Discover reports a Q4 decline, I bet I know why
Posted by: Curtis Stevens on December 17th, 2009

Discover released its fourth quarter financial results and they declined compared to this quarter last year.  I’m guessing this has to do with them becoming an association instead of their traditional role.  For decades, Discover played all parts of the role in credit card processing. They were the card issuer, processor and merchant bank. In other words, they gave out the cards to consumers, approved merchants for acceptance and processed all the transactions. I believe sometime in 2008, they started to become an association like V/MC. Instead of them assuming liability on the merchant’s site, banks such as Wells Fargo & HSBC became acquirers for Discover like they are for Visa/MC. Why would all this matter you ask? Before, Discover charged higher discount rates to merchants and they kept 100% of the profit. Now, they have Interchange like V/MC and that is all they collect. What the merchant pays on top of that goes to other people in the chain. Also, the Interchange rates are quite a bit less than what Discover was charging merchants directly 3 or 4 years ago.

7-Eleven extends processing contract with Heartland
Posted by: Curtis Stevens on December 17th, 2009

7-eleven has extended their current processing agreement with Heartland for another 7 years.  I was a little surprised to hear this.  7 years is a long time.  Plus with Heartland’s breach earlier this year, I was surprised to hear a big company like 7-eleven sticking around.  Just because their network was breached, that doesn’t mean they are not secure now, but generally news like that doesn’t go over well.  However, that is great news for Heartland and I think that is awesome.  I am also guessing that the pricing they are paying is extremely low.  From all the quotes and pricing I have heard of current merchants paying with Heartland, it wouldn’t shock me at all if they gave the pricing away very cheaply.  Other associates I know in the credit card processing business would agree with me on this. Granted, with a merchant this size, they generally demand very low pricing, but I also bet that their pricing is probably so low, it isn’t worth the headaches that come with 5,800 locations.  Before the breach, Heartland claimed to have over 250K locations.  I wonder how many they have now after the breach.

You can still lose on gift cards without expiration dates
Posted by: Curtis Stevens on December 17th, 2009

Consumers have been warned for the longest time about gift cards with expiration dates. With all the publicity, most of your big retailers and chains do not impose any expiration dates anymore. This is all great except apparently some states are now claiming those unused funds if you do not us it in a certain period of time. How can they do this? There seems to be a law called “escheatment,” that says the States have the authority to overtake abandoned property. You may not guess unused gift cards would be considered property, but obviously some states are seeing it that way such as New York and California. NY is 5 years and CA is 3. So you better use those cards or lose it. There are many sites out there that you can sell your gift cards to if you have no interest in the store.  Simply do a search online for them.

I personally thing this is not right on the State’s part. The credit card processing business has been preaching for years that one of the best benefits of having gift cards is that the unclaimed money is simply yours to keep. It will vary with every merchant, but unclaimed gift card value can be anywhere from 10 to 20%, which is simply extra free cash for the merchant. Apparently, this is no longer the case if you are located in some states.

Lets all give thanks to the POS credit card terminal
Posted by: Curtis Stevens on December 17th, 2009

Being close to the holiday season, I figured it would be a good time to give thanks to the POS.  I feel the payment industry has been very blessed for many years and all of this is due to the POS, also known as the credit card machine.  Who was the very first company to introduce the POS and when exactly was that?  If it wasn’t for credit card machines, this whole industry wouldn’t exist. wouldn’t exist nor the thousands of payment processors out there as well as Internet commerce. 

Now, with all of this, you still need consumers to buy and pay with their plastic.  So we should also give thanks to all the consumers that do use their plastic.  Without them, the industry wouldn’t have grown from something very tiny to the behemoth that it is today.  If we are going to thank these two, we probably should also thank all the technology companies involved as well, as they helped make all of this happen by bring products & solutions to the table that made the acceptance possible.  Such as being created over a decade ago, creating a whole new industry known as Internet commerce.   In short, I’m grateful for the invention of the POS.  Without it, I wouldn’t have a job today with stable income and an opportunity to do something I really love.  So whether you are a merchant, consumer or one in the same industry as us, lets all be grateful and appreciate everything we have today.

4 Steps to avoid deadbeat clients
Posted by: Curtis Stevens on December 17th, 2009

Many small and even large businesses find themselves spending a lot of time on collecting from their clients.  You do not want to lose their business and even though they haven’t made any payments, you may extend them a little bit more.  And then guess what, they don’t make any payments!  First, get strict when lending new credit, especially to new clients.  Insist on some type of credit card payment or guarantee.  Secondly, give more scrutiny when considering new clients.  Do your research thoroughly.  Do a background check on the company and talk to some of their references.

Thirdly, maintain control over account receivables.  If an account is 30 days past due, give the client a call and start letting them know their payment is due and you will insist prompt payment.  Lastly, find a good debt collections agency.  A good agency can do wonders for you.  They will know all the laws they must abide by and are worth their 20% commission.  From my experience, you have better success when going after owners that have semi-good or great credit as those people generally care about their personal credit.  Ones with horrible credit will generally not care as much if any at all.  Interestingly though, most credit card processing service providers will not take debt collection agencies as a merchant so they can accept credit cards from the clients. Their are processors out there that will, but very few do.

Boston merchants are using cash discounts to lower processing fees
Posted by: Curtis Stevens on December 14th, 2009

The Boston Globe reported that a local Japanese restaurant in Boston has started a modest revoke against Visa/MC.  They are offering cash discounts for consumers that pay with cash.  Such as, on Sundays, maki rolls go for 55% off for cash paying customers.   Diane, the owner of the restaurant hopes this inspires more customers to use cash instead of credit and lower their overall credit card processing bill. Diane doesn’t understand why they must give all that money to the credit card companies. She pointed out that during a down economy, the card issuers haven’t lowered their rates, in fact they have increased some. She is in fact correct on this. However, there is a cost to accepting cash as well. It works fine for small business owners that can oversea the business on a daily bases, but for businesses that are company or franchise owned, cash has a big cost as well. You have theft, loss on miscounting, risk of robbery, etc. Think of it this way, you have a store you own in another stay. You have a manager running that store for you. Now, you have that drawer full of cash that must be managed, handled, accounted for on a daily bases. Credit cards makes everything electronic and eliminates many of the issues cash creates. The downside is there is a cost to it. However, if V/MC would stop increasing Interchange completely during these harder times and maybe reduce it some, I think it would make everyone feel a little happier.

When you thought fast food prices were already cheap
Posted by: Curtis Stevens on December 14th, 2009

Are you a fast food lover?  There seems to be good news for you during a tough economy.  Some national chains are reducing their already low prices to encourage consumers to keep coming through the door and making the cash register ring.   For example, McDonalds is rolling out a dollar breakfast menu early next year and Burger King has already been advertising a $1 double cheeseburger.  These sort of items have been the dollar price range for over a decade or longer.   Honestly, I’m a little surprised as I thought their margins were already tight.  I assume they are hoping customers will buy other menu items that cost more and will make up for the slim profit margins.   If you are a fast food restaurant owner and are considering this approach, be sure to keep in mind all of your costs, including credit card processing fees. They can turn into a big percentage when dealing with very small purchase amounts. The bad thing is most consumers have no idea how much the restaurant is paying and if they did, I’m sure they would change their habits in some form or fashion.  It is probably because I work in this industry and know all to well what merchants pay, but I have always personally been a cash paying customer when paying small dollar amounts.

Be sure to give thanks to your vendors & customers
Posted by: Curtis Stevens on December 14th, 2009

I think now is a good time to look back at your success for 2009 and give thanks to all of your vendors and customers that helped play a part in it.  Without your vendors, you wouldn’t have any products to sell.  Without your customers, you wouldn’t have anyone to buy them.  I do not know about everyone else in the credit card processing industry, but us here at, we are very grateful. We are also looking forward to a prosperous 2010. The last few years have been tough on all businesses, including our industry. With some laws passing this year about consumer credit cards and all the talk or push for regulation from some merchants like 7 Eleven, we are glad and grateful nothing much has changed yet.  No one can predict the future, but as of right now, things seem to be looking on a more positive note.  Hopefully, 2010 will be a much better year for the economy as a whole.  So while you are spending time with your families this holiday season, give thanks and be glad your business survived another year in this tough economy.  If you are able to make it through this economy, think of what you will accomplish during a thriving economy!

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