Dirty Little Secret Of Equipment Leasing

It is a rare that it makes sense to lease a credit card terminal.  If you are dealing with a reputably merchant service company you can purchase credit card terminal for way less than leasing.   The leasing company is not the real problem; it is the merchant service company that “sells” the lease.  What most people / business owners do not realize is that the leasing companies are nothing more than a financing company for the merchant service provider who uses them to help place terminals.  In theory, if a business can not afford or have the capital to out lay for the equipment then the “leasing” company pays the merchant service provider the funds.  The leasing company collects payments to earn back what they paid to the merchant service provider.  In most cases the leases are set up for a 48 month term.  The leasing company could care less if they receive the equipment before the end of the term, because they paid out funds to the merchant service provider.  They cannot resale the equipment for anything close to what they paid merchant service provider.  This is where the problem is, the merchant service provider is who is bring the leasing company to the table.  The merchant service provider in reality earns a big commission from the deal.  The merchant service provider will earn more money if you lease the equipment.  For example let say the lease payment is at $35 (this is a low payment, I seen some as high as $99) for 48 months, that is $1,680 you would pay for the equipment.  The merchant service provider probably paid less than $300 for the equipment and earned a commission for over $1000.  Also the $35 does not include taxes the leasing company will collect from you and insurance that they will mandate and the intangible tax.  To end the lease, you have to make all payments and then return the equipment back to the leasing company.  That right you do not own the equipment. You can keep the equipment if you purchase it from the leasing company after the 48 month.  It called a residual value.  Most of the time the factor is 10% of the aggregate of the payments.  In the above example you will need to fork over around $200 to now own the equipment.  Also one other note, the leasing company will not remind you that you completed the term, because you have not until all payments are made and the equipment is returned.  YOU have to initiate the return to end the lease and payments.  I have seen situation where some were still paying after 8 years.  No one told them.  Beware when you call in the leasing company will try and talk you out of it by saying something like, if the equipment breaks while leasing we will replace it.  Let me tell you from experience you will pay hell getting them to make good on that.  The other thing they might offer is a new lease and equipment.  DON’T DO IT!!!

 

Bottom line you are much better off to purchase the equipment from a reputably source and have a good merchant service provider that offer their insurance.

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

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Batching Daily Is Important!

Batching, closing, or settlement for our discussion here is the same thing: the process of transferring funds from sales and credits between Acquirers and Issuers, including the final debiting of a cardholder’s account and crediting a seller’s account.

Why is this important?  First per the terms and condition every merchant signs, and is required by Visa, MasterCard, Discover, and American Express you agree to settle transactions within 24 hours.  The second reason a business should close every day, should there be transactions; it starts the funding process to the business bank account.  If a transaction is over 24 hours and is not settled, the transaction can down grade to a higher cost of interchange category.  It can also increase you chance of a charge back.  Last and perhaps the most important, with the debit cards you are most likely running, if you delay your settlement, it can throw the bank account in a negative for those individuals that may not keep good track of their prior purchases.    For example let’s say on a Monday Bob purchases something at your business with his debit card.  When the transaction is approved you are issued an authorization.  This “earmarks” the amount of purchase on Bob’s bank account and holds this amount waiting for your settlement.   If you do not settle the transaction after around two to three days the hold drops off.   Later you settle the transaction the funds are then taken from Bob’s account.  Perhaps Bob forgot about the purchase he made at your store on Monday and thought he had more funds but because of your delay it throws his account in the negative.

For your sake and your customers’  . . . settle daily.

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

http://www.tampabaymerchantservices.com

Month Minimum Processing Fee

Not all monthly minimum processing fees is the same from one company to another.  The standard in the industry is $25.00.  What is not standard is how they are calculated.  This fee is imposed if your credit card charges (discount rates) do not add up to monthly minimum amount.  For example if the monthly minimum is set at $25 a month and the discount fees came to a total of $20, the company will add $5.00 to make up the minimum.  Again the way this is calculated and what fees are applied to the minimum is not the same from one company to another.  Typically when a merchant processes $1250 in credit card volume at an overall effective rate of 2%, they will meet the $25 monthly minimum processing fee.  See below a copy of a statement where this business processed over $10,000 and still there was charge for minimum processing fee of over $24.  When shopping and comparing services, don’t just asked about one rate, peel back the onion, look at the total cost and all the fees.

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

http://www.tampabaymerchantservices.com

PREVENT CREDIT CARD FRAUD AND PROTECT YOUR BUSINESS

Fighting fraud is all of our responsibility and a little diligence on your part could save your business hundreds or thousands of dollars. Don't be shy about contacting a Risk Representative at Capital Bankcard if you are unsure about an order or transaction. We can help you determine if the transaction is legitimate and give you guidance on steps you can take if you are suspicious.

If you believe a card is stolen, fraudulent or otherwise suspicious, you should train your staff on how to make a Code 10 authorization request. The Code 10 authorization request alerts the card issuer to the suspicious activity-without alerting the customer. During a Code 10 call, you will speak to the card issuer's special operator, who will provide instructions on any necessary action. This type of authorization request is the most likely to result in a call to law enforcement.

Code 10 steps

Keep the card in hand to quickly respond to questions. Call 1-800-228-1122 and say "I have a Code 10 Authorization Request." When connected to the special operator, answer all questions calmly and in a normal tone of voice. Follow all operator instructions.

If the operator asks you to retain the card, comply with this request only if it is safe to do so.

If you are keying transactions or receiving them off the internet, you are at even more risk for fraud. Below are some red flags to watch out for in these environments.

Orders that require you to ship product outside of the United States. There are obviously very legitimate orders from overseas but, if your business does not normally receive such orders, or receives any which seem unusual, you should give them extra scrutiny.

Transactions requiring you to "prepay" the shipping costs via Western Union to a specific shipping company being used at your customer's request. Any suspicious sounding shipping arrangements are a good sign of potential fraud.

Unusually large orders or those containing multiple quantities of the same item. You know your business better than anyone. If a large order seems particularly unusual in any way, trust your instincts and follow-up on it. Thieves know a stolen card number won't last long so they typically place large orders while they can. They are also always looking to maximize their resale value.

Orders from generic e-mail addresses (ie. john@yahoo.com) or calls using TDD (telecommunications device for deaf) to place orders. Many of these orders are legitimate, but they are sometimes indications of a fraudster looking to remain anonymous.

"Rush" or "overnight" shipping requests. Crooks want your goods as soon as possible for the quickest possible resale. The last thing they care about is extra delivery charges.

Transactions with similar account numbers, multiple orders from one account or multiple orders to one address from multiple cards. These are all highly suspicious and are worth your attention.

We want to ensure that you and your associates are able to spot potential fraud and take action quickly in order to prevent fraud and protect your business, but only when it is safe to do so.

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

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Scam Targeting Businesses Accepting Credit Cards

A "customer" enters a business and makes a purchase using a credit card. The proprietor attempts to process the transaction, but every authorization attempt is declined. The cardholder tells the merchant he will call the card-issuer via his cell phone. The individual allegedly makes the call to his bank, but in reality dials the number of an accomplice. The cardholder hands the phone over to the merchant so the person on the other end can provide a false authorization number. The merchant then unknowingly forces the sale through the terminal, using the illicit code. Due to an invalid authorization being used such a transaction will almost certainly be disputed, causing the merchant to take a total loss. Merchants should only input codes obtained directly from the voice authorization center

Another scam similar to the above is the "customer", presents a Visa Gift Card and after it is declined; the phone call to the accomplice which results in a credit in the amount of the sale going back on the Visa Gift Card, while the merchant thinks it is authoring the sale.

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

http://www.tampabaymerchantservices.com

How Does Banks Charging For Checking Accounts Relates To A Business Accepting Credit Cards?

Every day now we hear about another big bank raising checking account fees.  This is because of the Durbin Amendment has capped the fees on debit cards thru interchange assessments.  This does not mean that you as small merchant will benefit.

If you have a tier rate structure, as most businesses do, you will not see a rate reduction. Talk to us so we can review your account and be sure you will see the savings you deserve

Contact us at info@tampabaymerchantservices.com or call 727-916-7294

http://www.tampabaymerchantservices.com

Cost To Accept Debit Cards Will Go Down - Will You Benefit?

In case you have not kept up with the Durbin Amendment to the Dodd-Frank Reform and Consumer Protection Act, it will lower the cost to accept credit cards. As of this writing this new reform will take effect in October 2011. This legislation gives the Federal Reserve the power to cap the interchange fees each time a debit card is used. Does this automatically mean that you as small merchant will benefit? The answer is most likely no. If you have a tier rate structure, as most businesses do, you will not see a rate reduction. We offer a rate structure known as interchange plus pricing. Interchange is the cost from the card associations. Now with interchange going down for debit cards as noted above you will automatically have your costs lowered. Under the tier rate structure your company, also know as the "acquirer" is not covered in this legislation. Don't expect them to pass on these savings to you, the business. It will be a big raise for them. Contact us today so you can benefit and lower your cost of accepting credit cards
 info@tampabaymerchantservices.com or call 727-916-7294
 http://www.tampabaymerchantservices.com