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Merchant Services is New to Me.

Merchant services is a broad terms most commonly applied to credit/debit card processing and supporting offerings. An acquirer or processor must transmit data from customers’ issuing bank based on card to an acquiring or sponsor bank who supports the merchant processing account. The acquiring bank funds the business through a second transfer, and the customer pays his or her issuing bank with existing balance or line of credit.

Reliability, affordability, and funding speed are critical elements when exploring options as many businesses accept significant more card sales than cash. While only a limited number of firms are true ‘processors’, Independent Sales Organizations (ISOs) and banks as well as direct processors are the most common channels for merchant services. Many banks, while occasionally self-branded, partner with ISOs or processors. Cost are generally similar among the options as internal structure and policies determine proposed pricing. Often small to medium volume merchants find greater value through ISOs or banks in support.

Ask for local references and credentials when researching options. Consider the company’s service capabilities — years of promised savings can be lost in hours of missed sales. Avoid contracts and equipment leases.

I don’t think accepting credit/debit cards is right for my business.

The truth is merchant services is not necessary for all businesses; however, most have significant benefits to accepting cards. While studies suggest accepting cards is actually cheaper than cash by limiting bank trips, employee theft, and messy accounting — other stances are less debatable. Accepting card payments reduce accounts receivable as well as increase sales and average transaction size. Plus processing fees are tax deductible!

I don’t know what I’m currently paying for processing.

You are not alone. Many business owners are sure their cost of processing payments. Many companies intentionally make this difficult or focus on rate while hiking other fees or leases.

The simplest way to determine your true cost of accepting cards is look at how your margins are impacted through calculating effective rate. Effective rate is the total monthly processing expenses divided by the total revenue generated from merchant services.

At minimum, you should self audit your account annually. Many companies regardless of structure hike fees annually with a passive notice if any at all.

I’ve had trouble gaining approval for or maintaining a merchant account.

Since all merchant accounts must be sponsored by an acquiring bank, processors have different underwriting and risk assessment guidelines. Risk for processing is typically determined by fraud and chargeback probabilities. Credit as well as certain products can result in an account being classified as ‘high risk.’ The most efficient method of establishing and maintaining a ‘high risk’ account is to determine which processors and acquiring banks are experienced with your characteristics.

My customers are other businesses or government divisions.

Enhanced data is gathered from transactions by Visa and MasterCard to provide businesses and governments in the form of analytics. The associations offer merchants discounted processing rates for providing this enchanted data. While traditional terminals are able to capture Level II Data such as tax amount and PO number, virtual terminals have the ability to capture and even pre-populate more detailed information called Level III Data. The higher data level provided results in a higher processing break by Visa and MasterCard.

There is no enrollment fee in accepting enhanced data, no penalty for missing information, and the virtual terminal expense can be recovered from a single transaction’s savings.

My business is online or has an online component.

E-commerce is often an underserved environment of payment processing. While various factors apply similarly to card present businesses, these are less obvious causing flat-rate aggregator models to become increasingly popularity. Removing inefficient middle-ware such as shopping cart software for those with small inventory quantity and capturing enhanced data are common methods to improve systems.

Examining a business model to consolidate accounts improves both financial and operation structures for those using a website in addition to retail or mobile processing for sales. Inventory syncing for retail and website sales, QR code linked payment pages for restaurants offering merchandise from their menu, and account software integration are a few options not commonly mentioned.

I use or am seeking a point of sale system to assist with my business.

Point of sale is a broad term for processing equipment most commonly used in retail and restaurant settings. Traditional countertop terminals are limited in capabilities, but are all some businesses require. Others are loaded with enough features streamline intensive operations. While some manufactures tailor their systems specific to business type such as quick service restaurant (QSR) others are versatile in functionality or marketplace where applications can be added. Inventory management, employee time clock, customer loyalty, table seating, and creating tabs are a few of the more common functions among the advanced systems.

Many PoS systems utilize preferred or occasionally proprietary processing partners as an additional revenue source. Getting an external perspective for existing and prospective units is often beneficial from both a financial stance as well as additional hardware not offered by the original manufacturer which can improve efficiency and security. Utilizing Personal Identification Number (PIN) debit and adopting EMV chip card acceptance are key methods for many businesses to reduce cost and limit fraud liability.

I need to accept payments while on the go or from a booth.

Mobile processing has become so popular that many point of sale systems have become mobile or tablet based which expands options to mobile or trade show merchants. Easy of use, cost reducing opportunities, and limiting liability are key component for selecting the best mobile solution. For those on the go, a suite inventory tools might not be necessary while limiting fraud liability and reducing the expense of accepting high ticket transactions are concerns.

I need to save money on my current processing or limit expenses of my new business.

Reliability, affordability, and funding speed are critical elements when exploring options as many businesses accept significant more card sales than cash. While only a limited number of firms are true ‘processors’, Independent Sales Organizations (ISOs) and banks as well as direct processors are the most common channels for merchant services. Many banks, while occasionally self-branded, partner with ISOs or processors. Cost are generally similar among the options as internal structure and policies determine proposed pricing. Often small to medium volume merchants find greater value through ISOs or banks in support.

When comparing options, many organizations compete on margin reduction. While competition is excellent for merchants, proper product utilization and processing practices are often most influential in cost reduction. Maximizing card present environments, participating in enhanced data processing, and analyzing the benefits of PIN debit are examples what commonly missed opportunities.

Ask for local references and credentials when researching options. Consider the company’s service capabilities — years of promised savings can be lost in hours of missed sales. Avoid contracts and equipment leases.

I need better ways to interact with my customers and keep them coming back.

Although merchant services is most associated with credit and debit card processing, more offerings are available for your business. Gift cards increase business awareness in a community, increase cash flow, and can be customized for increased recognition.

Analytics can assist identifying sale cycles, hot items, and promotional opportunities to insure you’re providing your customers what they are looking to purchase.

Loyalty softwares reward customers for consistently shopping with your business while promotions can be sent to new customers, top spenders, or those you have not seen as frequently.

My customers are generally a set group who reorder in fixed or varying increments.

Businesses who offer or seeking to offer subscription based products, whether magazines, store facilities, or dance lessons, benefit from utilizing software with recurring billing capabilities. Merchants can customize terms of billing such as amount, frequency, and renewal terms without the hassle of collecting payment or liability of store cardholder data.

Software allows merchants to securely store cardholder data for those frequent clients who reorder product or request services of various amounts. Either authorize cards by order or create an invoice in your account software and easily reconcile at month’s end.

It All Begins With A Conversation

Whether you’ve got a clear idea of the direction you’re headed or need some guidance before making a decision, we’re here to help you every step of the way.

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