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Archive for September, 2009
ApparelNews.net reported that the The Merchants Payment Coalition released a study showing a growing concern from retailers over exaggerated credit card fees. In the US, retailers pay roughly a two percent interchange fee for each credit card purchase. This is compared to a 0.5% interchange fee in Australia, and a 0.3% interchange fee in the EU.
Fed up with paying fees up to six times greater than other countries, retailers are now pushing for action in congress. A bill in the House called the “Credit Card Fair Fee Act of 2009” and the Senate’s “Credit Card Fair Fee Act” propose a system where merchants can together negotiate with banks over interchange fees. These two bills would let merchants have more access to talk to banks in establishing fees. However, Visa and Mastercard retort that merchants have plenty of opportunities to discuss lower fees.
Reform is met with criticism from merchants and consumers alike. About 60% of consumers believe merchants should continue paying the cost of accepting credit cards. Some retailers also believe that reform would benefit large businesses, but would not affect small business.
Last year, US interchange fees were up 33% from 2006. This represents $48 billion in 2008, and $42 billion in 2007. At TransFS.com, we strongly support the reform of interchange fees. Here are some ways for retailers to save on processing costs: (From ApparelNews.net)
1) Buy transaction machines instead of leasing: Buying a machine can cost about $300, while leasing a machine from a fee-processing company can cost $50 for 48 months.
2) Ask customers to use debit cards: Debit cards have lower processing fees, so offering savings on preferred payment methods can often pay off.
3) Use TransFS’s comparison shopping engine: We allow processors to compete against each other to win your business. This results in better pricing for you. We vet all of the processors who bid on our site to make sure they provide the best service and will act in the best interests of you, the merchant (in fact, we even contract the processors abide by certain rules that are merchant friendly).
Maintaining paper business records is an expensive, time consuming process. Business.gov has some tips to help your business decide what the benefits of going paperless are, whether it’s the right time for your business to switch, and if so, how to start the process.
Some basic benefits are include reduced costs, improved operations, minimizing risk, and environmental benefits. If your business is already paperless, don’t go “halfway.” Be fully committed to the system otherwise having both kinds of records can be confusing. Also, be ready for the initial monetary investment in a good system. Going paperless may seem daunting in the beginning, but in the long term it will have a lasting effect on your business.
Hello Tech Crunch Readers!
TransFS was fortunate enough to receive some great coverage from Leena Rao in Tech Crunch today. Please check out the article if you have a chance. It does a great job of summarizing what we do for merchants.
Earlier this year the guys at 37signals wrote an informative post about how they limited chargebacks. In it they shared their history of changes that reduced chargebacks little by little. This culminated in an innovative idea to create a website that explained 37signals’ charges to their customers. The URL of this site was then used as the business name on the credit card statements of customers. From their post:
If you don’t use a product descriptor (“Basecamp” or “Backpack”), you get 22 characters. So I decided to register 37signals-charge.com, redirect it to 37signals.com/charge, write up a page explaining why there’s a charge on your card, and put that URL on people’s charge slips instead of “37signals, LLC” or “Basecamp” or “Highrise” etc.
Now when someone buys something from us, this line item shows up on their credit card statement:
37signals-charge.com 800.xxx.xxxx ILVisiting that URL takes you to this page where we explain the charge, the products, some suggestions if you don’t recognize the products, and a link to our billing support form someone needs additional help.
This was quick to implement and lead to a 30% drop in chargebacks as a percentage of sales. Not bad for a small investment of time.
Do you have an innovative method to limit chargebacks that you have used in your business? If so, please share it with us in the comments.
The Merchant Maverick posted an article on cancellation fees today. In it, the Maverick mentions that cancellation fees are something that unhappy merchants consistently list as an annoyance. In fact, in a lot of cases merchants don’t even realize there are cancellation fees listed in their contracts.
Not surprisingly, all of us at TransFS dislike cancellation fees as well. We dislike them so much that we actually require all of our merchants to remove any cancellation fees they normally include in their contracts for merchants that find them through the TransFS marketplace. This is just one of the ways TransFS protects merchants.
If you are looking for a new processor, or looking for your first processor, give the TransFS comparison shopping engine a try. You won’t regret it.
Merchant Maverick, an outstanding merchant account review site, just published a great post on interchange and interchange-plus pricing. We are giving this post the TransFS “must read” certification so check it out when you have a chance. If you want to learn more about interchange and interchange-plus you can also read the following two posts that we have written on the subject:
Why you should want interchange-plus pricing
After reading these posts you will understand why we only allow bidders to use interchange-plus pricing in the TransFS credit card processing comparison shopping engine.
A new survey conducted by Visa recently found that consumers aren’t sympathetic to merchants when it comes to the costs of accepting credit and debit cards. It turns out that “consumers believe retailers benefit far more from accepting credit and debit cards than they pay in costs.” Consumers also believe that merchants look at card acceptance costs as a cost of doing business, just like they look at electricity.
Here is an excerpt from the survey that is especially interesting:
Retailers and their well-funded trade associations have filed lawsuits and are aggressively lobbying Congress to allow them to shift their business costs to consumers by allowing merchants to charge checkout fees whenever consumers use credit or debit cards. At the same time, national convenience store chains have launched misleading, in-store petition campaigns to cover for their checkout fee efforts.
“The response is loud and clear: consumers aren’t buying the message convenience store chains and big retailers are selling,” said Bill Sheedy, group president of the Americas for Visa Inc. “This research demonstrates that consumers are well aware that legislation is a Trojan horse that likely will lead to higher prices for cardholders while retailers pocket the savings.”
“Retailers want the best of both worlds – the benefits of card acceptance without paying the costs,” Sheedy added. “This research shows that retailers who are campaigning for checkout fees or uneven legislative schemes that shift the cost of doing business onto the backs of consumers are risking a customer backlash.”
I think it is instructive to put all of this is some historical context. When credit cards and charge cards first came to market a lot of merchants looked at them a fantastic innovation. Why? Because a lot of merchants ran their own credit operations but were unable to successfully account for the risks of doing so and thus found it hard to maintain these practices (even though customers demanded to be able to buy on credit). In essence, merchants looked at credit and charge cards as a way to outsource their expensive and time consuming in-store credit operations. (source: Paying with Plastic)
With that said I should mention that we, at TransFS, do believe that merchant credit card fees are still far too high. That is why we built the TransFS credit card processing comparison shopping engine after all (we want merchants to obtain the best possible rates that they can). However, we do believe that accepting credit cards and debit cards is important for merchants and that it is certainly demanded by consumers. Even before the dawn of credit and charge cards consumers demanded that merchants allow them to purchase items on credit. Credit cards allow merchants to offer that service without all of the hassle and the risks associated with running their own credit programs.
(via PaymentsNews.com)
We come across interesting articles from time to time that we want to make sure you know about and these two fit the bill. Here are the synopses:
10 Tips for Better Business Planning
Timothy Berry, founder of Palo Alto Software, has a great guest post over on Business.gov that discusses 10 ways to improve your business planning. Our favorite planning tool comes up as #1 on Tim’s list. What is that tool? Simply calling your customers and asking some questions. Nothing is more powerful than talking to customers and potential customers about your business.
Revolution Money: When closing accounts is counter-revolutionary
Some of you may already know about Revolution Money but for those that don’t, Revolution Money is a startup founded by Steve Case that is focused on building out an alternative payments network that is very friendly to merchants (one main feature: a flat 50 basis point per transaction fee). In an article published today, American Banker columnist Maria Aspan takes a look at Revolution Money’s recent closer of 2% of their cardholder accounts. This is an unusual move for a small payment network to make. Revolution claims it is closing the accounts to accomodate an additional banking partner. To learn more please check out the article on American Banker and view the Revolution Money corporate timeline.
Easy PCI Compliance
PCI Compliance rules, designed to ensure that credit card numbers are not kept on merchants’ computers in a form that are easy to steal, is a good thing, nobody like having their credit card stolen and fraud hurts everyone. However, it is expensive and complicated for everyone who accepts credit cards, in particular online merchants. Most business owners have no idea what they have to do to meet the PCI compliance requirements.
If you are confused about PCI compiance, Internet Retailer recently posted a good article on the topic. The best part of the article is this:
Don`t hold data
PCI experts say one of the best ways for a retailer to reduce PCI compliance costs is to not hold cardholder data, because only retailer systems—networks, servers, databases and software—that hold cardholder data fall under PCI. No card data in a customer history database, for instance, means that database is excluded from PCI audit.
Seriously folks, most smaller businesses do not even require an audit if their numbers are not stored. Just send the card into on to your gateway company and let them store it. Most small and midsized businesses, if they don’t store credit card numbers, can achieve PCI compliance by simply filling out a self-assessment questionnaire.
This is one of many “post round-ups” that will start to show up on Financially Speaking. These post round-ups will allow us to quickly and easily share articles we find relevant to business owners. In this edition we highlight a post on the Consumer Reports website that highlights the hassles consumers face when using checks. We also highlight a post on American Express’ OPEN Forum that puts forward 20 time and money saving tips for business owners.
The Hassles of Using a Check: ConsumerReports.org
With many consumer turning back to checks in order to curb their credit and debit card spending, the issues of paying with checks have begun to emerge once again. This article from Consumer Reports highlights some of those issues. One of the main issues that is highlighted in the article is the use of TeleCheck. TeleCheck essentially runs credit checks on customers and can deny customers who actually have sufficient funds in their accounts. This is a huge hassle for both consumers and business owners.
20 Tips to Save Time and Money in Your Small Business and at Home: AMEX OPEN Forum
While the post doesn’t include using the TransFS credit card processing comparison engine to quickly and easily save money on credit card processing we still think it contains some great time and money saving ideas for business owners. One of the ideas that is close to our hearts is to shop around around for the best banking deals to make sure you are paying the least amount of fees and earning the most interest. You would be surpised how much different accounts vary in terms of both fees and interest payments.
