OfficeMax is getting a piece of the entire pie

Posted by: Curtis Stevens on November 18th, 2009

OfficeMax is your standard merchant with credit card processing fees.  The other side of the table they are now getting into is the issue end.  When it comes to processing a transaction, there are several parts of the whole process.  It starts with banks issuing out credit cards.  They are referred to as issuers.  Visa/MC are the association that is tied to that particular card or bank.  You then have the merchant account provider that processes the transactions for the merchant and assumes risk.  Lastly, you have the sponsoring bank, where all merchant accounts must be sponsored by a bank.  However, they receive such a small piece of the pie, it isn’t worth considering.

Now, as a merchant, they have a cost of accepting a credit card, which has its own benefits that comes along with it.  On the flip side, they are now issuing branded Visa Cards.  I assume they have some type of agreement with a bank where they get a kickback on all transactions their customer’s process.  So now they are now not only getting the benefit of accepting a credit card, but are getting a little something back on the card issuing side.  This ultimately reduces their costs to run those particular transactions that are associated with those cards.

Merchants, credit card fees & having surcharges

Posted by: Curtis Stevens on November 18th, 2009

In generally, businesses cannot add a surcharge to a credit card transaction for the convenience of the customer using the card.  When a merchant signs up for a credit card processing account, they are agreeing to a merchant agreement that states this is completely prohibited.  The rule is coming from Visa/MasterCard directly.  Their theory is they do not want their customers to be penalized for using their service.  In generally, I think it is a bad idea anyways.  Consumers expect merchants to absorb the cost like any other business expense.  I see a lot of places in my area that do this and if their processor ever finds out, they would immediately terminate their account.  They would then have an almost impossible time getting another one.

There is one exception to the rule. That is government agencies.  V/MC have allowed these types of organizations to add a convenience fee to the transaction.  Most government agencies are now accepting credits and many of them charge a 3 to 4% surcharge.  In my opinion, that shouldn’t be acceptable as they are now charging more than what it actually costs.  If their costs is that high with their provider, then they should get their fees reduce as Interchange tops out at just a little over 3%.  This shouldn’t be an area that generates revenue for them.

Dollhouse Bettie was able to cut her credit card processing fees

Posted by: Curtis Stevens on November 17th, 2009

A retail merchant called Dollhouse Bettie was able to cut her processing fees with her bank, WellsFargo after making a lot of profit and giving poor service. I have seen it countless times, banks like WellsFargo take advantage of the relationship they already have with their banking customers. Would you agree this is fair, $50 a month for two years for a credit card machine that you can buy for around $200? 2.30% for swiped transactions?  This may have been ok 10 years ago, but this is 2009.
One way you could look at is, they were making over $4,000 a year from her account and look how much trouble she had when trying to negotiate with them.  6 calls back & forth isn’t acceptable in my opinion.  Why continue doing business with them if they treat their loyal customers that way? They should be bending over backwards for her and grateful for the business! I hope they replaced or repaired the credit card processing machine for free then, after making that much profit on your account.  I also recommend her checking out an Interchange plus pricing model instead of the 3-tiered pricing system most commonly found among smaller to medium size companies.

Convenience stores protest over processing fees

Posted by: Curtis Stevens on November 16th, 2009

There has been a lot of news lately about convenience store owners protesting over the fees they are charged for their credit card processing service.  7-eleven recently went to Capital hill with like millions of signatures from consumers contesting to it.  The problem with that is most consumers have no idea what they are really signing and what it means.  Merchants should consider several things.  For starter, it is a cost of doing business.   Just like there is a cost to handle cash as the store.  Is anyone complaining about all the other bills they have, like utilities, rent, insurance, etc?  Secondly, if they are so upset with it, why not stop accepting credit cards?  They would tell you they would probably lose too much business.  That should be enough right there!  I agree credit cards have become almost like a currency.

However, view it as a better currency.  You generally have ticket lifts vs cash paying customers, you receive your funds in a day or two and you do not have to worry about all that cash being held in the draw for employees or robbers to steal.

Palm beach merchant services claims to save money

Posted by: Curtis Stevens on November 16th, 2009

Palm Beach merchant services has been claiming to save merchants on credit card processing fees and exchange for a cut of the savings.  The idea itself sounds really good and that it should work out to the merchant’s advantage.  However, there are a few other ways to view this and points to consider.  First off, merchants shouldn’t contact someone else to do their negotiating.  It would be like using a third party to negotiate for you when talking to your vendors or your phone company about your bill.  Yes, they may know this business a little better and know how much they can squeeze, but with a little patience and a some talking, you can very well learn this yourself.  Simply call your current processor and see what they are willing to do.  Then call some other companies and get some rate quotes from them based on your current processing numbers.  Take all the information you have learned and go from there.

The second thing to keep in mind is you wont have to share those savings with a third party.  A little bit of your own time and some phone calls could very well save you 100% instead of giving part of those savings to someone else.  Remember, your current processor doesn’t want to lose your business!

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