Who Pays for the Air Miles and Toasters and Golf Balls when I scan a Rewards Card?

YOU DO!!!! Yep, that's right. When your merchant statement arrives and you see higher rates for a cps/retail (swiped), it is probably some type of Rewards or World Card. American Express started this trend. Visa and MasterCard had to jump on board to compete. Then you, the merchant, got the "honor" to help pay for it.

Why Do Debit / Check Cards Have A Lower Rate?

Time to look at the Visa/MasterCard cost sheet again. See the heading Off Line Debit Cards? Debit or Check Cards are not credit cards but are electronic checks and are deducted from the customer's checking account. So, the fee is smaller because VISA and MasterCard have less risk.

YOU NEED TO KNOW THIS

If you scan a debit card or a check card and don't ask the cardholder to enter their pin number, you the merchant, will be charged .95%-1.05% of the sale. If you do ask the cardholder to enter their pin your expense is about $.65- no matter how big the charge. I have a pool and spa installer that likes this knowledge. It saves his company hundreds of dollars per sale. Of course if you are a coffee shop you would want to scan all debit and check cards because it would be cheaper to pay the 1.03% for smaller transactions. Usually the cut off is about $35.00 - $45.00 in order to benefit from entering the pin via the pin pad.

What does the term "Processor Mean"?

There is one more “piece of the pie” not showing on the cost sheet. The company that gets to collect the fees through your credit card machine / terminal (i.e. T7P-T, Omni 3750, Semicron, Crest, or NCR Point of Sale System (POS) or maybe an internet gateway) has to be paid too. This company is called the Processor.

The processor could be Elavon Merchant Services, Intuit (QuickBooks), Merchant Express, Authorize.Net, First Data, North American Bancard, EVO, Heartland, Bank Of America, Paynet Systems, and even Forbes is a processor.

They forward the Visa or MasterCard charges and debit/check card transactions from your terminal/machine to the various entities that get their "piece of the pie". The PROCESSOR gets paid to process and distribute the money TO VISA, MASTERCARD, AND THE CARD ISSUER.

If you are a new business, then just wait…your phone will be ringing from processors from over all parts of the country. You must have Total Merchant Services knowledge. If you don't, you will be taken advantage of. A week does't go by that I don't talk to merchants that can't get out of their1-3 year agreements …

Please...Please read this info again and again. If you need further advise please email me at AmmonsConsulting@Gmail.com.

Do I need Local Support or Can I Get Good Service By Phone?

Knowledge is the key to a successful relationship with your processor.

If you prefer a local source or a nonlocal source for the company that processes your customer's debit or charge cards, it will depend on your willingness to learn how the charge card business works behind the scenes.

If you choose a local processor, the representative will help you do the paperwork. The local representative will install the equipment.

However, chances are after the initial installation, you will not see the representative again unless they are service oriented (The Turn Over Rate is Very High in this Business!).

So, you must be prepared with all 800 phone numbers for customer service and tech department or you might have it tough in the long run.

If you choose to do business with a nonlocal processor, you will probably do most of the paperwork on their web site.

You will need to fax certain information to them.

When your equipment arrives by UPS or FedEx etc, you will call the processor's customer service and be instructed how to install the equipment- it's not hard to do.

HAVE QUESTIONS: AmmonsConsulting@Gmail.com