My company sells B2B. We take credit cards as a convenience for many of our customers. As a wholesale B2B company the processing fees are really hurting us. What appears for be a fairly good deal on "qualified" transactions has spiraled out of control on mastercard/visa. My current processor claims most of my transactions to be business credit cards and is rating them non qualified which costs us 3.25%. Although I know I sell B@B I don't think the high percentage of cards are actually business cards. They don't show me the actual transactions market, just the ne totals. This in itself might be a ripoff or something is wrong in the system somehow. Obviously I need to poll customers to get a batter handle on this issue.
I have spoken to some other processors but this entire area seems to be such a shady business. Are there any other B2B wholesale companies here or similar that can give me some ideas. We do high volume with no hassles. The current costs are having me consider some other alternatives.
https://www.wellsfargo.com/biz/merchant/options/gateways/ima/pricing - Looks like about 2.5%. They charge extra for "Non-qualified" but maybe their processor is more honest...
Xeon852
Senior Member - 1K
posted: Nov. 11, 2007 @ 9:22a
I thought non-qualified was usually when you didn't swipe the card, but manually entered it instead? There are some services that are specifically designed for places that do most of their cc transactions like this - like Paypal's Virtual Terminal: https://www.paypal.com/us/cgi-bin/webscr?cmd=_display-vt-fees-outside
(there are plenty of others - this is just one I remembered off the top of my head).
Economist said: Why not set up a google payments account? Or setup a Paypal business one?
My business is not really web based. I should mention that. We dont actually take orders directly online. Paypal does have a merchant Gateway program at 2.4% with a steep $30.00 monthly fee but they include AMEX in that. I might test it anyway here to see how it works.
Not swiping does not mean its NON QUALIFIED. Usually business cards and they are not clear when they mention "reward cards". I know there are some lawsuits pending against the processors right now. These fees are getting crazy for me. Last 4 weeks cost was $6000.00 not counting AMEX. Discover merchant fees are very low and fair but not many people have/use their cards.
Thanks Rob
Xeon852
Senior Member - 1K
posted: Nov. 11, 2007 @ 9:29a
Have you called your current processor and see if they offer a better plan that qualifies more types of cards? Could be worth a shot.
My current processor seems very uncooperative. This area (merchant processing) seems to e a really slimey business. These companies use all sorts of calculations, it gets crazy. I got a quote this week from Sam's Club and the rep told me some huge number I would save with them. When we went over the numbers step by step it actually showed a savings one month, and the followng month it would acutally be more than my current processing.
Rob
elleve
Ancient Member
posted: Nov. 11, 2007 @ 10:59a
2 things.
1st, get a better processor that's either 0 fees like google checkout, or something close to 2%.
2nd, consider passing the fees to the businesses who want to use cards, if you're charging the same price for both bank transfers and cards, then the businesses will prefer to use cards.
You could do this by giving the card users an ultimatum, either go through the google checkout themselves for no fees, or pay 2% and you can process it for them.
Yes, the whole "business, corporate, or reward" higher tier is a major scam. Mainly because you can't tell what kind of card, and therefore what fee YOU will pay, until you get your merchant bill at the end of the month.
BTW - I've had very good luck w/ Costco's merchant services (Nova).
chimeer
Cranky Member
posted: Nov. 11, 2007 @ 3:07p
Have you considered offering cash customers a 2% discount and adjust prices upward to even things out? You will remain within the acceptable guidlines for visa/mc but you will encourage customers to pay with cash.
elleve, your second option is not a possibility under the merchant's acceptance agreement with Visa or Mastercard. In fact, I sometimes tell merchants this, and if they insist I pay more, I then do a charge back to make my point. I guess I am sort of a jerk, but they should play by the agreements they sign.
bubbagump said: elleve, your second option is not a possibility under the merchant's acceptance agreement with Visa or Mastercard. In fact, I sometimes tell merchants this, and if they insist I pay more, I then do a charge back to make my point. I guess I am sort of a jerk, but they should play by the agreements they sign.
As long as they offer the discount in paying with cash, and not a surcharge to use your CC, they're within the bounds of the agreement. Also, special circumstances like paying your taxes allows the tax agency to tack on a convenience surcharge for using your CC.
I feel like I am getting hammered by my company too. Tried to change to another & it was worse! I pay $400-$700 per month. BTW - I've had very good luck w/ Costco's merchant services (Nova).
Anyone else use Nova? Are they actually cheaper?
CycloneFW
Senior Member
posted: Nov. 11, 2007 @ 4:51p
TBotzon said: I feel like I am getting hammered by my company too. Tried to change to another & it was worse! I pay $400-$700 per month. BTW - I've had very good luck w/ Costco's merchant services (Nova).
Anyone else use Nova? Are they actually cheaper?
I use Google Checkout, so I cannot give any experience w/ Nova.
But I did want to mention to keep in mind that Nova partners with many other companies such as Costco & Wachovia. They likely have different prices, but may provide add'l perks. I know Wachovia's Merchant Services told me that if I had the funds credited to my Wachovia acct, they do 1-day settlements instead of 3-day. Might be a lot faster than GCO, but it couldn't beat Google's 0%.
bubbagump said: elleve, your second option is not a possibility under the merchant's acceptance agreement with Visa or Mastercard. In fact, I sometimes tell merchants this, and if they insist I pay more, I then do a charge back to make my point. I guess I am sort of a jerk, but they should play by the agreements they sign.
No, you aren't sort of a jerk... you are.
"...they should play by the agreements they sign" - so should you - if you agreed to the fee and you signed to that... you shouldn't do a charge back and try and steal the merchandise.
OP , check out the numerous eBay sellers searching "credit merchant" or "merhant account" or similar terms. Consult the ones with high perfect feedback and get a complete detailed fee breakdown, explaining your concern about higher rates for certain card types. You ar likely to find a better processor.
I agree that many processors are slimy and I also think the reason cc issers are pushing business cards so heavilyis bc of the higher merchant fees.
CycloneFW
Senior Member
posted: Nov. 11, 2007 @ 5:45p
TBotzon said: Why not set up a google payments account? Or setup a Paypal business one?
Can't do that for a Brick & Morter business-right?
I use Google Checkout for Rent Collection. They have the option to send out an invoice via email and the other person clicks the link to send payment. The directed me to use this method for all offline orders and services. The only stipulation was that it has to go to the other person's email acct and they had to initiate the payment. They could not give you their details and you complete the process on their behalf.
1st, get a better processor that's either 0 fees like google checkout, or something close to 2%.
2nd, consider passing the fees to the businesses who want to use cards, if you're charging the same price for both bank transfers and cards, then the businesses will prefer to use cards.
You could do this by giving the card users an ultimatum, either go through the google checkout themselves for no fees, or pay 2% and you can process it for them.
#2 is not possible. I cant afford to alienate customers. There are some solid business reasons for me to process cards. First little or no bad checks, secondcollection issues etc. That is worth sometime to every business. In the 2% ranges things work out. At 3% or more it begins to hurt (in a wholesale operaton) On the retail side the higher fees might be a little more workable. I have a large customer base. No need for ultamatiums. Google checkout doesnt cut it as some customers dont do emal and god knows when they check it etc.
Rob
Photonx
Senior Member
posted: Nov. 12, 2007 @ 7:02a
I think OP should approach customers with other payment options, cash/google checkout etc. However, the point is your doing this to HELP save them money, not save yourself money(though you will also). You might be surprised how quickly your customers will educate themselves to save an extra 2% on their costs. Google wont cost you anything to run(at this time). Personally, I know I'd jump through some hoops to save 2% on my costs...
B2B is mostly done on net terms; saves alot of fees. If you want to remain competitive you best get them on credit terms.
If the customer continues to be non-profitable by using credit card instead of terms; just up their pricing model to cover their card use eh?
MrsTrish1
New Member
posted: Nov. 12, 2007 @ 8:03a
Run away from Sams club. Basicaly the same thing happened to me, and now due to fees I am paying more. The statement is very confusing, and I'm stuck in a contract.
MrsTrish1 said: Run away from Sams club. Basicaly the same thing happened to me, and now due to fees I am paying more. The statement is very confusing, and I'm stuck in a contract.
Thanks for the info on Sams club. I will avoid any contracts at this point because it seems there is is alot of funny business. If I start get overcharged they want tohe contract so you cant get out.
rigor said: B2B is mostly done on net terms; saves alot of fees. If you want to remain competitive you best get them on credit terms.
If the customer continues to be non-profitable by using credit card instead of terms; just up their pricing model to cover their card use eh?
We have been in business for more than 20 years. Do you want to buy all the bad debts and court claims we have against other companies? I get stuck with judgments big time! There are people in my industry that are long out of business due to this fact. Not to mention the labor in administrating the collection of money. Many companies wont pay until you prod them. Making a claim about raising prices sounds easy on paper to cover additional costs. Also I never said anyone was "non profitable" I am trying to contain my processing costs to a reasonable figure. Furthermore I believe that my current processor is pulling a fast one in claiming many of my cards to be business cards when they are not.
Robert
randian
Member
posted: Nov. 13, 2007 @ 12:02a
Are GCO's prices different for biz cards? I don't see anything in their fee disclosure saying so.
i dunno but 3% (not including fraud) of 10 million gross sales might be worth taking on some bad debt? we really don't know how small your business is? or what you do?
rob did you contact any of the processors who advertise on eBay? Ive found the best merchant rates on eBay, with no junk fees monthly
Has anyone actually used a merchant processor from eBay? I have tried locally a couple different processors and they are all sleazy and tell you one thing but when you start getting your statements there are all these charges that were never disclosed. Getting out from under them is usually a huge undertaking as well. I am a little gun-shy of going through the ordeal again unless I knew it truly would save money & I am not getting hammered with all the junk fees.
I agree about the costs being confusing with the different tiers. I receive updated pricing info from my merchant account from time to time. I'm looking at the last update, and it is literally an entire sheet of paper filled with different rates. There is literally over 100 different rates on this sheet, and to top if off, there aren't even the complete rates...just the interchange fees (I think), and there are at least a couple other rates and fees that get tacked on top of this.
As far as eBay...that instinctually sounds like such a bad idea, but if you can put that gut feeling aside I bet it probably can work out well (as SIS said, look for the people with tons of positive feedbacks). I'll look into that. Thanks SIS.
LordKronos said: As far as eBay...that instinctually sounds like such a bad idea, but if you can put that gut feeling aside I bet it probably can work out well (as SIS said, look for the people with tons of positive feedbacks). I'll look into that. Thanks SIS.As many have said, most processors are slimy. The eBay feedback system is a great way of showing who is honest, as compared to some processor where you cant see reviews from other satisfied/unsatisfied clients
The problem with the eBay feedback system is you have to make your feedback pretty quickly (within a month, I believe). In the case of a merchant account, it might take a couple months to realize just how slimy the vendor is, especially if you don't carefully read through all of the terms up front. For this reason, I might question just how valid all of their + feedback is.
I saw the same sort of thing with an ebayer selling counterfeit DVDs before christmas. The vendor had 100% positive feedback. When I got my DVD it was counterfeit. On a hunch, I started contacting other buyers. Many of them ended up having counterfeits, and most of them had already left + feedback. Around xmas time, most people buy the DVDs, wrap them up and put them under the christmas tree, and don't realize until months later they got a counterfeit. At least I was able to save a couple people from embarrassment.
rigor said: i dunno but 3% (not including fraud) of 10 million gross sales might be worth taking on some bad debt? we really don't know how small your business is? or what you do?
Would help to know your full picture mate.
We do a good level of business. I talked to my partner about this. The reality is that there is a threshold that actually makes it more efficient to consider more customers on terms. Dealing with the collection issues and a few stiffs gets to a certain point to be measured against the merchant fees. My customers that use the cards consider it a convenience. Not sure exactly the direction right now on this one. I am going to try the paypal virtual merchant as at least a temp solution. They are by far the best with AMEX cards and business cards. It might be as crazy as using them for biz cards and AMEX and using my current processor for straight qual transactions which may be debit cards and consumer cards which is about 20% of the current volume. They key is to properly identify cards from clients going forward and to ask some questions. Wells fargo emailed me a proposal at least 50 pages long. The sales rep did not clearly identify the tiers that would apply to us. (UNREAL!) I also think if my current processor saw my volume go way down they would take good notice. I will check out the eBay guys as well. WalMart tried to establish their own banks foor a purpose of processing their own merchant charges. So far the goverment has prevented them from doing that. And they pay alot less than me. I will update as I know more. Whats amazing is these companies can make a fortune in monthly fees from us and still charge us a bull crap $9.95 fee for the purpose of mailing me a bill. What a joke. Also when we charge customers we have no issues regarding fraud.
robertw477 said: I am going to try the paypal virtual merchant as at least a temp solution. They are by far the best with AMEX cards and business cards. It might be as crazy as using them for biz cards and AMEXrob PLEASE dont use paypal. PLEASE. I say this with the utmost concern for your sanity and preserving your business relationships.
Search this forum pr paypalsucks.com if you need to know why
CycloneFW
Senior Member
posted: Nov. 13, 2007 @ 11:33p
SUCKISSTAPLES said: robertw477 said: I am going to try the paypal virtual merchant as at least a temp solution. They are by far the best with AMEX cards and business cards. It might be as crazy as using them for biz cards and AMEXrob PLEASE dont use paypal. PLEASE. I say this with the utomost concern for your sanity and preserving your business relationships.
Search this forum pr paypalsucks.com if you need to know why
ok, this topic is top of mind to me since I have gone through all of this....
I've taken all my statements for the past year, and through my Sams Payment services (mymerchantview website) I was able to find exactly which cards were "non qualified". Almost all card processors use First Data Merchant Services so you have the same mymerchantview site and the same lousy interchange conditions. I put this all into an excel spreadsheet and my "1.59%" rate turns out to average nearly 3% some months due to non qualified rates. The sales reps for Sams Payment and other processors start off telling you you'll save $$ with them and not incur as many fees, but when you ask them to look at your exact spreadsheet they start mumbling and saying that interchange/nonqual fees are a way of life and incurred from Visa/MC.
Here is what I did:
Step 1: Opened a SECOND merchant account... and have it coded for BUSINESS credit cards only. The new machine will work exactly the opposite of your current machine. You'll pay a non-qual fee for every NON business card accepted. Very easy through Sams Payment, since I am a plus member they waive the monthly fee. I bought a used Hypercom T7P on eBay for $100 and they reprogrammed it for free. Do not pay their price for equipment or lease--the T7Plus only costs $250 NEW!!
Using this second account (with 2 credit card machines side by side) I would swipe the business cards on the second machine, and the personal cards on the personal machine. Looks awkward having 2 machines side by side, but it was saving us several hundred dollars per month.
We STILL kept getting hit with interchange rates, because some business cards have no company name, and we had some non-swiped cards. We got burnt for $800 on a $40k credit card transaction that we had to call the 800# for verbal authorization because the terminal said "call visa/mc". It triggered a fraud alert and could only be done online.
The credit card processors, and card issuers are crooks, and they make so little on the advertised processing rates that they all try to screw you over for interchange rates that more than double your rate. Do what you can to save $$.
STEP 2:
Most recently we have gone to Google Checkout for 95% of our credit cards. Now instead of time of pickup, we email our customers a payment request and that does a hold on their card, and we authorize the card/mark as shipped when they pick up. They charge an amazing ZERO point ZERO fee through the rest of 2007, and then they will charge a flat 2.0% (with fast funding, no other fees).
I'd caution you against paypal because of all the bad feedback (paypalsucks.com has tons of horror stories), and the fact that I don't think they do instant funding like Google.
Expert you make some excellent comments. I am amazed that they were also getting you so much for swiped cards. I will look into google checkout. The main negative for me is that my orders should go out the same day and with this system I rely on a customers ability to check his email and t input his cc info online. I have some customers very afraid of the internet and they might be nervous about entering their credit card info online. It is an idea and the real question is the best way to implement it or if I can implement it on a partial basis. The problem with google checkout as I see it is that it is initiated only by the customer every single time. Our customer might have to be called and told to check their email for the bill. Now on large transactons this might be interesting but on the small ones it could be a hassle. I would not be surprised to see google raise their rates in 08 also. I dont think they have to guarantee the rate for the entire year.
expert5186 said: ok, this topic is top of mind to me since I have gone through all of this....
I've taken all my statements for the past year, and through my Sams Payment services (mymerchantview website) I was able to find exactly which cards were "non qualified". Almost all card processors use First Data Merchant Services so you have the same mymerchantview site and the same lousy interchange conditions. I put this all into an excel spreadsheet and my "1.59%" rate turns out to average nearly 3% some months due to non qualified rates. The sales reps for Sams Payment and other processors start off telling you you'll save $$ with them and not incur as many fees, but when you ask them to look at your exact spreadsheet they start mumbling and saying that interchange/nonqual fees are a way of life and incurred from Visa/MC.
Here is what I did:
Step 1: Opened a SECOND merchant account... and have it coded for BUSINESS credit cards only. The new machine will work exactly the opposite of your current machine. You'll pay a non-qual fee for every NON business card accepted. Very easy through Sams Payment, since I am a plus member they waive the monthly fee. I bought a used Hypercom T7P on eBay for $100 and they reprogrammed it for free. Do not pay their price for equipment or lease--the T7Plus only costs $250 NEW!!
Using this second account (with 2 credit card machines side by side) I would swipe the business cards on the second machine, and the personal cards on the personal machine. Looks awkward having 2 machines side by side, but it was saving us several hundred dollars per month.
We STILL kept getting hit with interchange rates, because some business cards have no company name, and we had some non-swiped cards. We got burnt for $800 on a $40k credit card transaction that we had to call the 800# for verbal authorization because the terminal said "call visa/mc". It triggered a fraud alert and could only be done online.
The credit card processors, and card issuers are crooks, and they make so little on the advertised processing rates that they all try to screw you over for interchange rates that more than double your rate. Do what you can to save $$.
STEP 2:
Most recently we have gone to Google Checkout for 95% of our credit cards. Now instead of time of pickup, we email our customers a payment request and that does a hold on their card, and we authorize the card/mark as shipped when they pick up. They charge an amazing ZERO point ZERO fee through the rest of 2007, and then they will charge a flat 2.0% (with fast funding, no other fees).
I'd caution you against paypal because of all the bad feedback (paypalsucks.com has tons of horror stories), and the fact that I don't think they do instant funding like Google.
When you email through google checkout how does that be a hold on their card? Do you have their card number already?
I am not sure agree with all of the comments about the merchant processing. Being in business more than 20 years I can see it is an area with a ton of bait and switch and outright fraud. I have seen other small busineses and companies I know get the shaft with renting/leasing these credit card terminals, among other issues. I think that paypal online and google have been a help somewhat to the smaller online guy. In my processing I care only about rate. The"customer service thing" is way overrated. Once I am up and running I probably average no more than 3-4 calls a a year is there is an issue (if that). Per se the entire thing is signing up new people and providing little more than the service. I wish I had such a business. My business is far more complicated.
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