New Important IRS 1099-K Merchant Information
Posted by: Curtis Stevens on March 19th, 2011
The Housing Assistance Tax Act of 2008 included an IRS section called 6050W, which requires credit card processors to start reporting merchant’s gross sales beginning in January 2012 for the 2011 calendar year. The reported gross income will not be adjusted for credits, chargebacks, returns, fees & reserves. This reporting requirement includes an annual filing on a new form called 1099-K. Part of the requirement is processors must match the merchant’s company name and federal tax ID number “TIN” with the IRS TIN database. If this information does not match, processors will be notifying merchants via phone calls, letters, emails or notices on their monthly processing statement. It is imperative that merchants respond to such notifications. In the event that merchants do not respond, processors will be required by the IRS to begin withholding 28% of all deposits. These funds would go directly to the IRS and the merchant would not receive them back until they file their tax return. Merchants may also be assessed a fine by the IRS of $150/TIN for non-compliance.
Processors are having to invest resources, money and labor in order to implement and manage the processes needed to meet these new reporting requirements. As you may have guessed, the industry seems to be taking a similar approach as they did with PCI Compliance by passing on this expense to the merchant. It is unknown at this time what the industry will do as a whole, but so far some very large processors have already assessed a $99 yearly fee. Most processors have yet to make an announcement on what they are going to do but should as the year progresses.
Did you find this information helpful? If so, become one of our merchants! This is one of the many benefits you receive when you allow us to handle your processing. Give me a call (800) 605-3972 ext 111.
NEW!: Free Point of Sale System (POS System)
Posted by: Curtis Stevens on January 4th, 2011
We are pleased to announce a game changing event for the payment industry with our newest initiative. We will be offering our fully loaded point of sale system (POS System) with integrated payments for free! The software and hardware have both been overhauled for this initiative to provide a truly state-of-the-art POS solution. Whether you need 1, 5 or 10 stations, they are all free. You simply pay a $59 monthly support fee per station and receive lifetime replacements, on-site repair & professional installation and 24/7 remote tech support.
If the system is having a problem, our tech support team can remotely log into the system to trouble shoot. This will help resolve issues more quickly than ever before. No other POS system offers this feature! There is a retail, restaurant and pizza version of the software to meet most merchant’s needs. And of course, the device is 100% PCI compliant and will include any and all upgrades in the future!
Verifone Acquires Way Systems
Posted by: Curtis Stevens on September 3rd, 2010
It was announced on Wednesday, September 1, 2010 that Verifone acquired Way Systems. Verifone has had a couple of acquisitions these past few years. I’m sure it has a lot to do with increasing their market share and ensuring their footing in the ever changing payment space. From all the acquisitions I have ever witnessed in generally, they normally never go over very smoothly. Some areas will surely take a hit, like service and support. However, only time will tell. If anything, Verifone needs to get their act together. If you visit www.waysystems.com, it simply redirects to a single page on Verifone’s web site. There is no longer any information about the product, service, etc. What’s up with that? I believe they should have planned that better. On the positive side, we still have some of the $249 Way Systems Special in stock, so get one while you can.
New Product: iPhone / iPod Touch Wireless Processing Device
Posted by: Curtis Stevens on August 5th, 2010
World meet PaySaber. PaySaber welcome to our product line. We are excited to announce our new product that turns your iPhone or iPod Touch into a wireless credit card processing machine! It has an integrated card swiper so you can qualify for retail rates along with an integrated thermal printer. You can also elect to email customer receipts as well. This device can even act like a complete POS system if you choose. It can also track your inventory with the optional bar-code scanner. It even has a customer database feature as well.
The current selling price for this product is better than any other competing product in the market place. We are currently selling the device at an introductory price of $199 and that is a steal!
Also, check out the video on our product page that compares this to a wireless credit card machine. It is very entertaining.
A Merchant Account VS. Paypal & Google Checkout
Posted by: Curtis Stevens on June 22nd, 2010
Clients ask us all the time to compare a merchant account with us to a third party provider such as Paypal and Google Checkout. So we decided to compile a comprehensive list of all the reasons why you should consider a merchant provider instead.
1. Customer Service – Gotmerchant.com strives to provide excellent customer service. This is the main reason why each merchant is assigned a personal account manager that they may call directly at any time. If you do some searching online, you may find that this is not the same with companies like Paypal. Try calling their customer service department sometime and see what kind of results you get.
2. Seamless Integration & Better Conversions - Using payment gateways such as Authorize.net allows you to offer a seamless integration within your web site. What does this mean? The visitor will never leave your web site during the entire checkout process. This is very important for any major ecommerce merchant. Neither PayPal or Google Checkout allow your customers to remain on your website during the entire checkout process. When you add a few extra mundane steps to your checkout process, it increases your chances of losing a sale. Would you not agree having the highest conversion ratio possible is important to your bottom line? Think about it from a retail perspective. How quickly do consumers get irritated sitting in line at the register waiting for their turn? The longer they wait, the less satisfied they are. This is no different with Internet shopping. You want your checkout process as easy, quick and simplified as possible. Give a customer a reason to abandon their cart and they will.
3. Underwriting - Unlike third party providers, all merchant account providers send their applications through an underwriting process. This is where a human reviews the account and evaluates it for risk and determines if the business type is acceptable. Obviously there are certain business types merchant providers will not take, such as adult related businesses. The list of unacceptable merchant types will vary though from one provider to the next. There are also many stories available online that start off with something similar to, “Paypal froze my account.” This should be expected more often as they instantly approve accounts and ask questions after the merchant starts processing. According to some information found online, once an account gets held, Paypal can be difficult to reach, especially their risk management department. It is also said that their call centers are located overseas whereas most merchant providers keep that within the USA.
Something else to consider is the chargeback process. With Paypal, consumers have two opportunities to dispute a charge, known as a chargeback. They can dispute the charge with Paypal directly. If Paypal rules in the merchant’s favor, they can then dispute the charge with their credit card issuer. At this time, Paypal is at the mercy of the card issuer like the rest of us merchant providers.
4. Deposits - Paypal deposits your money into your Paypal account and you then must manually withdraw your funds. Whereas merchant providers automatically deposit your funds directly into your checking account and this results in much faster funding times. This doesn’t apply to Google Checkout however as they also make direct deposits.
5. Paypal’s Reputation - Many businesses and consumers refuse to use Paypal. This could be based on a previous bad experience with the company from a consumer standpoint or as a merchant. You should ultimately give your clients the payment method they choose. It may be a good idea to offer Paypal & Google Checkout as an alternative option, but not your primary or only option.
Visa, Inc. Acquires CyberSource – What Does this Mean?
Posted by: Curtis Stevens on April 21st, 2010
I came across Visa’s announcement that they will be acquiring CyberSource for $2 billion. CyberSource owns Authorize.net, a major Internet payment gateway. CyberSource claims to processes about 1/3 of all ecommerce transactions in the US, serving almost 300,000 merchants. What does this mean for the credit card processing industry? Honestly, I am flabbergasted and have all sorts of thoughts and feelings about this. Because of how complex this business is and how everyone is interconnected with one another, this action can result in so many different negative scenarios. Visa/MC have always strictly been an association. They have never provided any services and their member banks are the ones that do everything. This includes issuing credit cards to consumers as well as providing merchant accounts to merchants. For anyone that knows how this business works, this is a little bit of scary news. You could say that Visa will now be a conflict of Interest. I can however understand why they are making a move such as this. They are a publicly traded company and the core motivation behind any publicly traded company is profit. Only time will tell on what they do with it and how it affects the industry.
At the end of their Q&A session on their webcast announcement, Visa does suggest that they will be doing away with the acquiring division of CyberSource / Authorize.net and turning it primarily into a referral based business. This part is good news for Authorize.net resellers such as ourselves. They have been competing with their resellers for several years by providing merchant accounts themselves through a partnership.
For years, there have been reps or companies that make the claim that they are direct with Visa. This has never been true for what I explained above. However, now that Visa is acquiring CyberSource, I would not be surprised if anyone working for CyberSource now tries to makes use of that line even though it is still not true. Visa may now legally own CyberSource, but that does not change any of the relationships, costs or how everyone is interconnected with one another.
Fast Food Restaurants – Tips on Your Credit Card Processing Fees
Posted by: Curtis Stevens on April 16th, 2010
In today’s environment, it is more important than ever for restaurants of all types to accept credit and debits. According to a 2008 study by Hitachi Consulting, about a 1/4 of all transactions made at fast food restaurants are made with a credit/debit card. If you have a quick service restaurant (fast food), how do you keep your credit card processing fees to a minimum? When fast food restaurants have a very low average ticket, in the $5 to $10 range, everything matters. The percentages and transaction fees can add up to a big percentage and pennies matter a lot. When your average ticket is so low, the percentage you pay is as important as the transaction fees.
Lets assume we are dealing with Interchange plus pricing. If your processor charges you 10 cents per transaction, that is 1% on a $10 ticket amount. You would then have to add the Interchange per item fee which can range from 4 cents on up depending on the type of card you process. You will also have a percentage to pay as well. When you have a restaurant such as Jimmy John’s that does close to a million a year in revenue, this becomes even more critical. The best advice I can give anyone with a low average ticket is as follow:
- Get setup using the Interchange plus pricing model instead of 3 tiered. It is much easier to control your cost by knowing how low your processor can go as you are dealing with costs.
- Process your transactions over IP instead of dial up. IP processing is having your transactions submitted using a high speed Internet connection. Not only does this speed up your checkout, but most processors can offer you lower transaction fees than if you were to use dial up.
If you have any questions, feel free to leave your comments.
Verifone’s new mobile processing solution PAYware
Posted by: Curtis Stevens on March 23rd, 2010
Verifone has released a new mobile credit card processing product called PAYware. It is Verifone’s version of mobile processing and their attempt to put the new Square product in its place. Mobile processing is starting to grow in demand and there are countless options available today for merchants to choose from. You have wireless terminals such as the Nurit 8020, Verifone VX610 and WaySystems 1581. You also have mobile devices that work with the iPhone and there are even numerous app choices to choose from as well. Verifone is hoping to become a leader in this field but only time will tell. We are in talks with our processing relationships to see if Gotmerchant.com can add this new Verifone product to its arsenal. We already have so many choices that it may be confusing for some, but I think adding one more will only give our customers better choices and that is great for everyone involved.
Verifone’s PAYware starts selling around the country this month through the Apple iPhone store. According to Verifone, the product uses its Connect payment gateway to process payments. Most processors are compatible with their gateway product, so merchants should be able to pick any merchant provider they choose. It will definitely be interesting to see how mobile processing progresses over the next few years. Will the wireless terminals we have been selling for years become obsolete and be replaced with our cellphones that are hooked up to a swiping device (including all cell phones and not just iPhones)? If anything, new products like this is certainly making the service more appealing to small businesses that will not process very many credit cards.
Recommended procedures for bar merchants using open bar tabs
Posted by: Curtis Stevens on March 22nd, 2010
Do you own a bar or a restaurant with a bar and want to give your customers the option to open a bar tab for the night using their credit card? If so, here are some recommended procedures I have come up with after doing research for one of our customers. Some of these ideas and points came from other companies in the credit card processing industry and what they have experienced with their own merchants.
The first step would be to run an authorization only transaction on the card, such as for $50. This checks to make sure the card is still valid and the funds are available. At the end of the night, you close the tab which captures the final purchase amount and this can be less or more than the original authorization amount. What you need to seriously consider is what does your business do to encourage customers to close their tab and sign the credit card receipt before leaving.
Listed below are some options you may want to consider. Not all options will work with every business. You will need to find the appropriate one for your customer base as some may not go over well.
- Hold on to their credit card and give it back after they close the tab. If they leave & you still have the credit card, call the card issuing bank using the number on the back and inform them that you have the cardholder’s credit card and to inform their customer. Ask them to come in, pickup their card & sign their receipt. If you do this, you may also want to ask for a drivers license and compare the signatures to ensure they are both legitimate.
- Have a key locker similar to valet parking. You ask for their keys and place them in safe place. You give them a ticket stub that references their keys. When they close their tab, they get their keys back.
- Do nothing and see how much your losses are and decide if it is worth it.
- Ask for their phone number, which you can call them if they leave without closing their tab. You may also want to ask for a driver licenses as well to verify legitimacy.
- Ask for their drivers license and hold on to that.
- A combination of any of the above.
I hope you find this information helpful. If you have any other ideas or tips, please leave your comments.
Credit Card Processing Fees: 3-Tiered VS. Interchange Plus
Posted by: Curtis Stevens on March 16th, 2010
The battle is on, which credit card processing pricing plan should your business be using? 3-Tiered pricing or Interchange plus? This is the question many larger merchants may be asking themselves, including merchants that process $10,000+ a month in volume. Before we go into the details, here are the basics: Visa & MasterCard have several dozen rates known as Interchange that determines the rate a merchant must pay for a particular transaction. The applicable Interchange rate is determined by various circumstances, such as was the card swiped, keyed-in with(out) AVS, is a business, corporate or reward cards.
3-Tiered Pricing VS. Interchange Plus Pricing
Under the 3-tiered pricing plan, you pay one of three rates called Qualified, Mid-Qualified & Non-Qualified. The rate you pay for each transaction is determined by the applicable Interchange rate. Under the Interchange plus pricing plan, we simply pass along actual Interchange cost and add a set markup to every transaction.
The chart below should demonstrate the concept and make things clearer.
What is Gotmerchant.com’s Offer?
Gotmerchant.com’s markup under the Interchange plus program varies based on your business type, average monthly volume and transaction size. Please call or email us for a rate quote and let us know you are interested in the Interchange plus pricing program.
Did this post make things clearer for you? Please leave your comments and let us know.