Not all credit cards are the same. No I don’t mean they are different colors, or have different designs on them. Different card issuers have cards types of cards. So how do people know they are picking the right credit card? There are cards that have rewards programs, cards with low interest rates, cards for people that have bad credit and cards for people with special needs.

The first thing that most look for in a credit card is the interest rate. Cards may have a low introductory rate and offer great rates on balance transfers, but these may be nothing more than teaser rates. Reading the fine print can save some from paying as high as a 30 percent APR. Look in the fine print for the variable rate or how high the rate will go after the introductory period.

Continue reading "What Distinguishes One Credit Card from Another?"

Every day more businesses are going out of business and layoffs continue to plague the nation. The traditional brick-and mortar merchant may slowly become a thing of the past. Many are trying their hand at home based businesses and internet ventures. Over the past year we have seen a significant rise in companies like mortgage restructuring, debt consolidation, and various classified offerings online. Although these types of businesses are lucrative, they come with great risk to their owners and the acquirers that take on the challenge of processing credit cards for them.

Most may think that banks are not taking on these types of credit card accounts because of the financial state of our banks. There is a big difference between the acquiring side of banking and the issuing side. In fact the acquiring side that handles credit card processing in the banking industry seems to be the only piece still making money and I predict they will continue to generate revenue. There are acquirers out there that are designed to specifically cater to high risk types of online businesses and have flourished in these industries. To make sure your new venture does not turn out to be a big loss, it is important to look for more than just a card processor to partner with.

Some important items to look for when starting a high risk business online:

Continue reading "Does High Risk Mean Big Opportunity or More Losses?"

It is amazing to me how many different sized businesses still do not accept credit cards as a form of payment, and do not know about other value added products. Many business owners I have talked to that do not accept credit cards at their business seem to have the same two objections. The first reason is that the fees are too expensive, causing it to not be cost effective for them. The second reason is that no one has ever asked them to pay with a card. Although we may find the later objection odd in today’s world, where everyone seems to pay with a credit card, it is frequent in the landscaping, IT, delivery, home based businesses and many more.

Credit card acceptance has been said to add many different benefits to a business. Most business owners report large increases in profits when they begin accepting credit cards. Credit cards allow customers to make a purchase, despite a shortage of cash.

Services businesses, such as IT professionals, will see a large decrease in the number of past due accounts. It is also historically true that people will even spend more because they don’t have to part with cash. It is less expensive for you to accept a $50.00 payment by credit card, than the costs of labor, supplies and postage required to mail an invoice.

Continue reading "How Can Accepting Credit Cards Benefit A Business?"

In 1730, the first advertisement for credit was placed allowing furniture to be purchased over time. Almost 200 years later, Western Union issued a metal plate to their employees instead of a paycheck. Of course this card was only good in company owned stores. It was not until the 1950s that Bank of America issued the first revolving credit card.

Technology in the payment card industry has grown tremendously in just the last 5 years. Merchants are able to accept payment using any java enabled cell phone, and can even turn their laptop into a credit card terminal. But the best is yet to come.

Continue reading "Technology Trends and Card Processing"

Credit card processing has been around for many years in some form or another. Back on the “Little House on the Prairie,” the Olsen general store allowed consumers to pay for items on an account. All the consumers were kept in a log book and paid when they could. We have evolved as a nation, and so has our technology.

In New York, in 1950, the first credit card was released by Franklin National Bank of Long Island. It was also in New York in 2001 that our entire outlook changed. The World Trade Center was attacked and Homeland Security was created to protect our nation from terrorism. The government put in place The Patriot Act, which affected the merchant services industry by putting stricter guidelines on account approvals. Merchants are now required to submit a copy of government issued documents identifying themselves and their business.

The following items are considered acceptable (you will need a minimum of one from each category):

Continue reading "Is It Getting Harder To Get A Merchant Account?"

“Interchange fee” is a term used in the payment card industry to describe a fee that a merchant’s bank (the “acquiring bank”) pays a customer’s bank (the “issuing bank”) when merchants accept cards using card networks, such as Visa and MasterCard, for purchases. Although Visa and MasterCard determine Interchange rates, the fees are not retained by them. They only act as intermediaries between the members on either end of the transaction.

In nature we have the cycle of life – in card processing we have the life of a transaction. It is important to understand where the fees come from and know who all the players are.

• The process starts with the consumer making a purchase via a terminal or website.
• The merchant’s terminal transmits the transaction, via DSL or phone line, to the acquiring bank.
• The acquiring bank routes the transaction to a processor, and then to the card associations via Visa’s system (VisaNet) or MasterCard’s system (INET).
• The association’s system requests an approval from the issuing bank.
• The issuing bank sends back a response. If the card is approved, an authorization code is sent back to the association. The association sends the code to the acquiring bank, and then to the merchants terminal.

Continue reading "How Are Your Card Processing Fees Assessed?"

There are many third party processors out there that benefit when the Bank Card Associations (Visa and MasterCard) raise their rates. They look at this as an opportunity to make an additional profit from their merchants. Merchant services providers get to decide how they will pass the various increases and decreases through to the merchant. More often it is the increases that get passed on, and not the decreases. New Visa Interchange rates, MasterCard Interchange rates, and other processor Interchange rate schedules are typically published by the Bank Card Associations in April and October.

Since there are many different processing categories for Interchange rates, they can be confusing to most merchants. Merchants pay higher or lower rates depending on, but not limited to, whether or not it was a rewards card, purchase card, or debit card. Rates can also be assessed based on your SIC code and how often you batch your terminal.

Continue reading "How Rising Interchange Rates Can Affect Your Business"

Many merchants violate the credit card companies’ rules and don’t even know it. Most stores don’t have any procedural information about how to process a credit card sale as part of their employee training other than hitting the “sale” button, and why should they? Are there any consequences?

I am continually shocked by the number of Visa and MasterCard violations made by merchants I shop with a daily basis.

Here are a few mistakes I’ve personally witnessed merchants make:

Continue reading "How Do Merchants Violate Visa and MasterCard Rules?"

With 80% of online shoppers using credit cards, you can’t afford NOT to take credit cards. Did you know that merchants offering credit cards as a payment option increase their profitability by estimated 50%? With the inherent advantages involving credit card processing, should you really go with your initial instinct and choose the cheapest option?

Let’s face it – we all strive to have that BMW as opposed to a Dodge Neon, and even shop around for the best appliances. Knowing this, have you ever stopped to wonder why we, as business owners, opt for the lowest bidding credit card processor for something as important as our business?

As with other products, cheaper does not necessarily equate to better. How about reliability? If your customers are charged the wrong amount, or transactions are declined due to an unreliable or inaccurate gateway, who do you think they will blame? That’s right, YOU! Consider this – is the money you’re saving using the cheapest solution worth the cost of losing future business?

Continue reading "Can You Afford to Give Your Credit Card Processing to the Lowest Bidder?"

I frequently get calls from merchants who say they were quoted one rate, but claim different rates are showing up on their statements. Unfortunately, merchants can experience a rate increase or surcharge because of the type of card your customers are using, such as sky miles cards and rewards cards. Another cause of increased processing costs is transactions being processed incorrectly by the merchant. How can merchants avoid being charged these surcharges and still qualify for the best rate possible?

First, it is important to understand the different types of transactions that can occur when running a credit card sale:

Continue reading "What are Non-Qualified Transactions and How Can Merchants Avoid Them?"