- Don’t rush into an account. The credit card processing industry has many moving parts and there are quite a few things to consider when opening an account. Give yourself enough time to do the research necessary to make a good decision. Selecting the right service provider can make the difference between a great experience and a miserable one. Make sure you understand how you intend on accepting credit cards now and in the future. There are many different account types depending on how you interact with your customers. Choosing the right account type ensures the very best rates are available to your business. Make sure you understand how interchange works. The majority of the fees paid to process credit cards come from the credit card interchange networks. Understanding how the interchange fees are calculated will help you negotiate the best deal on the account. Make sure you ask questions on items you don’t understand and develop a working relationship with a service provider before you sign up. Make sure you select a provider that has a dedicated account representative for you to work directly with.
- Abide by the rules. The merchant service agreement outlines the rules and regulations for the use of the account. Make sure you understand the length and term of the contract. Make sure you understand what you have been approved to sell. During the application process you indicate the products and/or services you intend to sell. The rules for a merchant account stipulate that you are only allowed to accept credit card payments for the products/services approved on the application. Selling something else with the account can lead to the account being terminated and the business placed on the MATCH list.
- Angry customers can hurt your business. Make sure that you respond to customer billing complaints immediately. Customers that can’t get their billing complaints resolved with the business will contact their credit card issuing bank or the credit card association and initiate a chargeback. Excessive chargebacks can also lead to the account being closed by the processor not to mention hefty fines for each occurrence. The best defense is a a good offence. Makes sure your customer service number is displayed on your customer’s credit card statement along with your business name. That way they will call you first. Make sure you answer their call and help resolve their issue.
- Stay within your limits. Your merchant account will have certain limits established for the high ticket amount and total monthly volume that can be processed with the account. These limits are known in the industry as soft limits. There is always a little leniency for exceeding the limits on the account but it is always a good idea to know your limits and be proactive if you intend on exceeding them. For example if you know you are going to exceed your high ticket amount with a certain sale, call in for authorization first. This demonstrates good management and will make it much easier to increase your limit amounts in the future.
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It is often thought that opening a merchant account with the bank that handles the business checking account is the best way to ensure good rates and quality customer service for credit card processing. While there are instances where this is true, especially with very large business, often times it is the exact opposite.
Here are a few reasons why this is the case.
1.) Credit card processing in not their core competency
Most banks specialize in storing and lending money. Most, if not all have little to no experience in credit card processing and only see it as a way to leverage their customer relationships to increase revenue. Credit card processing is often outsourced to a third party where additional markup is added as a referral to a third party processor. Credit card processing is a completely different industry from the banking industry. The assumption that a bank is most capable entity for the set up and maintenance of a merchant account is similar to assuming a dentist can fix a broken arm.
Your business is much better served through seeking the assistance of a specialized company that only works with credit card processing accounts. Similar to the medical industry, you will be much better served through the use of a specialist and unlike the medical industry you will achieve a much better rate.
2.) The sales represenative is a 9 to 5’er
When working with a local bank to set up an account for credit card processing you will be working with a sales representative that has no financial interest in seeing that your account is set up and set up correctly. More often than not the representative will be a salaried employee working 9 to 5, or worse an hourly employee that will have no financial incentive for helping set up your account.
You would be much better served with a processor that has a sales force that is financially connected to the account creation and maintenance. If the representatives salary is connected to the processing account’s they set up, it’s amazing how efficient and available they become.
3.) Lack of flexibility
Most banks do not have the flexibility to set up merchant accounts on multiple networks. There are a handful of processing networks available and some are better than others depending upon the source of the transaction. For example the Omaha network is better than Nashville for retail swiped transactions. Again, it comes down to the fact that banks are not set up to handle the unique demands of credit card processing. Save yourself a lot of hassle and cost and seek a company that specializes in credit card processing.
Would you like information from a company that has specialize in credit card processing for over 10 years?
When a customer uses a credit card to purchase goods or services, just how does the money get transferred from the customer to the merchant to complete the sale? Batch processing is the technical term and is explain in detail here.
There are three main steps in credit card processing:
- The authorization
- The capture
- The settlement
When a customer’s credit card is swiped or keyed into the credit card terminal the first thing that happens is a request for authorization is transmitted. The communication comes from the merchant account and is sent to the bank that the customer’s credit card was issued from. The authorization will check that customer's account to make sure they have the funds necessary to complete the transaction. If they do, a hold is placed on the funds and an approval is sent back to the merchant account.
This process continues with all the other transactions over the business day. At the end of the day the business needs to collect on all the authorization holds that have been placed for the day’s credit card sales. At this point the business needs to capture and settle the authorization holds. This is the job of the batch process.
Batch processing can be setup to occur automatically or it can be a manual process. This depends on the specific requirements of the businesses. The batch process can be run more than once a day, if need be, however there is typically a charge associated with the batch process so you will want to factor that into your decision if you would like to run it more than once at the end of the business day. The batch processing component first contacts the banks where the authorization holds have been placed. It then captures the funds on hold and then transmits the funds to the merchant account. Once all the funds have been captured the funds are then deposited or settled to the bank account on file with the merchant account. The batch process takes between 24 to 48 hours to complete at which time the business will see a deposit in the account matching the total reported by the batch process.
It is very important for the business to examine the bank account to ensure the total deposited matches the amount reported by the batch process. If there is a discrepancy you will want to contact your processor immediately to determine where the error has occurred.
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.
- 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
How to Find a Good Merchant Services Provider
Partnering with a strong Denver merchant services provider not only enables a business to facilitate timely payment processing, but to deliver quality end-user customer service. If your business isn’t currently utilizing merchant processing to accept debit and/or credit cards, you are certainly missing out on a significant piece of consumer or business-to-business sales.
Locating a Merchant Services Provider
As with most professionals, the best are often discovered through referral networks. When seeking to partner with a new organization, be sure to ask for referrals from trusted business associates, clients and your network of friends. In addition to scanning your current network, you can also locate a merchant services provider via completing an online search. Once you have narrowed your initial search to several organizations to evaluate, you will need to develop a list of questions of which will provide you with answers to compare against.
Selecting a Merchant Services Provider
When choosing a good Denver merchant services provider, keep these factors in mind:
- Experience - How long has the organization been in business? What are the company’s customers saying about the services offered? What does the Better Business Bureau have to say about the firm?
- Services Offered - Competitive merchant services providers offer a wide range of services, extending beyond addressing the basic processing needs of your business. And most, will offer these basic services at no cost to their customers.
- Rates and Fees - What are the monthly or ongoing rates and fees for the services offered? Can you review those terms in writing? Is there a monthly limit on the transaction volume? If so, what rates will be assessed? Will you be assessed an application fee, set-up fee or installation fee?
- Technology - Does the company use the most up-to-date technology for processing transactions? How often can you expect the technology to be updated?
- Customer Support - Does the company offer 24/7 live customer service? What is the expected response time for addressing technical issues?
The most important decision when selecting a merchant services provider should be the level of value you are receiving for the level of service provided. Spend time performing not only your initial research, but with gathering facts about the firms you are considering to ensure that you select a Denver merchant services partner that meets or exceeds 100% of your requirements.
Merchant Services in Denver, CO – Top 3 Benefits
Are you looking for a merchant service provider that is local to the Denver and surrounding areas? Maxx Merchants located at 609 E Speer Blvd., Denver,CO,80230 specializes in merchant services and credit card processing. Maxx Merchants has been dedicated to helping small and medium sized businesses establish fast, easy and reliable payment processing since 2001.
Maxx Merchants specializes in account creation for retail merchants, phone order merchants, and internet merchants. We have a very robust payment gateway that is easy to integrate to almost any website and facilitates payment processing from the iPhone, Android and Blackberry mobile operating environments.
Maxx Merchants has built its success through emphasis on customer services. We have dedicated technical support staff ready 24 hours a day, 7 days a week to assist with any processing related issues. All support staff have access to back end networks to ensure expedited resolutions. This means that all support related inquiries are resolved on the initial call.
What are the top 3 benefits to selecting a merchant service provider in Denver?
Personalized Service – When you select a local merchant service provided you get the benefit of a more personalized experience. It starts of with al face to face meeting to discuss the specific needs of your business. The application process is discussed in detail and explained thoroughly. A detailed explanation of the support materials needed to accompany the application into underwriting is given. The application is explained and completed. Once the application is approved, installation is handled personally and all systems are tested to ensure proper function and speed.
Expedited Issue Resolution – Another benefit of local merchant service in Denver is expedited issue resolution. There is something very reassuring about being able to call your account representative with any problems and having your rep available to assist first hand.
On-Site Consultation – One of the greatest benefits to local merchant service in Denver is on-site consultation. Consultation includes best practices in solution set up, installation accuracy with full testing and continued follow up to make sure everything is running efficiently.
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:
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!
Best practice account set up for international credit card processing
Does your business sell products internationally? Are you looking to establish a solution that is compliant with association regulations and sustainable?
Visa / Master Card association regulations state that a business should have only one Merchant ID (MID) per product line. However, there are exceptions to this rule, a merchant is permitted to have multiple accounts for a product line if the intention is to acquire greater volume limits. Multiple accounts are also permitted to route international transactions to an appropriate account for processing. NOTE: It is strictly prohibited for a merchant to acquire multiple merchant accounts in order to spread charge back volume and occurrence.
I order to achieve the best possible rate for processing international credit card transactions, it is important to route the transaction to a specific account for processing. This is achieved through the set up of multiple merchant accounts in addition to deployment of software that determines the IP address of the computer initiating the order. Once the origination of the order is determined the transaction can be routed to the appropriate merchant account for processing.
All United Stated originated sales should be routed to a US based merchant account. In order to establish a US based merchant account the requirements are as follows:
- Incorporation in the United States
- United States Bank Account
- United States based credit history
- United States identification
With a US based merchant account you will have a 5% - 10% limit on international transactions. There for any non-US originated sales need to be routed to an international or off-shore merchant account for processing.
International merchant accounts can be set up in numerous countries. Most merchant account providers offering international / off-shore merchant accounts will handle the entire account set up. Set up typically requires incorporation in the selected country as well as establishment of a domestic bank account. Again, the incorporation and bank account set up are offered as a service of the merchant account provider. Once complete, all international transactions (with the exception of the US based transactions if you are able to establish a US based account) should be routed to this account.
Lastly, all domestically originated transactions (relative to the businesses home country) should be routed domestically.
This merchant account solution set up ensures your international sales are routed to the account where you receive the best possible rate for processing.
For more information pertaining to merchant account set up for international sale please contact us at (800)917-8026.
First let’s examine why businesses use their bank for credit card processing.
- Lack of understanding that other options exist
Many businesses select their bank for credit cards processing simply because they have always used their bank for financial functions. It is thought that the bank must be able to give them the best deal based on a history of loyal patronage of the business. The truth is that businesses that use their bank for credit card processing typically pays more than any other segment in the country.Equipment purchase and lease prices are, on average, double and the processing rates are often much higher than a merchant service provider’s. Businesses are locked into long term contracts with no options for termination.
The reason for generally higher prices and inflexible contracts is that fact that most banks outsource their credit card processing to a merchant service provider (MSP) or independent sales office (ISO). The problem with outsourced service is the introduction of a middleman and additional margin that must be covered. All but a few large banks outsource their credit card processing.
Many businesses feel that it is more convenient to have one entity handle all their financial functions. It is very convenient to have one place to see all the business financial data. However, aside from the deposits, credit card processing and banking are not integrated. There for the service you get from a merchant service provider or your bank will be exactly the same.
Most businesses don’t know of other options beyond their bank and subsequently don’t research the cost and customer service benefits of a merchant service provider.
So why is it beneficial to select a merchant service provider for credit card processing?
Well, first of all is specialization. Your merchant service provider only function is to provide credit card processing and electronic check processing.
Next is superior customer service, lower rates and better pricing on equipment. Most respectable merchant service providers have 24 hour a day, 7 day a week customer service. Your business will also be given a personal account representative for questions, issues and payment consultation. Your merchant service provider also has access to the payment network and can solve most every issue over the phone. Issues are resolved on the first call and don’t result in your business calling different departments looking for the right person to help. Equipment pricing is often the very best as your business is negotiating at the source.
Another significant advantage is the ability of your merchant service provider to work with many different banks. If your business processes with your bank and you have issues with your account you will have to switch out both accounts which can be a huge pain.
Your merchant service provider also has a much higher level of business expertise in setting up the right service for your industry type. Odds are that your MSP has numerous other businesses just like your and can instruct you as to the most beneficial set up.Bottom line - merchant service providers have more industry experience, more available and focused customer service, better prices and are specialized in providing payment products and service for your business.