I just got off a conference call with authorize.net and a new client of mine. Our mission was to switch their merchant account provider within their authorize.net account. I happy to say the whole process took about five minutes and was almost painless (the hold music was brutal!).
I have previously written on this blog that the weakness of authorize.net was their customer service. I believe I even mentioned 30-45 minute hold times for customer service calls. Well I know this call was only a single experience with them but they sure seem to be moving in the right direction.
Thank you Brian of authorize.net you did a good job today!
Note: I feel I need to note that my company is an authorized reseller of authorize.net.
Watch this video and read this post to learn what to look for and ask when you are shopping for a merchant account.
What watch out for:
Super low discount rates – the lower the advertised rate is the greater your effective rate typically will be.
Free terminals or gateways – in business nothing is free in the long run. Chances are if you are paying nothing for a $300 terminal you are gong to receive a higher rate and a nice three year contract with a $300 early termination penalty.
Proprietary gateways, software and terminals – if you cannot use the “point of sale” products they are providing with other merchant account providers reject the offer. If you want to leave them but cannot transfer your data you are stuck! Or maybe you like buying new terminals every time you move to a new provider.
Questions to ask:
Can I have interchange plus pricing?
Do I receive rebates when I issue a credit to a customer?
Do my rates go down when a customer uses a check card? (Swiped Visa -.51% + $.05; swiped MC -.53% + $.05; keyed in Visa ad MasterCard -.25% + $.05)
Are there any other additional fees, margins, costs, etc. that you have not mentioned to me?
If you are going with a tiered rate plan ask for a break down of what card types are included in each tier.
If there is a minimum monthly discount fee, ask if that fee is waived if your discount fees for the month exceed that amount.
Is there an early termination penalty? If so, what is it?
Is there an auto renewal clause in your contract? If so, can I get rid of that?
When I have customer service issue who do I call? If they do not provide their own name or someone else’s, say good bye, you deserve better.
What is EIRF ad how can I get rid of it? If they can’t answer this basic question, say bye bye.
Business Type: Napa Valley Winery (specific name withheld)
Initial Status: To the untrained eye this merchant account statement looked just fine; here are a few of the problems that stood out to me:
One merchant account for both their tasting room and wine club
25% of there Visa transactions going to a “non-qualified” status
Transactions being grouped into “mid-qual” and “non-qual”
No rebate given on debit card transactions
Effective rate of 2.76%
Base rate of 1.77%
Mid-qual rate of 2.35%
Non-Qual rate of 3.35%
Transaction fee broken up into two line items on the statement totaling $.30
Old Tranz 330 terminals in the sting room
The controller of this winery very was very committed to their local bank and satisfied with the fees. In other words, I was privileged to even get a look at their merchant account statement.
Solution: Here is what I did to get this merchant account in shape:
1. Split up the account into to accounts, one for the tasting room and one for the wine club. I did this because it will help to reduce the amount of wine club transactions that end up coming in at a higher rate. Also it will give the winery a clearer picture of how each profit center is performing.
2. Removed the broad and expensive categories of “mid-qual” and “non-qual” and replaced them with transaction specific categories that have no hidden profit added to them.
3. Gave them the following rates:
Tasting Room – Retail account with a base discount rate of 1.90% + $.15 per transaction and straight pass through on all their surcharged transactions.
Wine Club - MOTO account with a base discount rate of 2.21% + $.15 per transaction and straight pass through on all their surcharged transactions.
4. Provided a brand new VeriFone Vx570 terminal for the tasting room.
5. After receiving the first statement I reviewed it and found that one of the tasting room employees was skipping the prompt for an invoice number when a customer called in an order. The result was some transactions coming in at a higher rate. I was able to talk to the tasting room manager and prevent that from happening any more.
First lets start with what RDC stands for - Remote Deposit Capture. RDC is a new generation of check imaging and conversion. This new service was made possible by “The Check Clearing for the 21st Century Act,” formally known in the U.S. House of Representatives as HR 5414 and informally known as Check21, which allows banks to clear checks using images (reproductions) of them rather than original items. Thus the need to transport paper checks to the bank has been eliminated.
The RDC solution enables users to scan checks and transmit the scanned images to a bank for posting and clearing. RDC is a fully integrated, web-based electronic payment processing system that uses a check scanner to convert paper checks into electronic transmissions. To accomplish this, five items are needed:
Check scanner
Personal computer
Internet connection
Check scanning software
Image exchange agreement with a bank
With RDC, checks clear in 24 to 48 hours, compared to five to seven business days with traditional check deposits. So RDC is a great way to save your business time and money, while offering your customers yet another way to pay for your goods and services.
Here are some of the ways RDC can benefit your business:
Eliminate trips to the bank
Keep existing bank relationships
Reduce the number of returned checks
Enjoy faster check processing times
Make deposits later in the day
Use a single provider for both credit card and check processing
Reduce the number of bank relationships for multiple location businesses
If this sounds interesting to you contact me and I will forward you more information including pricing.
Watch this video to be warned about the dangers that lurk in many merchant account contracts. The focus of this lesson is on early termination fees and contract auto renewal. If you heed these words you can save yourself a lot of money and suffering.
