How To Save On Your Merchant Accounts Fees

With debit swipe fee reform now implemented, retailers nationwide are anticipating saving on the interchange portion of their merchant accounts fees.  Preliminary data indicates that millions of dollars in charges may be coming their way.

The Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 went into effect on October 1, 2011. Under it, the Federal Reserve capped the interchange fees banks can charge on debit card transactions at 21 cents, plus 0.05 percent of the transaction. Issuers are also allowed to charge an additional penny per debit transaction to offset their fraud prevention costs. The new average swipe fee for a debit card purchase is 23 cents, compared to the pre-Durbin average of 44 cents.

It’s important to note that the legislation applies only to Visa® and MasterCard® debit cards (not credit cards), and only to banks with more than $10 billion in assets. It caps the interchange fees that the banks charge, but does not apply to third-part processors, who can charge whatever they want to their merchant accounts customers.

“As an industry, we’re really pleased that the new rules have now taken effect,” Connecticut Retail Merchants Association President Timothy Phelan recently told the Hartford Business Journal. “We really won’t know the true benefit until the retailers get their statements.” Phelan added that he expects that merchants, in time, will pass along any savings they receive to their merchant accounts customers.

The business journal reported that Connecticut merchants could expect to save about $260 for every $100,000 in Visa and MasterCard debit charges they process.

In the months leading up to its enactment, the Durbin Amendment prompted an epic battle on Capitol Hill that pit credit card-issuing banks against merchants and their associations. The banks argued that they would lose billions of dollars in revenue from lower fees — income they threatened to recoup by charging debit card customers monthly fees to use their cards. Several major banks, including Bank of America, Wells Fargo and J.P. Morgan Chase, dropped that idea after cardholders rebelled and threatened to close their accounts.

For now, retailers are waiting for their first post-Durbin Amendment merchant accounts statements to arrive to see how they’ve fared under the new rules. If they have questions regarding their savings, they should discuss them with their merchant services provider representative.

Why It Pays To Accept Credit Cards

 

One of the biggest challenges for a small business is competing with larger businesses with greater resources. One proven strategy for leveling the playing field is to accept credit cards. After all, 78 percent of American consumers own a credit card, and 80 percent own a debit card.¹ That’s a huge market that no merchant can afford to ignore — especially small businesses who don’t plan on remaining small for long.

Small businesses that start to accept credit cards benefit in a variety of ways. Most obviously, they immediately become an option for patrons who prefer to pay with plastic. In their eyes, seeing the logos of the major credit cards in a merchant’s shop or on their e-Commerce website means that merchant is in the same league as much larger retailers. Since most small businesses strive to offer the superior customer service that the Big Boys often can’t or won’t, it’s a no brainer that they should expand their payment options to include the debit and credit cards consumers use so frequently.

Secondly, the convenience of credit cards cuts both ways. Consumers appreciate swiping their card and cutting the transaction time to just seconds so they can be on their way. But merchants benefit, too. Shorter transaction times mean they can serve more customers more efficiently. And, at the end of the day, merchants can send all their transactions in one batch to their credit card processor for electronic settlement, knowing that within days the proceeds will land in their account.

Credit card processing with a reputable merchant services provider like Merchant Account® is a very secure operation. State-of-the-art encryption technology keeps cardholder and account information safe, as does our PCI-compliant electronic payment gateway Transaction Express™. Whether a merchant accepts credit cards with a countertop terminal, an online virtual terminal or in the field with our mobile PayFox® service, the transaction is protected from fraudsters and identity thieves.

Merchants who accept credit cards also usually see an increase in sales. The reason is simple: Credit card shoppers tend to spend more than shoppers who pay with cash or a check. Impulse buying and upgrading to a higher level of merchandise are both possible when the shopper taps a line of credit instead of a wallet to pay.

Finally, there are savings to be realized from accepting credit cards. Merchants spend less time making bank runs and processing paper checks. New credit card processing options like wireless and mobile mean that merchants who deliver services or products to customers’ homes or businesses can collect right then and there, foregoing the time-consuming and expensive billing and collection process.

Today’s credit card processing is fast, convenient and safe, and the many options available give merchants the opportunity to work with a merchant services provider to design a package that meets all their requirements. For small business, being able to accept credit cards is the smart way to go and grow.

¹   Source: “The Survey of Consumer Payment Choice,” Federal Reserve Bank of Boston, January 201

Why It Pays To Accept Credit Cards

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It Pays Off For Small Business To Accept Credit Cards

November 10, 2011 By merchantaccount Leave a Comment (Edit)

One of the biggest challenges for a small business is competing with larger businesses with greater resources. One proven strategy for leveling the playing field is to accept credit cards. After all, 78 percent of American consumers own a credit card, and 80 percent own a debit card.¹ That’s a huge market that no merchant can afford to ignore — especially small businesses who don’t plan on remaining small for long.

Small businesses that start to accept credit cards benefit in a variety of ways. Most obviously, they immediately become an option for patrons who prefer to pay with plastic. In their eyes, seeing the logos of the major credit cards in a merchant’s shop or on their e-Commerce website means that merchant is in the same league as much larger retailers. Since most small businesses strive to offer the superior customer service that the Big Boys often can’t or won’t, it’s a no brainer that they should expand their payment options to include the debit and credit cards consumers use so frequently.

Secondly, the convenience of credit cards cuts both ways. Consumers appreciate swiping their card and cutting the transaction time to just seconds so they can be on their way. But merchants benefit, too. Shorter transaction times mean they can serve more customers more efficiently. And, at the end of the day, merchants can send all their transactions in one batch to their credit card processor for electronic settlement, knowing that within days the proceeds will land in their account.

Credit card processing with a reputable merchant services provider like Merchant Account® is a very secure operation. State-of-the-art encryption technology keeps cardholder and account information safe, as does our PCI-compliant electronic payment gateway Transaction Express™. Whether a merchant accepts credit cards with a countertop terminal, an online virtual terminal or in the field with our mobile PayFox® service, the transaction is protected from fraudsters and identity thieves.

Merchants who accept credit cards also usually see an increase in sales. The reason is simple: Credit card shoppers tend to spend more than shoppers who pay with cash or a check. Impulse buying and upgrading to a higher level of merchandise are both possible when the shopper taps a line of credit instead of a wallet to pay.

Finally, there are savings to be realized from accepting credit cards. Merchants spend less time making bank runs and processing paper checks. New credit card processing options like wireless and mobile mean that merchants who deliver services or products to customers’ homes or businesses can collect right then and there, foregoing the time-consuming and expensive billing and collection process.

Today’s credit card processing is fast, convenient and safe, and the many options available give merchants the opportunity to work with a merchant services provider to design a package that meets all their requirements. For small business, being able to accept credit cards is the smart way to go and grow.

¹   Source: “The Survey of Consumer Payment Choice,” Federal Reserve Bank of Boston, January 201

Credit Card Processing And Durbin's Amendment

In just over a week the Durbin Amendment goes into affect targeting credit card processing fees.  It has been a long time coming but will it provide the relief that it is intended too?  The common belief is yes but if we dig a little deeper, questions will arise.

The whole thing started as a result of the credit crunch which rocked the economy in 2008.  Last year the Dodd-Frank Act was passed which attempted to reel in financial regulations which Wall Street sorely lacked.  This new Amendment focuses on Credit Card processing fees which of late, have become overly burdensome for small business owners.  The fees they must pay to their merchant account providers is dipping into their profits and must ultimately passed on to consumers.

To make a confusing piece of legislation as simple as possible, let us define a generalization for the entire Dodd-Frank Act as it applies to humans.  It was simply a reaction to the credit crunch of 2008 and contains what is considered to be the most drastic attempt at policing financial regulation ever.  Whether it works or not or is simply nothing more than political posturing is yet to be determined but we will only concern ourselves here with the Durbin Amendment to Dodd-Frank.

This Amendment is focused on credit card processing, mainly debit cards and how big banks have been muscling merchants and forcing them to accept less than competitive merchant services because of their sheer size and power.  Currently, big banks are able to impose penalties on merchants for giving customers incentives to pay by cash or using other payment networks to pay for items.

As consumers we often believe the price of something is what we pay for it but it is a little more complicated than that.  Merchants must pay transaction fees to accept credit cards and these fees dip into their profits when accepting a credit card as opposed to cash.  This is why there are always little signs on the register telling us that we must spend a minimum for a merchant to accept credit cards, or sometimes they tell us that it will be a dollar or so surcharge before they swipe our card.  This money does not go to the merchant, but the merchant services provider.

In a lot of cases a merchant has to declare a minimum or even maximum sale to avoid the pitfalls of they may face from their merchant services provider and the Amendment aims to stop this.  Merchants are even penalized for loyalty programs, accepting checks and processing gift cards so this legislation was needed to provide relief for merchants drowning in fees.

The Durbin Amendment clearly states the maximum a merchant services provider can earn on a transaction and for those keeping score it goes like this.  For a debit card transaction highest interchange fee an issuer can charge 21 cents plus a max of 5 basis points multiplied by the amount of the transaction.  This Amendment also focuses on interchange, which simply put, is the fee a merchant's bank has to pay to its customer's bank to pull the money due from the customer's account. 

The intent of the Durbin Amendment is to bring direct relief to merchants but many critics say the banks will resort of other tactics to make up the lost revenues.  We have already seen the disappearance of debit rewards programs for consumers and the days of free checking accounts are all but gone.  An assortment of new fees we have never even heard of will undoubtedly pop up on or about October 1st so while there are major changes around the bend for credit card processing, ultimately we will have to watch the spending behavior of consumers to gauge its success.

Alternatives To Business Loans

The rationale behind this campaign is the fact that commercial lending rates are at near absolute all-time lows & the ability to access some of this cheap capital has become significantly easier since last year. The third reason & perhaps say the least reason being that it is an excellent time for companies to market share to competitors that are downsizing or leaving their chosen sector altogether.

"Never since the Great Depression has there been so much turmoil in financial markets & lower floor apartment at the same time," said Matt Reed, an associate at Clopton Capital, "I may sound like an unshakable optimist to say this, but because of superior technology, low interest rates, & a community hungry to find new opportunities this era could create some of the largest fortunes ever seen in history. "

"Clopton Capital is an organisation that was started based on the belief the financial crisis sensibly can be transformed into opportunities. We feel that proves competitive alternative financing options to the many companies that need us now more than ever is incredibly important work, "said Jake Clopton, founder of Clopton Capital Lending LLC |.   Clopton Capital, a Chicago-based SBA loan provider want business owners to know that there may very well be better alternatives to today's commercial loans. While the SBA loan sounds as if they're exclusively for small businesses, Clopton Capital now cover SBA loans up to $ fifteen million. "Most people wouldn't be a company that borrows $ fifteen million to," said Jake Clopton.

SBA  business loans have been the primary choice for years with most new & existing small business owners. The loans are made to be somewhat easy to guarantee, thanks partly guaranteed by the Small Business Administration, & is quite competitive since SBA loans are typically issued to companies that are high risk or built on ideas that haven't yet been established by another company's success.

Why You Need A Business Loans Consultant

The Reasons You DO NOT Want to Manage the Business Loan Process on Your Own.

We are often asked, “Why do I need to pay a consultant to assist me in obtaining business loans?  I have perfect credit, can’t I just do it on my own?”  On the surface this statement seems to make perfect sense, however, since the mortgage meltdown and ensuing credit crisis, like Elvis, “sense” has left the bank building.  All the rules have been rewritten on how to obtain business loans and what the banks are looking for and what lending triggers they use to grant a business loan.  Everyday we have new clients that come to us after being turned down by their bank of 20+ years.  This has nothing to do with creditworthiness, but rather, not understanding what programs and lending biases each bank utilizes when underwriting their business loans.  Before you venture down the road of do-it-yourself business loan development and ruin your personal and potentially your business’s credit, please consider the following:

• Lender Selection – In this post subprime lending paradigm, selecting the appropriate lending institution is quite possibly the most important single criteria when beginning the business loan application process.  There are literally hundreds upon hundreds of banks  and credit unions in this country.  Which banks will loan to small businesses with stated income applications? Start-ups?  Do not require collateral?  Have the best interest/promo rate?  The sheer number of banks offering business loans is daunting.  True, each bank will give general guidelines on how they underwrite business loans, however, the actual nitty gritty is proprietary and until an application is submitted, the borrower will never truly know what the bank will do.  Using a trial and error method to figure this out will absolutely ruin your ability to get future credit for yourself and your business.  I can’t count the number of clients that have come to us after trying to obtain business loans on their own.  Unfortunately, at that point their credit has been littered with inquiries and we can only say “sorry, contact us in 6 months and we’ll try again at that point.”  We have developed a systematic business loan application process that includes only the banking partners and programs we know your business can qualify for on the absolute best terms.

• Guideline Changes – Banks’ business loan guidelines and underwriting methodologies are constantly changing.  Strategies to acquire business loans that work today, may not work tomorrow.  This is the very reason Seed Capital has developed the most robust, dynamic lender database in the industry that monitors hundreds of banks and their respective business loan underwriting preferences in real time.  This gives Seed Capital instant access to the what, who and how much a particular bank is lending at any time, allowing our consultants to fashion a lender/business loan application strategy tailored to each our client’s individual needs, credit profile and geography.  This unparalleled understanding of business loan underwriting procedures is the very reason Seed Capital is the only company in the business loan industry that offers an unequivocal performance guarantee.

• Reconsideration Requests – If a bank says no, do you know who to talk to and what to say in order to turn that no into a yes?  Our years of working with business loan underwriters has given us a deep insight into how to use reconsideration requests to get credit approvals.  80% of business loan underwriting is initially done with what is called an automated underwriter (AU) which is a computer program that scrubs the applicant’s credit, considers additional variables such as income and spits out a business loan decision based on that input data.  AU’s are plagued with issues and often decline business loan applications for quirky reasons.  With Seed Capital’s consultation, our clients are able to turn initial business loan declines into approvals roughly 90% of the time.  This is because we are able to analyze the decline reasons, assist the client in formulating a reconsideration request and know exactly which individual in each lending institution they need to speak with in order to get their business loan declines overturned

• Window Dressing – You may think that you have perfect personal credit, however, close to 75% of our clients need some form of “window dressing”.  This is a term we have coined that simply means making minor tweaks to the personal credit report in order to get the most business loan approvals with maximum limits and the lowest rates.  We understand exactly what credit criteria on which the banks base their business loan approvals.  Our consultation can mean the difference in getting a $20,000 business loan on your own, or $150,000 in business loans with our window dressing techniques.

These are just a handful of reasons on why you need an expert to assist you in wading through the intimidating world of business loans.  In the business loans world there is absolutely no substitute for experience and know-how.  Seed Capital will ensure you get the maximum working capital business loan up front and build a perfect business credit rating in just a few short months.  At that point, you will never need to worry about your business’s working capital needs ever again.  GUARANTEED.