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Archive for the ‘credit card processing’ Category
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/
Paypal Increases Amex Rates
For those people who use PayPal as their payment processor, you may have noticed a little blurb at the top of your screen about a new Amex Card Acceptance Agreement.
PayPal will now charge the 3.5% fee to accept Amex payments, including it’s usually $0.30 per transaction fee (note this is for PayPal Website Payments Pro or Virtual Terminal).
A TransFS user recently asked:
My business runs on a subscription model and requires recurring billing. Can my gateway facilitate this or do I need to get a provider such as Chargify or Recurly to handle the recurring billing?
Here is our answer:
Unfortunately, most gateways are not built to manage recurring payments. Authorize.net will theoretically do recurring billing, however, their API is not good for making adjustments. For example, if you want to refund a customer one month due to poor customer service, Authorize.net’s API will not facilitate this customization. This is why services such as Chargify and Recurly exist. We recommend going with one of them plus a gateway when your business requires recurring billing: it’ll make your life much easier.
A TransFS customer recently asked:
We are a business centered around micropayments. Can you recommend any processors that specialize in micropayments?
Here is our answer:
Unfortunately, the only available options are Amazon and PayPal. Why? Processors don’t do micropayments because it is not profitable unless you can internalize the transactions and most processors do not have a strategy around that. That’s why only the big guys can do it.
Discount Collected
One of the ways processors confuse business owners is by having misleading statements. For example, look below at the final line of this business’s credit card processing statement. The logical assumption is that the amount being charged is $130.83
Not so. There is a sneaky line item called “discount collected” which is hidden in the “Settlement/Discount” section. This, plus the 130.83 is what the account is actually being charged.
While the business owner is led to believe that his processing fees are $130.83, in reality they are $469.82.
This leads to the phenomenon where business owners believe they are paying a low rate, but actually are paying many times that amount. When looking at your (often complicated) credit card processing statement, don’t take for granted the amount the processor wants you to think you are being charged. Instead, make sure to check your bank account and calculate your fees based on the true charge.
Learn more about how to reach merchant processing statements here.
To compare bids from top-tier credit card processors, check out the TransFS marketplace. A few minutes can help you save (average) 40% on your processing bills.
Update: Ripped-Off By Her Processor, Coffeeshop Owner Turns to TransFS and Takes Steps to Lower Fees
Earlier this summer, I reported on a TransFS user who was totally ripped off by her credit card processor. Luckily, she found a processor on TransFS who will save her serious money and act in an ethical manner. However, she took some steps to lower her credit card processing fees. These steps are easy and will have a tangible affect on her bottom line:
1) Impose a minimum for credit card use- Although this action may seem obvious, until recently it was illegal to set minimums. The Durbin amendment, passed in the last few weeks, is part of the larger Wall Street reform law and makes it absolutely legal for merchants to set a minimum value for credit card use.
2) Swipe credit cards instead of keying them in- Swiping a credit card triggers a lower interchange fee than keying it in. A card present, Visa credit card is about 1.47%+$0.10 while a card not present, Visa credit card has an interchange fee of1.85%+$0.10. That’s a difference of 38 basis points. This may not seem like a lot, but can represent significant savings for a low volume, high number of transactions business. (To put in perspective, almost $400 for $100,000 in monthly volume…over a year, $4800 in savings just from making a small change)
3) Offer incentives- This business owner encouraged customers to purchase gift cards, on which she offered 10% savings. So for example, upon selling a $50 gift card, the customer saves $5 while the business owner only gets charged processing fees for one transaction of $50, instead of 10 $5 transactions.
4) Educate your customers- Communities care about small business owners. Doing something simple to educate your customers may help them make a better payment choice for you. For example, the lady in question is considering hanging up a poster explaining credit card processing fees to her customers.
If you’re a small business owner, start an auction on TransFS now to get bids from top-tier credit card processors and start saving money in minutes.
Retrieval Fee
Often grouped in with chargeback fees, retrieval fees occurs when a customer requests a copy of the transaction receipt for a purchase. They don’t necessarily also dispute the charge (when a chargeback would occur) but rather request the receipt from the processor if the merchant for whatever reason can’t provide it.
This fee is a throwback to previous technology which did not permit copies of receipts to be stored online…now if a customer requests a receipt, it’s as easy as queuing up the receipt in your POS system.
Retrieval fee charges are super rare, and do not occur in tandem with chargeback fees.
To get the best deal on credit card processing services, comparison shop top-tier processors by starting an auction on TransFS.com–in minutes you’ll have apples-to-apples bids.
A TransFS user recently asked this question:
Sometimes I see entities refer to themselves as credit card processors and sometimes as ISOs. What is the difference between these two?
Here is our answer:
The Green Sheet defines credit card processors (also known as merchant account providers) as:
Processor: A processor is any entity that is physically processing a credit card transaction from swipe to settlement. In other words, a processor is a front-end network that enables a dial terminal, POS or gateway to connect to the Visa U.S.A. and MasterCard Worldwide systems for an authorization from an issuing bank.
Indeed, any back-end or settlement network that is receiving those authorizations and settling them to a sponsor bank is also a processor. Chase Paymentech Solutions LLC is a processor. Global Payments Inc. and First Data Corp. are processors. So, too, is Pay By Touch. Each of these companies has either a front end or back end, or both, and is involved in the physical authorization or settlement of a transaction.
Whereas an ISO is defined as:
ISO: This term is often used to indicate anyone selling bankcard services: Even Electronic Payments Inc. (EPI) calls its sales agents ISOs. [It stands for Independent Sales Organization]
So while a processor can be an ISO, an ISO cannot be a processor. Basically, a processor is in charge of the whole deal…just as it says, from swipe to settlement (learn more about the whole process here). ISOs have agents that resell this service…so for example, First Data is a processor and CoCard resells First Data’s services as an ISO. However, if you were directly to contact First Data, you could still get their services without going through an ISO.
How does this affect your business?
It doesn’t. There is no rule that mandates which provider of the categories is better, cheaper, or has superior customer service. This is just a glimpse of how complex the whole payment ecosystem is.
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.
