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Merchant Account Statement Analysis

January 15th, 2010

This is one of the rare accounts that is set up on an interchange plus pricing structure. This price system is a much better option for the client – so you will see more and more accounts being written this way as the market demands more competitive credit card processing prices.

1. Summary of all credit card processing sales during the course of the month. Broken down by card type and total amount of sales.

2. Average sale when the business owner runs a credit card.

3. This is a bit different than some of the other statements i’ve reviewed. Instead of having the qualified credit card processing rate here, Sage has put the basis point mark up here. In this case the client is paying 17 basis points over cost.

4. This is the total discount due on the monthly processing volume. This is ONLY the mark up that is due – not all other fees. (Multiply the volume of $35,275.74 times .0017 or .17% and you will get $59.99. You will see on page 2 where the rest of their credit card processing fees are coming from.)

5. Total amount due on all credit card processing sales.

6. Break down of daily merchant service transactions.

1. This is the summary of all of the interchange charges during the entire month of credit card processing. At first glance it may not be easy to see that all of the credit card processing costs being shown here are actually being charged straight pass through – but by doing a little math it is easy to figure out. For example:

Look at the 4th line item: CPS RETAIL CK DB - this is a retail check/debit card transaction – it was swiped through the credit card terminal without a pin number being entered. We know that the interchange cost to run this transaction is 1.03% + $.15 so if we work backwards we can see that this is what is being charged. 603 transactions x $.15 per transaction = $90.45. $18,451.52 x 1.03% = $190.05. Adding these numbers you get $280.50 – therefore – this is cost. You can go through line by line and see that all of these credit card processing transactions are at cost.

You will also see lines called dues and assessments in this section. These are direct pass through from Visa and Mastercard as well. The cost is .0925% for Visa and .095% for Mastercard. Crunch the numbers and you will see that these were marked up a little bit.

2. These are the additional transaction fees of $.10 each. Essentially this makes the clients total credit card processing cost: interchange plus 17 points and 10 cents.

3. American Express and Discover transaction fees of $.37 each! This is a VERY high transaction fee.

4. This is the pin entered debit cost. The client is paying $.40 every time they run a pin entered debit card. This is an older cost structure for pin debit. We now unwrap all pin debit fees – so you will see a transaction fee (typically $.25) and the debit network access fees. (typically .75% + $.17 per transaction)

5. Total additional credit card processing fees.

6. Total fees for the month.

7. The total percentage paid for the entire months credit card processing.

This client actually has a pretty decent rate system set up. Their amex and Discover transaction fees are extremely high – but otherwise the pricing looks ok. We were able to make some adjustments and save them around 11% every month.

www.capital-bankcard.com

Tags: credit card processing, credit card processing fees, credit card processing statement, how to read your credit card processing statement, interchange plus pricing
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“Merchant Services” credit card processing statement review

January 14th, 2010

The reason Merchant Services is in quotes in the title is because this is a generic name for a credit card processor. People know what you sell but you are not using a unique name. It may make selling credit card processing easier when they are trying to sell their services. The client may not have heard of some small credit card processing company – but they have heard of “Merchant Services” You will also notice that the statement looks very similar to Bank of America’s statement. They may use the same back end – or it may be a BOA statement – just branded differently for one of their sales partners.

1. The summary of all Visa, Mastercard, Discover, and American Express credit card processing sales broken down by card type, number of transactions, and dollar amount.

2. The average credit card processing sale amount. (per transaction.)

3. This is a the base credit card processing rate. (Also known in a three tier rate system as the “qualified rate.”) You will see on the next page that there are many more charges in this statement. Many clients are convinced that this is all they pare paying – all they need to do is divide their total merchant service bill by total sales to see that this is not the case.

4. The base transaction fee. You will see additional transaction fees on the following page.

5. The total amount paid for all credit card processing fees. This client paid $817.09 in fees on $34,711.26 of sales. Their total percentage paid for their merchant services for the month was 2.35%.

6. Summary of fees associated wit hthe 1.79% “qualified” rate plus the $.18 base transaction fee. On page 2 you will see where all of the additional credit card processing fees are coming from.

7. The summary of all daily credit card processing activity.

1. The remaining summary of the daily credit card processing transactions.

2. Summary of total card fees.

3. Account on file fee. This typically covers the credit card processing statement fee, monthly service fees, and any costs to call customer support.

4. Data breach security program fee. Some companies my call this a PCI (payment card industry) security fee, or a PCI insurance fee. Either way – in most cases it is charged monthly. At the moment some people think it is a bogus fee – if only because they don’t seem to be getting anything for it. Most companies will charge a one time annual PCI compliance fee that will cover the client for the year. It typically covers the cost of surveying their business to make sure they

5. This section show the mark up over the standard credit card processing pricing. Some companies would call this the mid and non qualified rates. After you get to know the true cost of interchange fairly well you will recognize theat the mark ups shown are exactly what Visa and Mastercard charge. For example, Rewards 1 cards process at 1.65%, a .11% increase over a regular credit cards interchange rate of 1.54%. On this statement you see that the mark up was passed through at Visa’s interchange cost. This is true for all of the cards in this section.

6. American Express transaction fee. This is being charged by Merchant Services to run American Express transactions. You will notice there is no other Amex credit card processing information on this statement. Our statement show all of the processing information because we run Amex cards on our system. So the client gets one statement and one deposit for all card types. They end up getting their American Express funding instead of waiting 4 days for it.

7. This is the additional Visa and Mastercard credit card processing authorization fee. It comes out to $.05 per transaction, add the $.18 per transaction on page 1 to get a total of $.23 every time the client runs a Visa or Mastercard through their terminal.

8. Discover authorization fee per transaction.

9. More interchange pass through fees.

10. This is the pin entered debit processing fee. Their are two ways to run debit cards, on-line or off-line. This is the fee for running them on-line and having the client punch in their pin number.

11. Total additional fees due.

12. How total credit card processing fees are calculated.

We were able to save this client about 9% off of their total monthly credit card processing fees by changing them over to a straight interchange plus pricing structure.

www.capital-bankcard.com

Tags: credit card processing, credit card processing fees, credit card processing statement, interchange plus pricing, merchant account, merchant services
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Credit Card Processing Statement Analysis

January 13th, 2010

This is from one of the few merchant service providers in the country that places the majority of their accounts on and interchange plus pricing structure. This statement is similar to the credit card processing statement we reviewed before, but it has a few minor differences.

1. Summary of Visa credit card processing deposits. You can also see the total of all interchange costs as charged by Visa. (Interchange is the true cost to process credit cards as set forth by Visa and Mastercard.)

2. Summary of Mastercard credit card processing transactions and interchange costs.

3. Summary of Discover credit card processing transactions and interchange costs.

4. This is the mark up on the account. It encompasses American Express, Discover, Mastercard, and Visa transaction fees, a monthly service fee, and the mark up over interchange.

5. Total of all Visa, Mastercard, and Discover credit card processing sales.

6. Total of ALL fees.

7. This the actual percentage that was paid to run all of the clients credit card processing sales during the month. This is calculated by dividing the total charges by the total amount of sales associated with those charges. As you can see this client pays about 2.62% on all of their sales. Keep in mind that if your merchant service sales representative told you that you would pay 1.69% on your sales, you were only getting part of hte story. Be sure to do the math, and if you pay over 2.5% then there is the possibility to save money.

1. The summary of all Visa credit card processing transactions as broken down by card type. You can see that the client paid 16 different interchange rates for Visa alone. These are determined by the card type that is being taken by the merchant. In other words, the business owner will not know what type of cards they are taking during the time of the sale. When they receive their bill they will see the full interchange break down and know what type of credit cards they process during the month. The least expensive category is offline debit (1.03%) while the most expensive card type was Signature preferred card not present (2.40%)

2. The summary of all Mastercard credit card processing transactions over the course of the month.

1. The remainder of the Mastercard interchange summary.

2. The summary of Discover card processing and interchange fees.

3. American Express transaction fees. They are currently being charge $.20 every time they run an American Express card.

4. Discover transaction fees and mark up. They are paying $.20 every time they run a Discover card transaction. In addittion the client pays 70 basis points (1 basis point = 1/100 of 1%, so 70 basis points is the same as .70%, or .0007) to the processor for running the transaction. This is in addition to the interchange charges that are broken down in section 2.

5. Mastercard transaction fees and mark up. The client is paying $.04 per transaction and 55 basis points to Heartland.

6. Monthly service fee of $10. This covers the statement and service fee as well as all other back end costs associated with processing credit cards on a monthly basis.

7. Visa transaction fees and mark up. The client is paying $.04 per transaction plus 55 basis points.

8. Total fees charged by the processor.

9. Total fees charged for all credit card processing over the course of the month.

By making some rate adjustments for this client we were able to save them just over 10% on their monthly merchant services charges. In addition, they now receive all of their American Express funds deposited in 24 hours instead of waiting 4 days for their funds.

www.capital-bankcard.com

Tags: credit card processing, credit card processing fees, credit card processing statement, Heartland Payment Systems, heartland payment systems statement, merchant account, merchant services
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Our clients keep getting offered a discount rate of “only” 1.69% – what’s the deal?

January 30th, 2009

I just had an interesting conversation with one of our top representatives. It seems that he has had a lot of his clients receiving phone calls and visits from our competition offering a “better” deal to his clients on their credit card processing.

Typically this is someone offering a rate of only 1.69%. We all know by this point that there is a lot more to processing rates than just one number. He has trained his merchants to ask the right question in order to find out how good a deal this really is.

When his merchants receive a call or visit – no matter what the sales rep tells them the rate is – they ask: “how much do you charge me over interchange?” If the rep cannot provide an answer they say thank you very much and tell them to move along. If the rep does not understand what interchange is or what the mark up is they will certainly not be offering our clients a fair deal on their credit card processing.

The key here is making sure your clients understand the benefits of our interchange plus pricing structure – and that we truly do pass cost right on to the customer and only charge them a small mark up.

Remember – you are not just a sales person – you are a consultant. Educate your merchants about what makes a consultant different from the every day merchant services sales representative. Once they understand what we bring to the table – they will never leave you without at least asking for your advice!

www.capital-bankcard.com

Tags: credit card processing, Heartland Payment Systems, interchange plus pricing, merchant account, merchant services
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Visa reduces gas prices at the pump!

June 28th, 2008

Beginning July 18, 2008, Visa Inc. will implement a cap on interchange rates for Visa debit and prepaid fuel transactions in an effort to help lower costs for oil companies and service stations that can be passed on to consumers at the pump. Systemwide implementation for restructured Visa credit card interchange fees on gas purchases takes effect October 2008.

“While Visa cannot lower the price of crude oil, there are things we can do to help make the process of buying gas easier for our cardholders,” said Bill Sheedy, Global Head of Corporate Strategy and Business Development for Visa. “As oil prices rise, we are accelerating our ongoing efforts to address the issues in the fuel segment.”

Interchange fees for Visa debit and prepaid gas purchases will be capped at 95 cents per transaction. Credit card rates will adjust to 1.15 percent of the total purchase plus 25 cents. In addition to the interchange fee adjustment, Visa will implement its Real-Time Clearing (RTC) program to process transactions immediately and reduce the hold times that financial institutions (FIs) place on cardholders’ account.

This new program is Visa’s way of contending with a nearly 100 percent jump in crude oil prices since June 2007, which drove gas prices in the United States from an average of $2.98 per gallon to $4.07 in a year. Visa hopes the interchange cap will give consumers more buying power and offer fuel dispenser merchants opportunities to improve business operations.

“People are frustrated enough with the price of gas today,” Sheedy said. “They shouldn’t be frustrated with the payments process as well. We took an entirely new approach to processing fuel payments and created a solution that removes many of the major barriers that consumers and station owners face at the pump today.”

Real-time authorization

In April 2008, the limit on debit transactions receiving chargeback protection increased to $75. RTC provides merchants and acquirers clearance within two hours. This can help drive sales for stations because it gives consumers the ability to pump more gas in a single transaction without hitting price limitations.

“The number one inconvenience that we’ve been hearing about is that when you use a debit card to buy gas, service stations can put a hold on your funds of up to $75,” said Maria Hatzikonstantinou, Vice President, Visa Public Relations. “So now with real-time clearance, it basically eliminates the hold that some stations put on your money.”

RTC can also qualify stations’ transactions for better interchange rates at higher ticket amounts, which can lower station owners’ costs.

Until the new processing changes take effect in Visa’s systems upgrade this October, the company will allow consumer fuel transactions up to $125 to qualify for its best-available interchange rates. This interim step is effective July 18, 2008. Once gas stations and their FIs migrate to RTC, consumer fuel transactions up to $500 will qualify for Visa’s best available interchange rates.

www.capital-bankcard.com

Tags: credit card processing, interchange plus pricing, merchant account, merchant services, visa interchange
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Why you should not lease a credit card terminal….

June 18th, 2008

Businesses often look at leasing as a viable alternative to purchasing high priced equipment. After all, not many small businesses can foot the bill for a $15,000 color copier. But would you lease a $200 cell phone or a $300 cash register? Of course not! So why do some businesses lease $150-$300 credit card terminals?

Most credit card terminal leases involve a 48 month term, and at least $20 a month. That totals $960 in payments! You could have received this terminal with only a small deposit using our free terminal program!

The Games Lease Providers Play:

Most merchants are given inflated costs to make them more inclined to lease. For instance, some companies will say a terminal, which costs $299, costs $600. With no frame of reference, many new customers will simply assume this is accurate, but may not have the cash or credit for that amount.

Also, some companies claim tax advantages to leasing. This is simply false. It is true that lease payments are deductible, but any business purchase is deductible. Would you rather deduct an expense or have the cash in your pocket?

That’s not the only bad news. Here are a few more facts about leasing credit card terminals…

Credit Card Machine Leasing Contracts are Binding.
Regardless of your circumstances, you cannot terminate the lease before the term ends.
You Have to Return the Equipment.
After you spend your $960, you then have to return the terminal
Leasing Has Costly Strings Attached
Terminal leasing companies sometimes continue to charge monthly fees beyond the contract term unless you contact them to cancel.
Equipment insurance is required for all leases, adding to monthly fees.

Don’t get stuck in a long-term leasing contract while paying far more than necessary to process credit cards. Save money and avoid the hassles of leasing—contact one of our independent sales representatives to learn more about our free equipment program..

www.capital-bankcard.com

Tags: credit card equipment, credit card terminal, free credit card machine, nurit 2085
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What are the different types of merchant accounts?

June 18th, 2008

In the credit card processing industry, every merchant is classified into a specific “merchant account type” category, based on how they collect card information and conduct transactions. To learn which category your business is classified under, we have defined the characteristics of each merchant account type in this article.

There are two main merchant account type categories, “Swiped” and “Keyed,” which reflect the basic methods used to capture card information. Within these main categories are sub-categories, broken down according to the business environment and processing technique.

“Swiped” or, “Card Present” merchants directly interact with their customers face-to-face and capture card information by physically swiping cards through a terminal or point-of-sale system. The sub-categories within this group include:

Retail Merchants: “Retail” merchants typically conduct business in a storefront or office where they interact with their customers face-to-face and physically swipe cards through a terminal or Point-of-Sale system.

Restaurant Merchants: “Restaurant” merchants require the ability to add tips to their charges (Note: Restaurants that do not process tips are still considered “Retail” merchants in this industry). Using a special tip function, they authorize a customer’s card for a certain sale amount and then settle that authorization with an adjusted price to include the tip amount.

Wireless/Mobile Merchants: “Wireless” or “Mobile” merchants need to accept and authorize cards wherever they are located, which is usually on the road. Using a portable wireless terminal, these merchants process on-site, real-time transactions at their customers’ locations.

Lodging Merchants: “Lodging” merchants (e.g. Hotels, Motels, and Bed & Breakfasts) authorize a customer’s card for a specific sale amount and, depending on the customer’s length of stay, will adjust and settle out that authorization a day or more later to include additional fees such as taxes, etc.

“Keyed or, “Card-Not-Present” merchants indirectly collect their customers’ card information, and, depending on the business environment and technology used, can process transactions in various ways. The sub-categories within this group include:

Keyed Face-to-Face Merchants: “Keyed Face-to-Face” merchants eventually meet their customers in person to deliver the product or provide the service, but they don’t actually collect card information with the customer or card present. Generally, they take orders over the telephone, via fax, mail, email, or the Internet, and then manually key-enter card information into a terminal, software, payment gateway, or other point-of-sale system.

Mail Order/Telephone Order (“M.O.T.O.”) Merchants: “M.O.T.O.” merchants rarely, if ever, meet their customers face-to-face. Instead, these merchants collect orders and card information over the telephone, by mail, fax, or via the Internet, and manually key-enter transactions through a terminal, software, payment gateway, or point-of-sale system. Then, once payment for an order is confirmed, the product is shipped for future delivery.

Internet or E-Commerce Merchants: “Internet” or, “E-Commerce” merchants conduct all business through a website, so all card information is collected and transactions are processed online, in real-time, using a payment gateway that’s built into their website’s shopping cart. So, once the order/sale is confirmed, the card is charged instantly and the product is shipped for future delivery. (Note: This merchant type does not apply to businesses that only market on the Internet, but do not immediately process payments via their website, upon order confirmation.)

www.capital-bankcard.com

Tags: credit card processing, merchant account, merchant services
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Merchant Account Statement Analysis

February 24th, 2008

This is a statement from one of the few credit card processing providers in the country that places the majority of their accounts on and interchange plus pricing structure. Their statements look confusing at first – but once you have seen one they pretty much all look the same.

1. This shows the total gross amount of credit card processing sales processed over the course of the month.

2. The breakdown of the monthly credit card processing fees. You can see where these are calculated on page 2.

3. Total fees for the entire month – including V/MC fees AND the processor’s own fees.

4. The net amount of deposits paid to the merchant after the credit card processing fees have been paid.

1. This is the fee charged by Mastercard for all of their transactions over the course of the month. Many processors will wrap this into their credit card processing rates if they are on a three tier rate system. With an interchange plus pricing structure it is always shown separately. The .095 is 9.5 basis points, or 9 and 1/2 cents for every $100 processed.

2. The breakdown of the actual Mastercard interchange categories processed over the course of the month. These are passed through at cost. Their is no negotiating these rates – they are set forth by MC. If you compare these numbers to where they may fall with a mid or non qualified rate you can see that the savings will be significant.

3. Visa’s assessment fee of .0925 or 9.25 points. (For those who do not know, 1 basis point = 1/100th of 1 percent)

4. The Visa interchange categories of credit cards accepted over the course of the month. Right below here you can see the total for all interchange fees for the month, $327.92.

5. This is the breakdown of the fees actually charged by Heartland for their credit card processing services. You can see in this case that the client is written at interchange plus .15% and $.15 per transaction. This means that the merchant will pay the processor .15% of their monthly sales. In this case they paid $24.42 based on their monthly credit card processing volume. The client will also pay the processor $.15 for every transaction that they process. This came out to $124.65 for this month. Total fees paid to the processor for this month were $149.07

6. Total credit card processing fees paid to the processor.

7. The transaction fee that the processor is charging for all American Express and Discover sales. In this case it is $.10.

8. The monthly service fee to have an account with the processor. It is $10, but if you look to the left of this you see $0. I don’t know why they have it set up this way unless they expect the client to believe that they actually are paying $0.

9. The total credit card processing fees paid for the month including all Visa and Mastercard interchange fees, and the processor’s own fees.

Since this clients average sale was so low and their transaction fee was so high, we were able to save them 9% off of their monthly and annual fees. If there is anything on here that is still unclear – please feel free to ask.

www.capital-bankcard.com

Tags: accept credit cards, credit card processing, merchant account rates, merchant account statement, merchant service statement, merchant services, mid-qualified rate, non-qualified rate
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Merchant Account Statement Analysis

February 23rd, 2008

1. This section summarizes the total credit card processing sales for the month. You can clearly see:
-Card type (v = Visa, m = Mastercard)
-# of sales, sales amount, returns amount, net sales, and average sales

2. Here you can see the total amount paid to the processor in credit card processing fees. (On some statements this number only represents the total for additional charges.)

3. 1.75% is the base rate that was paid to process Visa and Mastercard transactions. With a three tier rate system this would be called the “qualified” rate, which is typically the lowest rate you will pay to the credit card processor.

4. This is the discount due on this portion of the bill. In this statement this total only represents the qualified rate total. You will see on page 2 that there are MANY additional fees for other card types.

5. Daily credit card processing deposit summary.

1. These are all of the credit card processing charges that are not “qualified”. You can see that on this statement their are not just additional mid and non qualified charges, but an actual breakdown of the interchange categories that the client is being charged for. These interchange categories are set forth by Visa and Mastercard. What the business owner pays for each transaction type is set forth by the merchant bank. Typically these are lumped together into two categories, mid or non qualified. A better option for the business owner is when these costs are charged through an “interchange plus” pricing structure. You can easily see the different card types that this business owner accepted over the course of the month.

2. Here you can see the credit card processing fees that the client was charged for taking these different card types. In red you can see the percentages that were charged for these sales. Let’s take a look at the first category (Visa rewards 1) to figure out what percentage was charged for this transaction. The client was charged $67.53 for $11.070.61 in sales. If you divide the fee by the sales amount you end up with .61%. This is being charged in addition to the “qualified” rate of 1.75%. Therefore, when this business accepts this type of Visa rewards card they are being charged a total of 2.36%.

3. The monthly fee charged to the client, $7.50 in this case.

4. The fee charged for returns – on a per transaction basis. This client paid $.15 each.

This particular client had a hybrid pricing system. They were paying a qualified credit card processing rate but instead of mid or non qualified charges they were being charged for each interchange category (at a markup). By switching them to an iterchange plus pricing structure we were able to reduce their monthly credit card processing fees by over $350.

To learn more please visit www.capital-bankcard.com

Tags: credit card processing, credit card processing statement, interchange plus, merchant account, merchant account rates, merchant account statement, merchant service, mid-qualified rate, non-qualified rate, qualified rate
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What is the point? To help you understand your merchant account rates and fees.

February 22nd, 2008

I am often asked by clients, sales representatives, and even other people in my position how to read credit card processing statements. Unfortunately there are dozens of different formats to merchant account statements, and there are also dozens of versions of each format. (Much of this depends on the bank issuing the credit card processing statement.) So, even someone with many years of experience in the credit card processing industry will occasionally stumble upon a statement format that they have never seen before or that they do not understand.

I am going to attempt to educate business owners and industry sales reps through the posts on this blog. I analyze dozens of credit card processing statements every week for my sales representatives. I will post samples of some of the statements that I work on, and hopefully you can find it useful in understanding the statement that you are looking at.

Please feel free to email me with questions or if you would like me to review a credit card processing statement!

www.capital-bankcard.com

Tags: credit card processing, credit card processing fees, credit card processing statement, merchant account, merchant service statement, merchant services
Posted in Uncategorized | 1 Comment »

www.capital-bankcard.com

Merchant Account Statement Analysis

“Merchant Services” credit card processing statement review

Credit Card Processing Statement Analysis

Our clients keep getting offered a discount rate of “only” 1.69% – what’s the deal?

Visa reduces gas prices at the pump!

Why you should not lease a credit card terminal….

What are the different types of merchant accounts?

Merchant Account Statement Analysis

Merchant Account Statement Analysis

What is the point? To help you understand your merchant account rates and fees.

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