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CostCo Credit Card Processing – a deal or not

Posted by Alex Neir on Thu, June 30, 2011 @ 07:12 AM
CostCo Credit Card Processing

CostCo Credit Card Processing – a deal or not

Anyone who has a CostCo membership is familiar with the value the big box wholesaler offers on all sorts of merchandise and food. But, does the value translate to credit card processing? The answer may surprise you.

First of all it is important to understand that CostCo in not providing credit card processing. They are partnered with a company called Elavon who is a subsidiary of USBancorp. It is Evalon who is setting the terms and rates for the credit card processing account. Current at the time of this blog post the advertised rates for a CostCo credit card processing account are as follows:

  • Retail Merchants: 1.48% for card-swiped transaction plus $.20 per transaction
  • Internet and Mail Order / Telephone Order Merchants: 1.99% plus $.27 per transaction

As with most credit card processing providers advertised rates the rates look great. It’s the fine print that must be read to understand the actual rates that will be charged once the account is set up. Looking at CostCo’s website for their advertised rates we see the fine print:

"Rates listed are for qualified transactions. Rewards cards process at higher rates. Monthly minimum fee amounts to $20 per month."

To the average business this can be very confusing. What difference do rewards cards have on the actual rate charged? The answer – a lot, as statistics say that rewards cards currently account for 40% to 45% of all credit cards in circulation and are on their way to 93%. Let’s investigate further by looking at an actual CostCo bill:

CostCo Credit Card Processing

Looking at the bill you will see that transactions that qualified for the advertised rate are in green and transactions that did not qualify for the advertised rate are in red. Simple analysis determined that over half the transactions on the bill were charged a rate above the advertised rate. This is not uncommon for an advertised rate. That is why it is very important to understand how the rates will be applied once the account is set up. For a detailed understanding of what to ask when shopping for a merchant account, download our report!

Tags: Merchant Account Education, Credit Card Processing, CostCo Credit Card Processing

Credit Card Processing in Denver, CO

Posted by Alex Neir on Tue, June 28, 2011 @ 06:52 AM
Credit Card Processing Denver

Credit Card Processing in Denver, CO

Is your business located in Denver or the surrounding areas? Are you looking for local credit card processing in Denver? Do you want the added comfort of a local business that is able to respond personally to any issues you may have?

Maxx Merchants located in Denver is a premier provider of credit card processing. Founded in 2001 Maxx has consistently maintained a top 5 standing with Wells Fargo for merchant retention. In other words Maxx Merchants consistently exceeds customer expectations when it comes to credit card processing.

Maxx Merchants offers a full line up of credit card processing products for the Denver market. Some of which include:

Our sales staff is required to maintain a rigorous understanding of our entire product suite with detailed comprehension on how to adapt each product to the specific needs of each business. Every sales associate maintains a working relationship with the business / merchant for life of the account. This attention to customer service ensures each business is set up correctly and is well cared for.

In addition to a dedicated sales representative each business has 24 hour a day 7 days a week access to technical support. Maxx’s tech support is US based, live, English speaking personnel that have direct access to the bank-end credit card processing network. This results in first call issue resolution. If your account experiences difficulties you are 1 call away from a resolution.

Our attitude is the customer comes first. We will do everything in our power to make sure your experience with credit card processing is a good one. Please allow us to show you how integrity, professionalism and attention to detail translates to a partnership for your credit cards processing needs.

Tags: Merchant Account, Credit Card Processing Denver, Payment Processing

Merchant Account Support Documents – What’s Needed

Posted by Alex Neir on Thu, June 23, 2011 @ 07:43 AM
Merchant Account Support Documents

Merchant Account Support Documents – What’s Needed

When applying for a merchant account your business will be required to fill out a merchant account application. The application is typically standard across most merchant service providers with regard to the information collected on the application. Please NOTE: the terms can very greatly from provider to provider so be sure to read the service agreement that outlines the terms of service.

In addition to the application your business will be required to provide support materials as they relate to the business and owners. Required merchant account support documents are as follows:

  • Business organization documentation
    • Business articles of incorporation
    • Or Non-Profit documentation 
    • Or Sole Proprietor documentation 
  • Applicant(s) driver’s license
  • Voided business check
  • Business or applicant financial documentation
    • Previous processing statements
    • Or business banking statements
    • Or owner(s) personal banking statements

Business organization documentation

Organizational documentation is needed to ensure the business is organized in the US and is in good standing.

Applicant(s) driver’s license

A copy of the applicant(s) driver’s license in necessary to verify the information on the application has been recorded accurately and will be used to perform a credit check on all listed applicants. 

Voided business check

A copy of a voided business check is required to prove that the account associated to the merchant account has been established. This is the account that the funds received from credit card sales will be deposited into.

Business or Owner financial documentation

Financials are needed to illustrate the financial strength of the business and or applicants. Typically if the business has had a merchant account in the past all that needs to be provided are 3 of the most recent processing statements from the previous provider. If no previous merchant account is available, the next requirement would be the 3 most recent business bank statements. If the business is new and there is no banking history associated with the business then 3 of the most recent personal bank statements for the applicants will be required.

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Tags: Merchant Account Education, Applying For a Merchant Account, Support Documentation

Merchant Account Soft Limits – Explained

Posted by Alex Neir on Tue, June 21, 2011 @ 02:49 PM
Merchant Account Soft Limits

Merchant Account Soft Limits – Explained

When a business applies for a merchant account the application will ask for three financial figures that represent the credit card processing amounts requested by the business. These three figures are:

  • The average ticket or sale amount
  • The high ticket or sale amount
  • Monthly credit card sales volume

These figures help the credit card processor compile a risk profile for the business and ultimately drives weather the business is approved or not. A risk profile is considered based on the fact that the funds received from the end customer are deposited directly into the business bank account. The credit card processor assumes that the products or services purchased will be delivered. If they are not and the business disappears, the processor is responsible for refunding the customers money.

The sales figures requested on the merchant account application are weighted against the businesses financial strength to determine acceptance. If the business and owners are financially capable of supporting the requested amounts the application is approved.

Once approved these figures represent the soft limits for the account. The term “soft limit” is used because the account will allow these limits to be exceeded, however, the credit card processor reserves the right to hold funds that exceed the soft limits amounts on the account. Therefore it is important to understand your account limits and to stay within them.

What if you have to exceed your soft limits?

The best thing to do is be proactive. If you know you are going to exceed your high ticket amount or your monthly volume, call your processor ahead of time and explain the situation. By being proactive you are demonstrating good management of the account and most processors will work with you and will not hold your funds. 

Tags: Merchant Account Soft Limit, Why Is A Merchant Account A Line Of Credit, Risky Credit Card Transactions

Maxx Merchants, Big Frog and ReSource Software Announce Partnership

Posted by Alex Neir on Thu, June 16, 2011 @ 07:25 AM


Big Frog Partnership
Comprehensive Point of Sale (POS) and Payment Processing for new Big Frog franchise owners

Maxx MerchantsBig Frog and ReSource Software have partnered to offer integrated POS and payment processing services for Big Frog franchise stores.

Our partnership ensures preferred pricing combined with simplified set up, deployment and customer service.

With any business, the key to success is maintaining a simple business process while, at the same time, keeping business expenses as low as possible.

ReSource and Maxx Merchant's “keep it simple” approach is designed to save Big Frog franchise owners time and money.

ReSource Software is the industry leader in small business POS and multi/unit franchisor solutions. ReSource offers the best of breed solution for Point of Sale, Inventory Management, Marketing, Invoicing, Statement Management,  Accounting and Shipping.  Resource’s customizable solution provides the entire package, from software and hardware to installation and training.

ReSource’s technology is only part of the story. While their support tools are equal to larger companies, their support staff is unrivaled. Superior customer service, delivered on each and every call, is the attitude ReSource emphasize most. Developing relationships with customers is the most important part of the business.

Maxx Merchant's goal is to deliver cost effective, secure and innovative credit card processing to small and medium sized businesses. By providing personal service and technologically advanced products, Maxx Merchants has become one of the fastest growing payment processors in the country. With over $1.1 Billion of annual processing volume their success is a result of long-term customer relationships, a well-trained sales force, superior processing platforms and a merchant friendly approach to sales.

Maxx Merchants is intent on engaging and inspiring Big Frog franchise owers by practicing the values expected from a premier payment processing company. Maxx is committed to creating an environment where the Big Frog comes first. Maxx Merchants recognize that success is not about numbers, but more importantly about people and relationships.

Integrated payment processing with ReSource Software's POS offers Big Frog franchise owers the best of breed solution:

PRICING: Big Frog has negotiated reduced credit card processing rates to ensure Big Frog franchise overhead stays as low as possible.

SET UP: ReSource Software’s POS system has been pre-integrated with Maxx Merchants payment processing suite to offer turn key credit card payment acceptance.

DEPLOYMENT: All components of the Big Frog POS and credit card processing system have been configured and tested prior to delivery. The Big Frog POS arrives on location ready for business.

CUSTOMER SERVICE: Industry leading customer service and response ensures timely resolution of any system related issues.

Tags: POS, Big Frog, Point of sale credit card processing

Merchant Account Funding Delays - Explained

Posted by Alex Neir on Tue, June 14, 2011 @ 07:04 AM
Merchant Account Funding Delay

Merchant Account Funding Delays - Explained

A merchant account funding delay is the result of the merchant service provider holding funds that would normally be deposited into the businesses bank account. Typically the delay is the result of a temporary hold of funds due to exceeding the soft limits on the account or to reduce the risk associated with a particular business.

Merchant account funding delay due to exceeding account soft limits

When a business signs up for a merchant account part of the application asks for estimates on the total dollar amount to be processed each month, the average sale amount and the high sale amount. Each of these figures represents a soft processing limit for the merchant account. It is very important to give accurate estimates for these figures when you set up the account. The reason, your processor reserves the right to hold funds that exceed any of the processing soft limits on the account.

If a funding delay is implemented, the reason is the result of increased risk associated with the account. When a merchant account application is reviewed for approval by the credit card processor the criteria for an approval involves the evaluation of the information provided on the application. The processing volume, average sale and high sale amounts provided on the application are weighted heavily when the application is approved. If these limits are exceeded the risk profile for the business changes and the processor will hold funds. For example lets say a business is approved for an account with a monthly processing volume of $30,000, an average sale amount of $100 and a high sale amount of $1000. If the business runs a single transaction for $3,000 in a given month the high sale amount has been exceeded and the processor may hold the entire $3,000. Now, this hold will not be permanent as the processor my require additional authorization from the customer in order to complete the deposit. Another example is if the $30,000 monthly processing limit is exceeded. Any amount above the limit is subject to a hold.

It is good practice to remain within the limits of the account. If, however, you need to exceed the soft limits on the account, it often works to preemptively call into your processor and explain the situation for exceeding your limits. Most processors will see this as good management and allow for an excess amount to be run.

Merchant account funding delay to reduce the risk of a particular business type

This type of merchant account funding delay is usually called a reserve or rolling reserve. A reserve will be placed on an account if the account is perceived to be high risk. Typically for these types of accounts the reserve will be disclosed up front and will be a condition for approval. The reserve amount will specified in an addendum to the merchant agreement. Each month a percentage of the total sales volume will be held until the reserve amount is fully funded. Once the reserve amount is fully funded all remaining funds will be deposited in the business bank account. 

Tags: High Risk Merchant Account, Merchant Account Funding Delay, Rolling Reserve

Top 10 questions to ask when applying for a merchant account

Posted by Alex Neir on Thu, June 09, 2011 @ 07:24 AM
Applying for a merchant account
Top 10 questions to ask when applying for a merchant account

Applying for a merchant account can be a little overwhelming. You may feel that you don’t have enough experience or knowledge about the process to ask the right questions to avoid being over charged. We have created this useful guide to help you focus on the most important aspects of a merchant account as you compare providers.

What are interchange fees and how are they determined?

The bulk of the costs associated with a merchant account come from interchange fees. Interchange fees are charged from the credit card issuing bank and major associations (Visa, Master Card, Discover, etc) and represent the fixed cost that all processors are working off of. Understanding how interchange works will give you a fundamental understanding of how different price structures are setup.

What price structure will be set up for my business?

There are many different price structures that can be set up for any given business. Each one will interact with the interchange fees in a unique way. The three most popular pricing structures are:

With a tiered model the interchange fees are set at specific levels based on how the credit card being processed is qualified. The credit card processor’s mark up is built into the tier. ERR pricing sets the interchange fee at a specific level and charges a surcharge for any transaction that does not qualify. Interchange plus is the most transparent and passes the exact level of interchange directly through to the merchant’s bill. The credit card processor will add a markup on the merchant statement for the cost of the service they provide.

What can I do to make sure my credit card sales qualify for the best rate?

Remember that the bulk of your processing fee for each transaction is determined by the interchange rate the transaction qualifies for. Therefore it is very important to understand how to process your customer’s credit cards to ensure the lowest interchange fee is applied. Additionally, there is terminal software called BIN seeker that will automatically help route your transactions to the lowest level of interchange.

How will my fees be deducted from my account?

There are two settlement options that are offered by all processors. They are daily settlement and monthly settlement. With daily settlement you’re processing fee and per transaction fee will be deducted from each sale before it is deposited into your account. With monthly settlement each sale will be deposited into your account in full. Then at the end of the month the total fees for the month will be deducted from your account.

If I need equipment will it be leased or do I have the option to purchase it?

Never lease equipment. Terminal equipment can be purchased starting at $150. With a lease you will be locked into a very long term contract in which you will pay upwards of 1,500% or more of the actual cost of the equipment. Be very carful with processors that are pushing leased equipment as this is good signal that they don’t you have your interests in mind.

Is your equipment proprietary?

Proprietary equipment will only work with that specific processors network. Proprietary equipment makes it impossible for the terminal equipment to be re-programmed by another processor if your business decided to switch processors in the future. There are numerous manufactures that provide non-proprietary equipment that work will virtually all credit card processing networks. 

What is the early termination fee?

Most, if not all, credit card processors with have an early termination fee written into the terms of service. It is important to understand what that fee is as you compare providers. It is also important that know that the fee is negotiable.

Is there a monthly minimum fee associated with the account?

The monthly minimum fee is the minimum amount of fees that will be charged to the account over the course of the month. As the fees for the account begin to accumulate they are deducted from the minimum. So if you have a monthly minimum fee of $25 on the account and your total fees for the month are $16.57 the remaining amount of $8.43 would be applied to ensure you met the minimum. Monthly minimum fees are completely negotiable.

What is the annual fee for the account?

Most credit card processor’s will have an annual fee associated with the merchant account. This is another fee that can typically be negotiated so be sure to ask.

What is the PCI Compliance charge?

PCI DSS (Payment Card Industry Data Security Standards) compliance has to do with how your business handles credit card information from your customers. Identity theft has become an epidemic and the credit card associations are taking security of credit card information very seriously. Most all credit card processors will have a PCI Compliance check for businesses they provide service for. Most will also have an associated fee for ensuring compliance. This is another fee that can be negotiated.

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Tags: Interchange Fees, BIN Seeker, Applying For a Merchant Account, Credit Card Processing Fees, Monthly Minimum Fee

High risk merchant account - explained

Posted by Alex Neir on Mon, June 06, 2011 @ 03:37 PM
High Risk Merchant Account

High risk merchant account - explained

So what is it that causes a merchant account to be considered high risk? A common question and while the answer may seems straight forward it’s actually a little more involved than you may think. Every merchant service provider will have underwriters with slightly different guidelines for business classification. That being said below is a list of the most common criteria that is evaluated to determine the “riskiness” of a business. 

Level of Chargebacks

A chargeback is when a customer calls their credit card issuing bank to complain about a charge on their statement. The level of chargeback’s for the business must be either, less than 1% of the total sales for the month and/or less that 100 chargeback occurrences. If either level is breached the business will be considered high risk.

Instances of Credit Card Fraud

Certain business types and industries have a higher level of fraud and fraud attempts. Industries such as on-line betting have high fraud instances and are classified as high risk. Additionally, it’s possible for a business to be approved as a low risk business only to have there account re-classified later if fraud attempts are not managed according to the guidelines outlined in the merchant service contract.   

Product or Service Paid in Advance

If your business provides future dated products or services in which the customer must pay in advance, this business model is usually classified as high risk. It has been documented that this business model increases the occurrence of chargeback’s and therefore creates more risk for the processor. Air travel, subscription services and membership services typically fall into this category.

Target Market Location

Any business with a target market located outside of the United States will be considered high risk. When processing international credit card payments it is difficult for a domestic merchant account to perform an address lookup for the credit card being charged. The address lookup is a basic fraud prevention measure. Without the ability to perform address lookups the business account will be classified as high risk.  

Sales Acquisition

The manner in which a business acquires sales and leads will be considered when classifying the business. Businesses that use aggressive sales tactics, over exaggerate results, use outbound telemarketing, multi-level marketing or fulfillment through a third party will be considered high risk.

Sales Transaction

Merchant account classifications will always take into consideration how the business intends to accept credit cards. Any business that is not swiping the customer’s credit card through a terminal will undergo more scrutiny. Additionally, any home based internet business will be classified as high risk.

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Tags: High Risk Merchant Account, Merchant Account Underwriting, Chargebacks

5 Reasons Why Businesses Overpay for Credit Card Processing

Posted by Alex Neir on Thu, June 02, 2011 @ 07:24 AM
Overpay Credit Card Processing

5 Reasons Why Businesses Overpay for Credit Card Processing

There are numerous reasons businesses overpay on their credit card processing. Here are the 5 most common reasons.

#1.) Misunderstanding of how the fees are applied

With many different ways to structure credit card processing fees it is sometimes difficult to determine how the fees are applied. The three most common pricing structures are tiered pricing, ERR pricing and interchange plus pricing. Depending on the pricing structure that is in place for your business, there are specific rules that dictate how the fees are applied. It is very important to speak to your sales representative to review the pricing that has been set up. Additionally, it’s important to discuss how your specific pricing works and how the fees will be applied to your account.

#2.) Ignoring your credit card processing statement

The main reason most businesses ignore their credit card processing statement is the fact that the fees for the service are automatically deducted from the business checking account. Therefore, if a check doesn’t have to be written the statement tends to be overlooked. The credit card processing statement details all the fees charged for service over the course of the month and will also include messages from the processor as to rate increases and special updates. It is very important to review the statement each month so that you are comfortable with the fees that are applied. If there are any surprises or charges you do not recognize. Call your representative immediately and question the fee.

#3.) Confusing credit card processing statement

Traditionally the credit card processing statement is one of the most confusing statements you will receive for your business. To make matters worse some companies intentionally over complicate their statements to hide exorbitant fees. It is very important to understand your processing statement sections and fee layout. If you are confused by your statement, call your sales representation and ask them to go over the statement with you until you are comfortable. 

#4.) Failure to review your credit card processing rates

Price increases for your account can be imposed by Visa and Master Card or by your processor. It is important to review your rates at least once a year and compare the pricing to what you were paying when the account was set up. Typically Visa and Master Card raise rates on a yearly bases and the increases are usually very small. If you are paying considerably more today than you were when the account was created, odds are that your processor is increasing your rates and you should ask why.

#5.) Unintentional downgrades

A downgrade is the process of a transaction being charged at a higher level due to criteria for the credit card sale not being met. For example on a debit transaction if the PIN number is not captured, the transaction will be charged at a higher (or more expensive) pricing level. Additionally, for a swiped credit card transaction the terminal may ask for a zip code. If the zip code is not entered the transaction will be more expensive for the business to process. Speak to your sales representative to understand the criterion that needs to be captured to ensure you are qualifying for the best possible pricing.

Tags: Credit Card Processing Fees, Accepting Credit Cards, Overpaying for Credit Card Processing