Murphy’s Law

You know “Murphy’s Law”, anything that can go wrong, will go wrong.  And so it is in the credit card processing business.  It’s not a matter of if, but when something will go wrong.  Equipment breaks, telephone / internet goes down, run out of terminal receipt paper.  You place too many digits in when you run a transaction ($1200 instead of $120).  These are just a few.   When “murphy” visits regarding your credit card processing, we are there to correct the “murphy” in a quick manner.  We will post success stories about fighting “murphy”

Update #1

The other day, a customer moved around their customer check in desk.  When they went to plug everything back in, the credit card terminal would not come back on.  After trying a few things over the phone, went to them same day and fixed the issue

For help with your service and to keep “murphy” at bay contact us at: www.tampabaymerchantservice.com

Risk & A Merchant Account

What risk?  A customer gives me a credit card, I get an authorization, a day or two later I receive funds, so what is the problem or risk?

An authorization is letting you know that funds are available on the card at that time in point. An authorization does not confirm the cardholder’s card or limit the cardholder from disputing at a future date. If you received more than one decline seek another form of payment. A decline authorization is the issuing banking letting you know there is a problem.

There more to it than this.  A merchant account is like a line of credit with the processing company and unsecured lender.  There is a chance that a card holder can dispute a transaction up to six months from service rendered or delivery date.  If the merchant does not have funds in the bank account, then the provider will be the one to take the loss.  Also consider in some situations, a merchant collects payments in advance of providing the product or service as well as providing some sort of quality assurance, i.e. will be delivered, can be returned, satisfaction guarantee, therefore the risk is ultimately borne by the provider.  This is like a line of credit.   Keep in mind margins are so low for a provider, risk is screened and monitored very closely

Risk Variables & Key Areas

Company longevity & financial strength

Industry and how cards are processed

Billing method and accepting payments in advance

Why is it important for you to understand risk?

Since there are many companies in the merchant provider industry will manage the risk on the back end or after the account is approved.  Then the business might have an unpleasant surprise of having funds held until the merchant service provider is satisfied with the business meeting certain requirements.  In some cases the funds might be held in reserve for up to 6 months.  If you are unhappy, too bad, they have you under contact.  It is important to have this vetting beforehand.

If a merchant provider does not properly assess risk during underwriting and down the road a risk manager flags the merchant, they may withhold funds, require a reserve (where they hold a certain amount of money in reserve to offset the risk) or terminate the processing relationship. So be cautious when selecting a partner. If you are unhappy, too bad, they have you under contact.  It is important to have this vetting beforehand.

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

Have A Professional In Your Corner?

When you need help with your taxes you most likely go to a CPA for help. When you need medical care you go to a M.D.  If you need legal help you will most likely turn to an attorney who has the designation of J.D. which stands for Juris Doctor.  Need help with investments; you might turn to a CFP.  It just makes sense to turn to a professional for the more important business and personal items in your life.  You can trust these professionals have the knowledge and expertise to deal with the complex issues in their field.  They also have pledged to a higher standard of code of ethical conduct.

Now in the credit card merchant processing field there is a professional designation.  It is called Certified Payments Professional (CPP). The first graduating class was in January 2012.  The CPP is awarded by The Electronic Transactions Association (ETA). 

By obtaining your payments processing solution from a CPP, you can be sure that your representative is knowledgeable about the products and services he recommends and has the expertise to recommend the best and most appropriate solution for your business.  Your CPP has made a significant personal commitment to his profession and has agreed to adhere to the ETA Code of Conduct.

Don’t just call anyone . . . call a CPP

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

Visa announces more fee changes for April 2012

Visa has announced more changes to debit pricing structure, which will take effect April 2012.  When the Federal Government decided to get involved in price control to cap debit card fees, it was addressed by the interchange reimbursement fees.  Now the cat and mouse game has begun.  Now Vise has added fees under what is called “acquirer fees”.  This will get passed on to the merchant but escapes the Durbin rules.   

On with the details:

The new Transaction Integrity Fee (TIF) of $0.10 will be assessed in debit and prepaid card transactions that do not qualify for Custom Payment Service (CPS). The TIF is charged in addition to the applicable interchange fee.

The Acquirer Processing Fee (APF) will be reduced from $0.0195 to $0.0155 per authorization for debit transactions. (It will remain $0.0195 per authorization for credit transactions.)

The Interlink Switch Fee will change from $0.035 per transaction to $0.0225 + 0.08% (8 basis points), capped at $0.035 per transaction.

The new Fixed Acquirer Network Fee (FANF) will be assessed per merchant per month. This is the new name for the previously announced Network Participation Fee. For card present merchants, the FANF is based on the number of locations, and will be $2.00-$5.00 per location per month for most merchants. For card not present merchants and fast food restaurants, the FANF is based on sales volume, and will be $2.00-$15.00 per month for most merchants. (The fee is higher for larger merchants.)

The FANF is based on a merchant’s taxpayer identification number (TIN), just like the recently introduced 1099-K from the IRS. This places even greater importance on obtaining accurate taxpayer information for all merchants, including the legal name of the business and its TIN.

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

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

http://www.tampabaymerchantservices.com

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