In an incessant effort to increase our visibility, we are officially announcing our blog to the entire world via the prominent site, Technorati.  The primary purpose of the blog is to share information on the payment processing field, providing insight to merchants who need to establish and manage a merchant account.  Blog entries should enlighten business owners on aspects related to credit card payment processing capability, enabling merchants to better understand available options, the fee structure, our company and its programs, related e-commerce news, etc.  Personal vignettes will also be shared in an effort to inspire, encourage and support merchants.

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To learn more about our merchant account services, please visit us at http://www.intelli-collect.com.

Our company specializes on setting up merchant accounts for new businesses or established ones that have never had credit card processing capability.  Our pride and confidence swell when such business owners tell us that they have selected us after performing much due diligence – some researching for months before taking the leap into the credit card payment processing field.  While I have always been enthusiastic speaking with merchants who are new to the credit card arena, I typically feel a little uneasy speaking with merchants who are already processing with another vendor – as if I am walking on someone else’s lawn.

I recently spoke with a retail merchant who told me that she was not too concerned about the fees that we assess.  While I was detailing all relevant rates, she asked me a very interesting question: “How much do you think that I should charge my customers to make up for my credit card processing costs?”  She added, “I would like to charge a surcharge.”

I had an instant flashback to the time I placed a food order with a pizzeria.  When I walked into the restaurant, the aroma whetted my appetite.  Immersed in the beckoning scent, I barely heard the cashier when he told me that the bill was “$24.95.”  Upon seeing my credit card, however, the cashier rang up “$26.50.”  At the risk of appearing frugal, I did not question this action – only took notice that it was blatantly unfair.  Apparently, the restaurant owner decided to charge a surcharge when customers presented credit cards although I’m not certain how the cashier came up with a surcharge of $1.55.  (How much would the surcharge be if my bill were $100 or more?)

Sharing this experience with the retail merchant, I explained that charging a surcharge  is against Visa / MasterCard rules and violates the stipulations in merchant account contracts.  Indeed, if a retail merchant decided to add a credit card payment surcharge, this business owner can lose the right to process credit cards and be placed on the infamous MATCH / Terminated Merchant File (TMF) where it would be exceedingly difficult to secure credit card processing capability with anyone.

The retail merchant protested and said, “But I know some fast food restaurants charge a surcharge for debit cards.”  I answered, “If they are processing pin-based debit cards over the Visa / MasterCard network and charging a surcharge, they’re violating Visa / MasterCard terms.”  I explained that if a business owner uses a credit card terminal to process both credit and debit cards over the Visa / MasterCard network, the retail merchant cannot indiscriminately surcharge those debit cards. 

Of course, exceptions always exist and certain government and municipalities, and even the IRS, can charge a “convenience fee,” especially when credit cards are not a traditional form of payment.  Moreover, merchants who accept Discover cards can institute a surcharge.  After a federal antitrust suit was brought by a group of merchants who contended that they would have to raise prices if not allowed to surcharge, Discover yielded.  They now permit merchants to surcharge.  It may only be a matter of time before Visa and MasterCard consent or are forced to allow merchants the right to surcharge.

But I suggested an alternative to the retail merchant.  Perhaps she can offer a cash discount for non-credit card payments.  “This is perfectly acceptable,” I assured her.

This retail merchant wanted to know about the surcharge rules for online merchants.  I extended a simple, “I don’t know,” and committed to researching this topic.  Upon investigation, I learned the following:

Internet business owners can surcharge under the following conditions:

a)      A fixed surcharge is assessed, not a percentage of the sale; and

b)      Any surcharge must be assessed for all forms of payment – not just credit cards.

Of course, as a final thought, merchants may very well factor in the costs of credit card processing to determine the fees that they should charge their customers.  So it is imperative for merchants to reduce the costs of doing business.  One way is to allow us to serve their credit card processing needs.  

My grandmother has always taken an interest in my personal and professional undertakings but I was still surprised when she expressed the desire to learn more about my job as a merchant account manager (not exactly a titillating position).  During the course of our discussion, I explained that we generally charge between 1.5% and 1.75% for retail transactions (depending on the type of card) and over 2% for Internet and Moto (mail order telephone order) transactions.  My grandmother shook her head in disbelief and immediately determined that these fees “were too high.”  “Andy, she exclaimed, “You’re making 2% profit on each transaction!  How much is enough?”

It was time to give Grandma the abbreviated course, Merchant Accounts 101.  I explained that our company, indeed all processing banks, are governed by interchange rates – uniform rates that Visa and Mastercard charge their member banks.  These, in essence, are our buy rates and if we charge lower than the interchange rates, we will be losing money.  “So, you see Grandma,” I added, “We don’t make 2% on every transaction, but only several basis points.”  I expounded, “A basis point is only 1/100^th of a percentage point.”  She quickly reversed course and then said with a smile, “Maybe you’re not charging enough.”

Certainly, business owners, particularly those that are large and process an incredibly large monthly volume of credit card transactions, don’t want to hear that the fees should be raised!  Some are even calling for government regulation to ensure a reduction in credit card processing fees.  Large retailers, including the Safeway grocery chain, Eckerd pharmacy chain and others are engaged in lawsuits, citing that Visa and MasterCard are, for all intents and purposes, monopolistic entities that violate antitrust laws.  The retailers believe that Visa and MasterCard’s standard, uniform fee structure need not change, simply that the associated fees should be reduced. 

But how, in practical terms, is this going to be accomplished?  Visa and MasterCard are unlikely to determine that their profits are too high and implement interchange price reductions.  Consequently, retailers are urging for state and federal intervention requiring Visa and MasterCard to adopt “cost-based pricing.” 

Cost-based pricing may be summarized by the following simplistic formula:

Cost of product or service + Percentage of fixed profit = Cost-based pricing.

But determining the total cost, including Visa and MasterCard’s variable and fixed costs, are extremely difficult to calculate.  But even if the cost side of the equation (on the far left of the equation) cannot be determined with complete accuracy, retailers are demanding that Visa and MasterCard reduce the fixed profit percentage. 

My initial reaction to the retailer’s position was one of approval.  Corporate greed (are you listening Exxon Mobile?) hurts the average American consumer whose wallet continues to shrink.  It is disconcerting to know that Corporate CEOs, CFOs and those on the board get enormous raises, bonuses, benefit packages and huge retirement stipends when so many in the work force can barely make ends meet.

Perhaps if credit card rates would be lowered, then these large retailers would offer customers lower prices.  Consumers would benefit and everyone will be happy – well, save for the folks high up on the corporate Visa and MasterCard ladder.

But then I started reading more about this issue and learned that large retailers may very well decide not to pass on their credit card processing-related cost savings.  As one author wrote, “the hypocritical retailers do not sell their own goods for "cost-based" prices.”  Indeed, profit is the name of the game and these big boys may have trouble sharing their newfound good fortune.

Moreover, if government regulation were enacted, Visa and MasterCard are unlikely to just sit on the fence, bemoaning the fact that they have to reduce their interchange fees.  Somehow money will be recouped and it probably will be through the good ole’ American consumer / credit card card holder who will be assessed additional fees to use credit cards.  Think about the domino effect that higher gasoline prices have caused, leader to higher costs in so many industries.

There is a silver lining even if the federal and/or stat egovernment does not intercede with Visa and MasterCard’s policies.  One company, IntelliCollect / United Bank Card is willing to price their service using “cost-based pricing.”  As long as we are in the black with an account, we are willing to take the slimmest margin of profit.  Less individual profit can only maximize our total profits in the long run as we are bound to get referrals.

There is a small, yet palpable inherent risk in accepting credit cards.  Aside from chargebacks, there always exists a possibility that a given credit card is stolen or presented without any authorization to use from the card holder.  Even veteran merchants, processing for decades, can recount incidents where they have sent out product, subsequently learning that they have been victimized by credit card fraud.

I received a phone call the other day from one of our merchants who sells furniture.  She explained that she received a credit card from a so-called customer that was declined.  This customer then presented a different credit card with the same result: transaction declined.  The owner’s intuitive feeling was that “something was not right” – the customer may simply be over-extended, surpassing his credit card limits, or simply trying to engage in an act of deception.

The business owner leaned toward the perspective that the customer may be involved in shenanigans when he told her to ship the furniture to Romania (next day, no less) although the billing address was in the United States.  Before she ran the card through the credit card terminal, she called me, seeking my advice.  While I like to give people the benefit of the doubt, her recountment of the series of events fomented a feeling of suspicion within me as well.

At the time of our conversation, the customer asked for his card back and said he wanted to look down a few more aisles and examine the merchandise.  But the business owner had the two previous credit card numbers, including the expiration date, and the customer’s name.  I told her that instead of asking this customer for this third credit card and finding out the name of the card issuing bank and phone number, I would call MasterCard to investigate. 

In less than two minutes, I had the name of the card holder’s bank and their telephone number.  I advised her to call the bank and inquire about the status of the credit cards.  Moreover, I told her to have her Visa/MasterCard merchant account identification number as the bank would assuredly ask for it.  I was not certain whether the bank would be cooperative and provide this information, however.

Fortunately, the bank representative provided necessary information about the status of the credit cards.  Unfortunately, the bank representative’s news was quite alarming: the two credit cards presented were stolen!  Needless to say, the third credit card must have been pilfered as well.

This business owner then transformed into a detective, simply trying to find out who this person actually was lest he try to victimize others with credit card fraud in the future.  She told him that for furniture shipped overseas, she would need to see several pieces of personal identification.  This criminal quickly left the store upon this request, refusing to comply.  I wish I could report a happy ending (i.e., the thief got caught) but at least this merchant was spared, using caution and good old common sense to avoid credit card fraud.

As one might surmise, Internet merchants are even more at risk for credit card fraud.  It appears advisable, whenever possible, to call the card issuing bank of the customer to verify that the card is not reported lost or stolen.  Again, not every bank will disclose such information but many will. 

The extra time and effort in this type of due diligence effort appears well worth it.  International orders particularly need to be scrutinized.  Indeed, as the truism goes, “An ounce of prevention is worth a pound of cure.” 

My wife, by her own admission, loves LONG conversations – particularly over the phone.  She has been known to have “conversation marathons” with family members, friends and even strangers – from telemarketers to company representatives.  If someone is willing to make a connection with her, she will connect right back and ante up the minutes, so to speak.

Moreover, she is not reticent upon sharing personal information.  It is difficult for her to refuse anyone who asks her to participate in a survey.  It is equally challenging for her NOT to answer questions – no matter how invasive they are.  So recently when I happened to hear her ask the party on the other end of the line, “What is the CVV2 code?,” I stopped in my tracks.  Although I’ve been taught not to interrupt conversations, I felt the necessity to do so in this circumstance.

“Jackie, who is that,?” I asked.  She replied it was someone from MasterCard.  Mustering logic (not an easy task on an early Saturday morning), I answered, “If this person works at MasterCard, he already knows the CVV2 code.  “It’s a she, she meekly offered.”  “May I have the phone?,” I uttered as I reached out my hand.  Jackie relinquished her prized possession and handed the phone to me knowing that credit card discussion was just up my alley.

“May I help you, ma’am (do people still use this term)?,” I inquired.  This representative (I could not even make sense of the name she gave) explained to me that she worked at MasterCard’s “Fraud Control Center” and discovered two charges that Jackie unequivocally dismissed as unauthorized.  This representative was going to arrange a  credit but, of course, needed to ensure that the credit be given to the rightful card holder.

Consequently, this representative needed me to tell her the CVV2 code – the three-digit code located after the credit card number on the back signature strip of the credit card.  This scenario was illogical to me:  A MasterCard representative (caller ID came up “blocked,” I noticed) calling us on our phone number – the same listed with MasterCard – still needing proof that we are holders of this card.  Why even go over individual transactions when there was no certainty that we were the rightful card holder?  Perhaps she should have asked my wife’s maiden name to make this scam more plausible.

While it was clear that I would not volunteer this information to this fraudster, I was uncertain how to address her.  Should I dismiss the holes in her circular reasoning?;  Should I engage in a vitriolic attack upon her character or lack thereof?;  Should I preach to her that there were better ways of making a living?; Should I simply hang up and end this unpleasant event.  I chose the rather bland comment, “I work in the credit card processing field and I …”  Well, she decided her course of action quicker than me.  She slammed the phone down before I could continue.  I turned to Jackie and said, “Would you mind if I take the phone off the hook?”

Later, when I was ready to reestablish ties with the outside world, placing the phone back on the receiver, I called the real MasterCard, connecting to the fraud department.  The MasterCard representative told me that variations of this type of fraud have existed for years.  Some fraudsters call, use email and even snail mail to try to secure those three digits on back of one’s credit card.  He asked rhetorically: “Why would anyone from MasterCard legitimately ask for information about a card when they know everything about it?  I asked that question to Jackie and she stated, “That make sense … now.”

Now, it will make sense to you before you become victimized by such a scam.  And by the way, Jackie has adopted this mantra: “Never reveal any personal financial information over the phone.  So to all those who want to commit fruad: “Don’t bother calling us!”  

To learn more about our merchant account services, please visit us at http://www.intelli-collect.com.

I frequently participate in a forum whose members all work in the merchant account field.  While forum members are essentially competitors, we collectively extend a supportive hand in need answering a myriad of questions with the purpose to educate and enlighten on matters pertaining to our business.

I remember one post in particular where a forum member asked if it were advisable to detail all the fees to a prospective client.  I found most of the replies incredulous as the vast majority of responders advised him not to do so.  The message conveyed was that full disclosure of merchant account fees would “scare” the prospective client to signing with a company that appeared to have less fees.  One individual advised to embrace the “KISS” (keep it simple *) sentiment, fearing that educating clients would only “confuse” them, leading them towards immobilization, or worse, a competitor.

The basic thread running through many of the posts was that full delineation of fees would place the agent in a competitive disadvantage – especially before the actual agreement was signed.  Consider the scenario where a merchant was currently processing with another company.  A new agent who reviewed the merchant’s credit card processing statement may subsequently inform the merchant about certain unknown rates and/or particular high fees.  A proposal would be made where this new agent outlines how the merchant would save money by switching credit card processing providers.   Instead of signing with the new merchant account company, however, the merchant may call his current credit card processing provider to match the new lower rates.

Is this set of circumstances plausible?  Yes, it can happen hypothetically and, at times, is what actually transpires.  Can a new business owner, unacquainted with merchant accounts, opt for a company whose program appears less complicated where an agent has chosen only certain rates to disclose?  Absolutely and this happens with great frequency.  Many credit card processing agents ascribe to the philosophy that fee information should only be provided “on a need to know” basis.  (Too many agents firmly believe that the customer needs to know as little as possible!) 

Still, there were a couple of forum members who wrote about honesty as a core value – that it must be exercised in an individual’s personal and professional endeavors.  One aptly put it this way: “Integrity is not like a light switch.”  Another one quoted the aphorism, “honesty is the best policy.”  An honest proposal with a through accounting of rates and associated benefits can build a sound foundation for a long-term mutually beneficial business relationship.  A merchant who feels respected, knowing that he/she was treated fairly and honesty may very well be the best form of advertising, referring other merchants.

At the risk of standing on a soapbox (I tend to do this too often), we at IntelliCollect- United Bank Card practice the “Golden Rule.”  It is not difficult to see and understand the merchant’s perspective – how costs to run the business must be contained and how important it is to know about all facets of related services.  While it is unsettling for us to know that too many merchant account companies lie by omission (i.e., not disclosing all rates), it provides us with a great sales opportunity.  By establishing a reputation as a company that is fair, just and candid (especially in a field not known for much integrity) we can more readily propel our progress and success.  Whomever said that an “educated consumer is our best customer” was right on the mark! 

When a merchant signs a contract with a credit card processing provider, said business owner must indicate the anticipated monthly volume, average ticket and highest ticket.  Invariably, merchants (especially new ones), have an exceedingly difficult time with this speculation process.  It’s not easy forecasting one’s volume of business, let alone how much will be secured through the use of credit cards.

Despite the arduous task of predicting limits, it is always best to OVER-estimate the volume.  While the merchant needs to use reasonable assumptions in arriving at these figures, an over inflated amount may preclude a problem in the future.

Suppose a merchant indicates that the highest anticipated amount will be $1,000 for any given transaction.  If this merchant unexpectedly makes a sale of $3,000, this transaction will be red flagged and funds will not be released.  The risk department of the processing company will verify the validity of the transaction, holding up this merchant’s funds, jeopardizing needed cash flow.  Subsequent transactions may be held as well, even if they fall below the highest threshold amount.

While some companies expedite the process in confirming the authenticity of transactions (yes, we are among such companies), other processing firms place indefinite holds on merchant’s accounts, refusing to release funds for weeks or even months!  This is especially problematic during a merchant’s busy season where monthly volume can accelerate and reach much higher levels than anticipated.  Here, too, the processing companies can put the kibosh on the merchant’s account until further notice (i.e., when transactions are verified).  Serious funding delays may materialize and the merchant may very well be out of business (literally) as funds are not released on a timely basis.

While it may appear to the merchant that the processing company does not gain any commission from held transactions, there exists a very sound reason why processors engage in such a business tactic: to protect their financial interests.  Credit card processors worry that such transactions may be charged back to the merchant and that the merchant will not have sufficient funds to cover these chargebacks.  Who must then issue credit to the merchant’s customer?  The credit card processing company must then return the deemed ill-gotten funds.

So what is an honest, hard-working merchant to do to avoid interminably held transactions – aside from signing up with a reputable credit card processing company like ours that does not indiscriminately freeze accounts?  The merchant should initially request limits that are higher than anticipated.  Of course, with higher limits, credit card processing application approval becomes a little more challenging.  However, a merchant’s good personal credit score should be more than sufficient for the underwriter to approve the account.  (Those that do not possess favorable credit can get a cosigner that does have good credit.)

As time progresses, merchants can request a merchant limit increase as well.  Those in good standing (e.g., those that have not incurred chargebacks) can easily have their limits increased.  As business grows, it seems logical that such limits should increase from the initial forecast.

Merchants need to know their credit card processing volume limits and attempt to expand them when necessary.  In the scenario that the merchant knows that a given transaction will exceed one of the limits, a phone call to the processing company is in order.  The merchant may have to provide an invoice and even business bank statements but the holding time will be less as the processor is then included in the loop from the start.

There is no guarantee that funds will never be held.  Indeed, a company that suddenly takes in $1,000 per day when formerly taking in $100 per day will be under scrutiny from the credit card processing company.  This company may very well have to explain the set of circumstances to the processor and share business financials.  But if the merchant takes a more proactive role, keeping an all-important eye on limits and maintaining open communication with the processor, problems may be avoided.

To learn more about our merchant account services, please visit us at http://www.intelli-collect.com.

Company growth and expansion are common objectives shared by “think big” entrepreneurs.  Of course, the goal of profitability must first be met.  But once a firm is in the black, more grandiose visions easily take shape as business owners try to secure more customers, increasing market share, and offer a greater variety of services or products while extending even more customer support.

Our parent company, United Bank Card (UBC), continues its amazing development, transforming from a seemingly inconsequential upstart in the merchant account arena to a recognized leader in the field just in the span of seven years.  UBC processes over 3 billion transactions annually and provides credit card processing capability to approximately 2,500 new merchants monthly.  This type of growth is not only unparalleled in the merchant account industry but is rare to find in any business field. 

Adding to its list of burgeoning achievements, UBC has just been featured as the 6^th fastest growing private company in the United States by Inc. Magazine.  (Last October, it was listed as the 19^th fastest growing American-based private company.)  Currently, the Nilson Reports lists UBC as the 40^th largest payment processor in the nation. 

Indeed, UBC is no fly-by-night and continues to progress onward and upward.  But while growth continues, UBC is not manifesting a “corporate gorilla” complex.  Customers receive individualized attention and may draw upon the expertise of professionals, both in the customer service and technical departments, staffed at two locations – New Jersey and Arizona.  Merchant account clients receive 24/7 support and can obtain customized solutions to fit any business need.

As an independent sales arm of United Bank Card, it is our job to ensure that all merchants feel like the proverbial big fish in a big pond.  No merchant will get lost in the shuffle and has immediate access to problem-solving solutions.  If any questions ever arise, we are only a phone call or email away.

We are determined to be the #1 payment processor and the fastest growing private company in America.  But most of all, we are determined to be the #1 choice among merchants looking for affordable credit card processing, offered by the most responsive, ethical company.

In my nearly 4 years of employment with IntelliCollect – United Bank Card, I only spoke to one prospective client who fixated on a very important aspect of business: customer service.  While this individual was looking for the best rate, she concentrated most of her attention on the type of service she could expect after signing up with our program.

She needed reassurance that all emails would be answered in a timely fashion, problems rectified in an expeditious manner, questions answered with full disclosure and prompt, courteous treatment extended at all times.  I did not find her expectations and demands excessive.  Indeed, it was refreshing that attention was apportioned to our actual professional relationship and not just to the nuts and bolts of rates.

This is not to suggest that discussion of fees is irrelevant or unimportant.  (We are convinced that almost all of our clients sign on with us because of our extremely low, merchant-friendly rates.)  But it is counter-intuitive to me that so few inquire about what to expect once a business relationship is established.

In a similar vein, it is shocking that many companies (including the vast majority in the credit card processing field) forget or simply refuse to extend an outstretched hand of support, particularly to clients that they have retained.  Many take existing clients for granted, finding little time in building, developing and nurturing business relationships. 

Such attention to customers (even more important than attention to details) is particularly important if and when a problem arises.  When a company ignores a problem or engages in excessive foot-dragging, the client rightfully feels let down, accompanied by feelings of anger and/or disillusionment.  Consequently, such clients may decide to end a business alliance, seeking a firm that will appreciate their patronage and address concerns with a degree of professionalism, commitment and concern.  Problems are, at times, unavoidable.  Response time and offering viable solutions are within a company’s control.

Our company’s objective is to manifest responsibility with responsiveness.  We cannot expect to add new clients if we don’t satisfy existing ones.  And whether our relationship with a merchant is long-standing or new, a truism exists: everyone on the other end of the line must feel respected, listened to and attended to with patience, understanding and genuine concern.  My duties at IntelliCollect – United Bank Card are similar to the functions served as a school guidance counselor: It is imperative that I provide insight, resolve issues, provide guidance, direction and support, brainstorm effective strategies, and model integrity at all times.  Unconditional positive regard must be extended to customers, too.  After all, without their support, growth and profitability could not be realized.

Several years ago, I lived in New York and an over-abundance of retail merchants seemed to hire people who forgot to thank those who patronized the stores.  A simple, “Have a nice day,” could not even be offered on too many occasions – a seemingly small, yet incorrigible offense.  Business owners must be imbued with authentic gratitude, express it, and most importantly, show it.  Time for the golden rule to extend to the world of business: everyone wants to be treated fairly, respectfully, honestly and with courtesy.  Customers deserve such treatment and should not expect anything less.