WELCOME TO CREDIT CARD PROCESSING 101! MERCHANTS THAT OPT TO ACCEPT CREDIT CARDS FOR THEIR BUSINESS ARE AWARE THAT THERE ARE SEVERAL FEES THAT ARE ASSOCIATED. UNFORTUNATELY, IF THE MERCHANT DOESN'T DO ENOUGH INVESTIGATION, THEY MAY BE TAKEN FOR A RIDE.

THERE ARE COMPANIES OUT THERE THAT ARE ADVERTISING UNREALISTICALLY LOW RATES FOR THEIR PROCESSING, OR OFFERING A LOW OR NO COST MACHINE TO PROCESS WITH. KEEP IN MIND THAT IF THE DEAL IS TOO GOOD TO BE TRUE, IT PROBABLY IS! I WILL BE FURTHER ELABORATING ON WHAT I HAVE LEARNED FROM WORKING IN THE CREDIT CARD PROCESSING INDUSTRY FOR OVER SIX YEARS NOW. I FEEL THAT EVERY POTENTIAL MERCHANT SHOULD BE FULLY EDUCATED ON HOW THIS WORKS BEFORE THEY COMMIT TO A LENGTHY CONTRACT.

PROCESSORS CAN BUILD THE COST OF ANY REQUIRED EQUIPMENT INTO THEIR RATES. BY DOING THIS, THEY MAKE THE START UP FEES LOOK APPEALING, HOWEVER, THEY WILL GET YOU DURING THE TERM OF THE CONTRACT WITH THEIR OUTRAGEOUS FEES. UNFORTUNATELY, THE EQUIPMENT MAY BE SO OUTDATED, THAT IT MAY NOT HAVE THE CAPABILITY TO HOLD HIGH MEMORY (MEANING IT ONLY ALLOWS A LIMITED NUMBER OF TRANSACTIONS TO TAKE PLACE BEFORE THE MERCHANT IS FORCED TO BATCH OUT). THE EQUIPMENT MAY NOT BE CAPABLE OF TRUNCATING. THIS MEANS THAT THE CARDHOLDER CAN WALK AWAY FROM THE PLACE THEY MADE A PURCHASE, AND THEIR RECIEPT WILL HAVE THEIR CREDIT CARD NUMBER LISTED IN ITS ENTIRETY (AS OPPOSED TO ONLY HAVING THE LAST FOUR DIGITS LISTED FOR SECURITY PURPOSES). THERE IS A MAJOR LIABILITY FOR THE MERCHANT TO FUNCTION WITH SUCH EQUIPMENT. ADDITIONALLY, THE EQUIPMENT MAY NOT BE SMART CARD READY. A SMART CARD IS A MICROCHIP THAT IS PLACED INTO EACH CREDIT CARD. WHEN VISA/MASTERCARD DECIDE TO FULLY ENGAGE IN THIS SYSTEM, EVERY MERCHANT THAT HAS A MACHINE THAT IS NOT SMART CARD READY WILL BE FORCED TO UPGRADE. THIS UPGRADE MAY NOT BE TAKING PLACE IMMEDIATLY.  HOWEVER, IF A MERCHANT PURCHASES EQUIPMENT AND THEN DISCOVERS THAT THEY NEED TO UPGRADE, THEY WILL HAVE TO AGAIN PURCHASE NEW EQUIPMENT.

THE FOLLOWING IS A LIST OF RECOMMENDED EQUIPMENT:

OMNI, HYPERCOM MODELS (THAT ARE AT LEAST A T7PLUS), NURIT, VERIFONE, LIPMAN

AS FAR AS RATES, BEWARE OF PROCESSORS WHO OFFER RATES THAT ARE VERY LOW. THIS COULD POTENTIALLY MEAN THAT THIS RATE IS FOR EITHER A DEBIT CARD, OR THE PROCESSOR IS COMPENSATING IN SOME OTHER AREA. THIS MAY NOT BE THEIR QUALIFIED RATE (WHICH IS THE RATE CHARGED FOR HAVING THE CARD PRESENT AT THE TIME OF THE SWIPE). I HAVE SEEN RATE OFFERS FOR AS LOW AS 1.15%. KEEP IN MIND THAT IT GENERALLY MEANS THAT THERE IS A HIDDEN AGENDA INVOLVED AS FAR AS THE PROCESSOR IS CONCERNED. CURRENTLY, THE AVERAGE RATE FOR A QUALIFIED VISA/MC TRANSACTION IS 1.75% AND 18 CENTS PER SWIPE. THIS COULD CHANGE DEPENDING ON IF THE MERCHANT PROCESSES A HIGH VOLUME IN THEIR BUSINESS. RATES ARE GENERALLY LOWER FOR DEBIT CARDS. IN SOME CASES, IF THE MERCHANT PURCHASES A PINPAD TO ATTACH TO THEIR MACHINE, THEY CAN PAY LESS IN FEES. IN FACT, THEY CAN AVOID PAYING A RATE ON SUCH A TRANSACTION, AND JUST PAY A FLAT FEE (ABOUT 40 CENTS). THIS IS WISE WHEN THE MERCHANT HAS HIGHER TICKER AMOUNTS. FOR EXAMPLE. IF THE AVERAGE TRANSACTION IS $500, THEN THEY WOULD HAVE PAID A TOTAL FEE OF $8.93 FOR THAT TRANSACTION AS OPPOSED TO JUST PAYING A FLAT FEE OF ONLY 40 CENTS. RATES AND TERMS OF THE AGREEMENT ARE ADJUSTABLE. KEEP THIS IN MIND BEFORE SIGNING ANY CONTRACT. ASK AS MANY QUESTIONS AS YOU CAN BEFORE MAKING SUCH A LONG TERM COMMITMENT (TYPICALLY 3 YEARS IS AVERAGE).

HERE IS A BRIEF LIST OF QUESTIONS TO ASK:

ARE THERE ANNUAL FEES? IF SO, WHAT ARE THEY (THIS IS QUITE COMMON)

WHAT ARE THE STATEMENT /SETTLEMENT/TRANSACTION FEES?

HOW LONG DOES IT TAKE FOR THE MONEY TO HIT THE ACCOUNT?

WHAT ARE THE START UP COSTS INVOLVED?

WHAT ARE EQUIPMENT COSTS & WHAT TYPE OF EQUIPMENT IS AVAILABLE?

HOPEFULLY THIS INFORMATION HAS BEEN HELPFUL. I HAVE BEEN WORKING IN THE INDUSTRY, AND WELCOME QUESTIONS. AND OF COURSE, IF YOU WOULD LIKE A FREE QUOTE FROM ME I WILL HAPPILY DO THAT FOR YOU!

NICOOL2004