns Settlement

Back to the lower court for new settlement discussions or a trial...

Visa & Mastercard Settlemen Update

More Junk Fees

They just keep coming.  A new junk fee I recently came across.  I am often asked what is your rate? It’s not about one rate, one needs to look at the sum of the total. Here is another example about another “junk fee”. Monthly Funding Advantage is a made up fee. Also I am seeing a new junk fee called “EMV non-enabled Fee” at a rate of 3 basis points. This fee will hit restaurants that does not have a POS to accept Chip Cards.

Give us a call to find out how we can help you eliminate junk fees. 727-916-7294

Omnichannel retail - What is it and Why?

Customers want more than most retailers are able to offer. Modern consumers want to buy online, but pick up or return at the store. They want to browse product information on their laptop or smartphone, get coupons or discount codes, even make a purchase on their mobile phone while in a store. New consumers are naturally combining channels as they browse, research and buy.

With 90% of consumers researching products online before they buy and 25% of shoppers buying online after they’ve experienced and touched the items in-store, the path to purchase is no longer a straight line. Today’s tech savvy consumer demands flexibility from retailers as they drift from in-store to mobile to online and back again. The age of the brick-and-click is here and retailers need to catch this wave or get washed away as more and more of their competitors adopt the agile omnichannel model of retail.

In an omnichannel world, retailers can combine data from every transaction and interaction, from any channel, into a unique individual file for each customer. Customer records can include previous in-store and online purchases, deliveries made, coupons used, gift cards purchased, comments on social media, phone interactions – anything and everything that can be used to gain deeper insight into customer behavior patterns.

With a better understanding of their customers, retailers will benefit from higher customer satisfaction, which will ultimately result in more sales and brand loyalty. Being open for business 24 hours per day, 7 days per week, frees customers once bound by the dated constraints of store hours. This gives them added opportunities to interact with your brand on their own time and allows you to literally ring up sales while you sleep.

We have an affordable solution for retailers which give the best of both worlds. An integrated system means that retailers will be able to streamline their operations, saving time and effort with joint reporting, a unified inventory, and centralized sales information.

Give us a call to find out how we can help you.  727-916-7294

What Makes A Business / Merchant “HIGH RISK”?

High risk has to do more with the charge back exposure, since the acquiring / sponsoring bank is responsible for all charge backs if a business were to cease business and close for any reason.  A better way to characterize a business as high risk is harder to place

Why then is a business “harder to place” for taking credit cards?  This is because an acquiring / sponsoring bank will not even consider or approve a business based on various details that are not in line with their underwriting guidelines.  Most of the time it about the financial expose and loss. As an underwriter they look at worst case scenarios in regards to financial expose and loss.  For example, if a business had their processing account stop abruptly, this will have a serious consequence to their cash flow, which might affect delivery of product or service on payments taken previously.  This in turn causes customers to dispute credit card transactions when the product or service is delayed and everything for the business spiral out of control. 

Let’s examine travel agents.  There are several factors that make this type of business “high risk or hard to place”.  The vast majority of travel agents are good people who run legitimate sales through their business, but the problem lies with what is outside of their control.  They can do an excellence job booking a vacation well below market price, but a last minute deals from hotel or an airlines that significantly drop their rates the week before the vacation starts due to a surplus of rooms / seats.  In this example the customer books this last minute deal and goes to the issuing bank and disputes the original credit card charge and will likely win the dispute.  Also consider the travel agent has no control over how their vendor operates and if the customer has a bad experience for any number of reasons they are likely to get buyer’s remorse and dispute the charges. 

Another example is electronic cigarette most acquiring / sponsoring bank will reject this type of business type on principle alone citing it is too easy for a minor to purchase the product online.  It’s the potential of taking part in facilitating the sale of nicotine products to minors that the acquiring / sponsoring bank is avoiding due to nothing in regards to financial expose and loss.

Banks having been doing this a lot longer than you have been in business and have enough experience and history to know that even a good business can go bad.  They look at the long term, “how much do we stand to lose if this company closes its doors tomorrow?” Acquiring / sponsoring bank are typically on the hook for charge backs for six months after the delivery of a product or service. We hope this might help to give you a better understanding into this subject.

If your business is "high risk" or not, we can help.  Contact us at 888-506-9225 or info@tampabaymerchantservices.com

Dirty Little Secret Of Equipment Leasing – Part Three

To add to this subject and mention new information, a law suit was filed recently by the Attorney General of New York.  Read more on the link provide below. The company involved is Northern Leasing Systems.  This is just one company involved in this “leasing” industry.  In the complaint it mentioned deceptive sales practices, which I have heard about from business owners.  In additional it states, “Northern Leasing’s lease terms are onerous and totally one-sided in favor of the company.  The credit card equipment leased to consumers by Northern Leasing is valued at only a few hundred dollars (at most) when new, yet over the course of a Northern Leasing lease consumers pay thousands of dollars for the equipment." This echoes info in my previous post where I mentioned the cost.  Again, do not lease your credit card terminals or equipment.  It is just not a good business decision. 

http://www.ag.ny.gov/press-release/ag-schneiderman-sues-northern-leasing-systems-inc-deceptive-business-practices-and

 If you have any question about this, please feel free to contact us at  info@tampabaymerchantservices.com or call 727-916-7294

Don’t Get “Squared” by Square Up

I am noticing more and more merchant using Square for processing their credit cards.  On the surface Square may seem like a good option and for some it maybe.  If you are just starting out and not sure how well your new business my take off and depending on what you are selling or services of your new business, perhaps it is a good option. For example, right now it is more of a hobby that a thriving business.  Square might be a good option. 

However consider the down side of Square.  In many cases the cost for processing credit cards can be higher with Square.  Because Square is an aggregator you have no true merchant account.  They refer to their customers as sellers.  When one opens an account, they take much of what one presents with little vetting or underwriting.  If they question later what you do or sell or how you sell it, all then without warning your money will be withheld.  Then the fun begins with getting help or having a conversation with a person.  Consider other service related issues.  See the example below:

By the way Square is losing money, Net Loss of $48 million - per page 13 4q 2015 letter to investors

If you want to have first class customer service, in most cases less cost than what Square, call us 727-916-7294

Is There Any Benefit Obtaining Your Merchant Processing Account Thru an Association?

The short answer is not always.  It dependents on how much the Acquire charges or not charges.  What is an Acquirer?  Read our earlier post on this subject. at the following link.  This is not to say other benefits from the “Association” are not good, I am only addressing the credit card processing.  I have talked to several businesses that belong to the “Association” and one of the many so called benefits is the lower cost of processing.  Many of these same merchants are very closed minded about considering another alternative.  The few I did get to see had good rates, but not as low as we offer.  Do yourself a favor, let us look at your processing statement and we will analysis it to let you know just how good of a deal you are receiving from your “Association”.  I am sure you will be glad you did.

If you have any question about this, please feel free to contact us at  info@tampabaymerchantservices.com or call 727-916-7294

Dirty Little Secret Of Equipment Leasing – Part Two $10,000 for a credit card terminal!

I have written about the many different ways the banks or Processing Companies can rip your business off taking hard earned money out of your pocket.  One of the worse in my opinion is leasing of credit card terminals.  When you lease a credit card terminal you are paying about four times of what it would cost you to buy the terminal out right.  Read more in my original post  at Dirty Little Secret Of Equipment Leasing

I bring this subject up again because a merchant I was dealing recently recently discovered a lease payment coming out of his bank account when he went to change his bank account.  As it turns out it was for from a lease that was started more than 10 years ago.  He was paying around $90 per month. That is around $10,000 for a credit card terminal!  Not sure why the business owner did not catch this before.  Or his accountant and / or bookkeeper did not notice or discover this payment all these years when they worked with his taxes and bank account?

Another situation for another business I came across, the merchant has one lease account / payment started two years ago, then a “new” rep came into the business around a year ago and added another lease account.  Why? Good question, the rep left the industry so we cannot ask her.  Keep in mind these two leases are with the same leasing company.  I was helping the merchant sort this out and was on the phone with the leasing company and I asked them the question, why did they let her have two leasing?  Did they do any due diligence?  Well let’s say they had no real answer to the question.

Again, to you a business owner, DO NOT LEASE.  READ BEFORE YOU SIGN! ASK QUESTIONS. KNOW WHO YOU ARE DEALING WITH.

 If you have any question about this, please feel free to contact us at  info@tampabaymerchantservices.com or call 727-916-7294