What's in your "Bucket" ??

How do you truly know what you're paying?

If you've read this blog, or visited my website, you know that I am a strong proponent of total and full disclosure when it comes to merchant services. Unfortunately, in our industry, this stance is rarely taken by providers and reps in the field.

As you may already know, there are several different pricing methods in which you may be set up for accepting credit cards in your business. There is Three Tier, Four Tier and Cost-Plus pricing. Of these three, Cost-Plus is the most transparent to the merchant and can be, the least expensive. But, you have to have someone willing to educate you regarding how it works so that you can totally grasp the concept. If you, or anyone you know, owns a business that accepts credit and debit cards for payment, you owe it to yourself to get on over to my website for your education. I promise you will not be SOLICITED by me for your credit card processing business, however, all my contact information is there for you, if you desire my assistance.

When you are priced in a Three Tier format, (like the majority of merchants still are), you will have Qualified, Mid-Qualified and Non-Qualified rates. Qualified will be absolutely your best rate and will be for swiped transactions. But, here's where it gets tricky. For your Mid and Non-Qualified rates, each processor can add any surcharge they want on top of your Qualified Rates. And, they can throw whatever card or transaction types they want into whichever category they want, and....change it whenever they want.

For example, one processor may treat Rewards cards as Mid-Qualified with, let's say a .75% surcharge to the Qualified Rate. Other processors may treat those same Rewards cards as Non-Qualified with a 1.25%, or higher, surcharge. How does your current provider treat these types of transactions that are seen with ever increasing frequency these days? And furthermore, how much of a surcharge are you paying and is it fully disclosed on your statement? Do you know how to figure it out? You need to know the answers to these questions in order to minimize your total costs of accepting all kinds of cards.

In a Four Tier pricing format here is how the categories typically run:

Tier 1 for swiped debit cards

Tier 2 for swiped credit cards

Tier 3 for hand-keyed, maybe Rewards cards (or whatever the provider wants in there)

Tier 4 for corporate, world, Rewards cards (or whatever they want....YIKES!!!)

The bottom line is that you absolutely NEED TO KNOW what you're paying for what....don't you agree?

With the most recent Interchange adjustments (April 2008), it wasn't that there were many rate increases as much as there were more categories added. However, many merchant service providers utilized this as an opportunity to raise your rates. Others that I have seen, notified merchants (via a statement message that few merchants ever read) that several transaction types were going to be moved into higher costing tiers or "buckets". Check your March credit card processing statement to see what happened to your account.

As I've mentioned many times here, it's important to GET EDUCATED. My website is designed specifically to do that for your benefit. It is NOT A SOLICITATION for your credit card processing business, however, all my contact info is there if you desire my assistance.

Well, that's it for now. If you know others that own any kind of business that accepts credit cards for payment of goods and services, please send them to my website . In today's economy, we all need to do all that we can to improve our bottom line. Thanks for visiting!

Be Blessed and Be a Blessing

April 2008 Interchange Rates

Happy Spring! There are a couple things in life we can always depend on. One is that April 15th is always the latest tax filing date (unless of course, you get an extension. And, twice a year, in October and April, Visa and MasterCard review their Interchange Rates. And, this spring, they reduced rates.....NOT!!!! As you might imagine, that's not typically the way it goes. More often than not, we see increases of some sort but this time around we see something a bit different happening.

It's not so much that Interchange Rates increased this time around, as much as many more new "categories" were added. MasterCard, for example, has added Merit I Insurance and Real Estate Interchange categories. Visa, on the other hand, has added numerous new categories, primarily for Internationally Issued Card Transactions.

So, where do you stand in all this stuff? Do you even understand what "Interchange" is and how it affects the rates that you pay to accept credit and debit cards in your business? If you don't then it's about time that you found out. You'll find different sites referred to on this blog that will go a long way in EDUCATING you in the world of credit card processing. Go to these sites and learn all that you can.....it will be worth thousands of dollars in your pocket over the life of your business.

As I've reviewed this current Interchange situation I have discovered that merchants are being hit in a variety of ways. You may received a notice (typically via a "statement message" on your monthly statement) that came through in February or March. The problem with this, as I so often discover, is that many merchants never read or try to decipher their credit card processing statements. Consequently, the "notification of increase" may have just slipped by you.

I've seen some statements that simply state that "your rates will be increased by .XX% beginning April 2008". Others state that some categories, like "Qualified or Tier 1 and Tier 2 rates will not be affected, however some other types of transactions will now be Mid-Qual, Non-Qual or Tier 3 or Tier 4". What the heck does all that mean? Do you understand it? I DO! It means the processor is simply making adjustments in their favor. Now granted, they are all in business to make a profit, and rightfully so.....you are too. But, unless you are thoroughly educated on how this business works and know the questions to ask, you may be getting "hosed". Sorry to be so blunt, but that's reality.

Let's face it! If you're in business selling any kind of goods or services, you need to accept credit and debit cards. Rates continue to increase and the economy continues to slow down so making a buck is becoming more and more difficult. How would you like to improve your bottom line without even increasing your sales? It's simple, reduce your costs! And, one way to do that is by knowing how the credit card processing industry truly works and putting yourself in a better position to be able to negotiate the absolute best program available for your business.

Take a CLICK on over to my website where you'll find out more than you ever knew about credit card processing. I promise you.....I WILL NOT TRY TO SOLICIT YOUR BUSINESS! If you want to get more personalized help from me, my contact information is available.

Well, that wraps it up for now.....thanks for stopping by and please, be sure to tell all your business associates about my blog and websites.

BE BLESSED AND BE A BLESSING

Court Ruling on legality of Interchange

14 March 2008 - 10:37
MasterCard claims court ruling 'reaffirms legality of interchange'

MasterCard has praised the decision of a US appeals court to dismiss an interchange fee lawsuit brought by a group of merchants, saying the ruling reaffirms the "legality" of the current fee structure. The Court of Appeals for the Ninth Circuit upheld a lower court ruling that dismissed a suit brought by a group of merchants claiming that MasterCard, Visa USA and a group of US banks, had conspired to set the interchange fees charged to retailers every time a payment card is used.

The merchant group - which is led by hair salon operator Sheri Kendall - had claimed that the current interchange fee structure in the US violated antitrust laws. In July 2005, the federal court of the Northern District of California dismissed the lawsuit. The decision was appealed to the US Court of Appeals, which upheld the dismissal.

MasterCard general counsel and chief franchise officer Noah Hanft welcomed the decision and says the case was dismissed on grounds that the "merchants had failed to present facts that established a conspiracy". Hanft says the the court rejected claims the interchange fee effectively "sets a floor" for each bank's merchant discount fee. The court concluded that a decision by banks to recoup their costs "suggests a rational business decision, not a conspiracy".
"No US court has found interchange to be illegal," says Hanft. The merchant group is one of a number of trade groups that have been angered by interchange fees charged on card transactions and have filed dozens of lawsuits against MasterCard, Visa and many card issuing banks over the levy.

Last year The Merchants Payments Coalition (MPS) accused the credit companies of using a portion of the interchange fee - which is meant to cover processing costs - for marketing campaigns instead. The coalition said in July that a study had shown that card companies and banks spend only about 13% of the interchange fee on actual processing. The rest goes on marketing, profit and other services like rewards programmes. However merchants are set to get a greater say in the setting of interchange fees with the introduction of new legislation in the US that will allow them to negotiate interchange charges imposed on card transactions.

The Credit Card Fair Fee Act is the first attempt by US Congress to address credit card interchange fees and is the outcome of a hearing held last year by the House's anti-trust workforce. The US move follows action by the European Commission against MasterCard over interchange fees charged on cross-border card transactions.

The EC said in December that the multilateral interchange fees (MIF) charged for cross-border transactions made with MasterCard and Maestro debit and credit cards violated EC Treaty regulations and gave MasterCard six months to scrap the fee structure or incur daily penalty payments. However MasterCard has applied to the European Court of First Instance to annul the EC's decision. The Commission is also reported to be investigating the fees charged by Visa Europe following the expiry of an antitrust agreement between the card company and the EU's Competition Commission.

In 2002 Visa agreed to reduce levels of interchange fees for processing card transactions in return for immunity from legal action. However the exemption ended at the end of December and Brussels is said to be re-investigating the fee structure.