Here is a typical question that a new business owner asks: Should I accept American Express?  Let’s briefly explore the issue.

It’s a dog eat dog business world out there today, especially with the present state of the economy. The last thing you want to do is lose sales because you don’t wish to pay a few extra dollars on your monthly bills. It could actually cost you big time in the long run.

A prime example of this is the American Express credit card. You may be debating over whether or not you should accept American Express because the credit card processing costs are higher – particularly compared with the rates assessed when you accept credit cards with Visa or MasterCard logos.

However, you should do a little research before making a decision. Keep in mind that American Express is used by a lot of business professionals, so if you’re dealing with these types of customers or selling business-related items it’s a good idea to accept the card, especially since American Express transactions are generally 30 to 50 per cent higher than others.  In other words, customers tend to spend more when using an American Express card.

But if you’re running a comic book store or something more in the lines of “blue collar” items or services, then you may not need to take American Express. But just remember, you may ultimately be losing a customer, and with all of the competition today, such a potential customer will certainly find somebody else who will take their form of payment.

If you’d like to take Amex cards, you will need to set up an American Express merchant account. To be considered for an account you must be a registered business and/or licensed in your state as a partnership, corporation or proprietorship. You will also need to have a good merchant credit rating. If you run a travel agency, you need to supply a valid ARC/IATA number.

American Express offers two main plans to merchants and you should make sure to take the one that best suits your needs and budget.

There is a discount-rate plan that assesses a percentage of every transaction. There are no monthly fees and annual fees with this option and you are encouraged to manage your account online.

There is also a flat monthly fee plan ($5.95 per month) which is aimed at small businesses that usually process less than $5,000 in American Express sales per year

If you’d like to take American Express, but don’t want any monthly fees, the discount rate plan could be the one for you, as you don’t have to pay anything unless you take an American Express card for a transaction. It’s always there just in case you need it and it won’t cost you anything if it isn’t being used.

However, before making your final decision as to whether to accept American Express, be aware that many online vendors don’t accept Amex because of the company’s perceived chargeback policy. When a chargeback occurs, many merchants believe the company often sides with the customer. A customer-friendly (merchant unfriendly) chargeback policy can often lead to fraud, as many consumers buy online products and charge them back. This means the merchant is basically out of luck and out of pocket on the transaction.  Still, many business owners assert that Amex chargebacks are winnable so there is definitely a perspective divide as it relates to Amex’s chargeback policy. 

Therefore, before getting an American Express merchant account, you should make sure you fully understand the company’s chargeback policy and have it in writing.

All factors considered, it still appears worthwhile to become an Amex merchant.  You can expand your customer base, take in more money for these transactions, and possibly be able to satisfy some of your business’s needs.  Indeed, accepting American Express cards can help you develop relationships with other businesses as the company has its own network of companies that may be able to help you simplify your supply chain, or get access to various types of professional services.

The pros seem to outweigh the cons so I am giving a lukewarm endorsement to accept American Express.

Hypercom has been one of the world's top suppliers of electronic payment products since getting into the business in 1978. In 1987, the Australian company expanded to the USA and relocated to Phoenix, Arizona in 1990. Since then, the Hypercom Corporation has opened up shop in Latin America as well as Europe. They now have regional sales offices in China, Hungary, Brazil, Mexico, and the United Kingdom. 

The company offers a complete range of high security, end-to-end electronic payment solutions and services to a wide variety of customers including banks and large international and local financial institutions, electronic payment processors, popular retailers, independent sales organizations, and distributors.

Hypercom's experience and innovation allows businesses around the world to safely expand their revenues and profits. The company’s solutions include countertop and mobile card payment terminals, landline terminals, IP terminals, wireless terminals, unattended payment products, EMV and PCI-approved PIN Pads, network access controllers, gateway converters and transaction transport services.

Hypercom has been recognized globally as a top notch business by garnering various awards for its innovative technologies, high quality solutions, product quality, reliability, and functionality, and customer service and support.

Some of Hypercom's top products include the Hypercom:

Optimum T4210 

This countertop device has several high-end features including 24MB of memory, an ARM9 processor for fast transactions and also multi-application. It's also PCI PED approved to handle debit with and without an external PIN pad. It can also accept chip card transactions with the optional EMV-approved reader, making it ideal for magnetic stripe and chip card transactions. The 4210 is also MasterCard PTSP approved, Interac certified, and RoHS & China RoHS Compliant. It's an ideal product for retail and restaurants, small ticket sales, e-commerce, dynamic check conversion, check verification, and gift and loyalty cards, etc.

T7 Plus

This compact countertop POS terminal is ideal for those who are looking for a machine that takes all magnetic stripe cards and delivers authorizations very quickly. The unit offers bilingual screen displays as it can show Chinese and English at the same time. It is PED certified and EMV approved and is ideal for general retail, restaurants, pharmacies, and grocery stores, etc. The T7 comes in both 35 and 19-key configurations and can hold up to 20 unique merchant IDs in one terminal. The SureLoad thermal printer alerts cashiers when the paper is low and also eliminates paper jams. The terminal's multi-loader lets you download up to 12 terminals simultaneously.

ICE 5500

This compact, interactive POS terminal comes with an integrated printer and is designed to quickly process all kinds of credit, debit, and charge cards. The unit takes signature and receipt information to help cut down on chargebacks. The web-enabled machine features touch-screen graphics, electronic signature and receipt capture along with customer loyalty programs. It supports both smart card and traditional payment transactions. The ICE modem comes with the fastest dial-up capability available to help reduce transaction costs. The terminal also comes with 1 MB of memory and has 12 water-resistant keys.

ICE 5700

The 5700 terminal features electronic check reading and processing and provides web-based and e-commerce information via ePOS-infocommerce. The unit magnetically reads the MICR line at the bottom of checks for increased speed and accuracy. The 5700 has a high success rate of reading checks, even damaged ones. It gives you simultaneous card reader support for smart cards and magnetic stripe cards, electronic signature and receipt capture (ERC), virtual store hosting, e-mail, electronic bank statements, touch-screen graphic display, onscreen advertising, electronic couponing and loyalty programs. The modem has the fastest dial-up capability available (like its ICE 5500 counterpart) and the fast, removable thermal printer comes with an optional paper cutter to help stop paper jams.

P1300
  

This is a PCI-approved PIN entry device that is designed to meet the PCI PED security standards for PIN entry. The device gives clear instructions for easy transactions and comes with easily identifiable function keys. It is a compact unit that easily fits in your hand and allows users to hide their PIN entry with their body or hand. The P1300 also supports both DES and triple DES DUKPT encryption to help protect cardholder PIN information. It comes with a tamper-proof design that secures it from external attacks and meets new PCI PED security guidelines.

The aforementioned list only highlights only several of the myriad devices offered by the Hypercom Corporation.  While the company reported a net loss of almost 10 million in the first quarter of 2009, its fortunes will be on the rise as market conditions improve as its own brand of technology advances.  Long live Hypercom!

One of the most popular questions that I am asked by prospective clients is: “What is the difference between a qualified, mid-qualified, and non-qualified fee.”  First, I am impressed that the merchant is revealing an awareness of the components of a tiered rate structure.  Next, I forewarn the merchant that there are several conditions associated with each type of fee and that at the end of our discussion, a test will be given. 

Of course, I’m just joking but this blog entry / article may serve as a “cheat sheet” when gaining insight on the topic (i.e., becoming acquainted with the differences between the qualified, mid-qualified, and non-qualified rates).

Perhaps the best way to explore the subject is through an exchange between merchant and merchant account provider (MAP).  The first scenario is a dialogue between a retail merchant (RM) and MAP:

RM: I am just opening a small car dealership and plan to swipe just about all my customers’ cards.  I heard that it is cheaper to swipe cards than key them into the terminal.  I suppose then that all my transactions will be considered “qualified?”

MAP: Unfortunately, not all your transactions will be at the lower qualified rate.  It is likely that most of the cards you process will be in the qualified category, assuming that a given credit card’s magnetic strip is properly read by the terminal at the time of transaction and the customer’s signature is obtained.

RM: I anticipate very few problems where a credit card will not be able to be successfully swiped.  Assuming I encounter no difficulty with swiping cards, are there still certain credit cards that won’t be considered qualified?

MAP: Yes, typically rewards cards will be assessed a mid-qualified rate when one has a retail account.  Some rewards cards can downgrade to the non-qualified rate, too where you will incur the highest fee.  Corporate and International cards may also fall to the non-qualified rate.

RM: What if I swipe for an authorization?  Can I still receive the lowest cost when finalizing the sale?

MAP: As long as the authorized amount equals the deposit amount, and the transaction is batch transmitted electronically within a day of the authorization, you can still receive the lowest cost.  The transaction has to be authorized electronically as well (not called in, for example).

RM: What if I key in the transaction?  How does that affect my rate?

MAP: Generally, a keyed in transaction will be categorized as a mid-qualified transaction or non-qualified transaction, depending on several factors.  Again, the type of card you receive is all-important.  Check cards and standard cards will prevent the transaction from downgrading to the non-qualified rate.  Also, be sure to use an Address Verification Service (AVS) and key in the customer’s address because if there is an AVS mismatch where the customer’s billing address does not match the address listed on the card, the transaction will downgrade.

RM: How can I avoid the non-qualified fee?

MAP: As a reminder, try to swipe credit cards whenever feasible.  Use the AVS system and batch out within 24 hours after a card has been authorized.  While you won’t have total control over which credit cards your customers will use, remember to take advantage of “level 2 processing.”  Here, you would input additional information into the terminal when you accept commercial or corporate cards, including customer’s reference number, tax amount, and destination zip code.

RM: Thanks for explaining how qualified, mid-qualified, and non-qualified transactions are determined.  I’m going to hand the phone to a friend who plans to open an E-commerce Internet- based business as he may have additional questions on the subject.  Here he (IM) is:

IM: I just overheard about trying to contain the cost of corporate cards by using level 2 processing.  Can I use that system, too?

MAP: Yes, our payment gateway, Authorize.net, enables you to use level 2 processing.  As an Internet merchant, if you don’t employ level 2 processing, corporate cards will be valued at a non-qualified rate.

IM: As an Internet merchant, how can I avoid the non-qualified transaction category?

MAP: Similar to a retail merchant, ensure that you use AVS and batch out the same day, if possible, after card authorization.  Please note that the transaction amount has to be equal to the authorized amount, and the transaction shipping date should be within seven days of the authorization date.  Again, use level 2 processing for commercial or corporate cards.

IM: What about rewards cards and International cards?  Will they go to the non-qualified transaction bucket?

MAP: Typically, they would.  Some rewards cards may go to the mid-qualified category, but most would tend to fall to non-qualified status.  The better the rewards card, the more likely it is to fall to the non-qualified bucket.

IM: Can I get the same qualified rate as my friend (RM)?

MAP: Unfortunately, no, as your friend is swiping the card and you or your customer are keying in the information for your business.  All merchant account providers charge less for swiped transactions than keyed in transactions.

IM: So I can’t ever get a qualified rate?

MAP: You have to be careful with terminology.  Your “qualified rate” is tantamount to a retail merchant’s “mid-qualified rate.”  If your business is run via the mail, telephone, or Internet, and transactions are made without the credit/debit card being present, then there are different merchant processing terms used.

IM: Thanks for explaining the differences between these categories.  I now understand these tiers.

MAP: I’m so glad to be of service.  It’s so important to understand the nuances between the qualified, mid-qualified, and non-qualified transaction buckets and their associated rates.