Amex reports highest spending ever this year

Posted by: Curtis Stevens on November 20th, 2009

Amex may be returning to growth levels as a major credit card processing company by increasing its issuing as it has reached its highest growth rate this year.  Amex mentioned at a conference in NY recently that annual billings grew by 3% in October, the highest so far.  This is a lot better than compared to September, which saw a decline of more than 5% and 10% for August.  This is great news for ecommerce merchants everywhere.  This means they will be processing more orders as consumers are starting spend more, or at least with an Amex.  Even though Amex posted a disappointing 21% decline in income this recent 3rd qtr, the next qtr is looking a lot more positive.  Hopefully this shopping season will be a much better one for the economy as we really could use it right now.

Merchant’s complain in Utah about processing fees

Posted by: Curtis Stevens on November 20th, 2009

I recently heard a talk show that aired in Utah recently where the announcer talked about the fees merchants are paying for credit card processing. One of the complaints was merchants were claiming they can’t negotiate their rate. This isn’t true. They can up to the cost of Interchange. You can’t go below Interchange as it is the same for all companies, regardless of who your merchant account provider is. I can understand some merchants may be upset with the amount of money they are paying as there are some that do not have very competitive fees. However, there is a point when all of this starts to become too much and all the whining needs to end.

Take the recent 7Eleven that collected millions of signatures. They flat out admitted if Interchange was reduced, they are not going to reduce their prices. It is like everything else in business. We all want to cut costs so we increase our profits and unfortunately, Interchange is easy to single out because it is something that merchants pay on every credit card transaction. My advise to the merchant would be this. If you currently have $20,000 in credit card charges each month, how much of that would still be true if credit cards didn’t exist at all? You would only have cash and checks. Because of the way consumers use credit cards and live beyond their means, merchant’s sales are higher overall as a result of it. If credit cards didn’t exist, consumers would definitely be spending a whole lot less!

Some ecommerce myths & how you can avoid them

Posted by: Curtis Stevens on November 19th, 2009

I recently read an article that mentions some common myths when it comes to ecommerce and I’m going to evaluate them while giving my own opinion. The biggest one is you can never have too much information and that is completely false. When you give users too much data, too many choices, it can become overwhelming. Take a look at Dell’s computers. Look at how many choices they have when it comes to buying one and all the adjustments you can make. Now, look at Apple’s offerings and you will see everything streamlined to only a few choices. This is better in many aspects. Never miss an opportunity to cross-sell really only applies to retail purchases, like at a supermarket. Take for example. They are very careful when it comes to up-selling you. They never do it once you start checking out, but before you checkout, that is a great time to do it. They do not want you to get distracted. In a retail store, that can be totally different as you are physically in the store and it is not as easy as a click away to another web site.

Another myth is to display security logos during checkout on the page that shows the credit card processing like Visa & MasterCard. However, I’m not sure if I totally agree or disagree with this. Some may say a simple logo will ease any consumer’s concerns. It is however giving that company free advertising. Others would say you need to take more steps than that, such as create a page explaining what your company has done to ensure your customer’s information is secure.

Ecommerce merchants, get ready for the holiday season

Posted by: Curtis Stevens on November 19th, 2009

Are you an ecommerce merchant that is ready for the holiday sales season?  It is just around the corner and consumers are shopping earlier these days, way before thanksgiving.  Here are some ways to spice up your site and increase your sales.  Add some holiday cheer to your web site.  Use some holiday graphics that makes your web site look like the season.  Shoppers love great shipping deals, especially free ones.  Be sure whatever shipping deal you are having, the customer easily knows about it by promptly displaying this information on the site.  Do know if you do not charge for shipping, one good thing will be is your total sales amount will be less, which would mean you pay less in credit card processing fees! Gift cards is a huge business, be sure to offer them even if you are not a retail merchant. Be generous when it comes to return policies around the holiday time. Most big merchants give 30 days after December 31, as the recipient will not have the gift until the end of Dec. This will also help you keep your chargebacks to a minimum, which will also reduce the fees you pay in that area as well. Contests are another way to increase sales, people like a chance to win something big.

All I want for Christmas is my credit card fees to be capped says the merchant

Posted by: Curtis Stevens on November 19th, 2009

A local owner of a furniture store is saying all the credit card processing fees he is paying can be burdensome.  With the holidays around the corner, issuers may increase Interchange shortly, which will add to their costs.   The owner said they simply want to keep the rates at a reasonable level, which is acceptable.  The issue is where do you draw that line of being not reasonable?  Many merchants claim that they must pass down these costs to the consumers.  My question for them is how do you calculate every other business expense?  Nothing else is as set as compared to credit card fees as they are charged on a per transaction bases.  Take your utilities, rent, insurance, etc.  What about all those fees, are you not theoretically passing those fees along?  Business is just that.  Businesses must make a profit and regardless of what their total overall cost are to run their business, they will price their products accordingly.  It doesn’t matter where all the expenses come from.  It is simply easy to single out Interchange as it is the only expense that is occurred on almost every dollar brought in.

A record month for an ISO office

Posted by: Curtis Stevens on November 19th, 2009

MerchantWarehouse, a registered ISO as a credit card processing service provider, had a record month in October for the number of new applications they boarded. The amount was over 3,000, which is a lot of new customers to bring on board in a single month. I personally didn’t know MWH was that large of an ISO and was impressed by the numbers. I’m also happy for them for the accomplishment as that is no easy achievement. hopes to become a 1/10 of that size one day, but is still currently a smaller company. I believe the advantage to that is you can focus on the level of personal service and attention your merchants receive. Once you become a certain size, it is a more difficult task. They stated that their new accounts came from three difference sources, in-house sales, other agents and value added resellers or affiliates. I personally understand the importance to have great affiliates that send you business. As a business model, you can’t rely on a single source or two for new customers. If that source were ever to disappear, then your company’s future could be in jeopardy.

Amazon having issues with the states on sales tax collection

Posted by: Curtis Stevens on November 19th, 2009

Amazon is having issues with a few states when it comes to collecting sales tax.  Since they are selling on the Internet, you now have interstate commerce.  Many ecommerce merchants find themselves with this dilemma and issue to work out.  Which states do you collect sales tax from?  Only from the states you operate in, such as warehouses, operations, etc?  Or do you only worry about the state where you are headquartered and doesn’t matter if you have some fulfillment center in another state.  Another thing you must consider, is you will also pay credit card processing charges on the sales tax amount as well, but that doesn’t amount to much unless your volume is huge. They say state and local governments lose more than 7 billion in revenue each year because of the 1992 courts decision that states the merchant must have a physical presence in the customer’s state.

I personally think it would be a bad idea if this were ever to be overturned. I think consumers would think twice about buying as much online. That has always been a big selling point, no sales tax and a big convenience of ordering without ever leaving your house. If this were to change, it would definitely change the landscape some.

Don’t mess with women when it comes to business

Posted by: Curtis Stevens on November 18th, 2009

Women are becoming a big key player in business.    During the course of the year, women owned businesses are generating around $3 trillion in revenue and employ 16% of the workforce.  I think it is great that women are starting to become  a big part to the entrepreneur industry.  As with men, women bring a unique perspective and view to the table.  The way they think and consider can be totally separate from men.  While this can be good, there are some possible downsides.  But that can also be said with men.  That is why it is important to have both females and males at the top of an organization.  That way you can draw the best things from both counterparts.

One thing I have noticed when talking to merchants is women seem to ask more questions, especially about the credit card processing fees. This can be very important as the industry as a whole is very fee oriented and if one doesn’t ask questions and fully understand what they are getting into, they could possibly find themselves in a pickle  This is a big plus in women’s favor.

Is it a good idea to be the first franchisee of a new franchise

Posted by: Curtis Stevens on November 18th, 2009

Being a franchisee is general is a completely different topic in itself.  But what about the idea of being the first franchisee of a new franchise system.  Susan, an owner of seven Batteries Plus gives us their experience.  She said being the first has its advantages and disadvantages.  One big plus is open territories.  The big downside I would think could be support and experience since the business hasn’t ever been in the franchise arena which is a whole ball game all together.  One of the important things to figure out would be who will be handling the store’s credit card processing service. Like many franchises, they require or highly encourage franchisees to use the company corporate is working with. Susan did say that you must have a good feeling about the owners, their drive to grow the franchise and support you every way possible. Don’t forget, you have the Internet and all of its resources at your fingertips. Something that wasn’t available for them back when they started in 1992.

How to make a micro-payment business work online

Posted by: Curtis Stevens on November 18th, 2009

Micro payments are becoming big business for online merchants.  Simply take a look at what Apple has done with MP3 downloads for a dollar.  When a merchant sells something and is only charging a dollar, there is very little wiggle room to cover your expenses.  One big expense can be the credit card processing fees.  A buck isn’t much to work with.  Even if you are dealing with Interchange only, you are looking at a minimum of 10 to 16 cents per transaction plus 2 to 3% of the transaction, which the % doesn’t amount to more than 3 pennies.

When getting a merchant account, the per transaction fee would be most important.  You will incur a transaction fee from them plus the gateway service, which I assume you will be using to collect the credit card data through a web site.  The hard cost per transaction with most gateways is 5 cents.  You are now looking at a transaction fee from your merchant provider.  They must cover their costs from the processor and have a little left over for their own profit.  Because technology keeps improving and overall costs continues to go down, processor’s fees for authorization and settlement have continued to decline over the years.  It is very well possible to get a transaction fee of 10 cents or less including AVS.  Depending upon your volume, it could be several pennies less.  One thing a merchant can do to help alleviate this expense is to have the customer prepay for so many units, downloads or whatever it is you are selling.  For example, if you are selling MP3 downloads, then sell them in groups of 25 for $25 instead of 25 individual $1 transactions.

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