Maxx Merchant Services Blog

Mobile Payments | As a retailer should you care?

Trends show that consumers are adopting mobile payments at an increasing rate. A recent study from Gartner shows that mobile payment increased by 38% (to 141 million) between 2010 and 2011. Additionally, the Yankee Group predicts the value of mobile transactions worldwide to increase from $162 Billion in 2010 to $984 Billion in 2014, over a 600% increase. These predictions as easy to justify with giant players such as Verizon, AT&T, T-Mobile, Google, Sprint, Citi and MasterCard all jockeying for position in the virtual wallet space.

What is a mobile payment?

A mobile payment is the exchange of money through an electronic device such as a phone, tablet or any NFC (Near Field Communication) compatible appliance.  NFC is the technology that allows for an electronic payment to be sent via contactless communication.

Will my merchant account be affected by mobile payments?

If your business has a retail shop, yes this trend will affect you. The assumption in the marketplace is that once consumers adopt the concept of a virtual wallet they will cease to carry conventional credit cards. A virtual wallet allows the consumer to convert their physical credit cards into virtual credit cards managed in a virtual wallet and accessible with a smart device (phone, tablet, PC, etc). If the consumer does not have a credit card to swipe and your business does not have an NFC compatible terminal you’ll be forced to key in the transaction and pay a higher rate. This is also known as a downgrade from a qualified transaction to a mid-qualified transaction.

What merchant opportunities are opening up with the emergence of mobile payments?

Mobile payments establish the convergence of payment, offer redemption, loyalty benefit and rewards all bundled seamlessly into the checkout process. Mobile payment enables merchants the ability to build a stronger relationships with customers through convenience, loyalty benefit and discounts.

Merchants can create offers or discounts for specific products and services that are delivered to your target market creating brand awareness. Offers are stored by the customer for redemption either in the store or online. Electronic wallet users can automatically store the offer within their wallet for automatic redemption.

Electronic wallets can also store rewards cards for participating merchants. This enables merchants the ability to seamlessly integrate offer redemption and loyalty benefits within the checkout process. 

What equipment is necessary to take advantage of mobile payments?

Currently, the Google wallet (partnership between Google, Citi, MasterCard, First Data and Sprint) is utilizing MasterCard’s PayPass technology and is compatible with Pay-Pass enabled terminals. First Data also offers a contactless payment peripheral compatible with their terminals and POS solutions.  

VeriFone reported back in March that all new terminals they manufacturer will be NFC equipped. VeriFone has also declared themselves neutral in the mobile wallet war providing terminals and POS systems that are compatible with ISIS (partnership between Verizon, AT&T and T-Mobile) and Google Wallet.

What to do?

Our good friend Michael Koploy over at Software Advice has written an excellent article if you would like more information on how to prepare for the emergence of mobile payments.  

Would you like information related to strategies on how to take advantage of the emerging opportunities being created by mobile payments?  Click the image below.

CostCo Credit Card Processing | Would you like a lower rate?

Lowering overhead and expenses is an ongoing battle for any business. Credit card processing fees are a cost of doing business and can be reduced with a little investigation and the right questions. If you have found this post then you are already in the investigation phase. Maxx Merchants would like to offer credit card processing at a lower rate than CostCo is offering.

The CostCo credit card processing offer is extended through a company called Elavon. The advertised rates for processing are as follows.

• Retail merchants with a small-ticket (average sale less than $15.00)
  1.37% plus $0.12 per transaction
• Retail Merchants (Credit Card Present, Person Present)
  1.48% plus $0.20 per transaction
• Internet and Mail Order and Telephone Order Merchant Accounts (Card Not Present)
  1.99% plus $0.27 per transaction

Additional Fees

• $4.95 per month Statement Fee
• $25.00 Application Fee
• No Batch Fee

Maxx Merchants is happy to announce the following reduced rates.

• Retail merchants with a small-ticket (average sale less than $15.00)
  1.35% plus $0.11 per transaction
• Retail Merchants (Credit Card Present, Person Present)
  1.45% plus $0.18 per transaction
• Internet and Mail Order and Telephone Order Merchant Accounts (Card Not Present)
  1.95% plus $0.25 per transaction

Additional Fees

• $4.95 per month Statement Fee
• $0.00 Application Fee
• No Batch Fee

*Advertised rates are for Visa/Master Card and Discover and represent the qualified rate. AMEX and rewards cards will process at a higher rate. A monthly minimum charge of $20 will apply when transition fees and per item fees are less than $20.00 for the month.  

6 Steps in Applying for a Merchant Account

Are you considering applying for a merchant account? If the answer is yes then this post is for you. I will explain the process and give you specific direction on how to secure the very best rates available.

When applying for a merchant account there is a specific order in which you should approach the process. Below are the 6 steps when applying for a merchant account:

1. Review the different pricing option available and understand how your business is affected by each
2. Review some questions to ask when shopping for a merchant account
3. Shop at least 3 different providers
4. What to expect with the merchant account application
5. What will be required for merchant account support documents
6. Generally, how long do it take to set up a merchant account

A detailed understanding of the different merchant account pricing structures will help you when speaking to merchant service providers. Some providers will pitch you a pricing model that is more advantageous for them and one that is not the best fit for your business. Additionally, it is important to know how your business transactions affect your costs with respect to frequency and size.

When shopping for a provider it is helpful to know what to ask. We have compiled a set of questions that will get you headed in the right direction.

Always shop at least 3 providers. This will allow you to get a feel for multiple providers and will strengthen your chances of finding a good fit for your business.

Once you decide on a provider the next step is the application. The typical application is quick and easy to fill out. Most providers will gather the requirements on the phone and are able to consult you on ambiguous questions. Important pieces to pay attention to are the merchant account soft limits. You will want to make sure you give your account enough room to grow as the business expamds.

Along with the application you will be required to provide support materials related to the applicant and business applying for the account. A short list of support materials can be found here.

The length of time it takes to get an account set up depends upon your type of business, industry, requested volume and financials. The process can take from 24 hours up to 2 weeks.

If you found this post to be helpful and would like to inquire into and account with Maxx Merchants please give us your contact information and a representative will be in touch shortly.

Merchant Account Pricing | What to focus on

Merchant account pricing can be confusing in that there are quite a few moving parts that determine the overall cost month to month. This post is intended to explain how merchant account pricing is set up and give your business specific direction when considering alternate pricing plans.

There are three pricing models used to establish merchant account pricing.

1. Interchange Plus – Transparent pricing in which you are assigned an exact markup over interchange
2. ERR (Enhanced Rate Recovery) – One advertised rate with disguised downgrades
3. Tiered Pricing – Multiple tiered prices depending on how credit cards are accepted

Regardless of the pricing model there are two components that make up the majority of your merchant account cost. The percentage of the sale and the per-transaction cost.

Most merchant service providers will have a preferred pricing model which is used to quote merchant account pricing. It is up to the business requesting an account to specify which pricing they prefer. The most cost effective pricing is Interchange Plus.

Specific direction when considering alternate pricing plans

Rule 1 – request interchange plus pricing. If the provider you are speaking with tells you that your business does not qualify for Interchange Plus pricing, look for another provider.

Rule 2 - Understand how your business’s transaction size and frequency affect your merchant account costs. First, determine your average sale amount. Take the total amount of sales for the previous month and divide them by the total transactions. Second determine the total number of transaction you are likely to conduct month or month.

With these two figures you can do a simple calculation to determine where you need to focus when negotiating your rates. If you have a higher average sale amount and lower transactional volume you need to negotiate a lower percentage of sale. If you have a lower average sale amount and I high transactional volume you need to negotiate a lower per transaction price.

For example - If your pricing is 1.59% and $0.25 per transaction:

• A $1.00 transaction will cost $0.27 or 26.59%
• A $100.00 transaction will cost $1.84 or 1.84%

Would you like more guidance on how to negotiate your merchant service pricing? Download our guide on questions to ask when looking for a merchant account.

Third party credit card processing | Allowed or Not?

Does your business outsource customer service to a call center? Would you like the outsourced call center to be able to accept credit card payments from customers they are assisting? This can present some confusion as the privilege to accept credit card payments is reserved specifically for the company that has been underwritten and approved for the account.  

When a business applies for a credit card processing account it is required that the business indicate what the account will be used for. The business must explain the products and service sold, the average ticket, high ticket and monthly volume that will be transacted with the account. This information, along with business financials and history will be used to determine if the account is accepted or not.

Once approved the business is permitted to use the account to transact credit card payments within the parameters indicated on the application.

So, what rules apply to a third party employed by the business that has been approved for the account?

Some providers have specific policies with regard to third party transactions and do not allow them.  However, this is a very common practice and is not a violation of Visa/Master Card guidelines. Third parties that are granted permission to process on an approved merchant account must adhere to the rules outlined in the merchant services contract. Any violation of the terms and conditions of the merchant account contract become the liability of the business approved for the account. Violations can result in the business being included on the TMF (Terminated Merchant File) so it is very important to make sure that any third party that is granted access to the account understand the terms of the contract.

For more information on the specifics facing your business please don’t hesitate to call. (800)917-8026

CostCo Credit Card Processing | What to consider

When considering credit card processing it is hard to ignore CostCo as a provider given their attractive advertised rates. It is also natural to expect savings given their brand is synonymous with savings. However, as with most things, analysis is needed to determine if the advertised savings will actually result in the best credit card processing account for your business.

Analysis needed

• What are the rates and how do they apply
• What does your business transactional volume look like

What are the CostCo credit card processing rates and how do they apply

CostCo credit card processing rates are advertised as:

• 1.48% plus 20 cents per transaction for retail merchants (card present, person present transactions)
• 1.99% plus 27 cents per transaction for mail order, telephone order and internet merchants (card not present transactions)
• A free terminal rebate after 12 months of processing

It is important to understand that the advertised rate will only apply to transactions that meet specific criteria. For retail merchants the advertised rate will only be applied to Visa and Master Card swiped transactions for debit and non-reward credit cards. Reward credit cards are credit cards that offer a reward for use such as cash back, frequent flier miles etc. The rate will not apply for American Express or Discover. So in actuality, approximately half of your businesses transactions will downgrade to a higher rate. That higher rate is not disclosed until the application process is initiated. The typical downgrade is 1% so the advertised rate should be 1.48% – 2.48%.

What does your business transactional volume look like?

This is an important step in determining the right pricing for a merchant account. The CostCo credit card processing rates will affect the total monthly fee for the account differently depending on the volume of your transactions. For example:

If your business is internet based and the pricing is 1.99% and $0.27 a transaction

• For a $5.00 transaction the total fee would be 7.39% of the purchase
• For a $50.00 transaction the total fee would be 2.53% of the purchase

So if your business has a low average sale amount and a high number of transactions the $0.27 per transaction is where you need to focus. If your business has a high average ticket and a low number of transactions then you should focus more on the percentage of sale.

In conclusion it is important to understand how the rates for a credit card processing account will affect your specific business. Until you know that, it is impossible to tell if an advertised deal is actually a good fit for your company. If you would like help understanding credit card processing rates and there effect on your business please don’t hesitate to call our friendly staff as we would be pleased to help. (800)917-8026

Terminated Merchant File | What it is and how to avoid it

The terminated merchant file, TMF or match file is a database that is maintained by MasterCard and Visa banks (also known acquiring banks) for the purpose of recording businesses that violate their merchant services agreement. This database serves as a reporting agency for the merchant services industry.

All merchant service providers, as a requirement of underwriting, will query new merchant applications against the terminated merchant file to determine if there is a match. The query will include the business name, business address and principal applicant(s) first and last name. If a match is uncovered the application will be declined.

What to do if you are on the terminated merchant file

You must first identify the acquiring bank that placed your business on the terminated merchant file. They are the only entity that can make changes to the listing. Once you identify the acquirer, it’s important to be persistent in requesting the reason for the inclusion on the TMF. It may take multiple calls to identify the right department to gather the information. Remember “kill them with kindness”. You are undoubtedly frustrated with the situation but airing your frustration will only prolong the process and increase your frustration.  Once you understand the circumstances that led to your listing, do everything in your power to correct it and have the listing deleted. This may include legal counsel so make sure your hire a specialist if you choose this direction.

How to avoid being included on the terminated merchant file

• Read your merchant account contract carefully and avoid any violations.
• Make sure you remain within the soft limits of your merchant account.
• Make sure you list your business phone number within the descriptor that shows on your customer’s credit card statement. This gives them the information they need to contact your business about questionable charges. You do not want your customers to call the bank directly.
• Provide exceptional customer service and put your customers first. Consumers have a lot of power if they choose to contact their issuing bank to complain about your service and charges.
• Don’t commit fraud.
• Never run a sale for someone else’s business!

6 Considerations for a Merchant Account Processing Limits Increase

The successful approval of any merchant account application is dependent upon the merchant account processing limits that are stipulated within the account application. The merchant account processing limits establish the boundaries for which the account must remain. Processing limits are defined with two account attributes.

• The monthly processing volume
• The high ticket or sale amount

Most businesses will estimate these attributes when establishing a merchant account to ensure room for business growth. However, if these attributes are exceeded the processor has the right to hold the excess funds until the overage is investigated and the processor is comfortable.

If your business’s monthly volume and high ticket amount have grown beyond that stated on your application, you can request a merchant account processing limits increase.

The acceptance of a limits increase is subjective so it is important to understand the factors considered for an increase.

• Business Banking Balance
• Business Credit Score
• Business Processing History
• Recurring Billing
• Industry and Transaction Method
• Reason for the Increase

Business Banking Balance – This is the amount of balance you are carrying in your business account from month to month. The underwriting department will want to see a strong balance in the account over the entire month. Not just the beginning and the end. This reassures the bank that if the increased limits result in chargebacks the business has funds available.

Business Credit Score – The credit score for the applicant(s) will always be investigated to ensure the applicant(s) are meeting their financial obligations.

Business Processing History – The business’s processing history will be reviewed to make sure the account has been managed correctly. The underwriting department will look to see if the account has exceeded the processing limits (soft limits) in the past. Chargebacks and refunds will also be looked at to determine how customers are behaving. Clean processing history is extremely important for an increase in processing limits to be approved.

Recurring Billing – Businesses that engage in recurring billing or automated re-billing are subject to higher levels of chargebacks and will undergo more stringent review for a processing limits increase.  

Industry and Transaction Method – Certain industries are considered more risky and will have tighter processing limits to protect the processor for chargeback liability. Additionally the transaction method will be considered when reviewing a processing limit increase. Retail, card present businesses will have an easier time than internet based businesses.

Reason for the Increase – The underwriting department will want and explanation as to why the business is asking for a processing limits increase. Has the business expanded product lines, delivery channels etc.

Business growth is the goal of every business. Excellent business management is the key to growing the limits established by your processor as a protection from liability. If you would like to request a processing limits increase, please contact our friendly staff at (800)917-8026.

Merchant Cash Advance | An easy way to get capital for your business

With the current climate in the lending industry it has become exceedingly difficult for small to medium sized businesses to qualify for a business loan. That being the case what other lending options are available to businesses to raise the cash necessary for business growth?

A merchant cash advance could be the answer.

A merchant cash advance is a lending instrument that allows your business to take advantage of future credit card receivables for an instant infusion of cash. The qualification process is quick and easy and your business can usually receive an advance in as little as 3 days.

How does it work?

Our underwriting department will analyze your merchant account statements to determine the cash advance amount you qualify for. The maximum cash advance amount available is $250,000. Once an advance amount has been identified that amount will be wired into your business account.  At that point a pre-determined percentage amount will be held back from each subsequent settlement for a pre-determined amount of time. The percentage amount held will be applied to the repayment of the advance. A percentage of future credit cards receivables is used to ensure that a hardship is not imposed on the business as would be the case with a set dollar amount. The advance is automatically paid back so there is no action needed by the business owner or staff.

Qualification requirements

• 500 Fico
• $5000 per month minimum processing
• Average retail ticket less than $600
• 15 batches per month
• Bankruptcies discharged for at least 1 year

Merchant Account Fraud – 3 ways to protect your business

With the proliferation of the digital era more and more businesses are seeking the ease and convenience of the internet to increase sales. Unfortunately, the criminally minded have seen this as a giant opportunity to maliciously profit from unsuspecting businesses. As a business utilizing the internet as a sales channel how do you protect against potential losses from such criminals?

The answer is a fraud detection solution.  

Most fraud detection solutions are based on a management utility that allows merchants to configure extensive filters to help in detecting fraud and screening suspicious transactions. The combination of an extensive reporting system gives merchants a quick and easy way to review transactions, block suspicious activity, and zero in on malicious users.

3 ways to protect your business from merchant account fraud utilizing a fraud detection solution.

1. Thresholds – Allows your business to set specific parameters for detecting fraud
2. User bans – Ban specific users by IP address, credit card number, country, etc
3. Exceptions – Set specific exceptions to make sure you don’t exclude legitimate customers

Merchant defined thresholds

Thresholds let your business define rules that are applied to each order as it is processed. Rules can be simple to complex and can apply in sequence. For example you can define a dollar limit for a specific order, total for the day or week. You can also set up limits for the number of orders in a given day or week.  Limits can be linked to a specific IP address or credit card number. Additional features allow for limits to be set for the number of credit card numbers that can be used. This eliminates criminals from testing cards for approval. Once your specific rules have been configured you can set the system to flag the transactions for review of decline them immediately.

Merchant defined user bans

In addition to dynamic transaction review, static user bans are effective at eliminating known threats. For example if your business is experiencing repeated fraud attempts from a single IP address or band of IP addresses you are able to configure a specific rule to eliminate the threat. You are also able to ban specific credit cards numbers or bank bin numbers to eliminate credit cards from a suspicious bank. Known problematic geographic regions can also be banned. 

Merchant defined exceptions

With any good fraud detection solution there will always be exceptions to the rules you establish. A proper fraud management solution should allow for specific overrides to be defined making sure legitimate customers are not prevented from a successful purchase.