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Credit card processors are notorious at charging annual fees without explanation or little awareness. If you are a customer that is seeking help with understanding annual fees, and want help in making sure you aren’t charged one, stick around and you’ll read more about this in our blog posting provided by Centurion Payment Services. Annual fees are profit makers for merchant processing companies, and are avoidable if you can talk with the decision maker in regards to what you want versus what you are going to to get on your merchant credit card processing account. Annual fees typically have various names, forms, sizes, and reasons. Mostly, you’ll notice if you are in the industry of processing credit cards, the annual fee is a profit center for lost profit throughout the year on any particular merchant account.
Typically small merchant’s who cannot afford this fee, are charged it annually, and not told about it; usually because the merchant processor plans on charging the credit card processing merchant in December’s; typically when a sales representative is no longer with the company anymore. Many questions may arise due to processing credit cards and the annual fees, so in this blog posting; we’re going to cover these questions, and try to narrow down an answer for you to understand what can be done and what questions you should be aware of and ask.
Why are processors charging this fee, and what can be done? Processors charge this fee as a way to profit for any lost revenue throughout the year. Typically a merchant services provider will say they are using this fee to cover additional expenses. In reality, the annual fee that you are charged on a credit card processing account is arbitrary and again, used as a profit center for the merchant account.
How to avoid this fee in the future? Annual fees can be avoided if you make sure you are dealing with the right person at the merchant services company. The reason its critical to make sure you are speaking with the highest power who has a relationship with the Independent Sales Organization is because you need to ensure that you are 100% confident that you will not receive a fee from any merchant services provider and or its affiliates (ISO) stations. These fees are very dangerous to the customer, and we need to ensure that they are 100% avoided if you truly want to get a good rate for your merchant account. We firmly believe at CPS; annual fees should be avoided, and thus we do our best to make sure you are avoiding them at all costs.
How can I ensure I won’t be charged an annual fee in the future after my first year processing? Get the agreement that there is no annual fee in writing. Do not let a merchant services rep give you a “word of mouth” I won’t charge the fee. This is a typical “unethical sales practice” which results in an annual fee being charged, and this is the purpose of our blog, to avoid the annual fee at all costs. Other tips on processing credit cards and annual fees include: Making sure you are not locked into a contract. Making sure that your annual fee is not charged monthly. Making sure you are not signing an annual fee agreement *AKA* fee in the rate-plan of fees set up by the merchant service rep.
In choosing a credit card processing company, there are many considerations and factors to consider. Do not attempt to do this alone, or without the advice of someone in the industry who knows what they are doing/understands. Its typical that merchants get set up by processing companies that do not have the best interest of the merchant at heart. This is seen in many situations where a credit card processing company hires sales reps on a commission structure to sell merchant processing/ credit card processing services to customers. If a merchant is set up this way, its most likely beneficial to the sales rep over the merchant processing the credit cards.
How do you avoid this? Approach your local bank, however, ask if they outsource the credit card processing or do it in the house. Banks tend to outsource this processing of credit cards to sales negotiable negotiable negotiable have high turn-over, thus giving you a rep who isn’t looking out for your best interest. On the other hand, its somewhat better; because now you have a point of contact when a problem/fee arises on your statement that you didn’t know was going to be there. Rates often change , so its typical for processors to add fees to your account to offset the fees, and gain higher residual profit.
What is the best way to select a processor? Ask a friend who owns a company or do your research. Its important to understand the difference in pricing models for credit card processing. Some processors will charge interchange, and others tiered rates; as previously mentioned in our blog. Make sure you know how you are set up, so you know what you are paying. This factor is critical in determining a start to understanding your rates for processing credit cards. Furthermore, you must understand that you are not safe just because you have interchange pricing, but you are at a start to being safe.
What are other measures to make sure you are safe in credit card processing; so you aren’t being ripped off? Well, this is a complex question, so we’ll try and give a simple answer; as best as we can, in regards to merchant services. Credit card processing and merchant acceptance for credit cards is charged based on rates of the interchange. After you pay a surplus above the interchange rate, you will notice misc. Fee’s that are tacked on monthly, and sometimes annually. We’ll break down the monthly common fees, which are negotiable, and touch on the annual fees you may see later on your credit card processing statement from your merchant services provider.
Monthly, you will see fees called: Statement fee, batch fee, monthly minimum, and on file fee; Along with PCI fee, and other misc fees that are listed. The true cost of merchant services is around $6.00 to keep an account open (on file), so we’ll need to make sure that monthly you are not paying too much over that; if no cards are ran. This can add up though, however, to much more if priced high, and can be very dangerous and costly to the merchant for processing credit cards.
The last thing to touch on is the annual fee, or fee that is charged annually. This is a big part of the problem merchants see when processing credit cards. The reason they see such issues is because they are never told about a fee annually, and this could be related to the PCI Fee, or Annual Fee and cost to keep accounts open. This fee captures extra profit for the merchant processing company to allow for additional profits to be spread throughout the account and give a buffer on the annual residual the account pays out. This fee is very high typically around $100.00 on average and ranging up to $500.00 on some cases, but rare. You want to ensure you are not overpaying for merchant services and credit card processing in this area, and make sure that an annual fee is set and is fare. In a lot of cases, and in the cases with Centurion Payment Services, we’re always looking to avoid an annual fee at all costs, in addition to giving you the best credit card processing rates monthly as well, and lowest monthly fees.
Credit Card Merchant Processing is a very difficult and complicated industry to understand when you are a merchant. Most companies are not very honest, and those that do not have honest sales reps to relay messages of transparency. Most incentives by Credit Card Merchant Processing companies are done off commission. The commission is determined by a percentage of the residual difference in the cost of the processing the merchant does to the rates set up by the Credit Card Merchant Processing company. How are rates set and what makes them? This is 100% up to the merchant services rep who sets your merchant account up for credit card processing. This must be done by someone who doesn’t just enter the market in an overnight frenzy, and is a truly established business and has truly established representatives.
Many credit card processing companies today do not inform there representatives on how to sell to benefit the customer/merchant; they sell to benefit themselves and the company (merchant processing company). This leads to a huge conflict of interest for the sales rep and typically lies, and promises that cannot be kept are told to merchants to attract them to switch and sign up for processing credit cards. This is extremely dangerous, as merchant processing companies lock those into agreements with early termination fees and leases that cost thousands. If you do not know what you are doing in merchant processing, you will sure end up with a bad deal, and something you cannot get out of.
By having these issues, we’re aware and understand that merchant processing is a delicate topic. We are here because we have a dream that one day, all merchants will be able to understand what they are paying for there credit card processing, and thus will give them a better deal, and change the industry forever. How can we do this? We can’t do it alone, we need word-of-mouth help, and others to engage into the systematic process of selling credit cards. Since most customers have been mistreated in our industry, we have to defend our representation of our beliefs as best as we can to give the customer the best merchant processing for Credit Card Merchant Processing available and also educate the customer. In the end, we do not want the best for us, but a mutually beneficial relationship that a customer can find true value in when processing their credit cards for their business.
With turnaround being rapid in the merchant processing world of sales, we know that customer service is lacking. This doesn’t only affect merchants waiting on long hold times for customer service through their processor, but it means that they are uneducated about major changes going on in the credit card processing industry. The biggest change impacting merchants is happening this year. It requires a complete terminal replacement because credit card processing is going to be done differently. Currently in Europe, all merchants use a chip/EMV credit card processing solution; thus not using the swiper on a credit card for transactions. What does this mean? Well, it means that merchants have more secure transactions; due to chip cards assigning a random code to each transaction. This random code in the chip card technology (EMV chip cards) allows for merchants to be able to have less of a risk of a data breach of credit card numbers and personal data. This is a requirement by Visa and Mastercard, and yet most merchants do not have a clue. Merchant loses chargeback rights if this isn’t handled
The purpose of this blog post is to educate merchants on this change and give them the options they need, and knowledge to reduce liability by the October 2015 deadline. Why is this important? Well, if you do not have a credit card processing machine that is working through the chip system by October 2015, you will be liable for your chargebacks. An example is if a merchant sells a wedding ring to a customer and the customer has the merchant swipe the credit card transaction rather then EMV chip card run the transaction, the transaction is 100% liable to the merchant, regardless of proof due to not having a chip-card reader. If the ring was $20,000 and a customer swipes there credit card (Visa and Mastercard), this transaction could 100% be disputed, and in addition, will give the customer 100% chargeback rights and allow the customer to even keep the ring. This is a terrible and horrible risk that is not necessary, and can be avoided by getting a new credit card machine, such as a $150.00 ICT220 by Ingenico. We must make sure all merchants know this so that they can avoid being scammed by customers who know this, and Merchant loses chargeback rights
I’d like to see every merchant have this machine before October 2015, so we can make sure transactions are not liable on the merchant’s side because they were not aware. This will be a costly mistake for merchants who aren’t educated, and we must change this immediately. If we do not promote this and educate all merchants, whether they are processing with our credit card processing company or not, we will see a huge issue with chargebacks and fraud. We want to avoid Merchant loses chargeback rights.
Merchants tend to fall victim to not knowing what rates merchant processing companies are charging and tend to be uneducated in the process of learning about good deals versus bad deals when it comes to credit card processing. The purpose of this article is going outline and discuss the benefits of interchange pricing models versus tired pricing models when speaking in terms of merchant credit card processing and acceptance. The two pricing categories both have advantages and disadvantages depending on how many basis points you are paying, and how you are taking your credit cards in your online business or retail brick and mortar location. Merchant credit card processing and acceptance.
Interchange pricing is defined as “Merchant accounts that operate on an interchange plus pricing structure may sound more intimidating, but they’re much more transparent and less expensive than tiered accounts. On an interchange plus pricing structure, the merchant pays the exact interchange fee in addition to a flat markup to their merchant service provider. This eliminates inconsistent buckets and overpaying for inflated rates.” As a result in interchange pricing, you pay less than you typically would in a tiered model because you are not exposed to inconsistent fees and understand that you only pay above the cost of the credit card transaction ran by Visa and Mastercard (TM). The interchange fees are always set by Visa and Mastercard (TM), thus paying “above interchange pricing” is cut and dry, versus having to understand bucket rates, and why and how they fall where they do. For example, if you are a merchant that owns a bakery and are processing credit cards to sell a cookie, you would run the sale on your point of sale credit card terminal. After running a sale on the credit card terminal, anticipating you swiped the card, you’ll pay a fee above the charge of the card. What is the charge of the card? You can refer to the interchange tables (updated twice a year in April and October). Since we’re in April now, interchange fees will be rising, and its important to know them. Where do you find them? Simply look here: Visa and Mastercard to get all the interchange fees for credit card processing. Merchant credit card processing and acceptance.
Tiered rates are those in which are buckets together, and less beneficial for the merchant processing credit cards. The reason that tiered rates are unfavorable versus though of interchange is because they are grouped together and are dependent not only on card type, but how you run a sale, and other conditions such as batching out transactions the bank timely, etc. These circumstances are the fundamental problem with tiered rates, not to mention you get a higher interchange charge assessed. So, you may be wondering what does it mean per card type? Well on tired rates, you are dealing with 3-6 rates, typically 3, which go from 1.69% on a retail account up to 5% in some cases. What is the factor causing the higher rates to be charged? Its if the card is swiped or keyed in as well as if the card is a debit card, credit card, rewards card, etc. These circumstances cause the card type typically to bump to the higher rate, and thus, you the merchant pays more to process the card. If you are on a straight interchange method, you will not be penalized for the downgrades.
In conclusion, you can see there are two ways to be set up as a merchant who accepts credit card processing. These ways are important to understand, so you can understand how you are priced, and what your rates are. If you have any concerns and questions regarding how to set up credit card processing and what the best way is, Centurion Payment Services will be happy to help. Merchant credit card processing and acceptance.
When selecting a company to facilitate your credit card transactions is not a small task. Many merchants are confused by the complicated statements, contract terms, misconceptions, and fears. We hope by reading this, you can discern the differences between a credit card processor who has your best interest at hand, or a processor who has their best interest at hands.
Statements in the credit card processing world are very tricky and not easy to understand. They are almost like a jig-saw puzzle that must be solved. Sometimes you may have a enhanced bill-back statement, which won’t even show current charges. Its important to know what is coming out of your bank account each month, and how to match it up with your bank card merchant services and processing history.
Contract terms are very lengthy in merchant services, and also auto-renew most of the times. This is particularly bad for the merchant if he is in a “bad deal;” because he cannot get out of the contract once signed. Make sure you know contract terms and agreements. Don’t always take your credit card processing sales rep’s word for i;, as 9 out of 10 times the sales rep in the credit card processing business for Visa and Mastercard are lying and not accurately telling the right information. The reason they do this is in order to have a personal gain of the commission.
Misconceptions in credit card processing is a very common thing. Most people think that machines are very costly, rates are very high, and fees should be charged for all sorts of conditions. This is not the case, in fact, credit card processing should be made simple, clear, and easy to understand. If it sounds too complicated, ask questions to your credit card processing and merchant services account rep. Do not allow a merchant services and credit card processing account rep confuse you without understand what it is they can offer you, so you do not have any misconceptions.
Fears are a driving factor behind merchants who select a credit card processor. The reason is, mostly everyone has been lied to. Like I said previously, 9 out of 10 merchants are mainly lied to in order to be closed so I rep may earn his weekly commission. This thought process is very dangerous to yourself as a merchant when selecting a credit card processor, because you may turn a good deal down based upon fear of being exploited when, in fact, a deal is actually good or better than you are in; it comes down to knowing the facts. So if you need credit card processing, we hope you found this useful.
Article Re-posted by Centurion Payment Services.
By Robin Sidel (All content is 100% written by Robin Sidel, re-posted by CPS)
EXTON, Pa.—Inside a one-story brick factory surrounded by a locked chain fence, more than a thousand workers toil in a plant that operates around the clock to help U.S. banks catch up to the rest of the world in credit-card security.
The owner of the plant, Oberthur Technologies, is racing to meet the banking industry’s demand for new cards embedded with a computer chip in addition to a traditional magnetic strip. The goal: to reduce card fraud by making it harder for thieves to create counterfeit cards.
Some 575 million of the new cards—representing about three-quarters of U.S. credit cards and about 40% of debit cards—are expected to be in the wallets of American consumers by year-end, making it the biggest rollout of new cards in decades.
Total Return
Why New Credit Cards May Fall Short on Fraud Control (Jan. 4, 2015)
Chip card, which have been used throughout Europe, Asia and Canada for years, are coming to the U.S. after delays from banks that issue cards and the merchants who accept them.
But challenges remain: Even though tens of millions of new cards have already been shipped to customers, only Wal-Mart Stores Inc. and a few other large retailers so far have upgraded their payment terminals to accept the new plastic. Target Corp. , which had a massive breach in late 2013, has upgraded its terminals and plans to start accepting chip card in the late spring, according to a spokesman.
ENLARGE
Many merchants are also griping that they won’t meet an October deadline, when the liability for fraudulent transactions will under certain circumstances shift from card-issuing banks.
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A trade group representing tens of thousands of grocers and pharmacies last month asked Visa Inc., MasterCard Inc., American Express Co. and Discover Financial Services to delay the October deadline until 2016, citing backlogged orders for new equipment. It also expressed concern about potential delays in the checkout line during the holiday shopping season because consumers may be confused about how to use the cards, which must be dipped into a reader rather than swiped.
So far, the card networks haven’t given any indication they will delay the plan.
As an additional complication, some small banks are saying they won’t start issuing the more secure cards until next year at the earliest.
Previously
MasterCard’s Carolyn Balfany discusses chip-and-PIN technology with Paul Vigna on MoneyBeat. (June 2014)
Credit-Card Industry Ramps Up Security Efforts (Sept. 4, 2014)
“Some of [the small banks] are struggling with the complexity of it, and the cost is a factor,” said Jamie Topolski, director of alternative payment strategies at Fiserv Inc., which is helping small banks navigate the transition to chip cards.
The cards are as much as five times more expensive to make than traditional cards, costing roughly $1 each. Even for small banks, that could be an added expense of tens of millions of dollars, a big tab at a time when they are being squeezed by low interest rates and heightened regulatory requirements.
Card-issuing banks hope that the extra expense will be offset by a decline in fraud costs.
“We want them, and we hope the benefits outweigh the costs,” said Doug Gulling, chief financial officer of West Bancorp. Inc., which has $1.5 billion in assets. The Des Moines-based bank, which operates 12 branches in Iowa and Minnesota, will start introducing chips on its debit cards next year.
The new cards are considered more secure because the chip creates a unique code for each transaction, making it more difficult for thieves to replicate the cards with stolen data. Traditional cards with a magnetic strip contain static data that can be duplicated, including account numbers and expiration dates.
Card manufacturers say that they are having a hard time convincing some financial institutions that the cards take longer to make than traditional cards, especially if designs need to be altered to make room for the computer chip that is embedded on the front.
“The large issuers are very sophisticated and have been working on this for years, but there are some people that are just scratching the surface,” said Steve Montross, chief executive officer of CPI Card Group, a manufacturer that shipped about 70 million chip cards to U.S. issuers last year.
ENLARGE
Chip cards represent about 80% of the cards being made these days at the Oberthur plant, which has a capacity to produce 20 million cards a month and is located about 30 miles west of Philadelphia. The company bought the Exton plant in 1999 as part of a plan to gear up for chip-cards production, thinking they were around the corner.
“It took a very, very long time, and now it’s happening on an accelerated basis,” said Martin Ferenczi, president of North American operations for Paris-based Oberthur, a printing firm founded in 19th-century Paris that has morphed into one of the world’s leading manufacturers of credit and debit cards.
The plant now employs 1,080 workers, up 68% since 2013, and it recently shifted to round-the-clock operations.
Security at the plant is tight. Workers who move through different sections of the facility must pass separately through multiple sets of locked doors that can only be accessed electronically with an identification card.
The plant was humming on a recent morning as nine rows of cages filled with hundreds of thousands of half-finished credit and debit cards waited for their chips.
The nation’s largest financial institutions are ahead of smaller banks in getting the new cards to their customers.
J.P. Morgan Chase & Co., the nation’s largest credit-card issuer, has issued more than 19 million chip cards so far and expects to have more than 70% of its credit-card portfolio converted by year-end, a spokesman said. The company has started issuing debit cards with chips in Arizona and Illinois and will be rolling them out nationally over the next few months.
Citigroup Inc. has issued more than 12 million chip cards in the U.S., representing more than half of its portfolio. The big bank plans to start issuing chip-enabled debit cards this year, a spokeswoman said.
In the credit card processing world, things are changing, and they are changing somewhat fast. Mostly, we avoid changes because they are not required or needed, however; this change will impact everyone, drastically. Accepting credit cards is an important thing. What change is this? Well, it’s a simple, yet complex change. Its the change from swiping your credit card, to having a”EMV, which stands for Europay, MasterCard, and Visa, is a global standard for inter-operation of integrated circuit cards (IC cards or “chip cards”) and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions.
According to Wikipedia the definition and explanation of EMV/Chip Card Techonlology in credit cards is “EMV is a joint effort initially conceived by Europay, MasterCard and Visa to ensure the security and global interoperability of chip-based payment cards. Europay International SA was absorbed into MasterCard in 2002. Accepting credit cards is critical to your businesses success. The standard is now defined and managed by the public corporation EMVCo LLC. JCB (formerly Japan Credit Bureau) joined the organization in December 2004, and American Express joined in February 2009. China UnionPay was announced as a member in May 2013,[1] and Discover joined the corporation in September 2013.[2] The EMVCo members MasterCard, Visa, JCB, American Express, China UnionPay, and Discover have an equal 1/6 interest in the standards body.[3] IC card systems based on the EMV specification are being phased in across the world, under names such as “IC Credit” and “Chip and PIN”.” – Wiki Source
This technology is critical for maintaining and keeping charge-backs low. Since the target credit card processing breach and other well known, high popular breaches, we see a need to move into this direction. What does this mean for you as the merchant? It means that you must comply by October 2015 if you do not want to be held liable for your charge-backs. Whats a charge-back? Let me explain, its a dispute to the transaction that you ran for a sale of services/products. If by October 2015, you do not have a chip card reader and accept the credit card in this manner, you will be held responsible for your charge-backs, as they are now responsibly held by the processor who handles your credit card transactions. What does this mean for you? It means that you MUST get a chip-enabled machine immediately to avoid any problems. If you own a jewelry store, sell a diamond ring on credit card to a customer, and they find something wrong with it and or just want to take advantage of you, they can dispute the charge (after October 2015) , and if your customers card wasn’t read through the EMV technology chip cards, and they dispute the transaction, you can say bye the merchandise, and the money. What will happen is your bank account will be debited for the monies in the dispute process. After this, the processor will check how the card ran (must be run chip), if it wasn’t, and it was swiped, you will automatically lose your charge-back rights, and have to forest the product and the money to the customer disputing the chargeback, no matter who’s a fault (you the “merchant” or the customer). Visit us at CPS for Accepting credit cards
This blog is written so that you can become aware of these important changes that will impact your business and be able to learn how Accepting credit cards will help your business grow. Since the credit card processing industry has such high turnover, we cannot adequately imagine that everyone will know this information, and be ready for this change. We hope this article spreads throughout the internet so that you may, in fact, understand your rights, responsibilities, and protections when accepting credit cards in your business.
For more information:
website: www.centurionpaymentservices.com/
Phone: 305.528.0052
If you are looking for best credit card processing service, then you are at right place.
Get your free quote today!
* Awarded to processor partner; Vantiv/NPC
* CPS may offer a contract buyout and free terminals. Additional terms and conditions may apply.
