Posted by Jeff Shavitz on Tue, Jan 12, 2010 @ 01:59 PM
Retail merchant accounts carry the least amount of risk to the credit card processor. Because retail merchant accounts are considered low-risk, they are given the lowest rates and fees.
In order to find the best merchant account you should first learn how the different qualification rates will affect your business.
Retail Merchants
In order to qualify for a retail merchant account a business must be able to transact the majority of their credit card sales by swiping a customer's card through a credit card machine. This act is referred to as electronic data capture. Most processors will require a merchant to transact at least 80% of their sales via electronic data capture to qualify as a retail merchant.
Retail Credit Card Processing Rates
Retail merchant accounts pose the least amount of risk to a processor and therefore carry the lowest qualified discount rates. The qualified discount rate will only apply to transactions that are run using electronic data capture (swiped transactions). Any transaction that must be keyed-in will run at a mid or non-qualified rate.
If you will not be swiping the majority of your transactions you should not apply for a retail merchant account due to the downgrading of transactions described above. Instead, you should apply for a mail order merchant account.
If you are a retail merchant you should also give some thought to purchasing a pin pad in order to run debit cards at a flat per transaction rate. Knowing when to use each card can save considerable money.
Retail Merchant Sub-Categories
Certain business types qualify as retail merchants because they swipe the majority of their credit card transactions, but are assigned separate merchant accounts due to an inherent high or low risk associated with the business type.
Lodging businesses such as hotels, motels, and bed-and-breakfast establishments must utilize a lodging merchant account for their processing needs.
Grocery stores are able to utilize a grocery merchant account which has the lowest rates and fees of almost any merchant account due to the inherent low chargeback rate in the grocery industry.
Article courtesy of: Merchant Council (www.merchantcouncil.org)
To learn more or to find out how much you can save on a retail merchant account, get a free rate analysis from CCS today.
Posted by Jeff Cohen on Thu, Aug 20, 2009 @ 11:39 AM
Below are a few of the key reasons why merchants overpay for credit card processing, and what business owners can do to address these problems:
1. Confusion about how fees are charged, resulting in costly downgrades
Problem - Credit card processing fees are confusing - transactions can fall into qualified, mid-qualified or non-qualified categories, and many businesses end up paying mid and non-qualified surcharges when they don't have to.
Solution - Contact your credit card processing representative to find out why your transactions are downgrading and what can be done to remedy the causes. If downgrades can't be lessened, consider switching to a new merchant account provider where transactions won't be downgraded as often.
2. Failure to read credit card processing statements
Problem - some businesses just don't read their merchant account statements, which is the main communications tool that many credit card processors use to inform merchants about rate increases and other vital information.
Solution - read your credit card processing statements every month, and pay special attention to the area where important updates (like rate increases) are listed.
3. Difficulty understanding credit card processing statements
Problem - processing statements are notoriously confusing, and to make matters worse, each processor has their own way of structuring their statements, which makes general tutorials on the subject impossible.
Solution - call your credit card processing rep and have them teach you how to read your statements - the time it takes to do this could save you a substantial amount of money.
4. Failure to regularly compare rates
Problem - Credit card processing rates can fluctuate over time. Changes can come directly from Visa and MasterCard or from individual processors, so failing to compare rates on a regular basis could leave you at an expensive competitive disadvantage.
Solution - Periodically test the market and get multiple merchant account quotes. If you're current rates don't compare favorably, it may be time for a money-saving switch.
5. Downgrades to due 'user-error'
Problem - credit card transactions downgrade because of things a person does or doesn't do when charging the card. Certain requirements must be met in order for a credit card transaction to fall into the lowest merchant account rate category, and failing to meet these qualifications may cause a higher rate to be charged.
Solution - learn about the different qualifying requirements for your credit card processor and your specific type of merchant account. The easiest way to do this is to call your credit card processing rep and have them walk you through it.
Courtesy of: MerchantCouncil.org