Would it be easier to manage your business if you knew your fixed costs were just that, fixed, for the next 12 months? How about 24 months?

Are you tired of explaining to customers why you raised prices again? Or do you just absorb rising costs to keep customers from going elsewhere? During the next year or two, how much more will you have to pay for inventory?  How about your insurance, rent, gasoline, utilities, wages…? It’s all going up.  And with the printing presses at the U.S. Mint heading into overdrive, the sky might be the only limit for inflation.

Well, here’s one cost you can count on not to increase for the next 20 months. For every new merchant account we open through the end of July 2009, we guarantee there will be no price increases until the end of March, 2011. This applies to all 4-tier retail accounts and 3-tier e-commerce/mail order/telephone order accounts. This offer does not apply to Cost-Plus merchant accounts.

Ordinarily, discount rates are adjusted annually (or even more frequently) to keep up with the Visa/MasterCard/Discover increases. But your discount rates (qualified, mid-qualified, and non-qualified), your item fees, your gateway fees, everything will be locked. When we agree on a rate plan, you can count on it!

Even with today’s uncertain credit markets, you can know your credit card costs will remain under control.  But this offer is only available to merchants opening a new account before the end of July 2009.  Hurry!  Time is running out.

In this economy, nobody wants to pay more than necessary for credit card processing. But don’t waste time yet looking for a new processor (unless you plan to try me) just to save a few basis points. Stay put for now, and keep reading. I’m going to tell you about a simple policy change you should make at your business. If you’ll follow my instructions, I guarantee you’ll see an immediate savings every month, and it’ll be more than just a few basis points!

This scenario occurs in nearly every business, but particularly in e-commerce businesses. A customer places an order for one or more items. Let’s say the total cost of the order is $179.50. You process their credit card and collect an authorization number. At some point before you’ve shipped the order and captured your payment, the customer calls back to make a change. Maybe they want to change the shipping address or method. Or maybe they want to change the order itself – more products, less products, or just different products. Regardless, they change something, and that changes the total cost of the order. You probably see this everyday, and you make the changes without ever complaining.

As you already know, the original authorization is good for any dollar amount up to, but not exceeding, $179.50. Any additions to the order that drive the price up will require you to get a new authorization. But what do you do when the changes cause the total cost to drop? If you’re like many merchants, you leave the authorization as-is, and you later collect the new total by manually entering the reduced dollar amount. After all, the original authorization is still valid for up to $179.50, right?

If your merchant account utilizes Cost Plus pricing, you’ve almost certainly seen line items that say “Electronic Interchange Reimbursement Fee” (EIRF) and the corresponding higher discount rates. If your merchant account utilizes 3-Tier or 4-Tier pricing, you may not have seen the term, but you’re still paying for it every month among those transactions downgraded to Non-Qualified.

The Electronic Interchange Reimbursement Fee is assessed when an authorization is settled for any amount other than the authorized amount. This usually occurs when the price dropped due to a change, and the original authorization was used to capture the funds. Let’s look at the $179.50 authorization again. Suppose the customer changed from Second Day to Ground shipping to save $10. When you capture $169.50, your transaction will be downgraded due to EIRF. Cost-Plus accounts will see the actual EIRF rate on their monthly statement. Those accounts with 3-Tier or 4-Tier rate structures will see the transaction downgraded to Non-Qualified. Either way, this will cost you an additional 1% of the total, on average. That means you’d pay about $1.70 more than necessary in fees, just because of the change in shipping rates.

“OK, so how can I avoid these additional charges?” you ask. It’s simple. Make it a habit (or better yet, make it a policy) to get a new authorization number whenever you change an order’s total. Yes, you’ll be charged an additional item fee, but that shouldn’t be more than $0.25. For large orders, in particular, the savings will really add up.

Was this cost saving tip news to you? Hopefully not! If your agent is watching your back, he/she should have already talked to you about it. If not, I’d appreciate the opportunity to earn your business. If you have questions about this or any other topic related to credit card processing, please don’t hesitate to give me a call.

I’m happy to provide this information free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts.  You can also follow me on Twitter, where I regularly post short tips.  I promise to never spam you or pressure you.  Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!

If you operate a traditional brick-and-mortar business, then you’re probably well-served by your retail merchant account with pricing based on “card present and swiped” transactions. You may receive a few telephone orders, but that small number of transactions can be easily entered by hand.

On the other hand, if you operate an e-commerce business that receives orders strictly over the Internet, a MOTO account is probably the only account you’ll ever need. MOTO accounts utilize a pricing structure that assumes your transactions will always be taken via mail order, telephone order, or Internet. In other words, the cards will not be present, so it’s not possible for you to read the magnetic strips with a terminal. Many e-commerce business do occasionally get walk-in customers, but these sales are relatively few are far between.

But how about those of you who don’t fit neatly into either group? You’re part of the growing number of businesses that operate primarily online while maintaining a strong, local retail presence. For you, it may worth the monthly costs to open a second merchant account. There are at least two advantages in having a separate e-commerce and retail account. First, separate accounts allow you to easily distinguish between your two revenue streams since each account will show its own daily deposit in your checkbook. The second advantage is cost savings. Because retail accounts don’t handle e-commerce transactions well, and because e-commerce accounts don’t handle retail (swiped) transactions at all, you’ll experience more downgrades (surcharges) when forcing your account to perform double-duty.

So how can you know that the savings will justify paying for a second account? Since this question usually comes from e-commerce clients who are expanding into brick-and-mortar retail, I’ll explain that scenario. First, you’ll need to know what percentage, on average, will you save on each transaction if you open a retail account. If your best e-commerce rate is 2.20%, improving to 1.70% with a retail account, then your expected savings is 0.50%. Next, you’ll need to know how much you’re going to pay to maintain the second account. Are there monthly minimums? If you’ll only be paying for a second statement fee, say $10/month, then that’s your additional cost. Finally, divide your added costs ($10) by your expected average savings (0.005), and you’ll see your break-even point is $2,000. That means that unless you’ll be processing at least $2,000 per month through the new retail account, you won’t save enough to cover the added costs.

I’m happy to provide this information free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts.  You can also follow me on Twitter, where I regularly post short tips.  I promise to never spam you or pressure you.  Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!

To do business on the Internet and accept online credit card payments, e-commerce merchants need both a merchant account and a payment gateway. The gateway secures the transactions and collects CC authorization numbers, guaranteeing that you (the merchant) will receive payments from your customers’ credit cards. The merchant account works with an acquiring bank to convert authorizations into cash, depositing the money directly into your business’s bank account. But does it matter which of these two providers you contact first? Yes, it does matter (unless you don’t care about saving money, and if that were the case, you wouldn’t be reading this!)

Payment processors (merchant account providers) usually act as resellers for payment gateway providers, and vice-versa. So either one can usually provide you with the other’s services. But since most credit card processing costs (discount rates and per-item fees) are paid through the merchant account, you can save more money if you start by shopping for a payment processor who offers great rates. Once you’ve found your processor, let them establish your new payment gateway (with Authorize.net or another reputable gateway provider.)

Recently, I was contacted by a fairly large e-commerce business with first-year sales of about $4 million. They’d been in business for just under one year. In their haste to go live, they’d accepted a bad rate plan from their local bank. After a successful first year, they were ready for a better deal and better service. Because they’d been using Authorize.net since the beginning, they contacted Authorize.net and asked for help finding a new merchant account. Authorize.net was more than happy to oblige. Soon, the business received contracts for a new gateway (from Authorize.net, of course) and a new merchant account (from an Authorize.net “preferred partner.”) They found me just before signing the contracts. Not only were the discount rates and fees still too high, but the Authorize.net fees were high, too! I was able to set up a new merchant account and a new Authorize.net account, saving the merchant an additional $1,500 per month.

Based on my experience as an e-commerce business owner, Authorize.net is the best payment gateway available. I recommend them to nearly all my e-commerce merchants. But if any processor or agent insists that you use their preferred supplier, hold onto your wallet! Suppliers typically pay fees to be listed as “preferred”, and that usually results in higher costs for you, the merchant.

If you think you may have been the victim of an inside deal like the one I described, call me. I’d be happy to take a quick look at your statement. If it turns out that your gateway and merchant fees are reasonable, I’ll tell you. But if there’s room for improvement, I’ll tell you that, too.

Lately, I’ve gotten a lot of requests from retail merchants who need to accept credit cards, but they don’t have traditional retail locations. Several were salespeople who needed to take orders (and payments) while traveling. A couple were contractors who wanted the ability to swipe customers’ cards on job sites (so they could get lower discount rates), but they also wanted a system that could perform double duty in their retail locations, too. One call was from a man who sells products at county fairs up and down the West Coast. The most unusual may have been the youth minister in Oklahoma whose church operates roadside fireworks stands. They wanted to accept credit cards at six locations. But because their fireworks stands are only open 2-3 months out of the year, they needed to avoid the cost of buying terminals.

I had the same solution for all of them – StarCharge from Orion Payment Systems. Unlike other processors who may require a merchant to purchase an expensive terminal before processing credit cards, this ingenious program by Orion utilizes equipment that most business owners have already – a laptop computer. If you attach a USB card reader (optional, available for about $50 online), the laptop will have the same functionality as expensive credit card terminals, without the limitations caused by telephone or network wires.

StarCharge allows mobile merchants to do business on their terms. When a merchant chooses to add a USB card reader, his swiped transactions qualify for the best “qualified” rates without requiring a phone line. Since the software works on any computer (including a laptop), the merchant is free to accept credit cards at his customers’ locations. He only needs an Internet connection to get instant, real-time authorizations. Most merchants connect wirelessly via Wi-Fi or a wireless Internet card (available through their cellular provider), but a wired connection works fine, too.

The service technicians at Orion will walk you through the process of installing StarCharge on your computer(s), both the in-store PC and/or laptop. In fact, they are happy to help install StarCharge on multiple computers at no extra charge. This means you can arm each of your sales reps with StarCharge, enabling them to accept payments on-the-spot and without paying expensive downgrades. And obtaining real-time authorizations gives you the confidence to know you’ll get paid. Never again will you return to the office to process stored transactions, only to find that a customer paid you with a card that was no good.

You might expect to pay a lot for all the benefits offered by StarCharge, but you’d be wrong.  In fact, you get everything I’ve described for less than half the price of a traditional credit card terminal! Here’s the breakdown:

• $50.00 to purchase the StarCharge software
• $25 for activation and training (no extra charge for multiple computers)
• $5/month (in addition to your regular monthly statement fee)
• $.03/transaction (in addition to your regular transaction fee.)

I’m happy to provide this information free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts.  You can also follow me on Twitter, where I regularly post short tips.  I promise to never spam you or pressure you.  Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!

When debit cards appeared on the scene a few years ago, merchants were told to expect big savings. When a customer pays with a debit card instead of a credit card, there’s an opportunity for you (the merchant) to save, but only if you know what you’re doing. Otherwise, you may end up paying more than necessary. In case your CC processor skipped “The DOs & DON’Ts of Debit Cards”, I’ll hit the high points and show you where you can find more information.

In the first scenario, a customer pays for a small purchase with her debit card. She knows her PIN number, and she’ll be happy to enter it (if you ask her to do so.) Should you ask? Should you even allow her the opportunity?

A typical fast-food restaurant is a good illustration of this scenario. Have you ever noticed that these restaurants never ask you to enter your PIN number when you pay for your order? There’s a good reason. If you entered your PIN number, the restaurant would actually pay more for your transaction. If your current processor never explained this, you may be wondering “Then what’s the point of a debit card?” Debit cards and PIN numbers CAN help you (the merchant) save money. The trick is knowing when to ask for the PIN number, and when to hide the PIN pad. I posted a more detailed article on HubPages that explains all you need to know about this topic.

The second scenario involves a merchant who isn’t set up to accept PIN numbers at all. Perhaps you (the merchant) don’t have a PIN pad attached to your terminal. Or perhaps you accept payments over the Internet or by phone. In those cases, there’s no possible way for your customers to enter a PIN number. Regardless of your situation, you should always pay less when your customers pay with debit cards.

Does your merchant account utilize tiered pricing? If you’re unsure, look for the terms Qualified, Mid-Qualified, and Non-Qualified. If you see any of these terms on your statement, you’ve got tiered pricing. Most merchant accounts group the several hundred or so Interchange rates into broad groups or tiers. That alone doesn’t indicate a problem. Just remember that debit card transactions always cost your processor less than credit card transactions. The problem occurs when your merchant account provider fails to pass the savings on to you. If you see the words Qualified, Mid-Qualified, and Non-Qualified, you should also see the words Qualified Debit (or just Debit.) And most importantly, your processor should be charging 20-30 basis points less for those transactions. For instance, if your Qualified transactions are charged at 1.70%, your Debit (or Qualified Debit) sales should be somewhere in the range of 1.40%-1.50%. Unfortunately, many credit card processors charge the same rate for both Qualified Debits and Qualified Credits, choosing instead to keep the difference for themselves.

I always pass the debit cards’ savings on to my clients, whether they are retail, e-commerce, or B2B. If you’re not sure how you’re being charged for debit cards, I’d be happy to look at a statement and explain it to you. If it turns out that your processor is applying fair rates to your debit card sales, then you probably have nothing to worry about. But if your processor is applying the higher credit card rates to your debit card sales (and keeping the extra profits for themselves), it may be time for you to move on.

I’m happy to provide this information to you free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of all future posts.  You can also follow me on Twitter, where I post tips that are too short to post here.  I promise to never spam you or pressure you.  And please rate my posts and/or leave comments so I’ll know how to improve. Thanks!

There’s an old saying that warns “If you’re trying to sell a cow, don’t give the milk away for free.” (You may have heard it in a song by the Georgia Satellites.) I’m pretty sure the saying had nothing to do with farming! It’s good advice for anyone involved in negotiations, including anyone who’s seeking favorable rates from a new payment processor.

When you’re searching for a new merchant services provider, you have the advantage. You have an established business with a proven track record. You already have a merchant account (in other words, you’re not desperate.) And you know what rates you’re currently paying. If you’re talking to a credit card processor about possibly changing to their merchant account, there’s a good chance they want your business more than you need theirs.

In negotiations, you never show your hand. In the credit card processing business, all providers pay the same Interchange (wholesale) rates. So naturally, we are all able to beat one another’s rates (if we know what rates you’re paying.) If an agent insists on seeing your statement BEFORE he’ll give a proposal, don’t walk away. Run!! If you give him that information, he’ll certainly offer a better rate, but not nearly as good as you might have gotten by playing your cards closer to the vest.

I prefer to give potential clients the best rate quote I can afford, regardless of their current rates. I’ll give you a binding quote without asking what you’re currently paying. If you’re speaking to another agent who’s not treating you with that kind of respect, I’d appreciate the chance to earn your business.

I’m happy to provide this information free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts.  You can also follow me on Twitter, where I regularly post short tips.  I promise to never spam you or pressure you.  Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!

Over the years, I spoken to many business owners who knew exactly what they were paying. They knew their Qualified rates, as well as their Mid-Qualified and Non-Qualified rates. But most business owners just don’t have the time to pay attention to those kinds of details. And even if they wanted to, many statements hide the MQ and NQ rates, disguising them instead as smaller, segmented fees. In those cases, it can be difficult for the casual observer to even locate the rates.

Here’s an easy way to determine your overall cost in less than a minute. In fact, I often use this approach myself to determine whether or not it’s worth if for me to pursue an account. You’ll only need 2 numbers: the total of all transactions processed during a given month, and the total of all discounts and fees paid during the same month.

The first number should be easy to find. It represents your total credit card sales for the month. Usually on the first page of your statement, you’ll see a breakdown of your transactions. It may list Visa, MasterCard, and Discover separately, or there may be line items for Qualified, Mid-Qualified, and Non-Qualified. Regardless, there should be a total shown on the same page. Circle that number.

The second number may be a little harder to find because some processors take money from your daily deposits throughout the month (called “daily discounting”) and then take more from you at the end of the month. In that case, you’ll need to find how much was taken beforehand by locating the Deposits Summary. There, you should see a total of how much was withheld throughout the month. If you find a number like this, circle it. Next, look for a total of all fees and/or discounts itemized in the statement. Since this amount is being withdrawn from your account by the processor, it’s usually labeled as “Total amount withdrawn from your account.” Find and circle that number. If your processor withdrew daily discounts throughout the month, add those two total together. This amount represents your total cost of accepting credit cards for the month.

Now, you simply divide the second number (total cost) by the first number (total credit card sales.) You’ll probably get a number somewhere between 0.0175 (1.75%) and 0.0400 (4.00%). Without knowing anything about your business, I can tell you that 1.75% would be a very low average and 4.00% would be very high. With all fees included, most retail business will be somewhere close to 2%, and most e-commerce businesses should be closer to 2.75%. Businesses that primarily sell to other businesses (B2B) may be closer to 3.50% due to the high number of corporate cards they receive. Keep in mind, these are only examples. Your average will vary based on many factors, including how you receive your orders, what type of cards your customers are using, etc.

If you’re satisfied the results of this quick test, congratulations! If you’re not satisfied with your results, I’d ask you to please give me a call. I’ll look over your results and show you where you’re paying too much. And if you’d like, I’ll offer a rate proposal and calculate exactly what you can expect to save.

I’m happy to provide this information free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts.  You can also follow me on Twitter, where I regularly post short tips.  I promise to never spam you or pressure you.  Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!

Have you ever put off taking action because it was easier to do nothing, even though taking action would surely save money, improve your business, etc? If you’re like me, you prioritize tasks each week, doing the “most bang for the buck” projects first. Less significant projects, although they are easy to implement and fiscally responsible, may never rise to the top of your list – especially if those projects require you to leave your comfort zone.

When it comes to my vehicles, I’m a man of long-term relationships. If I buy it, I’ll drive it ’til the wheels fall off. A few years ago I bought a new Chevy Avalanche. At the time, gas cost about $2.25/gallon. The Avalanche met all my basic transportation needs. I even added trailer brakes to aid in pulling our camper. Over the years, I spent a lot of time in it. You could say I was comfortable in the relationship. But as gas prices began to climb (and climb…), my feelings toward my truck slowly changed. I focused less on the features I loved and more on those I disliked, namely its cost of operation. Every time I filled the tank, at a cost of $100+, the gap between us grew. But out of convenience, I stayed in the relationship. (After all, who’d want to try to sell a gas guzzler in a market flooded with them?) Finally, after spending almost $120 on a single tank, I decided it was time to break it off!

Long story short… it took 3 weeks, but we finally parted ways. And because I didn’t want rising gas prices to end another perfectly good relationship, I bought something that gets 40+ mpg. Now that I’ve done it, my only regret is that it took me so long. I still leave Point A, consistently arriving at Point B. And when I do have to stop for gas, I no longer harbor ill feelings.

For some of you reading this, changing credit card processors sounds like what I went through with my Avalanche. You know you’re paying too much for a service that another processor could provide for less. You know that a better rate plan could save you anywhere from a few cents to a few dollars on every transaction, meaning big savings over the years. Or, maybe you just know you’re not getting the service you deserve. But the thought of spending 20 minutes on the phone completing an application just seems too inconvenient.

How long have you been reading this or other websites, knowing it’s time to make a clean break? Will you continue to “grin and bear it” every time you open another monthly statement? Or will you pick up the phone and finally do something about it?

I’m happy to provide this information free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts.  You can also follow me on Twitter, where I regularly post short tips.  I promise to never spam you or pressure you.  Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!