Dec 29

Involves Much More Than Your “Rate”

A few articles ago I mentioned how there is a complete disconnect between what you should be looking for in a merchant account provider, and the way merchant accounts are marketed (and understood) by business owners.

The disconnect?

Focusing on rates and fees to the exclusion of everything else.  And there are two main reasons why I say that:

  1. most merchant account providers actually hide the true cost of processing by focusing on “rate” (as if there is only ONE rate)…
  2. most business owners think that the only way to evaluate different providers is to ask about their rate (as if there’s nothing more to ask)…

And that’s a problem.  Or a potential problem for your business.

Why?

Well, if you’re like most of my clients, 85 to 99% of your revenue comes from accepting credit cards at your business.  Any problems with your merchant account will have a bottom line immediate impact on your business.

Big time.

In other words, if your account was “frozen” and you couldn’t get access to your money for 90 days (or more) because it was being “held” would you be able to keep the lights on?

Believe it or not, this does happen from time to time.  And for most people I know the answer is simple.  They just couldn’t survive very long with a significant portion of their cash flow tied up in red tape for no good or understandable reason.

Now, in the above scenario, what’s a few fractions of a percentage point (real or imagined) when you can’t even get access to your money.  What, in essence, did you really save?

Hey, don’t take my word for it.  Here’s a brief quote from an actual email I recently received from someone who is NOT a client (yet - we’re working on it):

“It’s been a hell of a ride. Some bad things happened this year too including:
-motorcycle stolen
-wheels stolen off my car
-hit and run side swipe
-PayPal holding 100’s of thousand of dollars without explanation
-merchant account shut down without notice, etc.”

This can happen to anyone.  And it occurs more often then you might think or imagine.

So when it comes to choosing someone to help you accept credit cards (online or off), or if you already accept credit cards but are unhappy with the service you’ve received to date, there ARE alternatives.

Basically, you can choose some “mega-processing” company and deal with sales reps needing to fulfill their quota on the “front end,” with “back end” support provided by a call center and hours on hold.  OR, you can choose to work with a business owner who will fight FOR you to keep your account open and running smoothly.

It really is that simple.  The choice is yours to make.

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Nov 10

Credit card processing fees (or merchant account fees) are typically the most misunderstood aspect of accepting credit cards at your business. It’s perfectly understandable.

And the reason is simple, because it’s more complicated than you might think.

Not to mention, it’s probably the one aspect of opening a merchant account that gets skipped over, glossed over, or plain lied about by a number of sales reps out there all trying to win your business.

How do I know this?

Well, in working with business owners for the past few years, the single most asked question I get is…

“What’s your rate?”

And when I hear this question, there’s one thing I’m real sure about.  Okay, maybe two.

First, that the business owner doesn’t really know what he or she is paying.  Second, that more often than not I’ll be able to save them a significant amount on their monthly processing fees.

Credit Card Processing Fees Explained

The true cost to accept credit cards for your business is based on two, and only two, factors.  Remember, we’re only talking about Visa and MasterCard here.  American Express and Discover are different, even though merchant account providers can set you up with them as well.

Okay, those two factors affecting your rates for accepting Visa and MasterCard are…

  1. How a card is processed
  2. The type of card processed

That’s it.  Before we discuss these in detail, can you spot one item noticeably absent from the list?  I’ll give you a little hint… think about monthly revenues.

To set the record straight once and for all, monthly volume does NOT affect your rate.  I don’t care where you may have heard this, it absolutely has nothing to do with your credit card processing rate.

Ever.

The Truth About Processing Volume

Now, if you’re talking about AMEX, processing volume does matter.  As your volume increases, you may qualify for a reduced fee, but only IF you reach certain thresholds based on your industry type.  When accepting Visa and MasterCard, however, it’s a different story.

Or at least, it should be.

See, there’s only one little problem when I talk about your processing volume for Visa and MasterCard, and the rates for accepting credit cards at your business.  Just because Visa and MasterCard do not base their fees on processing volume does NOT mean that your merchant processor follows their lead.

Which means, just because your actual processing rates are on based on volume, does not mean that you will not pay more.

On a number of occasions I’ve heard from business owners who were told from their merchant services provider that their fees were going up.  And the reason given for the rate increase was because their “volume” wasn’t sufficient enough to maintain their current rate.

Now, a company may blame their rate increase on your volume.  But that’s just a convenient way to increase profit margins at your expense, and then turn around and blame you for it.

Real nice, right?

Needless to say, this is hardly good business practice.  In our next article we’ll cover in more detail the two factors affecting credit card processing fees.  So keep an eye out for it, okay?

Oh, and don’t forget to register for the site to get email notification whenever we add new content here.  And to suggest a topic for me to cover, or answer a question, kindly leave a comment for us.

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Nov 5

before signing up with a merchant account provider.  This isn’t “the sky is falling” type stuff.  Just a quick overview about a few tidbits of information you should know about credit card machine options before you sign a contract.

For starters, you should avoid accepting an agreement that includes, or pushes for, a credit card terminal lease.  There just isn’t a good reason for this.  Ever.

If you ask me, any sales rep suggesting that this would be good for you is reason alone to talk to someone else.  Just check out the previous article and read carefully to find out why.

So instead of the lease, here are 3 options you should definitely consider…

Wholesale

One option is to do some research online and pick up a credit card machine direct from a supplier that does NOT do merchant processing.  You can get a really great price on the equipment.  Just be sure to ask about the need for reprogramming.

You can also check out ebay (now that most of the scammers are gone).  Lots of folks sell their older or no longer needed equipment.  Again, be sure that it can be reprogrammed.

One quick tip:  LinkPoint machines can NOT be reprogrammed.  Ever.  So avoid these like the plague.

Retail

Another option is to just buy the darn thing.  Here’s where you’ll find out how the sales rep gets paid.  If they insist on a huge markup, you’ll know that they only make their money on selling you the equipment.

And that’s a problem, because once you sign up, you’ll probably never hear from them again.  And since you’ve done your research (hopefully), you’ll have a pretty good idea of how much the darn machines cost anyway.

Now, not all machines are the same.  But with your research, have the sales rep justify their price to you.  Okay?

Free Equipment Programs

Finally, there are free equipment programs available.  In fact, more often than not this is the option most of my clients prefer (if they qualify).  Not only is the credit card machine free, but some programs offer free replacement of defective machines for life.

Now, in my book, that’s not a bad deal.  Just be sure to understand the requirements of the program before signing up and you should be fine.

If you’d like some help in deciding which option is best for you, send us an email to info@ampyourcashflow.com and we’ll help you out.