I read some recent advice from another competitor on how a merchant can save on their processing fees. There are a few things they mentioned that raised an eyebrow. The company is Nova merchant funding and states they were founded in 1984. This is obviously not true. It appears they are an agent for North American Bankcard, which Nova’s domain name was only registered last year. NAB may have been founded in 1984, but not Nova. Then the article goes onto to say that a termination fee is one area that merchants should avoid at all costs. The last time I checked, NAB has a very hefty cancellation fee by default. It could very well be true that this agent has decided to waive the cancellation fee with NAB’s permission, but with the fact that other false information is being given, I personally would question their promises. Lastly, I disagree with notion that cancellation fees are bad. I understand both sides of the table, but us processors incur a lot of expenses boarding any single merchant and having them leave for another provider to save a few extra bucks, isn’t profitable for anyone. Now, I totally understand if there are service issues or promises not delivered. In those cases, any fees should be waived. But for a small business that wants to test the waters and cancel in 3 months, isn’t profitable for any firm or agent, regardless of how big or small they are.
Sean from Transfs had a customer contact them asking when would it be time to leave Paypal for a true account that goes through actual underwriting. Sean made the comment that the downside to using Paypal is the user must finalize the payments off the merchant’s site and will go to Paypal’s site to complete the payment. This would result in a less than professional image and may hinder conversion ratios, which would affect your bottom line. This was totally true for many years until Paypal introduced their API service earlier this year. That means merchants can now integrate their web site or shopping cart seamlessly. The API eliminates this issue, so why wouldn’t you go with Paypal? I can think of several reasons. Their reputation, level of customer service (will you be able to get a hold of someone if you need service), no personal service from an assigned account manager and greater chances of issues with their risk department for they never do any underwriting. When you do not underwrite for risk, you will have a tendency to give your merchants greater trouble as you operate on a business practice like “approve first, ask questions later.” He suggested to leave once you are processing over $5K a month in revenue. I suggest doing it as soon as you can afford to.
Many ISO’s have had a tough year in 2009. With shrinking margins and other challenges, many ISO’s are being forced to become creative on how to increase revenue for the new year. This is all based on a study that was released by Aite. They surveyed 28 companies and 17 banks that acquire merchants. This includes most of the top 100 largest acquirers. When they were asked about their 2010 challenges, many stated customer attrition will be one of them. Then margins and PCI compliance followed. As the economy tighten, many merchants will want to see what kind of savings they can find with all of their vendors and expenses. What are some of things merchants are asking for most? Pricing being the number one, then reputation and better service third. I was surprised by the reputation answer, I figured that wouldn’t be very important, but all the data breaches this year and years past, may play a big role in this. I also find it interesting that 69% of acquirers said they plan on increasing their sales force, which means more competition for companies like Gotmerchant.com. I personally welcome the challenge as most acquirers do not provide the level of personal service that we do and most of our merchants appreciate the personal touch.
Global Payments announced last week that it will be selling its money transfer business. They agreed to sell its DolEx & Europhil branded money transfer business to another entity called Palladium. Under the agreement, Global will receive around $85 million based on the performance of the business at the time of closing. The company said this will allow them to put more focus on the merchant acquiring business and reinvest in the sales process of acquiring more merchants. Global is one of the top largest platforms and processors in the US. Experts are saying the sell off makes sense as the business had been a drag to margins & growth in past years. Excluding the money portion of the company, Global expects to have revenue of 1.60 billion for 2010.
Ingenico, a payment solutions provider has partnered with the best provider for automated in-flight solutions to provide processing services to airlines via satellite communication. Ingenico’s new iPA280 is the key piece of this solution, providing robust and secure wireless transactions. When it comes to , Ingenico is not know to be the leader. Nurit & Verifone have the market share in this segment. The IT company Ingenico will be using is called Avit. IATA said that the airline industry loses around 1.4 billion annually in fraud. Ingenico is hoping to help the airline industry limit this with their revolutionary new product for in-flight processing. They stated the partnership will also maximum revenue opportunities while reducing transaction settlement time.
In my opinion, Banks are not a good source to get a account setup and there are many reasons as to why I say that. It is still true today, most banks do not provide adequate services for ecommerce merchants. Banks have always been focused and geared toward consumers and retail merchants, but not much for the online arena. There are some big banks that are however. Most of your big banks like BOA, Wells & Chase do offer merchant services directly through them, but many of your regional banks do not. They generally partner with someone else like Gotmerchant.com to provide this service to their customers. I personally would rather share the wealth. If the bank already has your banking business, why not give the credit card processing to some other company that will provide you with the same level of service or better? This is with the assumption that the pricing is the same or similar between the two parties. Plus, because of the size of many banks, you do not get any personal service or attention. You are simply customer number 1,250,493 out of their 5 million customers for example. Lastly, I have personally found that banks at many times take advantage of merchants because they have that established relationship with the merchant. For that, I have seen merchants pay hefty fees for the processing and credit card machines.
The tech support provided by your company of course should be exceptional. There are some major factors that can play a role in the quality of service you receive. One factor being the kind of experience the provider has with your type of business. When it comes to risk, the risk department must manage and control the risk of all the accounts the company has on board so it doesn’t over extend itself and get into financial trouble. It is best to test out their tech support and customer service departments before you sign up with a company. You should have confidence that if you have any issues, you will be able to get a hold of someone to resolve it. The tech support department should be available 24/7. Since your Internet store never closes, you need round the clock support in-case something happens unexpectedly.
MerchantWarehouse, a registered ISO as a 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.
Gotmerchant.com 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.
Heartland recently filed a court briefing expecting all of its merchants using Verifone terminals to contact Verifone directly for support. Verifone has been saying due to the data breaches Heartland has been experiencing, they are eliminating any free continuous support to Heartland directly. Heartland stated that it relies on assistance from Verifone to support its merchant base that use their products. Verifone has stated that it encourages ISO’s to reach out to its merchant base and have the customers registered with Verifone for free support from them directly. Verifone has estimated that about 3/4 of their merchant base relies on their product technology. Verifone has also stated that it will cease support for any system connected to the Heartland network at the end of December 31 of this year.
If your business needs to process level 3 data for government credit cards, then you have one more choice when it comes to 3Delta is already certified on numerous platforms, but this adds one more company giving merchants another choice in payment processors. This also helps 3Delta improve it’s product offerings, which should also have a direct affect on their sales.companies. 3Delta Systems has now become certified on the Chase Paymentech processing platform. You can use their service to process level 3 transactions on that processors platform.
Merchants can reduce their processing costs if they process credit cards using level 3 data. However, this only comes in handy when merchants process business or corporate cards, not if their customer base consist of mostly consumers. The main difference with level 3 is it consist of extra line item data, such as a description of what they purchased. It is exactly as it sounds, line item data or detail. There can be an extra monthly costs to process level 3, but the reduced Interchange rates can well make up for it plus much more.