Full Version: Credit Card Processing
From: Engravin' Dave (DATAKES) [#1]
17 Mar 2007
To: ALL
Below is a post from Chris Miller on DistributorTalk (DT). For some in our industry it may not work efficiently enough, but it's an interesting angle on minimizing credit card processing fees.
For those who are members of the DT forum, here is the thread. http://www.distributortalk.com/forum/showthread.php?t=7377. For those who are not, here is his original post.
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With all the posts and questions about credit card processing I had to set the record straight. I have been through it all and believe me when I tell you I have found the BEST way to accept credit cards. This thread will save you the HOURS of research that I have already done and a ton of money too!
First off I use the Paypal Virtual Terminal to process all cards. I collect my customers credit card info myself and run the cards so they do not even know I use Paypal. The charges appear on their statements under MY company name.
Because of my volume I fall under the "Merchant Rate" of 2.2% + $0.30 per transaction as shown in the attachment. I also pay $20 / month and NO OTHER FEES. I am able to process Visa, Mastercard, American Express, & Discover all for this one low rate even with the card not present. Best of all I can do it ALL ONLINE in just a few seconds.
The funds are then stored INSTANTLY in my paypal account where I can immediately access them at any ATM with my debit card, with any merchant using the Paypal debit card (Has a mastercard logo) OR I can transfer it out to a bank account of my choice. Every other merchant account makes you wait DAYS before you can access the funds. Not with paypal though!
Now that I have collected payment from my customer (98% pay me with credit card and they are HAPPY about it) I can turn right around and pay the supplier upfront with my Paypal debit card and I get 1.5% cash back in my account for doing so!
With this system you can keep your credit card processing rates EXTREMELY low and you can improve cash flow too.
What's better? My paypal account is a MONEY MARKET fund that earns 5% on all of the businesses money each month while it sits there.
I seriously cannot imagine running my business any other way. I have been through the invoicing, collections, sending out checks, etc and I will never go back. This makes things SO MUCH easier and saves me a ton of TIME and MONEY which means more time to SELL!
If you want to be set free and enjoy a new, easier way of handling your companies AR/AP I HIGHLY recommend Paypal and their Virtual Terminal.
EDITED: 17 Mar 2007 by DATAKES
From: Vicky (ANDERI) [#2]
17 Mar 2007
To: Engravin' Dave (DATAKES) [#1] 17 Mar 2007
I don't think Virtual Terminal is available to Canadians. :-(
But, I believe I've found a close runner-up. I have my merchant account through Costco. They offer it through Nova Merchant Services. It's relatively inexpensive - in a month where I have no CC transactions, I pay $30CDN for the terminal rental, minimum payment and taxes. My rate for telephone transactions is 2.21%. The money is deposited into my bank account within 2 days of processing. Not a bad deal, I think. ;-)
From: Engravin' Dave (DATAKES) [#3]
17 Mar 2007
To: Vicky (ANDERI) [#2] 17 Mar 2007
Vicky,
Do you get charged a higher rate for keyed transactions, or corporate cards?
From: Vicky (ANDERI) [#4]
17 Mar 2007
To: Engravin' Dave (DATAKES) [#3] 17 Mar 2007
From: PenTrophy (PENINSULATROPHY) [#5]
17 Mar 2007
To: Vicky (ANDERI) [#4] 17 Mar 2007
Many of the credit card fees depend on the programs attached to them:
frequent flyer miles, cash back $, Gm cars. You pay to support those programs with your processing fees. When I get my charge back statement it tells me what it cost to process and they are all over the place (Nova Merchant) American express is the worst...
I purchased my terminal $325. I do not pay monthy/ per trans/ or annual rates.. no minimums. But must be a Costco Business member....with three kids that's no problem... plus I get 2% cash back.....
EDITED: 17 Mar 2007 by PENINSULATROPHY
From: Engravin' Dave (DATAKES) [#6]
17 Mar 2007
To: Vicky (ANDERI) [#4] 17 Mar 2007
Vicky,
Most processors apply the following charges to merchants:
1) Interchange Charge - These are additional charges that get passed on for corporate cards, rewards cards & hand keyed transactions.
2) Discount Charge - This is the percentage rate that you are typically quoted for standard, card-swiped transactions. My rate is 1.9%.
3) Authorization Charge - This is basically a fixed transaction fee. Mine is $.10 per transaction.
4) Monthly Maintenance Fee - This is a monthly service charge. Mine is $5.00
5) Annual Membership Fee - This is an annual fee that is charged by Visa. I get charged this every February. This fee is $39.50.
6) Minimum - I have a monthly minimum of $25. I've always been well over that.
I do a quick analysis of my fees every month to make sure they aren't out of whack. My total January processing charges were 3.24% of charged sales. My February processing charges were 3.18% of charged sales.
Have you ever calculated out all of the different fees that get applied to your statement? Do you see these other charges on your statement?
From: Vicky (ANDERI) [#7]
17 Mar 2007
To: Engravin' Dave (DATAKES) [#6] 17 Mar 2007
All I ever see on my statement is/are:
- Visa/MasterCard Charges (I don't take Amex). This is the 2.21% of my sales
- Card Minimum (if I didn't make the $10 min for the month, this will bring me up to $10. If I made my $10 min in the 2.21%, then this amount is $0).
- Equipment rental - that's my $18 for the terminal plus taxes (6% GST and 7% PST).
That's it. There's never anything else on my bill.
From: Engravin' Dave (DATAKES) [#8]
17 Mar 2007
To: Vicky (ANDERI) [#7] 17 Mar 2007
From: Vicky (ANDERI) [#9]
17 Mar 2007
To: Engravin' Dave (DATAKES) [#8] 17 Mar 2007
Yup, just checked the last couple of months' worth. Exactly 2.2% of my CC sales.
Like I said, I don't know if it includes corporate cards. 2.21% is the rate for hand-keyed/telephone sales. If you have mostly card present sales (i.e. you're swiping the actual card through your terminal), then your rate is more along the lines of 1.9% - possibly lower, I'm not sure on that so don't quote me. ;-)
Now, bear in mind that you have to be a Costco Executive member as well. Also, I'm not sure if this is available in the US. I'm pretty sure you can find out if you go to Costco.com...
ETA: Here's the US version of the program:
http://www.novainfo.com/costco/index.asp
EDITED: 17 Mar 2007 by ANDERI
Message 6349.10 was deleted
From: Engravin' Dave (DATAKES) [#11]
17 Mar 2007
To: Vicky (ANDERI) [#9] 17 Mar 2007
From: PenTrophy (PENINSULATROPHY) [#12]
17 Mar 2007
To: Engravin' Dave (DATAKES) [#11] 17 Mar 2007
and if you use the american express card you get 2% back from Costco purchases and 2% back from American Express.......
pays for the membership over a year.
From: precisionlaser [#13]
17 Mar 2007
To: Engravin' Dave (DATAKES) [#1] 17 Mar 2007
David, I have to thank you for bringing this up for discussion. I use Quickbooks Merchant Service and after doing an analysis of my costs, I am astounded to find that I paid an average of 3.9% of each VISA and MasterCard sale last year. You'd think that I'd be tracking this, but what with one thing after another, I wasn't paying attention. You can bet I'm paying attention now, and will be cutting the Quickbooks service off as soon as I can get another account established.
Like the old saying says, "if you find you're doing something stupid, quit doing it, Stupid!"...I will investigate the Paypal option as well as the Nova processing option. I'm still in shock...if you ever get to Memphis, you have a steak dinner and a beer waiting on you!
From: Engravin' Dave (DATAKES) [#14]
17 Mar 2007
To: precisionlaser [#13] 17 Mar 2007
Mark,
You are welcome. It's good to check in on this topic every once in a while to compare what rates we are all receiving.
For qualified customers, I still try to encourage them to use my in-house credit terms. I'd much rather give them 15-30 days to pay, versus paying the credit card processing fees.
EDITED: 17 Mar 2007 by DATAKES
From: precisionlaser [#15]
17 Mar 2007
To: Engravin' Dave (DATAKES) [#14] 17 Mar 2007
I do have a number of customers who pay via check and have 30 days terms, etc., but I also have some long term customers who like to pay via card, so that option is there for them...I just didn't realize how much I am paying for that from QB.
I like the looks of the Nova option and will investigate further. I did notice that they have a QuickBooks plugin available, so it looks as if moving from the QB service to Nova might be a little easier and it's cheaper for sure.
I am a Sams Club member so I checked out their credit card processing deal, and it's substantially higher than the Costco deal (2.39% vs. 1.99%), so it looks like I might become a Costco member.
From: Engravin' Dave (DATAKES) [#16]
17 Mar 2007
To: precisionlaser [#15] 17 Mar 2007
From: John (ICTJOHN) [#17]
17 Mar 2007
To: precisionlaser [#15] 17 Mar 2007
Mark,
I too have been checking into credit card processing for the past week. I currently am with NOVA and found out that Costco goes thru them. I was able to come up with 1.64% with Both Costco as well as SAMS.
Both companys' programs are similar but SAMS has another option called "Business to Business", which will give you 2.04% for ALL transactions, not the 1.64%, 1.78% 2.83% or 3.35% (plus 26 cents each trans) for the different levels of reward cards.
Most all of my cards have some type of rewards program (military & city gov.) attached so I am paying the higher % for most of the cards, so I will run several months thru Excel and see which program would work the best for us.
BTW, what started this was I received a letter saying my card machine was "Old" and would cost more to process cards since it couldn't use the newer security features. So I bought a new unit on e-bay for less than half the price that NOVA wanted for the same model.
Attn: David Takes,
The closest Costco to me is 175 miles away (Olathe) but I still feel it pays for itself. :B
Just my % worth............... want credit?
~
From: Engravin' Dave (DATAKES) [#18]
17 Mar 2007
To: John (ICTJOHN) [#17] 18 Mar 2007
John,
I'm getting more and more out of state business, which means my percentage of hand-keyed transactions is growing. My current provider hasn't threatened me yet, but a letter is likely coming soon with a new and improved rate because of the excess hand-keyed transactions. (new and improved for them) :-( My rate was based on a very small percentage of transaction being hand-keyed.
Does the Sam's processing allow unlimited hand-keyed transactions?
I used to live less than a mile from where that Costco is located in Olathe.
I do belong to Sam's Club, although I've only stepped in the store once in the past year. Maybe something like this would at least help justify the membership. I'll investigate that option as well.
From: precisionlaser [#19]
17 Mar 2007
To: John (ICTJOHN) [#17] 18 Mar 2007
Thanks John
The vast majority of my business is outside of Memphis, so we rarely get the chance to charge a card present, so the rate I'm most interested in is the MOTO and ECommerce rates. We have a couple of older card machines from the days that we had a retail kiosk in St. Louis, but I'm sure that they don't meet the requirements now...after all, they're almost 5 years old now!
From: John (ICTJOHN) [#20]
18 Mar 2007
To: Engravin' Dave (DATAKES) [#18] 18 Mar 2007
David,
I don't know if they accept "Unlimited" manual transactions, but I have not ever been questioned and I am doing a lot of manual transactions like you. The salesman might not be the person to ask that question of, because he will probably agree to anything before the sale.
I'm still trying to analyze the pricing structures and how much it would cost for all processors I am thinking about.
~
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