Friday, March 28. 2008
Recession-Proof Your Business with the Best Merchant Account
I am among the 61 percent of Americans who believe that the US economy is currently in a downward slope, heading towards a recession or already at the point. Consider the astronomical number of foreclosures, escalating real credit card debt, ever-increasing consumer pricing (with particular concern about skyrocketing gasoline pricing and its domino industry effect), lagging personal income, rising unemployment or underemployment rates … and its easy to agree with the pundits who proclaim that all is not well with our recessing economy.
Despite the unsettling news or perhaps because of it, thousands of merchants across our nation continue to blaze an entrepreneurial path, opening up businesses, cutting a swathe along every conceivable niche. Most of these new business owners will realize the necessity to accept credit cards, and consequently, need to establish merchant accounts. (Consumer credit card use naturally increases during difficult economic times and merchants must accommodate their customers preferred method of payment.)
Knowing the importance of obtaining credit card processing capability, merchants engage in an exercise of due diligence in an attempt to find the best merchant account to satisfy their needs. Here are some criteria to consider when weighing options:
1) Associated credit card fees – This is an obvious consideration, particularly when business profit must be maximized. As comparisons are performed, all rates must be considered, particularly the discount percentage assessed to qualified, mid-qualified, and non-qualified transactions. Of course, other fees come into play, such as start up, monthly, and annual costs. By comparing apples to apples, merchants may reap the seeds of greater profit;
2) Monthly minimum expense – Many credit card companies charge a monthly minimum – a certain amount of processing a merchant must reach to cover the merchant account provider’s cost. For example, if the monthly minimum is $25 and the merchant has only attained a processing amount of $15 (calculated by taking the discount rate times the associated transaction dollar amount), the merchant would be responsible for an additional $10 that month. This can add up and take a bite out of crucial profit. Many new businesses, particularly during slow economic times, experience financial hardship during the first year, and it need not be compounded with unnecessary credit card processing expenses;
3) Cancellation or Termination fee – While some merchant account providers waive this cost, many assert that it is a valid charge due to the expenses incurred by the processor. But the cancellation / termination fee can run into hundreds or even surpass the $1,000 threshold. While business owners need to maintain a sense of confidence and optimism, the stark reality is that many businesses will fold … and with greater frequency in a depressed economy. Other merchants may simply grow disenchanted with their present merchant account provider, and look for a better solution, usually to cut costs. As such, a cancellation / termination will only serve as a financial albatross to the merchant; and
4) Chargeback expense, policies, and procedures – As the growing financial crunch bears its adverse effects to all, there is simply a greater likelihood that customers will initiate chargebacks, disputing a given charge. Merchant account providers typically assess a fee due to the ensuing investigation. Business owners should know what the fee is (the lower the better), and even more importantly, the merchant account provider’s chargeback policies and procedures. Some merchant account providers are very supportive in helping merchants navigate the process; others are very indifferent and may have policies that are not merchant-friendly (e.g., a tendency to freeze accounts). It is important to find out your merchant account provider’s modus operandi with chargebacks; and finally,
5) Customer support – Regardless of your choice of provider, it is important for you to learn the facets of credit card processing. Agents must truly enlighten merchants and hasten the learning curve. After all, in difficult economic times, merchants cannot afford to waste time on trying to figure out or solve problems stemming from their merchant account. There must be a quick resolution so merchants can concentrate on their core competency. Any independent sales organization or agent must provide fast, reliable service, and be available for any problems that crop up.
Despite down markets, merchants can recession-proof their business, and one way is to choose the best merchant account using the aforementioned criteria.
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To learn more about our merchant account services, please visit us at http://www.intelli-collect.com.
Tuesday, March 18. 2008
Flea Market Vendors: Looking for a Bargain to Accept Credit Cards?
If you are flea market vendor and want to keep up with the times, you may have looked into the option of accepting credit cards at your booth. It is no secret that people generally spend more money when they are putting it on their card, so it might seem like an obvious choice when it comes to increasing your profits.
However, there are many points to consider as wireless credit card processing terminals can be expensive, particularly the ongoing monthly fee. You need to work out whether you can afford this added expense and whether you will make enough money to cover all associated costs incurred with a wireless terminal account.
On a positive note, wireless processing terminals are not difficult to manage and navigate, and they are also light and easily transportable. You do not need an additional phone line and they work quickly and efficiently. Moreover, the coverage of wireless processors is excellent, although different networks offer better coverage for specific areas. This is something to talk to your supplier about.
There are many other advantages to a wireless processing service which you may have not thought of such as the fact it is generally safer (i.e., less risk of a fraudulent transaction) than with an Internet or mail order / telephone order payment. This is because the shopper is actually there when the transaction takes place and therefore the risk of a customer using a stolen credit card is minimized. The transaction is accepted or declined immediately at the point of sale so the possibility of accepting a stolen card is very low.
If you don’t think you will be accepting credit cards very often, there are alternative payment methods which you should investigate. The Dial Pay program typically offers lower monthly fees and no set-up fee. Furthermore, there is no need to purchase expensive equipment because the vehicle to facilitate the transfer of funds is a good, old-fashioned touchtone telephone.
Dial Pay is designed specifically for those who do not anticipate a high volume of credit card transactions or own small businesses. The downside to this option, however, is that there is longer wait for the transaction to be completed as the card is not swiped, but dialled in. In addition, a flea market merchant cannot obtain the lower swiped credit card transaction fee with a dial pay account. (A wireless program offers the benefit of a lower credit card processing transaction rate because the customers’ credit cards are swiped.)
An increasing number of flea market vendors are using the phone-in method to accept credit cards. With a Dial Pay process, you call a toll free phone number and use your mobile phone’s keypad to enter the credit card details. This allows you to immediately see whether there are funds available on the card and whether you should proceed with the sale or not. This is a relatively new system which may be more convenient and less labor-intensive than another option: Taking a manual imprint of the card, writing down or keying in the customers’ payment details, and processing the transaction with a virtual terminal or stationary physical terminal.
A virtual terminal is a simple web-based interface that allows you to input the customers’ credit card information. If you have a wireless connection on your laptop, you can use a web-system which allows you to enter the customers’ details straight into your account. Details include their name, address, card type, number and security code. It ends the information through a secure server and lets you know immediately whether or not the card is valid. Alternatively, you can key in payment information into a stationary terminal if the flea market offers you a phone line.
Many merchant account providers offer virtual terminals for free and may only charge between $100-$200 for a physical credit card terminal – much cheaper than a wireless unit. The monthly expense for this option will also be less than the monthly cost incurred with a wireless option.
But some flea market vendors choose not to or cannot use terminals (either virtual or physical) at the flea market, and input payment information later at their home office. However, this option entails a risk: You will only find out if the credit card is stolen or is maxed out later when you manually input the payment. You may not have access to the customer, and sadly, lose the sale and the merchandise.
Finally, using a virtual or physical terminal away from a flea market or trade show can take up a lot of time. If you sign up for this program, it behooves you to keep excellent records. One of our clients told me that he somehow lost his records as he was packing up to leave the flea market. Consequently, over 50 sales (hundreds of dollars of profit) was irrevocably lost.
In summary, there are a number of options for you to allow credit card transactions if you are a flea marketeer, regardless of the size of your business. Specifically, you no longer have to necessarily pay a small fortune for a wireless processor as there are several other, cheaper ways to process credit card payments. Regardless of the method employed, by allowing payment by credit card, you will almost certainly see an increase in sales and therefore more profit.
If you are a new business or only occasionally rent a booth, you may have felt that you were limited as to your credit card processing options but with the development in technology, credit card processing has opened up and is now affordable/available to everyone.
If you run a thriving business, then you may decide to sign up for a wireless account despite the expense because after all, this is the quickest and most efficient way to accept payment. But it is always good to know that there are other choices and methods available to you, especially if you are looking for a credit card processing bargain.
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To learn more about our merchant account services, please visit us at http://www.intelli-collect.com.
Tuesday, March 4. 2008
How to Reduce or Even Avoid Chargebacks
Chargeback is a term to describe reverse financial charges, initiated by customers who believe that they are not liable for a given credit card transaction charge. Customers may launch a chargeback for a number of reasons, including the declaration that the seller has not complied with the terms and conditions of the sale. Of course, not all chargebacks are legitimate; many are fraudulent – the product of a contrary bait and switch tactic or other such unethical means.
This obviously causes concern among the merchants as they not only lose the original sale or item, but they are also then charged for the reversal of the sale or the services. So how can a merchant reduce chargebacks or completely avoid chargebacks in the first place?
The following provides some ideas, based on common sense principles and fraud-preventative technology:
- Be clear about your business’s return policies and your refund policies. All terms and conditions surrounding the sale should be completely visible to the client, prominently displayed at the retail establishment and/or printed on the receipt. If you operate online, these return/refund policies should be posted clearly on the site, in a location that customers can easily access. Indeed, customers must be aware of the policies that you have implemented.
- If a customer starts a dispute and sends you a letter of inquiry or calls you before they have contacted their card-issuing bank, make sure you respond quickly and professionally. If you come across a ‘problem customer’ and there will be times that you will, then always take the high road and refund where you can. Some customers are never happy whatever service or item you gave them and they take pleasure in complaining. Let them think they have won and let them have the refund they ask for. These customers are a rarity, but they will crop up every now and again. So to avoid them ruining your business and your name let them have the refund so they can’t chargeback later.
- Collect the 3 digit security code indicated on the credit card. Visa has reported that the amoun of chargebacks has gone down by at least 26 per cent since the introduction of the security code into transactions. Like Visa, MasterCard and Discover have a 3 digit security code on the back of the credit card, and American Express has a 4 digit code on the fron the card. As customers properly identify their code, merchants receive some degree of reassurance that the rightful cardholder is placing the order which will reduce the possibility of future chargebacks.
- Use the address verification system (AVS). This makes sure that the credit card that is being used has the same registered address to what has been placed on the order form. This will stop people who have stolen credit cards making fraudulent transactions with you. This will then reduce chargebacks against you and save you time and precious money in the future.
- Inform the customer the name of the business that will appear on their credit card statements. This is particularly important, if you use a third party processor, such as PayPal. Please note that the third party processors name, and not the name of your business, will show up on customers’ statements. This can cause confusion and make some customers think they have had an illegal charge on their credit card, prompting chargebacks.
- Watch for orders that use the free email addresses with their orders. It is difficult to trace people through free email addresses as a real name doesn’t have to be registered and the person using it could use an alias instead. Most of the fraudulent transactions will be placed using a free email address.
- Take an imprint of the credit card used in the sale, if possible. So if you are faced with a credit card that is unreadable via the magnetic strip then it is vital you take an imprint. This is your proof that the card was present at the sale and will prove vital if a chargeback is then issued after the transaction.
- Use a mail carrier that requires a receipt and signature on delivery. This will prevent a customer from claiming that he/she never received a product.
- Keep all receipts and transaction information and delivery information on every sale. Good record-keeping is vital to ensure a strong defense against chargebacks.
- If you sell your services or items face-to-face rather than online then you could avoid chargebacks by asking the customer to provide identification with payment. This can help reduce chargebacks as you have proof that the credit card belongs to the person in front of you.
- Be aware of orders that come from countries other than your own. A lot of the fraudulent transactions come from foreign countries, particularly those located in the Middle East, Africa and also Asia. This is not to say that all orders from these countries are fraudulent ones, it just pays to be aware of the potential risk. Keep an eye out on bulk orders from these countries as they are more likely to be fraudulent.
If you follow one or all of these aforementioned tips, you will soon reduce chargebacks on your account, or possibly, eliminate them altogether. Like a matador who proficiently handles a charging bull, you are now empowered to deflect a potentially ominous foe, the ever-present chargeback.
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To learn more about our merchant account services, please visit us at http://www.intelli-collect.com.