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Credit Card Surcharge: New Rules

Posted by Alex Neir on Thu, January 24, 2013 @ 02:37 PM
Credit Card Surcharge
Credit card surcharges have been a hot button in the industry for a number of years and recent changes to Visa regulations have opened the doors for merchants to begin charging a surcharge to customers that wish to pay via credit card.

Credit card surcharging is still illegal in the following states: Texas, Oklahoma, New York, Massachusetts, Maine, Kansas, Florida, Connecticut, Colorado and California. So if you conduct business in any of these states it is illegal to add a surcharge to credit card transactions per state law, which always supersedes regulation of a particular company (Visa).

The rest of the nation has limited authority to surcharge customers starting on Jan. 27th, 2013 based on the rules established by Visa Merchant Surcharging regulations. It is strongly recommended that you review these rules before instituting a surcharge for credit card use to ensure you are in compliance.

Here is a condensed description of what is going to happen:

  1. Your business must notify your credit card processing acquirer and Visa at least 30 days prior to establishing a surcharge.
  2. You may only apply a surcharge to credit card purchases. You are not allowed to surcharge debit cards or prepaid cards.
  3. You may only surcharge an amount equal to or less than the discount rate established by your processor.
  4. You must disclose the fact that you are surcharging credit card transactions as a fee. You must clearly disclose the surcharge amount at the point of sale, online and on the credit card receipt.

Remember:

  • You cannot surcharge American Express
  • You cannot surcharge a debit or prepaid card in any circumstance
  • You cannot surcharge more than you are being charged to accept the card

These rules have been made part of the Visa processing guidelines that govern your merchant account. So, breaking these rule constitutes a violation of your card processing agreement and will result in your account being closed and your business being placed on the TMF list.

While this new regulation may seem like a benefit to your business it is strongly recommended that you proceed with caution if you intend on implementing a surcharge.  The preferred method of payment for most customers is a credit card. So charging the customer more for using their preferred method of payment may alienate your business and drive customers to the competition.  A good approach may be to test it for a month and pull it back to gauge the response of your customers. 

Tags: Credit Card Processing Fees, Accepting Credit Cards, Credit Card Surcharge

Free Gift Card Program

Posted by Alex Neir on Mon, January 07, 2013 @ 03:25 PM
Free Gift Card Program
Maxx Merchants is proud to announce a completely free* gift card program. That’s right free.

Gift cards are a proven method to enhance customer loyalty and boost sales. A typical gift card solution can cost between $250 and $500 to start and has associated monthly processing fees. Maxx Merchants wants to give your business the ability to deploy a gift card solution for free. The only cost associated with the program is the cost to order additional gift cards and we’re giving you 50 to start – free. That way if the program has benefit for your business you can order more cards. If the program doesn’t work, simply never order more cards. You will be charged nothing. It’s that easy.

Benefits of a gift card program include:

  • Build loyalty – Offering your customers more options enhances their experience and builds trust in your brand.
  • Increase sales – Plastic gift cards generate 2 to 10 times more sales than paper certificates.
  • Enjoy float or slippage – On average 10% to 15% of all gift cards are never redeemed
  • Rewards – Reward loyal customers with a free gift card
  • Ease of use – Gift card program utilizes the equipment you are already using to process credit cards.
  • Build you customer database – Gift card users volunteer their contact information that can be used to build marketing programs.

Maxx’s free gift card solution includes:

  1. Free 24/7 technical support
  2. Hundreds of card design choices to choose from or submit your custom artwork – free. No artwork set up fee.
  3. Front and back of cards are printed and customizable – free.
  4. Free electronic card proof prior to print
  5. The first 50 cards – free
  6. Free marketing package which includes
    Free Gift Cards
    1. 4” x 6” Acrylic Table Tent
    2. 5” x 7” Acrylic Display with Card Holder
    3. Acrylic Display Insert
    4. 2 ½” Round Stickers
    5. 3” x 5” Vertical Sticker Pack
    6. Single Card Holders or Envelopes

 

 Free Gift Card Sign Up

*Free program is available to merchants with a Maxx Merchant's processing account.

Tags: GIft Cards, Accepting Credit Cards, All in One Message Marketing

Small Business Credit Card Processing | What to consider

Posted by Alex Neir on Wed, May 30, 2012 @ 02:34 PM
Small Business Credit Card Processing

Given the state of the market today it is becoming increasingly unusual to find a business of any size that does not accept credit cards. Even the smallest mobile business are accepting credit card payments given the decreased cost of mobile processing solutions. In addition, the internet makes it possible for any business to remain open and profitable around the clock with an ecommerce solution.

There are numerous companies offering small business credit card processing solutions. However, the level of service can very dramatically for one provider to another.  

So, as a small business what considerations are necessary if you are ready to proceed with a credit card processing solution?  

Considerations for selecting a small business credit card processing partner.

All credit card processing providers offer their service in exchange for a fee that is tied to the transactions completed by the merchant or business. These fees are made up of the following:

  • Interchange – this is the fee changed by the bank that issued the credit card the customer is using to pay with. This fee is a fixed cost and cannot be negotiated. The fee or rate represents the wholesale price of accepting credit cards. The fee is made up of a percentage of the sale, as well as a per transaction cost.
  • Association Dues and Assessments – these fees are charged by Visa, Master Card, Discover etc. and are also a fixed cost that can’t be negotiated.
  • Interchange Markup or Margin – this is the additional cost the credit card processor adds on to the interchange, dues and assessments in order to make a profit. This fee is negotiable and is determined by the risk profile associated to the industry of the business seeking an account.  

As a small business it is important to understand that you have the ability to negotiate the markup charged by the processor. It is also helpful to understand the different pricing structures for credit card processing.  

While price is an important factor when choosing a provider there are also other elements that should be considered.

  • Track Record – How long has the provider you are considering been in business? Ask for references if possible. Check the provider in the better business bureau. Also, check services like the rip off report.
  • Merchant Agreement – Make sure you review the agreement carefully before signing to make sure you understand the agreement you are making.
  • Network Compatibility – When looking to deploy the processing solution you want to make sure that the provider you select has adequate network compatibility to work with any existing equipment as well as future equipment.
  • PCI DSS Compliance – The Payment Card Industry Data Security Standards are the rules set up by the federal government for the protection of card holder data. It is very important to select a provider that is PCI DSS compliant.
  • Support – Some providers do not offer round the clock support. Additionally, it is common for most providers to outsource support overseas where it is difficult to get the proper level of tech support. There is nothing more aggravating than having an issue with your income and not getting the help you need.

We hope this is helpful as you consider small business credit card processing. If we can be of assistance please don’t hesitate to call our friendly staff at (800)917-8026.

Tags: Interchange Fees, Small Business Credit Card Processing, Accepting Credit Cards

A Merchant Account without a Personal Guaranty

Posted by Alex Neir on Wed, February 08, 2012 @ 02:09 PM
Merchant Account Personal Guaranty

Signing up for a merchant account is an important step in extending the payment options your business offers. Signing up for a merchant account also carries financial responsibilities for the owner(s) and business. It is important to understand that a merchant account is a line of credit and will be underwritten with the processing bank as such.

The personal guaranty section of the application states that if the business suffers loses that cannot be covered by the business, the owner(s) personally guaranty repayment of such loses. This section is included in the application as protection from the high amount of risk the processor assumes from businesses that mismanage their account.

What to do if you would prefer not to sign a personal guaranty?

Most merchant service providers have alternate methods to evaluate the financial stability of a business and therefor waive the personal guaranty. The most common options are as follows.

  1. Business Financials
  2. Personal Letter of Credit
  3. Reserve Amount

Business Financials: A business that has been operating longer than one year can supply financial documentation supporting the strength of the company. Typical documentation includes income statements, profit/loss statements and balance sheets. Documentation prepared by a third party is always a plus.

Personal Letter of Credit: A personal letter of credit can be extended that promises a specific dollar amount for a specified amount of time. The terms of the promise to pay are outlined in the credit letter and both parties have to agree for the letter to be binding. This is often a good solution if the business financials do not satisfy the requirements to waive the personal guaranty.

Reserve Amount: In the event that neither of the aforementioned solutions will satisfy the processor requirements to waive the personal guaranty, a reserve amount might. A reserve amount is a specific dollar amount that is held by the processor. A reserve amount will also have specific terms that outline how much will be held and how it will be collected. Typically a percentage of each settlement is withheld until the reserve is fully funded. Once the reserve is fully funded the processor holds the money in the event that the business is unable to fulfill the obligations of the account. The reserve amount is fully refundable if there are no contract violations.

Tags: Merchant Account Personal Guaranty, Accepting Credit Cards, Reserve Amount

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

Top 7 benefits of accepting credit cards for your business

Posted by Alex Neir on Thu, May 19, 2011 @ 02:12 PM
Accepting Credit Cards

Top 7 benefits of accepting credit cards for your business

Credit cards are one of the most accepted payment systems for the purchase of goods and services that add ease and convenience for both buyers and sellers. Lets look at how businesses can benefit by accepting credit cards as a mode of payment.

  1. According to the researchers on consumer’s habit, people using credit cards to make purchases are mostly impulsive by nature. The average credit card user buys 2.5 times more than people who use other forms of payment. The obvious conclusion, any business that offers the convenience of credit cards as a form of payment can increase their revenue.
  2. When you accept credit cards as a way of transacting payment, it creates a sense of security in the mind of your customers. If the product does not live up to the standards for which it was advertised, there is a dispute process in which the customer can get their money back.
  3. It has been proven that credit cards help to enlarge the sales of a business by embracing a wider customer base. The ease and convenience of using a credit card to pay, plays a significant role in generating greater sales.
  4. Companies that offer an online purchase option from their websites enable greater hours of operation. Credit card payment from the website allows for business automation that results in greater sales with less expense.
  5. International sales become easy with an international merchant account. An off shore international account allow for sales to be completed in native currency with deposits linked to a single account in any desired country.
  6. Credit card transactions are processed in real time. So settlement is quick and easy without the need for complicated account receivable management.
  7. Setting up a credit card merchant account takes less than 24 hours. 

Tags: Merchant Account, Accepting Credit Cards, Payment Processing