Make Sure You Get the Lowest Rate Possible: Here's How!

In credit card processing, getting the lowest rate doesn't just mean shopping around. Even when you are quoted a low rate, that does not mean you will get that low rate on every card you process. There are things that you as the merchant must do on a daily basis when entering credit card information to make sure the low rate is applied to that transaction.

For Retail Merchants

If the customer is in your presence and you are swiping the card, most of the information the system needs to qualify is gained from the card's magnetic strip. However, pay close attention to what the terminal prompts you to enter after swiping the card.

• Is your terminal asking you to enter a tax amount or invoice number? Some Business cards will require a value be placed in these fields in order to qualify. If you are skipping passed this prompt or if your terminal has never prompted you for additional information when swiping a Business card and you are seeing a lot of non-qualified fees on your statement, you may want to contact your merchant service provider to make sure they programmed your terminal correctly.
• Is your terminal batching out every night? Most terminals are set up to automatically batch. But, if you are manual or if the auto-batch capabilities are not functioning properly and are skipping a day when they should be batching, this could cause all your transactions from that day to process at the non-qualified rate.

For Mail Order/Telephone Order and Internet Merchants

This means the customer is not in front of you with card in hand and you are key entering transactions. In most cases through a virtual terminal on your computer rather than a physical terminal. That means you must enter all the information the Payment Card Industry requires. In addition to batching out daily and entering tax information when applicable you will need to enter the following information along with the card number, expiration and amount of transaction;

• Always use the AVS (Address Verification System). This includes the street numbers and zip code associated with the billing address.
• Enter an invoice number. Even if your book keeping does not operate with invoice numbers. You can place random numbers in this field.
• Enter the 3 didgit CVC code on the back of the card.

If you follow all of these tips you should be getting the qualified rate the majority of the time. If you are not, you will want to contact your merchant service provider as other factors may be involved in your rates being higher. For example;

• Out-of-country cards will always process at the non-qualified rate because non-US based banks do not provide address information to allow for the added security of the AVS.
• Some Business Rewards and Corporate Purchasing cards will automatically process at the non-qualified rate regardless of information entered at time of transaction.
• Government cards will always process at the non-qualified rate.

Your merchant service provider may be able to review your account processing history to determine if one of these factors is involved in you not getting the qualified rate the majority of the time. In cases where these factors are causing you to non-qualify, your provider may not be able to assist. Ultimately, the Payment Card Industry has the final say on what will qualify and what will not.

However, your agent may be able to provide other solutions to cutting costs elsewhere, so it is always a good idea to communicate any concerns you may have in regards to your fees.

Should You Sign a Personal Guarantee?

Recently I was reading a post on a social forum. The commentator was a business owner complaining that their bank required a Personal Guarantee in order to setup a merchant account allowing them to accept credit/debit cards. The strict wording of the Personal Guarantee was also of concern to this person. They did not like how, even in death, it gave the bank the right to pursue legal action against their heirs, administrators, etc.

They were advised to try another service provider. Their next post was about how happy they were with a provider they found who did not make them sign a guarantee. All they had to do was pay 3%+ in processing fees and the bank placed $10,000 of their own money on reserve for 6 months or for the life of the account.

Do not be fooled! Holding $10,000 of your own money in a non interest baring account and charging you way more than you need to pay is just a back door way of getting a personal guarantee out of you and making more money doing it. If you can't or wont personally guarantee the legitimacy of your business then the bank will by taking your own money and holding it in case you process credit cards and decide to take the money and run without delivering product or services.

If the situation did arise whereby they had to pay back the card holder for undelivered product/services, they've already got the money to do that with. they are "guaranteed" that money will not come out of their own pockets. But, at what cost to the business owner?

$10,000 could have earned that person a significant amount of money had they been able to invest it. Even keeping it in the bank would have, at least, earned them some interest on their own money.

Not only is that person out the interest and/or investments they could have earned with the ability to have access to their own money, but their rates were much higher than they needed to be. Had they simply signed the Personal Guarantee they could have saved and earned potentially thousands of dollars more annually.

The Personal Guarantee is necessary and, with the recent down turn of the economy, it's here to stay. It is understandable why a business owner would not wish to expose themselves or their heirs to any liabilities, however, try to consider the costs and weigh the options before choosing to allow the merchant service provider to hold your money and increase your rates.

If you know that your business will operate in good faith fashion in accordance with all standard and legal guidelines and regulations then, chances are, you could save your company time and money by signing that guarantee and never face any negative consequences for having done so. The strong wording scares most merchants away from doing this, but would not be enforced unless the business operates in an illegal manner costing the merchant service provider money.

Ultimately, the final decision is up to the business owner as to whether they choose to opt for a reserve in place of a guarantee. No one likes to feel as though they are exposing themselves, but there may be advantages that overcome the strong wording and the possible exposure. It is up to each individual business owner looking to establish a merchant account to determine what is best for them.