You can improve your business sales by accepting credit or debit card payments. This is mainly because carrying cards is both more practical and safe, and people prefer to pay for their purchases through cards rather than cash. Apart from paying in person, when customers actually visit white label credit card processing the store, they can also buy goods and services online through the Internet, or also by phone or fax. Imagine losing your sales all because you did not have the means to accept credit card payments. Going by the advantages of accepting credit payments, it only makes sense that you accept credit payments.
For this, you need to have an Internet Merchant account. Customers can then submit their payment online or by phone. The process is relatively simple. You can open your merchant account in any financial institution, bank or an acquiring institution. To understand how the process works, you need to keep in mind that between the customer and merchant there exists a payment gateway, which not only validates the authenticity of the credit card, but also transmits the payment to the merchant account. Merchant service providers consist of two organizations: one is the credit card processing company that processes the credit card payments and the other is the merchant account service provider. The Merchant service provider companies can provide services for web solutions, mobile solutions, retail solutions, and MOTO solutions.
The merchant service provider companies accept credit cards such as Visa, Mastercard, American Express, and discover. They also accept echecks. This means you can transfer money from one account to the other-either in the same bank or in another bank. You can also utilize their services to monitor all transactions that take place through your website. Apart from accepting credit cards, these organizations also accept payment through gift cards, signature debits, and Internet auctions. Their services are designed to secure sensitive customer information and prevent any fraudulent transactions.
For more than two decades that I have been in the merchant services business. I have frequently been shocked by how many merchants hand me unopened merchant statements, for review. They often tell me that they are just too complicated to understand. Unfortunately, many merchant service providers do this by design so that merchants don’t know too much. Obviously, if you’re in any kind of business you need to accept plastic as a form of payment. Many merchants are simply resigned to the fact that it is going to cost them something and it is just accepted. What I want to try and do here is give you some things that will hopefully help you in your understanding of your own merchant statement. Before I get started, let me just say, there are numerous types of statements that would encompass the numerous types of pricing models. There is Three Tier, Four Tier and Cost-Plus or Interchange-Plus pricing models, each with their own form of jargon. First let’s talk about some basics of the differences. This form of pricing is, by far, the most transparent and most desirable form of pricing. That is, as long as the processor utilizes a format on their statements that are easy to read and understand. As an overview, here’s how this pricing differs from the two previously discussed. Keep in mind that not all statements will look alike but these are the types of categories you would typically see:
This is where we get into the section where you really need to be paying attention. It may be quite lengthy based on the specific card and transaction types that you see in your business. As mentioned earlier, this Cost-Plus/Interchange-Plus pricing is the most transparent pricing model. And, here is where you can determine what you are really paying. It can, at first glance, seem complicated and intimidating but it doesn’t need to be. So, here’s an example of what you might see and I have taken this from a recent merchant statement that i analyzed. The numbers you want to focus on here are the amount, Discount Rate, Item Rate and Fee Amount. Here’s an example of 21 Mastercard transactions:
So now let’s apply the math to see what we are being charged. The processor, in this instance is charging, as a “Plus” factor, 0. 1700 Discount Rate. Take this figure and divide by 100 and you will get the number of basis points, or percentage and you come up with. 0017. $2, 968. 31 x. 0017=$5. 04. This amount represents a portion of what the processor is making on this $2, 968. 31 in volume. Next, we have the Interchange charge which is a direct pass through on these Mastercard transactions. In other words, these fees get paid back directly to the card issuing entity. So, take the $50. 64 and divide by $2, 968. 31 and you get 1. 71%. So, if you add the two together, this merchant is paying 1. 88% on these Mastercard transactions. Furthermore, if you wanted to take it to the next level in analyzing your statements, you could go online and find the Mastercard and Visa Interchange rates and compare all your transactions for yourself. However, there are hundreds of different Interchange Rates for Visa/MasterCard transactions based on the type of card or transaction type that you would need to fully understand. Or, you need a rep that truly cares about your business and is willing to walk through your statement with you for greater understanding. This section of your statement is where the majority of your fees are represented.
