Archive for the ‘Uncategorized’ Category

What is ERR credit card processing pricing and is it ever good for a client?

Thursday, July 15th, 2010
Enhanced Recover Reduced (ERR)
Enhanced Recover Reduced or ERR is a pricing model that’s been around for a while but has been gaining in popularity lately as merchant service providers look for more profitable options to the less expensive flat rate or interchange plus pricing models.
ERR is often referred to as a mixed or blended rate because it’s a combination of tiered and interchange plus pricing – with a twist. ERR is a non-transparent form of pricing because it uses a base qualified rate and also a truly hidden charge in the form of the difference between actual interchange and the qualified rate. This hidden charge is the “enhanced” part of the pricing.
With ERR pricing, a merchant service provider will quote three different rates – a qualified debit rate, a qualified credit rate and a non-qualified surcharge. When a merchant processes a qualified transaction they will be charged the qualified rate quote by the provider. Things get a little fuzzier when they process a transaction that doesn’t qualify.
In this case, the merchant will be charged the true interchange rate, plus the non-qualified surcharge and the difference between target interchange for the transaction and the qualified rate. That’s the “enhanced” part of ERR pricing that makes it look a lot better than it really is.
Enhanced Recover Reduced (ERR)
Enhanced Recover Reduced or ERR is a credit card processing pricing model that’s been becoming more popular  as merchant service providers look for more profitable options to the less expensive flat rate or interchange plus pricing models.
ERR is often referred to as a mixed or blended rate because it’s a combination of tiered and interchange plus pricing – with a twist. ERR is a non-transparent form of pricing because it uses a base qualified rate and also a truly hidden charge in the form of the difference between actual interchange and the qualified rate. This hidden charge is the “enhanced” part of the pricing.
With ERR pricing, a merchant service provider will quote three different rates – a qualified debit rate, a qualified credit rate and a non-qualified surcharge. When a merchant processes a qualified transaction they will be charged the qualified rate quote by the provider. Things get a little fuzzier when they process a transaction that doesn’t qualify.
In this case, the merchant will be charged the true interchange rate, plus the non-qualified surcharge and the difference between target interchange for the transaction and the qualified rate. That’s the “enhanced” part of ERR pricing that makes it look a lot better than it really is.

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

Friday, 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 merchant card services.

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

Visa reduces Credit Card Processing prices at the pump!

Saturday, 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 processing 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

Why you should not lease a credit card terminal….

Wednesday, 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

What are the different types of merchant card service accounts?

Wednesday, June 18th, 2008

In the merchant card service 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

How to understand Credit Card Processing statements

Friday, February 22nd, 2008

I am often asked by clients, sales representatives, and even other people in my position how to read merchant account 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 merchant card services statement.) So, even someone with many years of experience in the merchant services 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 merchant processing services 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 merchant services statement!

We have the most lucrative merchant service sales positions available in the country.  Selling credit card processing is one of the best sales opportunities in the country with which to achieve financial success.  Learn more

www.capital-bankcard.com