Fees. 

Admit it, you clamed up a little bit when you just read that.  The word itself conjures up images of fat cat bankers rolling around in piles of your hard earned money, and dubious lawyers that bury clauses in fine print.   A fee implies a penalty…money taken from you for no particular service rendered.

In merchant account services, just like any other businesses, there are of course costs involved. The vendor that provides such services has to cover their expenses and can be expected to make some small margin off the service they provide.  Fees, however, are a different animal altogether. 

At Merchant Solutions, we waive a variety of “fees” imposed by certain merchant account providers.  These fees include but are not limited to:

• Application fee: would you believe some merchant account providers charge you to process the paperwork to even see if your eligible to work with them?   This is common of setting up your processing account via a bank. 

At Merchant Solutions, we don’t charge application fees.

• Set up or activation fees (or terminal download fee): another fee we’ll see from time to time some merchant account providers impose (again, often banks), are set up or activation fees.  The only time such a fee makes sense is if you are using a third party service which imposes the fee – gateway set ups or wireless terminal files, for example.  Otherwise, this is just another way for the processor to pad their pockets. 

At Merchant Solutions, unless third party services are ordered (like a gateway or internet shopping cart, etc) there is $0 set up fee. 

• Monthly minimum fees: Monthly minimum fees are often times the last thing on a merchants mind when they are establishing a processing account, but can come back to bite you in many ways.  A monthly minimum fee is a surcharge imposed basically for not processing enough volume in a given month.   This fee is imposed on top of any other fixed costs, such as a statement charge. Therefore, if a merchant has a $10 statement charge and a $25 monthly minimum and took 0 transactions in a given month, they’d be billed $35.  First this is of course a major consideration for seasonal merchants or merchants that only run sporadic transactions.   But even for regular processing merchants with a stable business, this could come back to bite you when you’re ready to reevaluate accounts in the future.  In the previous example of a $10 statement fee and $25 monthly minimum, if you were to try to switch processors for lower rates or better service, you’re still on the hook for $35 per month to the old provider for the duration of your contract if they impose a minimum.  

At Merchant Solutions, we provide a $0 monthly minimum.

• Annual Fees: an annual fee is there to put money in the processors pockets, period.  At merchant solutions, we offer no annual fees for all merchants.  The only exception would be when working with certain “high risk” business types for which we need to work with outside vendors as the only means to get the account approved (in which case the merchant will be notified prior to submission). 

At Merchant Solutions, we provide a $0 annual fee.

• Early Termination Fees:  its been said “if you love it, let it go”.  And while that may be good poetry, we find it good business practice as well.   If you’re in talks with a merchant account provider that needs to impose a significant cancelation fee in order to retain your business, you may want to consider the legitimacy of such a vendor. 

At Merchant Solutions, we retain our clients business through excellent rates and unbeatable service, not fees or penalties.   Therefore, we offer a $0 early termination fee.

 In addiont to upfront fees to look out for, in our statement analysis we often find a number of what we refer to as “junk charges”.  These are fees that merchant account providers will slide in over time in order to up their margins on your account.  These include:

• Debit Access Fee: here is one I’ll regularly see in statements sent in for analysis.  Typically this is a $5 or $10 surcharge to accept PIN debit.  On the merchant account provider side, there is no such fee.   Basically, they impose this to try to recoup some of the money they are losing by providing PIN debit, as the merchant account provider makes more on credit than debit transactions. 

Merchant Solutions debit access fee is $0 – always has and always will be.

• IRS Reporting Fee: Here’s a new one I see popping up.  I’ve see fees as high as $25 monthly.  What is an “IRS Reporting Fee?”  Another junk charge is all.  A merchant account provider is required to keep a W9 for your business on file and electronically submit your processing volume to the IRS in Jan.

Merchant Solution’s IRS Reporting Fee – $0.

• Unnecessary Gateway fees: I’ve seen a number of merchants, particularly through one specific provider whom I will not here name, get charged a “Gateway Access Fee”.  This is a monthly fee that can range from $10 to $150.  And while a gateway fee can apply for merchants that actually need a gateway to process (to facilitate integrations such as with an Ecommerce shopping cart, point of sale or order management system), it is NEVER needed by a merchant with a standalone terminal.   If you have a standalone terminal and there is even a penny of “gateway fees” on your statement, that’s simply a bogus charge.

•  “Additional Charges”:  this is another one I see from one specific processor all the time.  At the end of the statement, there will be a “Summary of Misc fees” which include statement fees, batch fees, and other legitimate charges.   Then the last line item will say “**Additional Fees” and have a flat amount next to it, and a number to call if you would like an explanation of these fees.   The only thing I can think when I see that is “seriously?”

                At Merchant Solutions, there are no non-enumerated fees; our “additional fees” = $0

• PCI non-compliance fee:  This one is a bit tricky…not sure I want to call this a “junk fee” but do want to address it as I see way too many merchants paying this.  As well, this is not to be confused with a “PCI Maintenance fee” or “Regulator Compliance fee”, which are both legitimate charges as long as they are nominal (basically, if they aren’t charging it separate, they are making up for it somewhere else on the statement).  A PCI non-compliance fee is different, and there are several reasons you can receive such a fee.  This could be that you are using a non-PCI compliant terminal, a non-supported integration into a payment system, or that you have not completed the self assessment questionnaire (PCI SAQ).  The reason I list this as a “junk fee” is it is completely unnecessary – at Merchant Solutions, we only work with PCI compliant equipment and systems, and can ensure you maintain PCI compliance, and will continually monitor and automatically notify any merchant that falls out of compliance, not just stick a surcharge on their statement.

• Duplicate transaction charges:  This one often takes a trained eye to spot, and is a particularly dubious trick.  In this set up, a merchant is charged multiple times for the same thing, thus rendering one of the two a “junk charge”. Here’s how it works.  A merchant account provider quotes a merchant a per transaction charge lets say, for arguments sake, of $.10.  The statement, however, will show a $.10 per transaction charge, then later down the statement, a duplicate $.10 per authorization charge.   This has become increasingly common.  Sometimes this duplicate authorization charge is hidden in a line item that says “Assessments / Network Trans Fee”.  Unless you knew to net off volume x .11% and then divide the remaining amount by the number of transactions ran, you’d never know that fee was hidden in there.

At Merchant Solutions, we charge a simple flat, clearly stated per transaction fee, with no separate hidden per authorization fees.

If you’re interested in learning more about processing your transactions via Merchant Solutions, or if you are currently processing and would like a review of your statement or contract for “junk fees” that can readily be eliminated, don’t hesitate to reach out to us.  Our contact information is below, and our knowledgeable staff will be more than happy to provide a fair, honest, and thorough analysis of your processing situation.

Request a return call or email: http://www.merchantsolutionsllc.com/contact/

Merchant Solutions, LLC

1350 Main St, Suite 206

Springfield, MA 01103

Phone: 866.326.3480

Email: contact@merchantsolutionsllc.com

American Express One Point Settlement allows merchants to be funded on their Amex transactions in one lump sum deposit along with their Visa / MC / Discover (and if applicable, PIN debit) transactions.  This provides merchants with the following benefits:

1. Faster funding:  traditionally, American Express transactions are funded at least one day later than Visa / MC and Discover transactions.  With Amex One Point Settlement, you receive the cash flow benefit of a faster funding timeframe.  And qualified merchants can even receive NEXT DAY FUNDING on their American Express deposits, including Monday morning availability for Friday / Saturday batches.
2. One deposit – easier to track: Any merchant that accepts American Express knows this drill.  A question comes up on a settlement, and now you have to go back and sort out your batch report vs. two separate sets of deposits on two different timeframes (that is, your bankcard deposits vs. your Amex deposits).  With American Express OnePoint Settlement, this is a thing of the past.  Every time there is one batch from the point of sale system or terminal, there is one deposit that correlates with that batch. 
3. One statement – ease of accounting: As well, you will now see all your rates and fees posted on one simplified statement.  So no longer will you need to add up your American Express statement fees to your merchant account statement – all transactions and rates are listed on one easy to read statement.

American Express One Point settlement is available to any merchant, whether they are currently accepting American Express or not.   There are no special rules or qualifications – as long as you pass standard merchant account underwriting, you can simply opt in for American Express OnePoint Settlement.  And the best part is the price – there is no separate cost for doing so.  You pay whatever applicable rates are for your industry as set by Amex, and we add the convenience of OnePoint Settlement.

If you are interested in learning more about American Express OnePoint Settlement, or would like to add this feature for your business, please don’t hesitate to contact us via one of the following options:

Request a return call or email: http://www.merchantsolutionsllc.com/contact/

Merchant Solutions, LLC

 1350 Main St, Suite 206

Springfield, MA 01103

Phone: 866.326.3480

Email: contact@merchantsolutionsllc.com

                9/2/2011

Hot off the press – some BIG breaking news as of today in regards to The Durbin Amendment!

The Durbin Amendment was part of 2010’s bank reform act, capping interchange levels on check cards significantly lower than current rates, and is set to go into effect October 1^st, 2011.  The big news announced today, however, is that these rates will apply to card not present transactions as well, such as manually keyed in and E-commerce transactions.

Where before these kinds of transactions would typically see discount rates typically in the 2.5% range (with a competitive rate generally being anything under about 2.5%), this new provision will allow merchant account providers to get closer to HALF A PERCENT (that’s .5%) for check card transactions.  For most E-commerce merchants, check cards typically will constitute around half the volume of transactions they’ll see in a given month.

So bottom line is ecommerce / card not present / MOTO merchants can see a 1-2% drop in their effective rate. 

The Durbin Amendment does not, however, stipulate that credit card processors are required to pass these savings along to their merchants.  Certain pricing structures will automatically see the benefits of this reduction on October 1^st, others will see no change in rates at all as of October 1st.  Its simply a matter of the pricing platform your provider has placed you on.  And if you’re like the vast majority of ecommerce merchants priced on a tiered, ERR, or billback pricing system, you are not in line to benefit from these savings.  

To find out if you are currently on interchange based pricing (and set to take advantage of this change), or if you are not currently on interchange based pricing and would like to be, please feel free to contact us.

Merchant Solutions, LLC

1350 Main St, Suite 206

Springfield, MA 01103

Phone: 866.326.3480

Email: contact@merchantsolutionsllc.com

A Better Business Bureau accredited company

When a major data breach was discovered in one of the banks processing credit card transactions in Australia, the bank did not issue an apology or send out an alert, but cancelled thousands of credit cards, throwing most of the country into payment turmoil. 

The cancellations involved no fewer than four card issuers, and were initiated just in time for the weekend and left thousands of consumers swiping unsuccessfully at customer service desks and checkout lines throughout the country. However, these are only short-term effects, and more effects are likely to follow. Since consumers were not informed about the cancellation, those who have had monthly payments on their credit cards will soon discover that their bills are not paid. On the positive note, card owners whose funds are stolen will be compensated. 

When this happens in America, banks generally alert consumers that their credit card numbers might have been stolen, and thus they should study their statements. 

Both methods have their benefits and drawbacks. Australian banks cut any fraud attempts, but their inability to inform consumers about the incident appears to be a major flaw in the system. Meanwhile, the card system in the US generally allows customers to hang onto their card, which is more convenient for card holders yet is also more prone to fraud attempts.

A report by technology news site Computerworld said Starbucks currently allows regular clients to download a smartphone app letting them to load a store account with their payment details and scan a barcode to conduct a purchase. However, a more universal system that uses near-field communication (NFC) technology currently embedded in smartphones could enjoy widespread adoption in the coming years. 

Starbucks already has a great access with its payment system, suggesting that customers would be willing to use this type of service at any other business, said the report. However, replication of the current system may be hard since it would require customers to download individual applications for every business they want to shop at. 

The report also said that Google has announced its upcoming pilot tests for its new “Wallet” feature in San Francisco and New York City, making it the first company to announce a NFC technology payment system. If it proves to be successful, the company will do a wider launch in the next few months, with experts expecting that a wider adoption of this and other similar mobile payment system will be completed in two to three years. 

“If NFC were just a way to replace the magnetic stripe credit card – which is what the [Starbucks] barcode system is – with your phone, than an alternative payment solutions such as what Starbucks has implemented may suffice,” said Gartner analyst Mark Hung in an interview with Computerworld. With services like Google Wallet, the system would be universal and ubiquitous, said the report.

A report released by the Reserve Bank of India (RBI) highlights the need to implement a set of measures aimed at improving the payments ecosystem and infrastructure in the nation. Inferences taken from case studies indicate that there is a need for a stronger authentication mechanism and a second factor (2FA) for card present transactions, said the report.In addition, the report stated some systems such as Europay, MasterCard and Visa (EMV), chip cards with PIN which have been adopted in various countries, as well as boosting the present MSD card system through the biometric identification.

“Aadhaar (issued by the Unique Identification Authority of India – UIDAI) authentication using biometrics provides a strong ‘who you are’ factor of authentication. This can be combined with a second ‘what you have’ or ‘what you know’ factor to achieve strong customer identification at the point of sale,” said the report.

While the option to utilize biometrics from the UIDAI database is technically possible, it may not be a practical option due to inadequate feasibility tests.“The working committee considered biometric or UID as the second factor in one of the solution sets; however the decision to adopt this would depend on various factors like number of UIDs issued to the population which transacts on cards, the error rates, authentication network capability to handle transaction volumes, network capability to handle enhanced transaction size and acquiring infrastructure,” added the report.

Depending on the size of the market, migration to EMV chip card and PIN usually takes over five years. MSD and PIN migration to a safer EMV chip and PIN is also expensive than MSD and biometrics, said the study.

“If we can’t find a buyer we will put it into rundown,” said Gulliver, adding that the review of the card business was going on.

Last month, the bank said it plans to cut up to $3.5 billion in costs and slash retail banking as part of its effort to boost profitability.Selling its $33 billion US credit card portfolio will be difficult for the company, which burdened itself with riskier assets during its unfortunate expansion into consumer lending in the US. HSBC’s credit card business in the US is too big to be sold off easily, particularly since the company announced in May that it is not willing to sell the portfolio for just any price.

Some industry players said Capital One Financial Corp and Barclays are potential buyers for some of the card assets, but it is unlikely that they acquire the entire portfolio. Few buyers can afford such huge credit card business after the global financial crisis, and the intensified regulation in the industry has made it more difficult for lenders to gain profit.

Mr. Gulliver plans to focus more on emerging markets like Indonesia, which he said was an investment target and one of their priority countries.“The cost of re-engineering has to come from other parts of the world, and from being smarter,” he said.

HSBC’s US portfolio is profitable, but it offers lending services mainly to riskier clients, making it harder for the company to cross-sell other products to US borrowers, unlike in Hong Kong, Indonesia and the UK.

Amid growing concerns raised by the credit card industry regarding the Credit Card Act of 2009, which came into effect in February, direct mail offers still arrive in consumer mailboxes at a pace in agreement with “economic conditions”, said a report released by the Center for Responsible Lending.

In addition, the difference between the rate that customers actually pay and the stated credit card offer rates clearly narrowed after the new rules took effect. The study showed that the gap has widened to an “unprecedented” level between 2004 and 2008. However, the difference has narrowed significantly since the passage of the CARD Act.

Currently, the variance is around 0.2 percentage point, from 2.3 percentage points during its peak. The actual rates that customers have paid on debt have stayed flat, once the economic downturn comes into effect.

The study looked at five sets of data, including bank call reports filed with the Federal Deposit Insurance Corporation. It also examined rate information obtained from the Federal Reserve, which tracks not only what customers are offered in the mail, but also what they are actually charged on the open account.

“Because price transparency fosters competition the long-term effect of the CARD Act is likely to be lower costs for consumers,” said the report.

The report said the agreements were made necessary by the diverse opportunities in the banking options and global mobile payment. Typically, it is hard for financial institutions to develop software that enables customers to manage their accounts through smartphones.

Financial experts said banking solutions and mobile payments are the future of the financial industry. They noted that these new solutions could be worth more than tens of billions of dollars in the next few years. Mobile banking has also been increasing in popularity in recent years.

Global financial services Chase and Wells Fargo both announced that they will end their credit card rewards programs soon. Chase said it plans to end the program by this summer, unless fresh rules about fees on debit card transaction are deferred.

American banks currently charge merchants an average of 44 cents per transaction; however, a condition included in the Dodd-Frank Wall Street Reform and Consumer Protection Act is set to cap transaction costs to around 12 cents. This new rules are being managed by the Federal Reserve, which has the power to delay the implementation.

“We have not yet made any final decisions yet in terms of earning points. We do plan to support redemption throughout 2011,” said Ed Kadletz, Executive Vice President and Head of Debit Cards at Wells Fargo.

CreditUnions.com said usage of debit card surpassed the usage of credit card in 2006. It has also seen increased usage, up  21 percent annually during the first half of the decade.