Store and Forward Merchant Account - Is it Right For Your Business?
Posted by Jeff Shavitz on Thu, Jan 21, 2010 @ 01:24 PM
A store and forward merchant account is not actually a specific type of merchant account by itself. The term "store and forward" refers to the way a credit card is processed using special equipment.
Store and Forward Explained
"Store and forward" refers to the process of using a special credit card machine to store a swiped credit card transaction in order to electronically send the data to a processor a later time.
Special credit card machines are able to store credit card information within their memory so that it may be sent to the processor once there is access to a telephone line or wireless signal.
Credit card machines that are able to store and forward also have built-in printers making it possible to swipe a customer's credit card and provide them with a receipt.
Benefits of Store and Forward merchant processing:
Low Rates and Fees - Store and forward technology makes it possible to obtain an electronic data capture without having to utilize a more expensive wireless merchant account. In most cases, processing credit cards with store and forward technology will allow you to qualify for the same low rates offered for a retail merchant account.
Lower Equipment Costs - The only other way to acquire a retail swipe rate while mobile would be to utilize some sort of wireless merchant account. Although great for some businesses, wireless merchant accounts can be cost-prohibitive for new business because of the high prices of wireless credit card machines. Credit card machines that are capable of store and forward are often half the cost of a wireless credit card machine.
Professionalism - Store and forward credit card terminals have built-in thermal printers allowing a merchant to swipe a credit card and provide the customer with a receipt all without access to a phone line or (with some terminals) a power source. Using this sort of technology gives a professional appearance to any business.
Drawbacks of Store and Forward Merchant Processing:
Inability to Obtain a Real-Time Authorization - Store and forward technology does not give you the ability to tell whether or not a credit card is good or bad the second you swipe it. You will not know if the transaction was good until you have access to a phone line making it possible to transmit the transaction information to the processor. The inability to obtain a real-time authorization is the main downfall of utilizing store and forward technology to process credit cards.
Many merchant who use store and forward to process their transactions will perform a voice-authorization if they are uncertain about the validity of a transaction, or if the transaction if for a large sum of money.
Popular Business Types for Store and Forward processing
Generally, store and forward processing is used by businesses that have a need for portability, have a low occurrence of declined transactions, have repeat dealings with the same customer, have a lot of repeat customers, and for businesses where store and forward is more cost-effective than wireless processing.
Tradespeople - Store and forward processing is often ideal for tradespeople. Businesses that deal with renovation, construction, decorating, interior design, etc. are perfect candidates for store and forward processing. The nature of their business often requires repeat contact with the same customer making a declined transaction a minor inconvenience instead of a financial burden. These business types also tend to have a high average ticket making the low retail merchant account rates associated with store and forward very appealing.
Craft Businesses/Home parties - Crafters and home-party businesses often consider store and forward as an option. However, these businesses have to use a little more caution because they often have only a single contact with their customer and would have no chance to recoup losses if a transaction were to be declined. Lower retail merchant account rates and lower monthly fees make store and forward a good alternative to Mail order telephone order merchant accounts (MOTO merchant accounts) or wireless merchant accounts if the risk is supported by the savings.
As the demand for store and forward continues to grow, more credit card machine manufacturers will begin to build to store and forward technology into their terminals. Currently, Lipman commands the vast majority of the store and forward market. Lipman also manufactures wireless terminals that are able to store transactions when cellular service or a phone line is not available and forward the transaction at a later time.
Article Courtesy of:
Merchant Council (www.merchantcouncil.org)
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