Queercents Professional Directory

• A Qualified credit card transaction is your lowest rate, also known as your Discount Rate.  This tier usually includes credit cards issued by a U.S. Bank to individuals and that DO NOT have a rewards program of any kind associated with the card, and the card has been swiped through your store terminal; the card is physically present.
• Mid-Qualifed tier cards are also physically present and swiped though your terminal.  These cards DO have a rewards program of some sort for the cardholder (airline miles, cash back, etc.) and those goodies are costed to you, the merchant.  Mid-Qualified also includes most business credit cards.
• Non-Qualified tier transactions are usually when the card is NOT physically present, such as for mail, telephone and internet orders.  These type of transactions carry the highest fraud risk and therefore carry a higher fee to you, the merchant.  These transactions include manually keying in a customer’s credit card number into your terminal.

Be aware that some merchant service providers may choose to classify business/corporate cards into the Non-Qualified tier.  If you are using such a provider, and you accept a lot of business cards, you may wish to switch to a provider that does not bump this type of credit card up to Non-Qualified rate.

A: You may benefit from our Trinity package.  This will allow you to use your PC at your sales counter as a virtual credit card terminal, saving the cost of purchasing a stand-alone terminal machine.  Trinity also allows you to process credit cards from your online store with our shopping cart software, and, third, even allows you to accept payments on the go with your cell phone!

Gift card sales totaled $97 billion in 2007, up from $83 billion in 2006, according to data from The3 Tower Group as cited in The New York Times.  2008 holiday season sales have not been finalized, but gift cards will probably pass the $100 billion mark for 2008.

According to a January 2008 National Retail Federation survey, 79.7% of consumers said that they plan on buying at least one gift card during the next holiday season.

An interesting trend noticed in 2007 is that consumers are holding on to gift cards for longer periods of time.  They are less likely to use them immediately after receipt or to use up the full value within one month.

An estimated 10 to 15% of consumers never cash in cards.  30% of card value is never redeemed.

Unused value on cards is money in the merchant’s pocket!

Among gift card purchasers:

• 56 % prefer having the ability to reload or add value to a card once used.
• 69% prefer a card for which they can choose the stored value versus pre-sets.
• Consumers are 10 times more likely to buy a gift vard over a paper certificate.

Advantages for the retailer?

• Studies show that people spend more on gift cards than on gift certificates.  The average gift card denomination in 2008 was $50-twice the amount chosen for paper gift certificates.
• According to a January 2008 BigResearch survey, 50.9% of gift card holders have spent much more than the value of the card when redeeming it.
• Research shows that people buying with gift cards are less fussy about the prices they are paying.
• Retailers are partial to gift cards because returns are reduced in comparison to gifted merchandise returned because the recipient did not like the gift.
• Gift cards have served to smooth out the drastic sales drop after Christmas, as gift card recipients return to stores to shop.
• While both gift certificates and gift cards are sold in various denominations, pre-set at purchase, with a gift certificate you have to give cash back for the unused portion of the certificate value.  With a card, that unused value remains on the card, and may never be spent.
• Better reporting and tracking – go online and see activity by store, card, etc.  Tracking paper gift certificates is difficult.
• Eliminate fraud – cards are difficult to duplicate!

So…if you already accept credit cards and have a terminal or POS system, you can also issue and accept gift cards and loyalty cards.  Your bankcard processor will add the necessary programming to your existing hardware.

You can choose from a variety of pre-designed gift and loyalty card templates, or have a custom card created with your store logo.  (Even the pre-designed ones will carry your store name.)

Transaction cost is roughly $15 per month and about 15¢ per transaction.  Cost for the cards may vary.

As an account executive for a national bankcard processor, I do offer gift and loyalty cards, so contact me with questions and I will get some materials to you.

James Hussher, Account Executive

954-513-0762

james at creditcardmerchantnews.com

In past articles I have covered the 3 tiers or rates at which you are charged by your card processor. Let’s briefly review those:

1. Qualified – this is the lowest tier and least expensive for you as a merchant. To be charged at this tier, the card must be swiped through your terminal. Moreover, it must be a personal credit or debit card, issued by a U.S. Bank.

2. Mid-Qualified – this is the normal tier at which personal cards are accepted if they have any sort of rewards program linked to them for the cardholder – cash back, airline miles, etc. This is also the tier at which business credit and debit cards are accepted. Those rewards programs cost the card issuers money and they cost that back to you, the merchant, in the theory that cardholders, anxious to rack up rewards points/airline miles, will use their cards more frequently and spend more with you.

3. Non-Qualified – this tier is used for higher-risk transactions, usually when the card is not present such as for mail, telephone and internet orders.

Now to the point of this article: there is a growing trend among some card processors to no longer process Mid-Qualified rewards cards and business cards at the Mid-Qualified tier! That’s right – they are “kicking” those cards up into the Non-Qualified tier and that means you will be charged at your highest rate for accepting those cards.

This is astonishing to many merchants I have met with. There is really no way, usually, to know if a personal credit card does or does not have a rewards program associated with it. But the statistic is, almost 70% of personal cards do now have a rewards program. That means you can expect almost 70%, on average, of personal credit cards you accept to NOT process at the Qualified rate, but at Mid-Qualified or even Non-Qualified rate! You are not permitted, under merchant rules, to decline to accept any card. You must accept the card and you only find out how the cards processed when you receive your merchant statement next month.

More and more statements I see have a dollar amount on the Qualified tier, and a dollar amount on the Non-Qualified tier, and “$ 0.00” at the Mid-Qualified tier. If you see this on your statement, you know you are unhappily utilizing a processor that is kicking rewards and corporate cards up to Non-Qualified tier, and costing you a lot of money.

While you can sometimes go to your processor and re-negotiate your tier rates downward a bit, you cannot ask them to change the tier at which they process the various types of cards. Your only choice at that point is to look for another processor, and make sure your new processor is not doing the same thing.

James Hussher is an account executive for a major bank card processor. James resides in Fort Lauderdale, Florida yet handles accounts on a national basis. You can reach James at 954.513.0762 or visit his site, Credit Card Merchant News .

Are checks still a viable payment method?

Checks are not the payment method of choice (next to cash!) like they used to be.  No one wants to worry about whether a check they accept will clear.  Returned checks not only mean you do not get paid for your sold merchandise or services, you also will incur a bank charge for the returned item.  You then have to chase down the check writer and hope they will pay, right?

With cash, you know you have been paid.  With credit cards, you run their card and receive an authorization number and know those funds will be in your bank account the next day.

But you are still leaving money on the table by not accepting checks.  Not everyone has a credit card.  Not everyone has a debit card connected to their checking account.  Or perhaps they have lost or had stolen their debit card and for a few days, until a replacement card can be issued, they need to go back to paying by check.  Many businesses still prefer to issue checks in payment because the check itself is an easy form of receipt for their own bookkeeping.

Bank charges for using ATM’s are increasing.  To withdraw cash from an ATM not belonging to one’s own bank, there are two separate fees a cardholder will be charged:  one from their own bank for using a non-bank ATM, and the other fee by the owner of the ATM.  It can cost a cardholder $5 or more to withdraw cash.

Many people do not like to carry cash, from fear of robbery or loss.

There is a solution for you: utilize a check guarantee service.  A check guarantee service will contract with your business to guarantee that any and all checks you accept will not be returned to you for insufficient funds or closed accounts.  Period.  (They ususally will not indemnify you against a check on which payment has been stopped.)

Moreover, the checks you accept will, through the check guarantee service, be converted into an electronic payment that will be deposited into your business checking account within 48 hours.  You do not need to make a trip to the bank to deposit the paper check, in fact you can stamp the customer’s check “Electronically Deposited” and hand the paper check back to the customer!  This process is known as “check conversion.”  It is available as a stand-alone service, however, as an agent, I always recommend my merchant spend a few dollars more per month and get the check guarantee and conversion package.

If you already accept credit cards, the check guarantee and conversion process works like this:  first, you will have a small peripheral device called a check scanner attached to your credit card terminal.  You slide the check through.  Input the sales amount and customer’s drivers license number and press “Enter”.  The checking account number and drivers license will be compared against a vast national database of checking accounts and persons who have, in the past, issued a “bad check”.  Assuming your customer clears that hurdle, an approval will be issued and a receipt will print from your terminal for your customer to sign, and give permission for the check amount to be electronically debited from their checking account.

If the check ever bounces, the check guarantee service will enter that customer into their bad check database and will, themselves, pursue collection efforts against the individual.  You do not need to worry about it.  The money deposited into your account for the check came from the check guarantee service’s funds, not the check writer’s account.

The cost to accept a check is actually less than the average cost to process the same transaction on a credit card.  Costs average about 1.4% of the check amount.

The more ways you give a customer to pay you, the more sales you will make.

James Hussher is an account executive for Card Payment Solutions, registered merchant services providers for Wells Fargo.  James is based in Broward County, Florida and may be reached at 954.513.0762 or james@creditcardmerchantnews.com

As an account executive for a national processor of electronic payments, I get asked some questions quite frequently and I have put them into a FAQ form here.

• Why can’t you just quote me your rates over the phone? Because there is not a single rate that we apply to all businesses.  Some businesses may be riskier for us to acceptthan others.  There are other factors as well: what is the dollar volume monthly?  How will the business be processing cards – online, over the phone, by mail or in person, or a mixture of these?  We also look at the credit worthiness of both the business and its owners, length of time in business, etc.
• Why do you look at my personal credit history? Your personal credit history is actually not a key factor if you are running a standard retail business, where the customer is paying for goods or services he receives or has received at time of payment.  But when you are shipping goods and taking payment up front, you are actually going to be getting paid for that sale prior to your customer receiving what they paid for.  In the event that the customer does not receive their goods or is unsatisfied with them, and that customer initiates a chargeback, i.e., they contact their credit card company and complain, your account may eventually be required to repay the funds you received from that transaction.  Whether you have those funds available or not, the credit card company has to repay the customer.  If the funds cannot be collected from you, they take a loss.  So for Internet merchants or those who take orders by mail or phone, personal credit can be a factor.  Personal credit can also be a factor if you are a retail merchant but you are doing a high dollar volume of transactions.
• OK, what is a chargeback, exactly? A “chargeback” occurs when the merchant’s account is debited for funds from a previous sale.  This happens when a credit card holding customer is able to successfully “dispute” a transaction they made with the merchant.  The transaction showed up on their credit card bill and for whatever reason they decided they did not want to pay for that transaction, so they went online or called the customer service department of their credit card issuing bank and they filed a formal complaint known as a “dispute”. That initiates the process.  After the dispute has been filed, the issuing bank will contact the merchant and inform them of the dispute and ask for any information the merchant has or is willing to provide in regard to the disputed credit card transaction sale.  The signed sales slip, if available, as commonly would be retained by a merchant in the case of a retail sale where the customer was there in person and presented their credit card to the merchant and then signed the receipt.  In the case of a mail transaction, the form whereupon the customer wrote their credit card information and signed the form and authorized the charge.  Telephone orders can be more difficult to prove, unless, upon delivery, an impression of the customer’s card was made and the customer signed that sales slip.  Internet sales can be verified as to what computer was used to enter the credit card information, because that computer’s IP address is usually recorded.  Sometimes the customer’s complaint is not that they did not place the order, but that there has been an unresolved problem or dissatisfaction with the goods or services received.  After being informed of the dispute, a merchant needs to either verify the sale as legitimate if it is being disputed as not legitimate, or, in the case of dissatisfaction, try to make the customer happy or voluntarily issue a refund.  If the merchant is unable to resolve the matter, the credit card issuing bank may reverse the sale and “charge back” the funds to the merchant.  This usually results in a Chareback Service Fee of $25 or more to the merchant, so if a refund is going to result anyway, the merchant is better off to issue it voluntarily and save themselves the fee.
• So how can I prevent chargebacks to my merchant account? Communication is important.  Make it easy for your customers to communicate with you if they have a problem.  If you have a toll free telephone number, ask your credit card processor to include that in the information they furnish to cardholders in their monthly account statements.  If the customer is going to see a different name for you on their bill, let them know that at time of purchase.  Second, when you accept cards, utilize the CVV2 (Card Verification Value) 3 digit code on the card back.  Ask for it when you process a card.  Third, use the Address Verification Service (AVS) to enter at least the card holder’s ZIP code.  For additional information regarding these two valuable procedures, visit the websites of the major card issuers:  VISA, Mastercard, Discover and American Express.  They all use some variation of these procedures.

I hope these tips have educated you and made you a smarter merchant!

James Hussher is an accout executive for a national bankcard processor and may be reached at 954.513.0762 or through the website he maintains for his credit card merchant customers:  http://creditcardmerchantnews.com/

What Equipment Do You Need To Accept Credit Cards?

The basic piece of equipment most small retail operation will want is a terminal, that black box that sits next to the cash register and is connected to the cardprocessor via phone line or Internet.  Cards may be swiped or input manually and an optional debit PIN pad allows customers to enter their secret PIN for their debit card.  If you accept checks, you can also connect a check swipe reader that will scan the check through the check guarantee service of your choice and electronically deposits the funds into your account, saving trips to the bank.  Connected to or part of the terminal is a receipt printer.

Instead of a terminal, you may elect to use a personal computer with a card swipe reader attached to it.  Point-of-sale software installed on the computer will accept the input card and send it via internet or phone line for processing and authorization.

There are literally hundreds of POS systems available on the market, many industry-specific, such as for hotels or restaurants.

If you do not have or want a POS system, you can set up a “virtual terminal” on your PC by logging in to your credit card processor’s website and swiping or manually entering card information for authorization.  Such sites usually also permit you to void, force and refund transactions or set up recurring transactions such as monthly health club memberships, automobile payments, etc.

Virtual processing usually also permits you to use you cell phone to get authorizations on the go, out in the field, and usually also offer a shopping cart that you can integrate into your company website for online purchases.

For businesses that deliver merchandise to customers, such as pizza shops, there is a new wireless terminal, most like a cell phone, that your drivers carry with them.  At the customer’s home they swipe the customer’s card through this mobile terminal and get an authorization.  This can represent a tremendous monthly savings over accepting orders over the phone at the store and manually keying in the customer’s credit card number.  Remember, manually keyed-in cards are charged a higher Non-Qualified Rate because the fraud risk is higher when the card is not present and swiped.  The mobile terminal does swipe the card and it is treated as a card-present transaction, at a much lower rate.  Mobile terminals utilize Packet Radio Service or cell service and are very reliable.  The driver carries a small printer on their belt to print receipts for the customer.

You can acquire equipment by outright purchase,  or lease it.  Each option has advantages, discuss them with your accountant.  If you do lease, you don’t have to worry if the terminal breaks, just swap it for a new one. Some processors will provide you with a “free” terminal but you will usually end up paying higher transaction rates or other hidden fees.  There is no free lunch.

James Hussher is an account executive with Card Payment Solutions, a registered merchant services provider (MSP) for Wells Fargo and JP Morgan/Chase.  James is based in Broward County, Florida and can be reached at 954.513.0762 or email james@creditcardmerchantnews.com

What rate are you paying to accept credit cards in your business?

Believe it or not, most merchants I ask do not know!  The answer is actually  bit tricky, because there are various rates for different card types! So let’s break down the mystery for you here:

Your basic rate is called your Qualified rate and it applies to cards you accept, be they credit or debit, in person, and swipe through your terminal in your store.  This is the safest transaction for the credit card companies.    This rate may vary from less than 1% to 2% or more of each sale made.  In addition to that percentage, there is usually also a per-transaction fee of anywhere from 5¢ up to 50¢ or more.  Qualified rate is usually also required to be a card issued by a domestic bank, i.e., a bank located in the United States.

Your next tier of rate is called Mid-Qualified and this rate applies to cards accepted in person as wel, however, the cards are not domestically issued, perhaps from a Canadian tourist, etc.  This rate also applies to business/corporate credit cards and is a rate you want to pay more attention to if you have a lot of business-to-business sales or host a lot of businessmen in your establishment, such as a restaurant or hotel.  These rates run higher than Qualified, anywhere from 2 to 3%, usually, plus the per-transaction fee.  Mid-Qualified rate also usually is applied to any card, business or personal, domestic or not, that carries back to the cardholder any sort of rewards such as cash back or airline miles.  You, the merchant, pay for those freebies earned by cardholders!  These days more and more cards do have some sort of rewards program attached to them, so you will often be charged the Mid rate even if the card appears to be a person’s personal credit card, domestically issued.

Your highest tier rate is Non-Qualified and usually applies to card-not-present transactions such as internet, mail and telephone orders.  These transactions carry a much higher fraud risk for the credit card companies and this risk is passed on to merchants.  Rates run from 3 to 5%, plus per-transaction fees.  Some card processing companies are also now charging this rate to non-domestic business/corporate cards as well.

We also want to address monthly fees you are charged.  Many processors assess a statement fee of $5 or $10.  If you want to view transactions and your statement online, there is an additional fee.  You may be charged 25¢ or so every night when you batch out your terminal and send the days transactions on to the bank to be deposited into your account.

Speaking of bank deposits, you should not have to wait more than 24 hours from bacth-out time for your funds to be credited to your business checking account.  Most processors promise 24-48 hours.  Some processors, however, will only guarantee quick availability if you are banking with their bank.

That is the short story.  If you are dissatisfied with your current processor, shop around!  rates and fees vary widely.  Because of the trickiness of determining what rates you are actually paying, ask a new processor if they will conduct an analysis of your most recent merchant account statement for you.  They should do this for free, and present you with a proposal that shows you, in black and white, exactly how much dollrs in sales you processed last month at each rate tier, and also break down for you the monthly fees, and then, across the page, set out for you their own new rate structure they are proposing and be able to show you your bottom-line savings.  This is really the only way to knhow if you are truly going to get a better deal by switching to a new processor.

Remember, too, that your old processor may have a contract cancellation fee, and you will have to figure that cost into your switch as well.  Your new processor often will help you eliminate that fee, however, and/or offer to pay a portion of it for you to acquire your account.  Negotiate!

In my next article I will discuss equipment, terminals and software to help you process your transactions.

James Hussher is an account executive for Card Payment Solutions of Santa Barbara, California.  Card Payment Solutions is a merchant services provider (MSP) for both Wells Fargo and JP Morgan/Chase.  James is based in Broward County, Florida and can be reached at 954.513.0762 or email at james.hussher@att.net