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This weekend, along with hundreds of other self proclaimed tech geeks, I will be attending SXSW Interactive in Austin, Texas.
This is a weekend of firsts for me: first time at SXSW…first time in Texas.
I will be blogging from Austin about all of the cool stuff I’ll be learning so even if you can’t make it…you can read all about it hereon Financially Speaking.
Of course, I’ll be specifically interested in how technology will affect the payments world, social media outreach to small business, and cool new stuff in general. If you have any questions or just want to see what’s up, follow me @TransFS or shoot me an email at stella@transfs.com
BuyerZone Experience Sucks
Last week, I decided to try an experiment… what would happen if I were a business owner looking to find a credit card processor from BuyerZone? Here’s what happened:
Friday Feb 26th
9 AM Filled out form on BuyerZone. Wow they asked for a lot of information. They said I would get quotes from multiple credit card processors, but at the end of the form, it just said I would be contacted by processors…no quotes. Hmmm….sure smells like lead generation…
9 PM My cell phone rings. It’s an unknown number…I let it go to voicemail since I’m out with friends (at 9 PM on a Friday). Later, I check my voicemail and it’s a processor.
Sunday Feb 28th
Got a few emails. One was very to the point about how much my service would cost. Another had a bunch of text followed by some numbers. The third had no quote at all, just text about the processor. The two quotes I am given are not in the same format so I can’t really compare them; one is interchange plus and the other is tiered. They also have random charges like “paper statement fee.” I’m most confused and decide to set up a time during the week where I will call these salespeople at my convenience and figure out where I’d get the best price.
Monday March 1st
9:30 AM Salesperson calls. I’m working and can’t pick up. This happens a couple of times throughout the day. Why can’t I just call when it’s convenient for me?
Tuesday March 2nd
I plan to figure out the best prices this afternoon. Opening the first email, I quickly locate the rep’s name and phone number. It goes straight to voicemail so I leave a message asking the salesperson to call me within the next few hours. I dial the next phone number and it’s busy. It’s always busy for the next two hours everytime I try to call. The third email leads me to a salesperson who apparently does not exist, the operator tells me “we have no one by that name working here.” Finally, the first salesperson calls me back and I can ask my questions. This processor advertises 0%. When I ask how they make money, she answers me that there is an annual fee I have to pay. This was nowhere in the email. Finally, frustrated, I decide to be done for the day. This has led me nowhere.
This experience was valuable for me since I got to see exactly why TransFS is sorely needed. Business owners should not have to go through such a tedious and inconvenient process to set up their credit card processing! Luckily, using TransFS it takes minute to get instant bids that are comparable to each other. Thank goodness for TransFS…(trying to be unbiased, can’t help it!)
Lessons in Customer Service
Being a newbie to customer service, I wasn’t quite sure what to expect, or what was expected of me. However, after hundreds of phone calls and chats with TransFS users, I’ve learned some general guidelines make customer service one of the most satisfying parts of my day. Here are some tips from lessons that I learned:
1) What is your personality?- As face-to-face interaction decreases and digital communication increases, a lot of behavioral cues taken from body language and human contact are lost. This means that language used in email is critical for getting not only your message across, but projecting whatever attitude or personality your business embodies. I had to tone down my professional speak a bit for TransFS, since we like to be seen as casual and approachable. On the telephone end, voice cues are your way of getting personality and message across. I like to smile before dialing a user, it just makes the whole interaction more pleasant. Even when you’re discussing something as seemingly mundane as credit card processing (trust me, it’s actually fascinating!) that extra bounce in your voice lets the users know you actually care.
2) Politeness and Energy Go a Long Way- Think extra polite in your interactions with users. Making jokes and laughing are always appropriate, but having that extra bit of respect will make you stand out. Adding more “thank you’s” is an easy way to show your appreciation and concern for your customer’s problem. Use your voice to show how excited you are in helping your customer deal with their issues and see value in your service.
3) Think Like the Customer- When customers ask questions, try to understand their context. Why are they asking this question? Maybe there is a deeper issue they mean to address. If you can get at this deeper concern, you’ve done your job. You’ve also assuaged the customer because they feel that you understand and care for their issue to be resolved. Another approach is to make sure you do not sound salesy. Speak to your customer with phrases that imply agency vs commitment. For example, “feel free to check out this feature…” ”we have a cool iPhone App that is free to download…if you want.”
4) Speak to Your Customer- Especially in an industry as technical as merchant account services, knowing at what level to speak to your customers is critical to their happiness. Try to gauge their level of understanding from what they tell you, and make them feel knowledgable. For example, it’s nice to say “As a dentist’s office, I’m sure you already know that accepting a variety of credit cards is important to meet the payment needs of your patients, but did you know….” Or end with…”but you probably already knew that.”
5) Make Sure They Are Satisfied- Always end your interaction by asking if your customer is 100% satisfied with your service, and ask if there is anything else you can do. Doing this ensures your customer will hang up the phone feeling particularly comfortable with your service. Asking this may also bring to light other issues they might have.
6) Go the Extra Mile- Follow up with your customers; show them you care. Speaking with customers is an important way to drive innovation, referrals, and keep your business in check. Working in your bubble can make decision making narrow sighted, but by broadening and really getting to know your customers, you will understand your business more completely.
Are you completely happy with this post? If not, feel free to email me at Stella@transfs.com 
Image thanks to http://www.flickr.com/photos/10159709@N07/2566010605/
In an effort to do some targeted advertising, I decided to try Facebook Ads and LinkedIn Ads. My assumption before the experiment was that LinkedIn would be much more effective and have higher CTRs because it is a professional sphere whereas Facebook is more informal. I started with Facebook Ads, designing 3 different ads in one “campaign.” One great feature in making a campaign is that Facebook really holds your hand throughout the process. Not only is their help section extremely useful, and offers a range of tools and explanations, but help is provided on the side with each step. After designing the ad, Facebook lets you narrow in on your target market much more detailed than LinkedIn. 
Whereas on LinkedIn, your choices are much more limited due to the way they define their users. For example, “business owner” on Facebook can just be listed as an interest, whereas on LinkedIn you have to guess at which title/position a person has: manager, vice president, CXO, etc. Here’s what their Targeting page looks like. 
The pricing on Facebook is also superior to LinkedIn. On both sites, you can choose between CPM vs. CPC, but Facebook suggests a value for both. Another huge difference is that LinkedIn is much more expensive. Facebook’s minimum daily advertising budget is $5.00 while LinkedIn’s is double (not sure why?). On Facebook, the ability to see the ad’s performances side by side was really helpful in playing with messaging and seeing what was effective. The ability to manipulate data was also superior on Facebook. They offer different kinds of reports, graphs, CSV uploading…it’s fun to manipulate and play around with all of the tools they offer. LinkedIn: don’t even think about it. Extremely underdeveloped. As far as performance, neither one was fabulous or game changing, but Facebook is proving to be worth the little money put in, whereas as LinkedIn was a failure. By running multiple ads, we are able to see which messaging works, and experiment with our targeting (for example: we started out targeting “college graduate business owners who speak English” and decided to drop to “business owners who speak English”). Our highest CTR on Facebook is 3.3% while it’s less than 1% on LinkedIn. Conclusion: Though Facebook ads aren’t as effective as we’d like, they are a great way to get your brand out there while on a tight budget. Though LinkedIn may seem intuitively like a better fit for some business advertising, skip it. Facebook’s advertising is immensely superior in quality. For more information, check out this great article about another business owner’s experience.
A TransFS user recently asked:
When there is a return, do I get money back from the processor?
Our answer:
Yes and no. You do receive money back for the interchange and assessment portion of processing, but since the return is another transaction, you will be charged again to process. (this is pennies) Feel free to learn more here.
Yesterday, Techcrunch reported that mobile payments startup Boku (now calling themselves Paymo) raised $25 million in series C funding led by venture firm DAG Ventures. Since its launch in June, Boku has raised $38 million in funding.
The way it works is that to make a micropayment, Boku users enter their cell phone number on the website, reply to a text message, and all virtual charges are tacked onto their monthly cell phone bill. This is great since users don’t need to have a credit card or bank account to make a micropayment.
Boku recently acquired its competitors Paymo and Mobillcash, and with this acquisition gained a strong base of users internationally. No joke: Boku boasts service in 58 countries and 190 carriers with more countries stepping into the queue.
One of the major problems mobile payments platforms face is high fees stemming from mobile carriers. This can represent anywhere between 10-50% of purchase price….also nothing to joke about. However, Boku is in the process of negotiating these fees down, first in Europe then hopefully followed by the US.
Boku’s major competitor is Zong, most well known for providing virtual currency via Facebook.
In a rare move, the major credit card companies Visa, Mastercard, American Express, and Discover have decided to waive interchange fees on donations made for the tragedy in Haiti. Happening only once before for tsunami relief in 2004, the revoking of interchange fees shows how card companies succumbed to public scrutiny over highlighted fees in light of the tragedy.
The Huffington Post reported that some non-profit disaster relief organizations collect up to 85% of their donations by credit card which translates to over $250 million dollars that credit card companies pocket from non-profit organizations. Many of these profits are pocketed directly after a huge disaster–like the earthquake in Haiti.
According to the New York Times, the companies will do as follows:
1) Visa- No interchange fees through February to donations made to major charities providing relief in Haiti. The list is still being compiled. Visa will also donate revenue generated by charitable donations through next month.
2) MasterCard- No interchange fees on donations made using US-issued MasterCards to the American Red Cross, AmeriCares, Unicef, Save the Children, and CARE USA.
3) American Express- Rebating transaction fees for donations made on the card directly to nonprofits listed on the Agency for International Development’s Web site.
4) Discover- Waiving some fees, but have not offered the public details.
Non-profits are a great candidate for saving money using TransFS. By using the reverse auction system and getting competitive bids from top processors, nonprofits can save an average of 40% on processing. Non-profits really need to make every penny count, so wasting money on excessive payment processing fees is an easy fix for non-profits looking to save some money.
The outcry of small business owners over interchange rates has been heard by their representatives in Congress… sort of. Three bills are currently in the legislative pipeline that would regulate interchange fees. Below are quick summaries and links that will allow you to track the progress (however unlikely) of these bills.
S.1212 The Credit Card Fair Fee Act
Summary: This bill proposes an ambitious bureaucratic solution. S.1212 would direct the Attorney General to appoint a panel of three Electronic Payment System Judges. The judges would have broad authority to set rules on interchange rates and terms of access to payment systems. This bill is my favorite piece of legislation from what has so far been proposed. I’m actually somewhat surprised it was even proposed – I thought command and control price setting (by the government at least) was taboo in this country.
Status: This bill was introduced by Dick Durbin in June, and was referred to the judicial committee. The committee has not taken up the bill.
H.R. 2965 The Credit Card Fair Fee Act
Summary: H.R. 2965 would alter antitrust laws to allow merchants to negotiate with acquirer banks to set interchange rates. Apparently, these negotiations would be illegal price-fixing practices under current antitrust laws. In my view this solution would do very little for small merchants. The only merchants that could effectively leverage negotiations with the uber-bank acquirers would be the Walmarts of the world, giving big merchants another competitive advantage over small merchants.
Status: This bill was introduced introduced in the House by John Conyers (D MI-14) and Bill Shuster (R PA-9) in June, and referred to the House Judiciary Commitee, which hasn’t taken up the bill.
H.R. 2382 The Credit Card Interchange Fees Act
Summary: H.R. 2382 takes aim at regulating discrete elements of the payment processors’ unfair business practices, by (1) protecting rights of merchants to post interchange rates information for customers, (2) protecting rights of merchants to not honor all cards (such as high-rate rewards cards), (3) protecting rights of merchants to steer customers to payment methods, (4) protecting rights of merchants to establish minimum amounts for payments with credit cards, and (5) prohibiting requirements for minimum numbers of transactions. I think this bill would be helpful if enacted.
Status: This bill was introduced in the House in June by Peter Welch (D VT). It has been referred to the House Committee on Financial Services, which has held hearings, but has not voted to send the bill back to the floor.
I am not optimistic about the prospects of any of these bills being passed. They are all in committee, where the influence of the lobbyists is at its most pernicious — and the powers that stand to lose from these bills have very influential lobbyists. By this reasoning, I think something like H.R. 2965 is most likely to be enacted, because it would benefit the huge retailers, who also have effective lobbyists. Nevertheless, Congresscritters do love to spout off about their love for small business, so maybe there is some chance that we can make them do something useful, such as pass S.1212 or H.R. 2382.
* Photo by KrS-NrY http://www.flickr.com/photos/9040545@N06/3440552648/
Debit Interchange Fees
The New York Times ran this interesting article yesterday, investigating the difference between signature debit transactions and PIN debit transactions. In my opinion, the article does a pretty good job of describing the vast market power of Visa and Mastercard, and the ways in which that market power distorts the debit payment system. For example, I didn’t know that when debit systems first emerged in the 1980’s, merchants actually received money back from banks for debit transactions because debit transactions saved banks the cost of processing checks. This makes a lot of sense, and highlights the fact that the actual cost of debit “interchange” for banks is practically nothing. Visa entirely changed the market by incentivizing banks to issue debit cards that use signatures instead of PINs, and charging higher fees. Because of the bizarre structure of the payments market, the higher rates charged by Visa actually made their more expensive product more attractive (to banks), and Visa captured a huge chunk of the debit payments market. Mastercard responded by increasing their interchange rates. The result is that merchants now pay approximately 75 cents per 100 dollars in interchange fees on debit purchases. All for a process that costs the banks almost nothing. The NYT reporter should be commended for getting this quote from Elizabeth Buse, Visa’s global head of product, with respect to debit interchange fees: [they are] “not a cost-based calculation, but a value-based calculation.” Indeed.
But beyond despairing over the market power of payment networks, merchants can take some steps to reduce their exposure. Specifically, signature debit still incurs larger fees than PIN debit, as shown in the chart. The article describes how banks try to encourage customers to use signature debit. Merchants should nudge customers toward the PIN option.
The GAO released this report last Thursday, on credit card interchange rates. Interchange rates are the rates charged by the banks that issue credit cards, and typically are about 2% of each transaction. These rates are extremely frustrating to merchants because they have been steadily increasing and because merchants (especially small businesses) have no practical means for negotiating these rates. Basically, if you want to accept 
Visa and Mastercard you are stuck with interchange rates. But hue and cry from merchants has caught the attention of the Feds. There are several legislative proposals on the table designed to help control interchange rates, and Congress directed the GAO to create a report on the subject.
The GAO report verifies the perception of merchants that interchange rates have gone up. The report also suggests that issuing banks may exercise market power, such that they can raise rates without losing customers (an economically inefficient state of affairs). That aspect of the report is the good news for merchants and their political advocates. The bad news is that the report criticizes the most commonly proposed approaches for fixing the problem, including (i) setting interchange rates, (ii) requiring disclosure of rates to consumers, (iii) prohibiting card networks from imposing rules on merchants, and (iv) antitrust exemptions to allow merchants to directly negotiate with issuing banks (which would generally be considered an illegal agreement in restraint of trade). The GAO is apparently skeptical that such measures would actually reduce prices for consumers.
While the best solution to interchange rate hikes may need to come from government, there are other transaction costs that merchants can negotiate down, including processing fees (for an earlier blog post explaining the difference between interchange and processing fees, click here). In fact, the GAO report found that the market for processing fees is in fact highly competitive. Each year approximately 1.4 million merchants switch processors (otherwise known as merchant account providers). TransFS tries to make it easier for merchants to make this switch, by setting up an internet auction to find the best-priced processor.
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About TransFS
TransFS is a comparison shopping website for credit card processing.
Our unique auction process and comparison shopping engine leads to an average savings 40% on credit card processing.
Click here to learn how TransFS works or try TransFS now to quickly add cash to your bottom line. Search
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