The Merchant Services & Business Insider

This morning I was reading my daily news with the latest updates in the credit card processing industry when I ran across this headline: MerchantService.com offers Free Ak-47 with New Merchant Account.  As a full disclosure, you should know that I pro-second amendment – yet I found this post to be quite unusual.  How do you put merchant services together with an AK-47’s machine gun?

As I read the post it seemed that MerchantService.com was not being fully serious.  Instead they were pointing out that store owners should have a hand gun to protect themselves – especially if they live in a high crime area with poor police presence. Nevertheless, I think that this press release was a publicity stunt by Merchant Service and it probably worked.  You can read the full press release here.

Welcome to part 4 of our 12 part series – “Tell Me the Best Merchant Solution for My Business.”  In this this chapter we are going to discuss the question of integrating your merchant service solution into your business and accounting systems.  Common questions that a controller or business owner will ask when making a decision on a new merchant services solution are are:

1. Does his solution I am getting integrate into my accounting systems and payment systems or no?

2. If not, do I need a new system?

3. If so, how do I get them to integrate?  Is the integration easy?

The short answer:
This is fairly complicated.  If you want a good answer that is specific to your unique needs and desires talk to a merchant services provider that will take the time to ask you the right questions to find out what you want to do and then give you a solution to do it.  Any company that is not great at doing this for you prior to signing up is not going to be good at it after you sign up.

The longer answer:
1. If you accepting payments via a website you are going to want to use Authorize.net or PlugNPay. PlugNPay offers a built in Quickbooks module where you can sync all of your transactions detail directly into Quickbooks.  PlugNPay also offers a great recurring billing module that can help you automate your billing if you have a recurring-billing business model.  If you are not using Quickbooks but another type of accounting system then we would recommend Authorize.net as it offers a very robust back-end that can integrate into almost any type of system.

2. If you accepting payments at a doctor’s office, company office, then we would recommend that you use PC Charge.  PC Charge is one of the most versatile payment solutions and it allows easy integration into many payment systems.

3. If you would like to accept credit cards through traditional merchant equipment that would typically be used at a retail business location your best option may be some of the newest merchant equipment such as the VivoPay 4000 in that it offers easy syncing features with some of the most popular accounting systems.

Keep on reading.  Next week will will go into part 5 of our 12 part merchant services series and talk about the questions such as: What forms of payment should I take and can I take?  Can I accept Visa, Mastercard, American Express, Gift Cards, Promo Codes on my website, Debit Card, or  eCheck?

Today the San Francisco Chronicle ran a story that the credit card debt per borrower was 4.9% higher than from a year earlier.  This practice is not good for people in debt as credit card debit is difficult to overcome due to its high interest rates compared to other forms of debt such as mortgage debt.

Here are the main reasons for the increase in credit card debt in 2012 compared to 2011:

1. Banks have increased the amount of credit cards they issue.  In Q2 of 2012 banks issued 3.1% more credit cards than they did in Q2 of 2011.  With this increase banks have increased the percentage of people they issue credit cards to with bad credit from 25% to 30%.   Many banks and financial institutions by lowering their standards for borrowing are giving more people credit cards who are prone to making significant credit card debt mistakes.

2. The economy is not great and people still want to and need to buy things – as a result they put it on their credit card.

Total American credit card debt stands at a stunning $852 billion dollars.  This is up more than 6% from 1 year ago in September 2002.   For households that have credit card debt the average mount of debt is $15,328.  Yet, at least consumers are not as bad as the U.S. Government which has a debt level of $16 trillion dollars which puts every American’s share of the national debt at $52,001.89.

My thought: yikes!  We are all collectively headed for a train wreck.  If we as individuals and as a government lived within our means tomorrow would look much brighter for all of us.

Welcome to part 3 of our 12 part series – “Tell Me the Best Merchant Solution for My Business.”  In this this chapter we are going to discuss the question of “Do I need software?  Do I need equipment?  How much will this cost?”

When trying to find the best merchant solution for your business you can know that off of the bat you are either going to need merchant equipment, merchant software or both.  Then question is how will you know which you need.  Here’s how:

1. You are going to need merchant equipment if you are accepting transactions in person more than a few times per month.  If you are accepting payments in person only a few times per month touch tone phone solutions such as Dial Charge will work fine.  Otherwise you will need merchant equipment.  If you are unsure which merchant equipment is right for your business read part 2 of  our 12 part series The Best Merchant Equipment & Software for Your Business.  All merchant equipment that you get should be free as part of your merchant service processing agreement.

2. You are going to need merchant software if you are accepting payments via a website.  You will either want Authorize.net or or PlugNPay as your gateway.  This service should cost you no more than $25 per month.

3.The other type of merchant software you may want is PC Charge.  This tool is great if you want to integrate your transactions into your accounting or computer system.  PC Charge simple turns any PC into a credit card processing terminal by plugging in a card read directly into the USB port on any PC or Apple computer.  You should be able to get this software for free as part of your credit card processing agreement.

Keep reading for part 4 of our 12 part series – “Integrating Merchant Payment Solutions Into Accounting Systems.”  In this series we will answer the following questions: “Will this solution I am getting integrate into my accounting systems and payment systems or no?  If not, do I need a new system? If so, how do I get them to integrate?  Is the integration easy?”

Welcome to part 2 of our 12 part series – “Tell Me the Best Merchant Solution for My Business.”  In this this chapter we are going to discuss the question of “What is the best merchant software and merchant equipment for my needs?”

First, there are the basics that all merchant services solutions  should have:

1. Your merchant payment solution should be PCI Compliant.  If they are not you will be in violation of the latest legal requirements to accept electronic payments.  In addition, by accepting payments through PCI complaint merchant equipment or merchant software your customers financial data is more secure and this lowers the instance of credit card fraud.

2. If you are doing in person-transactions you want to have a way to accept credit cards through a terminal by swiping a credit card through your merchant equipment.  Why?
Not only does this provide a faster buying experience for your customer – it can cut your fees to accept credit cards by about 50%.  Card providers such as Visa, MasterCard, American Express and Discover charge less to process a swipe transaction because the instance of credit card fraud is much lower when someone has a card-in-hand instead of simply giving the merchant a number to key in.  This savings should then get passed onto you through your merchant account provider and save your money in processing fees every time you run a transaction.

The next questions you need to ask are more tailored to your business:

1.  Will most of my transactions be occurring through my website’s ecommerce features?  If so, you need an ecommerce merchant services solution such as Authorize.net  or  PlugnPay.  If your website does not have a shopping card built into it then you can use the shopping cart that comes for free with Authorize.net or PlugnPay.  If your website does already have a shopping card you can plug it into Authorize.net or PlugnPay Gateway.  If your business offers a recurring revenue model you will probably want the recurring billing module that comes with PlugnPay.  If your business has a decent amount of credit card fraud you will want the protection of Fraud Trak2 from PlugNPay.  Otherwise, both of these options are good for your business.

2.  Would I like to have all of my transactions run through a PC and integrated into my account system so that all financials are centralized?  If so, PCCharge may be the right solution for your business.  PCCharge can handle in person transactions as well as remote phone order, or direct mail transactions.

3.  Is it important that my merchant equipment offer the latest and greatest?  If so, then you want something like the Vivopay 4000 or  Phone Swipe. The Vivopay 4000 offers traditional swipe as well as keyed in retail transactions yet it also offers tap and go technology that enables customer to tap their credit card or smart phone against the merchant equipment with a simple tap of their “mobile wallet” against the payment terminal.  Similarly the Phone Swipe, offers this technology but the merchant equipment plugs directly into your iPhone, iPad, or Droid device.  For any business that accepts payments in the field, such as a delivery company the Phone Swipe is the best method of accepting payment.

4. Are you a doctor’s office, restaurant, or a traditional retail store?  Then you have a broad array of options.  In your case you should not be paying for merchant equipment as there are providers that will give you everything you need to accept payments for free.  Merchant equipment such as the First Data FD100, the Omni VX570, or the Nurit 8020 will work great for you.

If you have questions you can continue to do research but you should also be able to talk on the phone with your merchant services provider and ask them.  If they will be a good partner for your business they will talk with you through the pluses and minuses of each solution for YOU and then can then advise you on the best solution for your business.

Keep on reading.  Our next chapter of this 12 part merchant service series will be “Do I need software?  Do I need equipment?  How much will this cost?”

Welcome to part 1 of our 12 part series – “Tell Me the Best Merchant Solution for My Business.”  In this this chapter we are going to discuss the question of “How much am I paying now and how much less can I be paying if I switch providers?”

Let’s cover the 1st part of the question first – “How much am I paying now”?
You may be surprise by the level of difficulty  there is in answering this question.   Merchant service providers purposely make it difficult for you to know what your merchant services rates are so you can not compare them against a competitor.  To find this answer, the first thing you want to get a look at is your current merchant services statement.  Take a look at your total processing volume and see how many dollars you processed through your merchant account in that amount of time.  Then find the total fees paid to your merchant account provider.  After you have found both numbers divide the total fees by the total processing volume and you have found your effective merchant services rate.  The next thing to find out is if you are on interchange plus pricing or if you are on 3-tier pricing.  If you see a total markup of interchange pricing plus a clear mark of fee of X number of basis points you are on interchange plus pricing.  If you see words such as “qualified,” “mid-qualified”, and “non-qualified,” you are on 3-tier pricing.  For 3-tier pricing in order to figure out what your rates are take your total fees at each level and divide it by your total processing volume.  Similarly, you will notice per-transaction fees on your statement.  Divide the total cost of transaction fees by the total number of transactions and you will know your per transaction fees.  Then enter  all of these fees and your average monthly fees into free 3rd party-tools such as the Merchant Services Rates Calculator.

The next question is “How much less can I be paying if I switch providers”?
The best way to compare this is to analyze your current merchant statements.  Then, request quotes from 2-3 different merchant services providers and ask what they would charge for the same fees.  Then simply compare the the new vendors against your current merchant provider by looking at your expected processing volume.  Again free 3rd party-tools such as the Merchant Services Rates Calculator, can help you to know the exact savings when comparing the merchant account providers.

Typically by switching merchant providers you can save approximately 30%.  This is because most merchant accounts are sold at a mark-up and over-time a merchant provider will gradually raise your rates without notification just like your bank usually drops your interest rates on your checking accounts without telling you.  This is why it is important to find a merchant provider that will offer you a low rate and a promise of locking that rate in for you.  In addition, some merchant account providers will offer you free merchant equipment which is another way to save money in payment processing.

Keep reading our blog for the next chapter of our 12 part series.  Our next topic is “What is the best merchant software and merchant equipment for my needs?”

In the past we wrote about The Mobile Wallet & The Future of Merchant Services. In the article we predicted that the future of merchant service payment processing is in mobile phones and the ability to accept payments through a mobile device and even to pay for things at a check out with a tap and go of your smart phone against merchant equipment such as the Phone Swipe plugin or the Vivopay 4000.

Yesterday, Bank of America confirmed our thoughts by launching their own mobile payment solution called Mobile Pay on Demand.   This service allows small business owners to accept customer payments over a cellphone. “I hate to come out with a commodity product, but every bank should have one,” said Trevor Rubel, the EVP of Bank of America’s Strategy and Emerging Products. Phone Swipe’s competitors now include Bank of America, PayPal, Groupon, Intuit and others.

Bank of America’s is charging 2.70% per swiped transaction.  This is below Square’ 2.75% per transaction fee yet it does not beat Phone Swipe’s industry-leading low cost mobile payment solution at 2.69%.

In order for society to continue to prosper and democracy be able to flourish there is one key element that must always be there: Freedom.  Without freedom the following things happen:

1. There will not be a free exchange of ideas.

2. Without a free exchange of ideas the government can take control.

3. When the government takes control people and businesses are told what they can and can’t do.

4. When the government gets this powerful and people are not vigilant in protecting their freedom all kinds of bad things can happen.

Not only will businesses from merchant services companies to manufacturing companies begin to sputter and fail but religious liberty and freedom of thought will begin to be curtailed.  When this happens virtually nothing is strong enough to stop the power of government.  Here a great video about Sustainable Freedom by Dr. Os Guinness that speaks to this fact that explains how it all fits together.

On November 6, 2012 President Obama made history by being the 1st President since FDR to win reelection with higher unemployment rates on election day then when he entered office and the unemployment rate over 7%.  What will his policies in combination with divided government in Washington D.C. mean for merchant services?

The Good News:

1. The Durban Amendment will stand and as a result merchant services providers will continue to see the benefits of lower discount rates on debit card transactions and they can pass that savings unto their customers.

The Bad News:

2. Due to massive government debt and printing up of money inflation will continue and accelerate making every dollar everyone has be able to buy less.  This will result in rising gas prices and lead to rising prices at grocery stores and at retail outlets.

3. Due to inflation merchant services providers will process more money and volume and make more money in revenue for a time.  Yet, that money will be worth less and employees will need corresponding raises to make up for the rising cost of living.

4. Inflation will lead to slower economic growth and possibility rising unemployment which will cause a recession.  In a recession, people will lose jobs, purchases will decline, companies will go out of business.  The result of this will be less processing volume with existing merchants, merchant services providers will lose some of their existing merchants as they go out of business, and existing merchants will look for ways to cut costs by switching to lower cost merchant services rates.

5. The silver lining is that there are economic cycles and naturally the economy should be recovering now.  Hopefully the policies above will not cause us to go back into a recession but instead we can be stuck in slow economic growth that is not much better or worse than it is today.

As the entire economy goes so goes the merchant services processing industry.