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Unfortunately most credit card processing rate quotes cannot be trusted, which is why we created TransFS, where all the offers are full-disclosure and fully accurate.
Here is an example of how a merchant account provider has advertised false rates.
Everyone wants links from other websites. It is a good way to build traffic, generate higher search engine rankings and attract more customers. 
There is a good way to do that: make interesting content and tell people about it.
There are many bad ways to do that: comment spamming, buying links, lying, etc.
One of my favorite sites Under30CEO – Jared, can I still read it when I turn 30 on Wednesday?? – recently posted a useful article by my coworker Stella.
Check out this comment to that article – “I really like this article because it is a big help for me and you will know so many ideas. I love the content and every word that you read you can easily understand it. Hope to see more article coming from this author” from “Credit Card Processor” with a link to a First Data website – http://www.fdiseagle.com/.
Seriously??? This is a $$$multi-billion corporation doing spam comments in a blog and lousy / obvious spam comments to boot. The resulting link has a nofollow anyway, so it’s hard to see what they are accomplishing.
First Data gets the Online Marketing Dunce award this week.
cc licensed flickr photo by cogdogblog: flickr.com/photos/cogdog/487367839/
Getting a job at an early stage company is hard. Actually doing the job after getting hired is even harder, like getting elected president of Haiti. We are a seed-stage company, we have an exciting mission, are going after a big market and, now that we have raised some outside capital, are actually doing some hiring. 
Startups at our stage usually do not have established hiring practices. We may not even know for which roles are are hiring. We often do not have “jobs” pages and even more often don’t post jobs on job sites, even the startup-focused job sites.
TransFS is in the market for a great marketing / BD person. Recently we had two people express interest in that sort of position.
One, a guy who had been following us for a while, has gone out to coffee or beer with me a few times. He always talks about how interested he is in the business, how it excites him, how he thinks it could be huge. In his past he has done some consulting work that is relevant and has decent results, which he likes to talk about, and usually does some name-dropping. Once I asked him to do us a small favor and he politely declined.
The other guy came to us more recently. We have never gone to coffee or beer. Instead he volunteered to help us solve a specific problem which he does in his spare time. The project has gone well and in the process we have gotten to know each other. Recently he expressed interest in joining the team full-time. Along with that expression of interest he wrote a detailed job description for the role he would like.
We won’t hire the first guy. While we haven’t fully figured out the hiring plan at TransFS, the second guy is pretty damn appealing. I recommend that approach to anyone looking for a startup job.
Buyerzone Scam
Lead generation is dead as a business model.
Recently we posted an account of trying to shop for a credit card processor on buyerzone and a video of the buyerzone process. It wasn’t a very good experience and its easy to understand why customers are upset, since BZ promises comparison shopping and really just sells your information as a “lead”.
It turns out that it’s not a particularly good experience for service providers either. There are quite a few negative reviews on sites such as the Ripoff Report.
We know a lot of current and former Buyerzone employees. They are not bad people, or trying to rip anyone off. But their business model of lead generation is one that is fundamentally dissatisfying.
Shoppers don’t want their information sold, they want straightforward options with all the benefits and disadvantages fully disclosed.
Service providers don’t want phone calls. They want customers.
Top 10 Payment Gateways
Payment Gateways are a layer of software that sit between your software / website and the credit card processor.
Q: Why can’t I integrate directly into the processor?
A: In some cases you can, but the processing networks are really old, have difficult APIs and are private networks not exposed to the internet. Therefore, integrating into a processor directly is quite cost prohibitive (imagine requiring a leased line). The gateway providers, and there are many of them, have developed that software already, have much easier APIs and provide the service at a very reasonable cost on a hosted, per-transaction basis.
The top 10 payment gateways in the US in popularity are:
- Authorize.net
- Cybersource
- Chase Paymentech Orbital (only works with Chase Paymentech processing network)
- First Data Global Gateway (only works on First Data’s various processing networks) – this used to be called Linkpoint, EFSNet and Yourpay, at various points in time
- Plug N Pay
- Beanstream
- Paypal Payflow
- ViaKlix / Virtual Merchant (only works with Nova/ Elavon)
- SecurePay
- USAePay
- TrustCommerce
Keep in mind that most of the gateway companies are not credit card processors / merchant acquirers. Many, especially the largest, such as authorize.net, are independent companies that work with a many processors. So you have lots of choice, don’t be fooled into thinking you need to sign up with one particular processor because of its gateway compatibility.
Even the gateways that are owned by a processor, such as First Data Global Gateway, work with a few different processors, so you always have choice, even if you don’t want to switch your gateway. TransFS can help you determine which processors are compatible with your required gateway and automatically help you negotiate the best rate.
Mastercard recently announced that it is opening it’s API, which is terrific news. Payments are important and they should be more open. However, the announcement is very light on details.
In addition to payments, MasterCard has identified approximately 20 platforms and services that it plans to open up to developers via the portal. These platforms and services provide additional functionality and enhancements to MasterCard’s payment capabilities.
The automated email that comes back from expressing interest to api@mastercard.com isn’t much better.
Thank you for your interest in the MasterCard API.
We will be in touch once we open this up to the development community.
Best regards,
The MasterCard Open API team
A few observations:
- Payments are the primary functionality so it is good they are included – any API that did not include payments would be a publicity stunt
- This will create channel conflict for Mastercard. Right now to process a transactions through mastercard, businesses typical sign up for a credit card processing account with a company like First Data or one of their 800 smaller competitors. If Mastercard is going to allow everyone to go around First Data and the other payment processors, that is very bad news for those payment processors. One way around the channel conflict is to have a different (higher) pricing structure for the new-style payments.
- If Visa does not come up with a competing product this will be very awkward for them. If there is an open API for Mastercard and Visa requires a traditional merchant account to handle the same transaction, there are at least a few online services that will use only Mastercard (afterall, most people have both a mastercard and a visa in their wallet).
- We will have to wait to see what the non-payments platforms and services are but they are an afterthought. Access to rewards programs? ATM locations? That’s underwhelming.
In growing a new business entrepreneurs often wish for more money and other resources to grow the business more quickly. Recently, I was talking to a friend who runs a very successful asset management business here in the Chicago area. Aside from being a 2-time successful entrepreneur himself, many of his clients are successful entrepreneurs and he usually has a great perspective on business strategy.
His lesson this week was:
Even the best businesses take a while (years) to cashflow and many businesses need time more than they need money, entrepreneurs need to be patient and not give up so early.
I thought more deeply about that comment and it began to make a lot of sense to me. Small changes can be made and tested quickly, but making major changes to product or marketing strategy both require time to measure the impact of each change. If it takes 50 major changes of direction to get a product right and each one takes 2 weeks to make and monitor, that’s 2 years worth of work!
Image courtesy of bogenfreund on Flickr — http://www.flickr.com/photos/28548387@N00/556656621/
The insurance industry, including carriers, brokers and agents increasingly accepts credit cards. Typically such businesses accept payment from their customers over the phone or computer, more similar to an internet business than a retail store.
Insurance companies have the added benefit, however, of a special category for Mastercard transactions (no special category exists for Visa, however). The full mastercard interchange guide is available at mastercard.com and below is a summary.
| Card Type | E-commerce Rate | Insurance Rate |
| Consumer Credit (non-rewards) | 1.89% + 0.10 | 1.43% + 0.05 |
| Consumer Rewards | 2.04% + 0.10 | 1.43% + 0.05 |
| Consumer World Rewards | 2.05% + 0.10 | 1.43% + 0.05 |
| Consumer World Elite | 2.50% + 0.10 | 2.20% + 0.10 |
The Mastercard insurance interchange rates are significantly lower than for other industries. To ensure you are getting the lowest possible rates:
- insist on interchange plus pricing
- ensure that you are set up to qualify for your industry-specific rates
- audit your bill afterward to ensure you are getting those rates
BillShrink is a great site that helps consumers shop for better deals on credit cards, cell phones, etc. It’s a good resource for business owners too, since most of us use those products. They recently announced that they reached 1,000,000 users, really an incredible amount of progress, very impressive.
Currently our company TransFS helps business owners get better deals on credit card processing. In the future we will help business owners shop for other financial products, such as payroll processing and lines of credit.
We do not compete with Billshrink, but we are similar enough that we draw inspiration from them and are happy when they have success since their hearts are in the same place as ours.
Keep kicking butt Billshrink!! We’re pulling for you!
Merchant Account Extra Fees
I recently stumbled upon a really great article in Digital Transactions magazine from June 2008 by Marc Abbey, a managing director at First Annapolis Consulting and an expert on credit card processing, entitled The Threat to Price Stability in the Small Merchant Market.
If your business depends on credit card payments you should read that article, but here are the highlights:
- Competition for new customers is increasing ( **great** news if you accept credit cards)
- Pricing for large customers has decreased by 8%-10% per year for the last 10 years
- Prices for smaller customers have not decreased because, while the list prices has decreased, extra fees have increased
- Merchant acquiring (credit card processing) is a business with large scale economies and low variable costs – in other words, the profit margin from adding a new customer is very high, which means that they have a strong incentive to add new customers
- Owners of small businesses do not pay much attention to their credit card processing fees, which leads to an inefficient market – in other words some businesses get better deals than other businesses, depending on how good they are at shopping.
- Business owners don’t pay enough attention to extra fees, which allows the processors to grab extra profits by sneaking in extra fees the business owners don’t notice (for example 37% of processors charge a more than 1% downgrade markup)
- Processors have grown rich charging extra fees, but that is about to change as the environment gets even more competitive and business owners learn how to see through pricing tricks
- More and more processors (around 30%) are using interchange plus pricing, which is more transparent and offers less opportunity for hidden fees (previous article Why You Want Interchange Plus Pricing) and those processors are gaining market share rapidly
Photo from Boxchain - http://www.flickr.com/photos/boxchain/
If you are a business owner that accepts credit cards, it pays to shop carefully (previous article Strategies for Cutting Processing Costs). If you want help shopping, we can help, the TransFS Marketplace has a dozen of the best credit card processors bidding for your business, every customer who uses the marketplace gets a great deal without wasting a lot of time shopping.
Extra fees like those described above are illegal on the TransFS Marketplace.
