I was answering a merchant’s question(s) today and realized that a lot of what these two individuals were asking would relate to a lot of other Merchants so, I asked if I could add their questions to my blog and they (very kindly) agreed. I did however change their names to ‘John’ & ‘Jane’ and blocked out their emails, to give privacy.
I hope you too can grab some nuggets from this Q & A. Be sure to let me know in the comment section what you think or what you learned or if there is something you still have a question about.
The Merchant is in regular text and my answers are in BOLD CAPITALS.
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Q & A Email
John & Jane,
Answers to your Q’s are below in CAPITALS.
Also, would you mind if I used your Q’s as a blog post on my website. I will not have any information that says, it’s you, but I feel that you asked very good questions that a lot of merchants in your shoes would want to know and I thought it might make a really nice conversation Q & A piece that could help other Merchants who are looking for the perfect merchant account provider.
I am in my office until 5pm today if you’d like to speak on the phone and then again (Good Friday) tomorrow from 1pm until 5pm. Have a nice Long Weekend!
Regards, Matthew
Thanks for getting this information to us so quickly! When we started taking Visa/MC a few years ago, we started with Moneris because our bank recommeded it. At first, they allowed us to keep our old fashioned hand operated machine and did not charge us in our down months. This quickly changed. Last season, the for the first time, we used a wireless/printing terminal which we leased from them. However, the fee structure kept changing. RATE ADJUSTMENTS ARE BECOMING MORE REGULAR IN CANADA NOW THAT VISA AND MC INTERCHANGE CHANGE THEIR RATES (VISA EVERY APRIL 1ST ADN MC EVERY OCT 1ST). IT’S NOT JUST MONERIS THAT ADJUSTS THEIR RATES. I FULLY UNDERSTAND HOW THESE RATE ADJUSTMENTS ARE FRUSTRATING FOR MERCHANTS AND THE LACK OF COMMUNICATION ABOUT HOW ALL THESE RATES WORK COULD BE COMMUNICATED MUCH, MUCH BETTER WITH MERCHANTS. THERE A TON OF MIS-UNDERSTANDINGS AND EVEN LAWSUITS GOING ON OVER THIS EXACT ISSUE. JUST SEE THIS SITE CALLED ‘STOP STICKING IT TO US‘. Fortunately, we were not on contract, so we cancelled last October and decided that a little research was in order! It’s certainly a confusing world though… I’ve seen quotes of 4 cents a transaction (which I don’t trust by the way) GOOD 4 CENTS IS BELOW THE BUY RATES SO THEY HAVE TO BE MAKING UP FOR SOME WHERE – SO LISTENING TO YOUR GUT IS HERE IS ‘RIGHT’… up to 25 cents a transaction. Hugely diverse set up fees, monthly statement fees… and varying contract lengths. The cost of buying a terminal outright or rent to own are often very far apart. And then there’s the discount percentages! But you know all this!!! YES I DO. AND I UNDERSTAND HOW CONFUSING IT CAN BE.
A couple of things I’m not clear on… are cellular terminals the same as wireless???NO NOT THE SAME. CELLULAR IS COMPLETELY MOBILE JUST LIKE A CELL PHONE, WHERE WIRELESS WORKS LIKE A CORDLESS PHONE ONLY SO GOOD FROM A CERTAIN AMOUNT OF METRES FROM THE PLUGGED IN BASE. I’m feeling that most people will want a receipt printed… do cellular terminals do this too??? YES THEY HAVE A PRINTER BUILT IN. We are quite new at ‘wireless’ piece of this process, given that we’ve been doing it by hand for so long. I know Moneris did not charge us air time… so I’m not sure how their system differs from cellular. IF IT WAS CELLULAR YOU PAID FOR AIR TIME, THEY USUALLY USE BELL MOBILITY AND SOMETIMES THE BILLED IS SENT FROM BELL AND NOT MONERIS. THE SERVICE PROVIDER I USE, USES ROGERS, BUT YOUR ARE BILLED FROM THE SERVICE PROVIDER AND NOT ROGERS.
We would like to be able to process Debit Cards as well as Visa/MC as they were a good percentage of our business last season. THEN YOU WILL WANT TO DO A CELLULAR UNIT, THE VIRTUAL TERMINAL WILL ONLY REALLY ALLOW YOU TO PROCESS CREDIT CARDS ONLY.
By the way… are you a company who provides sale/terminal services, or are you a broker for the best fit for your clients??? BROKER.
Thanks for now… I’m sure I’ll have a bunch more questions as we go. Oh, and we keep being deluged by hustles from Monex! Certainly their numbers are seductive, however my web research on them seems to say… “beware, beware, beware”! I guess it’s the old, “if it sounds too good to be true (or that simple!)… etc.” YES, THIS IS VERY TRUE. I TOO HAVE HEARD A MANY “BEWARE” STORIES ABOUT MONEX (I DON’T USE THEM), BUT DON’T HAVE ANY REAL EXPERIENCE DEALING DIRECTLY WITH THEM EITHER.
PART TWO – EMAIL TWO
John & Jane,
Again I’ll answer your Q’s below in CAPITALS. ALSO, FORGIVE ME IF THERE ARE ANY MIS-SPELLINGS BELOW, I AM A LITTLE TIRED SINCE I DECIDED TO ANSWER THIS LATE.
Have a nice long weekend!
Regards, Matthew Hunt
On Thu, Apr 9, 2009 at 5:54 PM, <@shaw.ca> wrote:
Hi Matthew… again, thanks for your answers!!! Of course you can use my questions as part of your blog! It reassures me when you say I’m asking the right questions! And, it seems to me, that the best way to for you to attract business, is to find a way to make this mish mash of information understandable for us poor, bewildered tiny to small business folks! YOUR EXACTLY RIGHT. MERCHANT ACCOUNTS CAN BE EXTREMELY COMPLEX, BUT I ALSO DON’T WANT THEM TO SCARE YOU INTO NOT HAVING ONE. PLASTIC IS A FACT OF LIFE AND PEOPLE LIKE TO PAY ON THEIR DEBIT AND CREDIT CARDS AND AS BUSINESS OWNERS AND ENTREPRENEURS WE NEED TO CATER TO OUR CLIENTS/CUSTOMERS NEEDS TO HAVE HEALTHY BUSINESSES. For me understanding = safety, and safety = comfort! YES, I AGREE. Anything that will help… go for it. A couple of other things that have been important for me to learn & might be helpful on your blog are these: From my research, I’m discovering although fees may seem to swing wildly from company to company, it often turns out that they are charging them under a different name… for instance, the company that claims they have no airtime fee, are in fact, burying it somewhere else!!! YES THIS IS UNFORTUNATELY TOO OFTEN THE CASE. I AM NOT SURE WHY SOME MERCHANT ACCOUNT COMPANIES THINK THAT MARKETING THEIR SERVICES WITHOUT TOTAL TRANSPARENCY IS HELPING THEM GAIN BUSINESS. MY PERSONAL OPINION IS THEY ARE STUCK IN AN OLD WAY OF SELLING WHICH IS VERY “BOILER ROOM or DEATH OF SALESMAN‘ MENTALITY – THIS WILL ULTIMATELY BE THE DEATH OF THEM BECAUSE WHAT THESE TYPES OF COMPANIES DON’T REALIZE IS THE WORLD IS EXTREMELY SMALL NOW, ESPECIALLY WITH SOCIAL MEDIA AND AS YOU HAVE ALREADY DISCOVERED A LOT OF P.O.’ED MERCHANTS ARE BLOGGING AND TALKING ON FORUMS ABOUT THEIR EXPERIENCES AND WHICH ALL GET INDEXED ON THE SEARCH ENGINES REALLY WELL, JUST SITTING THERE FOR ALL TO READ. I’m also discovering that there is such a thing as a ‘medium qualified’ or ‘non-qualified’ credit card transaction that often incurs a higher discount rate.YES THERE ARE DIFFERENT RATES FOR DIFFERENT TYPES OF:
- CATEGORIES OF BUSINESS
- TYPES OF CARDS PROCESSED
- HOW A TRANSACTION IS TRANSACTED
MOST COMPANIES BREAK THESE TYPES OF TRANSACTIONS INTO A THREE TIERED PRICING, USUALLY KNOWN AS:
- QUALIFIED
- MID QUALIFIED
- NON QUALIFIED
YOU SEE IN CANADA THERE ARE OVER 35 DIFFERENT BUY RATES FROM VISA AND MASTERCARD TO THESE CARD PROCESSOR WHICH IS CALLED INTERCHANGE. (BETTER THAN THE USA WHO HAS OVER 225 LEVELS OF INTERCHANGE) THE INTERCHANGE BUY RATES IS USUALLY POSTED ON EACH OF THEIR WEBSITES BECAUSE EACH COMPANY IS A PUBLIC COMPANY AND SO THEY SHARE WITH THE WORLD WHAT THE BUY RATES ARE.
THE REASON THERE ARE SO MANY DIFFERENT BUY RATES FROM VISA AND MASTERCARD IS DUE TO USUALLY 3 MAIN FACTORS:
1.TYPE OF BUSINESS – SOME BUSINESSES HAVE HIGHER RISK FACTORS WHEN COMES TO PROCESSING CARDS THEN OTHERS, FOR EXAMPLE A BUSINESS IS A CHIROPRACTOR HAS A DIFFERENT RISK FACTOR OVER A GROCERY STORE AND SO THERE ARE DIFFERENT BUY RATES FOR EACH CATEGORY OF BUSINESS.
2. REWARDS CARDS – THOSE SPECIAL CARDS THAT OFFER INCENTIVES FOR CONSUMERS TO SPEND MORE ON THEM TO GAIN POINTS THAT TURN INTO AIR MILES OR WHATEVER, OBVIOUSLY HAVE HIGHER BUY RATES BECAUSE THAT IS HOW THEY PAY FOR THOSE AIR MILES TO THE CONSUMER. NOW THERE ARE STATS THAT SUPPORT THE POINTS CARD USERS SPEND ALMOST TWICE AS MUCH AS NON-POINT CARD USERS AND THUS THIS A REALLY A BENEFIT TO THE MERCHANT. I HOWEVER, THINK THOSE STATS ARE NOT REALLY PURE BECAUSE I THINK POINT COLLECTING CARD USERS DO WHAT ME AND MY WIFE DO, WE PUT EVERYTHING ON OUR POINTS CARD AND PAY ONE BILL AT THE END OF THE MONTH SO WE CAN GET OUR FREE VACATION EVERY YEAR, BUT WE DO NOT SPEND ANY MORE THAN WE WOULD IF POINTS CARDS DIDN’T EXIST. WE ARE JUST BEING SMART ABOUT IT. HOWEVER, THE CREDIT CARD COMPANIES ARE USING THESE STATS TO SUPPORT HIGHER INTERCHANGE RATES, WHICH ULTIMATELY THE MERCHANT PAYS FOR AND EVENTUALLY THE CONSUMER BECAUSE AS THE MERCHANTS COSTS GO UP SO DOES THE PRICING OF PRODUCTS. ANYWAYS THAT IS A WHOLE OTHER STORY AND DISCUSSION.
3. THE THIRD REASON THERE ARE DIFFERENT RATES IS DUE TO HOW A MERCHANT TRANSACTS. OBVIOUSLY A TRANSACTION WHERE THE CARD IS PRESENT AND IS BEING SWIPED ACROSS A TERMINAL AND A HUMAN IS (SUPPOSED TO CHECK SIGNATURES) ETC. IS SAFER AGAINST FRAUD THEN LET’S SAY A NON FACE TO FACE TRANSACTION LIKE AN ONLINE TRANSACTION. SO WHEN THE TRANSACTS ARE NOT FACE TO FACE THEY TYPICALLY HAVE A HIGHER RATE ASSOCIATED WITH THEM.
NOW WHERE IT GETS CONFUSING IS EACH CARD PROCESSING COMPANY WILL TAKE THESE 35 PLUS INTERCHANGE RATES AND ASSEMBLE THEM IN EACH TIER – ONLY EACH COMPANY DOES IT DIFFERENTLY, SO ONE COMPANY’S MID-QUALIFIED TRANSACTIONS IS NOT EQUAL TO ANOTHER COMPANIES MID-QUALIFIED’S. THE SAME WITH NON’S TOO.
DID I LOSE YOU YET? 
FOR EXAMPLE,
ONE COMPANY MAY SAY ALL MANUAL KEYED TRANSACTIONS ARE CONSIDERED NON-QUALIFIED (WHICH IS NORMAL) BUT ANOTHER COMPANY MAY HAVE THE SAME BUT HAVE ALL ‘INFINITY CARDS’ BE ALSO CONSIDERED NON-QUALIFIED.
SO IT’S NOT ENOUGH TO JUST FIND OUT WHAT THE “QUALIFIED’S , MID-QUALIFIED’S, AND NON-QUALIFIED’S ARE, YOU ACTUALLY NEED TO DRILL DOWN FURTHER AND FIND OUT WHICH CARDS FALL UNDER EACH UMBRELLA.
THIS IS WHY I ONLY USE A COUPLE OF COMPANIES FOR MOST OF MY CLIENTS. I AM PERSONALLY A FAN OF SIMPLE AND TRANSPARENCY. THE RATE I QUOTED YOU ON THE CELLULAR WAS A BLENDED FLAT RATE AND IT COVERS ANY TYPE OF CARD AND/OR ANY TYPE OF TRANSACTION YOU PROCESS. FOR YOUR BUSINESS MODEL THIS WOULD PROBABLY BE BEST AND TO ALSO SUBMIT AS SEASONAL SO YOU DO NOT GET DINGED WITH MINIMUM PROCESSING FEES DURING THE MONTHS YOU ARE NOT USING IT.
DON’T GET OVERWHELMED, I WILL HELP YOU MAKE THE RIGHT DECISION FOR YOUR BUSINESS REGARDLESS OF WHETHER WE PERSONALLY DO BUSINESS OR NOT.
I’m also learning what rates are negotiable and what rates are not… and why! For instance… if the airtime comes through Rogers… the rate is theirs and is only likely to be negotiable when you are their direct client, as in a personal cell phone. Oh my, there’s so much to learn! YES SOMETIMES RATES ARE NEGOTIABLE, I USUALLY GET MERCHANTS VERY COMPETITIVE RATES RIGHT FROM THE GECKO. IT’S NOT ALWAYS THE BEST PRICE THIS IS BEST, IT’S A COMPETITIVE RATES WITH EXCELLENT SERVICES.
So for now, thank you for all of your help. We are currently sorting out, not only what our options re: POS services are, but how we will be structuring our little business this season. We have pretty much always been ‘a travelling show’ and this is a physically demanding process. My husband/partner is beginning to object!!! So, we are looking at the possibility of doing fewer events and more on-line & wholesale business. We need to decide just how viable that will be.
We’ll be in touch,
I AM HERE IF YOU HAVE ANY MORE QUESTIONS.
