5 Dirty Little Secrets About Merchant Account Services (ISO’s) From a Guy Who Has Worked At A Half Dozen Merchant Account Companies
August 20, 2010 by Admin · Comments Off
First, the good news: They are not all crooked, in fact a good portion of ISO’s are honest hard working men and women who have no intention of squeezing every penny out of you. Unfortunately, those that want to help you are outnumbered by those who are less than honest.
What you are about to read is a very good simple guideline to follow if you are having doubts about an ISO selling Merchant Accounts. Read carefully and if the person you are presently dealing with is “selling” what is written below, say ‘thank-you but I am not interested’.
1. The worst and most popular sales con at the moment has to do with Visa and Master Card rates so let me explain the following so that you fully understand why the sales representative you are dealing with could be deceiving you.
Visa and MC International charge what is known as an Interchange discount rate of 1.59. This can go up in the future but at the moment it remains at this rate. Any Visa or MC acquirer such as Moneris, Global Payments or Elavon will add an “Assessment” rate of 0.06 basis points to the 1.59 and this is considered their profit rate. In other words, the starting point for any sales rep cannot be lower than 1.65 unless you, the merchant is a gas station chain or a very high end grocery store such as Real Canadian Superstore. To offer anything lower means that the ISO will be losing money on every transaction. (Please note this rate is for Qualified transactions, the minimum rate for Unqualified is 2.04)
So, here is the con. The Merchant Account Services company will offer you ridiculous rates of 1.35 percent for Qualified transactions. These are transactions from normal credit cards that are swiped on a POS terminal. Sounds great right…but here is where it gets nasty. The ISO will offer these amazing rates but then charge you 2.75 percent as a discount rate for Unqualified cards. These are transactions that are keyed in manually, or are foreign credit cards, corporate cards, credit cards with air miles or some bonus point cards. Sixty percent of all credit card transactions fall under the heading of unqualified. So although you think you are saving, in reality you are not. The other shady trick is that the ISO will offer 1.35 percent and then turn around and raise 40 basis points three months later.
2. If you are leasing a regular IP or Dial stand alone POS terminal you should never pay more than fifty dollars a month for a 48 or 60 month term. This is dependent on the buy rate offered by specific manufacturers.
3. If an ISO charges you fees that are hidden in the back of a contract, then seriously consider someone else. The normal fees from any reputable ISO are as follows: Statement; Minimum Monthly on Visa/MC; normal transaction haulage fees; Set Up fee not exceeding one hundred dollars (for stand- alone terminals). This pays for processor administration costs.
If you ever see anything like Yearly Membership Fee then disregard this sales rep…immediately!
4. If they do not have a Help Desk then who will be helping you when you have a problem?
5. Every merchant acquirer and ISO has a cancellation fee, it is unavoidable but there are many who have excessive fees. In fact, I know of one that charges five thousand dollars. Find out the cancellation fees in advance and if they are more than three hundred dollars do not sign. If an ISO charges enormous cancellation fees there has to be a valid reason why they do and it always means their customer service and/or brand is awful.
Remember that there are good people in this business. The trick is to find them and to avoid those that rely on trickery.
What the Difference is Between an ISO and Bank Related Merchant Account?
August 16, 2010 by Admin · Comments Off
When considering where to obtain merchant services, there is no shortage of providers to choose from now a days that’s for sure! There is no doubt that processing has become a lucrative business. Over time, the service has been de-regulated, so merchant’s have much more choice as to who they want their provider to be. There are two major conglomerates to choose from. One can choose to have their Bank (member Bank – which means they are certified to process Visa and MC) process their transactions, or an ISO (Independent Sales Organization). Iso’s were developed after the de-regulation of merchant services.
There are some major differences between having an ISO process your transactions in comparison to the bank.
Direct Processing is a little bit faster from a bank hosted account, only because they have a direct link to the merchant’s banking info, where as with an ISO, the timing for deposits maybe anywhere from 24-48 hours after settlement. This difference exists because the branch would have a direct link to the deposit account, where the Iso’s deposit has to be cleared by Iso, then the member bank.
The Member Banks will also be more accepting of high risk merchant processing because of this link to the merchant’s account. Often times a merchant will have a business account with their bank, as well as other savings and credit accounts. Because of this “direct access” the branch has immediate security in the form of the entire merchant’s investments act to draw upon should there be any faulty transactions.
This high risk processing has advantages with Iso’s that the member banks cannot compete with at the same time….often times Iso’s are eager to obtain business, and, with the appropriated security in place, maybe more accepting of high risk accounts.
Service levels are another major difference. Banks are not as fast to provide comfortable “one stop” customer service in the same way that an Iso may be. Again Iso’s are more customer driven and as a result often provide better, faster more specific and personal customer service. As one may deduce, part of this improved service has allot to do with Hours of Service, Iso’s often have their own customer service and help desks working around the clock, where as a bank has very pre determined hours of operation, which are regulated and often not convenient for when a merchant may require additional services.
Pricing is a standard issue for any merchant seeking out services. This is where we see another major difference, in that, the Iso’s will compete and drive their prices down in order to obtain one’s business, the member banks are less competitive and often do not respond to competitive pricing quotes.
The best aspect of all of the differences mentioned here is that with the existence of both Bank’s and Iso’s being able to process merchant services, it offers a competitive edge to merchants. Just like any monopoly the more players on the board, the more fierce the competition which, in relation to merchant services, leads to the potential for better more competitive pricing and increase in the quality of service for merchants.
Mismatched Totals or Out of Balance – How To Fix
August 12, 2010 by Admin · Comments Off
You’re tired, it’s late and you want to go home. After an exhausting day you have just one task to complete on the Point of Sale terminal and that is your end of day settlement. Usually it is a two minute task but tonight when you go through the normal procedure the terminal is telling you that your sales are out of balance and ‘do you wish to continue’ with the settlement.
The answer is “yes”, complete it and if you’re tired deal with the out of balance tomorrow?
At this point you may be asking why wait until tomorrow and our response is simple:
You’re tired, go home and get some rest. Every reputable POS company has a reporting system that you can view online the following morning. You never “lose” money per se. In almost all instances the out of balance will probably have something to do with a communication error resulting in a cardholder being charged twice and this can be resolved easily.
POS systems and/or networks are not infallible, somewhere down the line there will be a failure of some sort and Out of Balance would be the most prevalent. There are basically only two reasons why a terminal will show you a mismatched total.
1. You attempted a transaction and received a communication error such as “Timed Out” or “Comm Error”. You then proceeded to re-swipe the customers card and complete the transaction. Occasionally, what will happen is that the host will approve a transaction and during the last leg of approval back to the terminal the transaction will cut off, i.e. disband thus the Comm error. This can happen because someone picked up the phone or perhaps you have not disabled call waiting and someone called while the transaction was being processed. Either way, the transaction was completed at the Host level but not at the Terminal level and the result will be the cardholder being charged twice although the terminal only has it once. Ergo, your end of day will be out of balance.
2. The second reason is similar to the first but in reverse. The card itself is only swiped once and it is approved at the Terminal level but this time the last leg of the transaction has gone back to the Host side and a communication occurs. The terminal says approved because the Host has sent an approval yet it is waiting for the terminal to send a message saying that Yes it has received the approval. If the Host network does not receive this message, the transaction will be “reversed”. When this occurs, the merchant is required to fax a copy of the transaction (not the transaction list) to the POS provider. Since the funds for the transaction would have been returned to the cardholder, the POS provider will request that the funds be sent to the merchant account. This process can take between five and ten days.
In brief, funds are never irretrievable and although the extra time needed to resolve an out of balance can be frustrating, it does not have to be. Check your online reports daily and feel safe that you will never lose money.
Applying For a Merchant Account? How To Help You Get Your Application Approved Quickly
July 18, 2010 by Admin · Leave a Comment
Supporting Documents Is KEY To A Quick Approval
Often merchants do not understand why they need so many supporting documents to apply for a merchant account and by being dis-organized about your supporting documents can cause the merchant account application process take longer and even cost you an approval. Applying for a merchant account is like applying for a short term loan.
Visa & Mastercard often settle up with a merchant within 2-3 business days after someone pays a merchant business via credit card and yet they wait 30 days before they collect from consumers and often don’t find out until that time whether the merchant fulfilled your services and/or products to the consumers. Because there is this huge risk of chargebacks to the credit card processing companies they are very specific on supporting documentation about your business to determine the risk factors involved in credit card processing. Therefore, they will require very specific information before they approve your account. In this article we will discuss those typically documents required and how to have them all in order to make your application process run quickly and smoothly.
Visa, Mastercard and everyone in between who provides their services is looking at your merchant application as if you are looking at a request to borrow money! So there are a few important documents we can provide right up front to make sure they receive the security they are looking for before opening this “lending” agreement. The same sort of documents one would provide for a bank loan would or can be applicable to a merchant services application. These documents fall into two Catagories:
- Business Information
- Personal Identification.
Business Information: The best sort of document to provide to solidify or confirm your Business info, should include your business name (Operating As) as well as your business’ Physical Address, such as any of the following:
- Master Business License
- Previous Processing Statements
- Gst or Business Registration Forms from the government
- Reputable online listings
- Utility bills are all great sources to help them validate your business information.
Personal Identification: The secondary type of i.d. one should provide in order to ensure a speedy approval for merchant services is related to the Personal info for merchant who is applying. Essentially, they are looking to confirm the home address so any of the following documents are great:
- Driver’s License
- Social Insurance Number
- Citizenship Number
- Age of Majority Card
- Permanent Residence card
More so than the documents themselves, what Visa and MC are really looking for is what I have coined “THE THREE C’S”.
- CLARITY
- CONSISTENCY
- COHESION
Clarity: Be sure they can see or read the entire document, copy quality is always important.
Consistency: make sure the support documents you are sending are valid, up to date and are true, in that they show the real current information for things like physical location, as you have presented it on your application.
Cohesion: it must flow, and make sense, for example, it is hard to believe one would have an industrial manufacturing business out of their home….so be sure what you are submitting is subject to common sense.
Now that you understand that applying for merchant account services is more like applying for a short term loan you can better understand their point of view. If you follow our recommended “THREE C’s” you will be more likely to receive an approval! If you would like to deal with a experienced merchant account broker who has proven track record of approvals by helping merchants organize their 3 C’s use our contact form here.
The Critical Canadian Merchant Services Guide – Part 2
September 25, 2008 by Admin · Leave a Comment
Why Card Processing is Important
Just look at Interac’s statistics on card processing in Canada:
Sixty-five percent of all sales are paid through Debit and/or Credit Cards in Canada. From my five years of experience working with many different businesses this can be much higher. If you have an e-commerce business it’s basically 100%. And a lot of other businesses, like restaurants and bars, can see up to 85-90% of their sales go on plastic.
Any sane business owner understands that, considering the types of statistics above, there is virtually no way to stay in business without having a merchant account.
But did you know not everyone can qualify for a merchant account?
Click here to discover how to increase your chances of qualifying for a merchant service account…
Dial-up Debit Machine
September 23, 2008 by Admin · Leave a Comment
Dial-up Debit Machines connect via any working telephone line. Many merchants use their existing phone line or tap the terminal into their fax line to save additional costs, but if you have a busy location you may want to consider having a dedicated phone line for your Debit Machine.
The reason for this: if you choose to use your existing phone line, you will not be able to be on the phone at the same time you’re doing a transaction. Dial-up Debit Card Machines can take anywhere from 10-25 seconds per transaction to complete depending on the age of the hardware and software. So, basing it on that, you should probably be able to judge if you can afford to share your existing phone line with your POS Terminal or not…?
Our advice is: if your business does under 30 transactions a day and you find your phone line is not constantly ringing off the hook then sharing your existing phone line will not be a big deal. However, if you find your business requires full use of the phone and you do more then 30 transactions a day, then you may want to consider getting a dedicated phone line for your machine, or use an IP Credit Card Machine.
The real big appeal for merchants of a Dial-up unit is that they are usually less expensive than ALL other types of payment processing hardware.
We have been helping small businesses connect to service providers who:
- Provide guaranteed financing regardless personal credit score
- Provide leasing from as low as $29-$49/month (Depends on hardware, deposits, credit score, etc.)
- Provide ownership from as low as $999 (including lifetime warranties)
- Provide debit transaction fees from as low as 8 cents
- Provide Visa & MasterCard rates from as low as 1.69%
- Provide a lifetime warranty included on all hardware
- Can deposit into any Canadian business bank account
- Can implement gift & loyalty card services (Very important-the power of gift cards can produce huge profits for your business.)
- Provide quality Customer Support 365 days of year
- Provide a 24 hour replacement unit if the current unit stops working (For most major urban centres; if you live in a remote area add an extra day.)
- Provide free software upgrades
- Ensure that ALL terminals are PCI & EMV compliant (Very important-no point investing in a terminal that is already going to be obsolete.)
