Cloud Payment Technology Helps Equipment Distributor Cut Credit Card Costs 50%

A Florida distributor of advanced industrial automation equipment, including SMC pneumatics,  reduced the effective rate of credit card processing to under 2%, including all merchant account and gateway fees. While a small part of the overall revenue stream, it was a growing cost center, impacting profit margins.

How did the distributor reduce costs? Two changes  were required. First a change in the credit card processing price plan, and second technology to automate qualified interchange rate optimization. Interchange rates include a percentage of the transaction and a per transaction fee, and comprise the bulk of all credit card processing costs. The same card can process at different rates, depending on which rules the merchant complies with.

The example business was using Bank of America First Data Merchant Services with an enhanced bill-back price plan. Most credit cards accepted were and are corporate, business, or purchasing cards. All transactions are card not present, also known as card absent, and some are international transactions. On the existing price plan, the merchant paid a flat rate percent of sales for all qualified transactions, plus an additional percentage fee for non-qualified sales. The non-qualified penalty was very high, resulting in an effective rate over 4%. (Total fees divided by net sales, minus American Express, equals effective rate.)

The best price plan for merchants, commonly available for $1,000,000 in annual processing, is called wholesale interchange plus or interchange pass through. With pass-through pricing, merchants pay all costs, plus a merchant discount, which is identified as a separate line item for billing. Costs and gross profits to the merchant service provider become transparent. Even better is for the merchant account to support level 3 processing, whereby a merchant that sends enhanced level 3 data may qualify for even lower rates on business, corporate and purchasing cards.

A Bank of America representative offered the merchant an additional agreement for a new interchange plus merchant account solely for their largest corporate customer. I recommended the merchant either renegotiate all of their business with my input or go with another vendor. It made no financial sense that the merchant solve the cost concern for only one client and not all of them. To reduce credit card processing fees, first the merchant needed a new interchange plus merchant account for all customers.

Interchange is the largest component of credit card processing fees. There are many rules to achieving the lowest qualified interchange rate. For business to business companies, it’s infinitely more difficult to qualify for the lowest rate for any given card type  due to the high prevalence of business, corporate and purchasing cards, and their many rules. Because it’s virtually impossible for employees to learn all the nuances of those rules, as well as even know what kind of cards their remote customers are presenting, cloud payment technology is the break-through that merchants have needed to achieve lower effective costs while also increasing efficiencies.

The three most challenging rules merchants have trouble complying with for business, corporate and purchasing cards:

  • authorization and settlement within 72 hours for all card not present sales
  • authorization amount and settlement amount equal
  • sending correct level 3 data, enhanced data that applies only to certain cards

Without all three of the rules met, fees can run one percent or more extra vs. when all rules were complied with. The merchant needed software that would help them meet all requirements, yet there are few market choices, including among cloud payment / virtual terminal solutions.

Bank of America offered a reasonably priced desktop software solution that would support level 3 processing. The reason it was presented to use for one customer only, is because all the information needed to be sent with each transaction creates an extra burden for accounts receivable. If the merchant used it for all customers, then they’d have to enter a lot of extra information on every sale to be safe, because users would have no idea whether the card would benefit from level 3 data or not.  Additionally, the one customer was on 30 day terms, so at the time the invoices were paid, the other criteria would be met. But that wasn’t true for new and other customers who were not on terms. An authorization was obtained for those customers on order, and weeks later, the final amount would often be different. This meant the merchant would not meet all three minimum rules for the other accounts to qualify for the best rates.

I recommended the merchant implement CenPOS, an intelligent rules-based cloud payment technology that mitigates risk of employees making decisions that impacted fees paid. It automatically determines when level 3 data is required for the lowest qualified rate. Additionally, it automatically forces proper settlement rules are complied with, including authorization.

Compared to the Bank of America First Data solution, my recommendation solved these problems:

  • Increased access: Anyone authorized can process transactions via the virtual terminal because it’s in the cloud, not desktop software.
  • Lower fees: All transactions optimized for lowest qualified interchange rate, not just one customer
  • Eliminate mistakes: Intelligent rules-based solution forces proper employee actions to mitigate risk and reduce fees
  • PCI Compliance: stored tokens replaced full card data- no employee access to card data. PCI compliant custom credit card authorization forms automatically generated for customer signature.
  • Operational Efficiencies:  Quick and easy to charge repeat customer accounts using stored tokens. One reporting hub to retrieve all payments, including resending receipts to merchants. Custom Level 3 data template(s) significantly reduce burden of adding level 3 data when prompted.

The merchant chose to open a new interchange plus merchant account as well as implement CenPOS.  Within 30 days, the merchant  streamlined payment processing and reduced card acceptance costs over 50%, as evidenced by comparing before and after merchant statements. Additionally, PCI compliance burden and financial risks were reduced, providing peace of mind for the family business owners.

Example of a wew low interchange rate a merchant transaction qualified for.

Above: Example of a new low interchange rate a transaction qualified for vs 3.77% on the old solution.

ARTICLE DISCLAIMER: The details of the third party offer are based on my recollection of verbal statements by the merchant. It’s possible not all information was shared with me, or that my recollection is imperfect. Before making any financial decisions for your company, speak with a qualified representative familiar with the nuances of business to business interchange rules and PCI compliance rules.

Did you like this article? Please give it a thumbs up / like it, review or share it.

 

 

 

3D Merchant Services Powered by CenPOS
2633 NE 26th Ave Metro South FloridaFL33064 USA 
 • 954-942-0483

virtual terminal credit card processing – vendor selection

Do you trust employees to do everything perfectly to help mitigate fraud risk and help reduce credit card processing fees? I hope not and here’s a story that illustrates a classic cashier blunder.

A retail cashier using my virtual terminal called and explained her problem. Whenever she key enters a transaction, the supervisor approval button pops up.  She then turns to the desktop terminal from their old vendor, “and the transaction goes through just fine”.  Upon questioning, I determined the cashier is entering fake information in some required fields, including zip code. This merchant is using our intelligent virtual terminal. Because the merchant has created a set of rules that requires the zip code to match on a key entered transaction, which reduces the risk of fraud, each time the zip code doesn’t match, only a supervisor can override to accept the transaction.

The right virtual terminal selection can improve profits by eliminating costly employee mistakes that can result in higher credit card processing fees, fraud losses, and chargeback fees. Our intelligent, rules-based virtual terminal dynamically prompts user actions, and doesn’t leave it up to employees to make decisions that impact merchant profits. Most virtual terminals work almost exactly like desktop terminals, except their in the cloud. They have no intelligence at all.

Here is a critical indicator of a smart virtual terminal:

  • Rules based- user is dynamically prompted for different information based on variable inputs including type of credit card (debit, corporate etc),  whether it’s key entered or swiped.

Any system is only as good as the implementation. Old equipment should be removed after new solutions have been successfully installed and tested.

Blog Author tidbit:  In high school I was a cashier at Sibley’s department store for the Christmas season selling gloves and scarves. I used a cash register.

christine speedy cashier sibleys

PS The merchant removed their desktop terminal from the store and the cashier has been informed by management to enter the right information.

Free Credit Card Virtual Terminal

Get a free virtual terminal to use with your existing or new merchant account with purchase of PCI Compliant, private cloud payment SaaS. The virtual terminal is the transaction and reporting hub for all electronic payment sources, including credit card and check. A rules-based solution, merchants manage user permissions, fraud tools, and acceptable payment types for single and multiple locations.

Key features:

  • Token billing- Tokens replace sensitive card data with random alpha numeric characters. Merchants can then charge the card again, with customer permission, by retrieving the token. Use for one off charges, schedule a series of payments, set up recurring billing, or create an installment agreement.
  • Intelligent: Automatically prompts users for all required fields to qualify transactions for the lowest qualified interchange rate possible at the time of authorization.
  • Reporting: 7 years data. Search includes search by name, a frequently requested field, among others.
  • One hub for all sources, including iPhone, online payments, swipe, and key entered.
  • Audit trail: all attempted transactions by user in addition to all activity (adding users, changing permissions etc). The reports for completed sales alone can help reduce the cost of external audits

free credit card virtual terminal

Contact Christine Speedy for more information about virtual terminals, (954) 942-0483.

 

 

iPad credit card terminal: First Data Mobile Pay vs CenPOS

This mobile POS review compares 6 features for swiping credit cards via an iPad mobile app. The features are:

 FEATURE First Data Mobile Pay™first data mobile pay  CenPOS mobilecenpos mobile payment app
Credit card processing- is the app compatible with many merchant services companies or is it proprietary?  proprietary  universal
Can the app store or use tokens in the transaction process? Tokens replace sensitive payment data. By enabling tokens for repeat customers, merchants can gain insights into customers. No. yes
Scalability: is it one app = one account, or can a merchant access data by user, by location, etc. Is it part of a suite of solutions to reduce PCI burden? unclear  centralized control & reporting
Multi-channel: are all channels integrated with one reporting hub?  unclear  yes
Fee relief: does the app have any intelligence to help merchants manage the cost of accepting payments, including swipe vs. key entered?  no  yes
Data storage: How long is data retrievable for? Searchable and exportable data helps reduce reduce audit costs, creates efficiencies, and improves business insights ? 7 year minimum
Worthy Notes: CenPOS is a private cloud suite of solutions compatible with light integration options to other software.
Business model: User licenses per location SaaS, per merchant ID

The review is based on publicly available information at the time of this writing. Technology products can change rapidly and readers are encouraged to review respective web sites for the latest information.

There are 62 Point of Sale (POS) apps listed on Infinite Peripherals App Partners. Infinite Peripherals is a leading provider of POS hardware for Apple products including the iPad.

To keep the list manageable the topics list is relatively small so merchants can see at a glance key differences. Your blog author, Christine Speedy, sells the CenPOS private cloud suite of payment processing solutions, that includes a free mobile app, compatible with all Infinite Peripherals products. Although other apps are also available from our partners, usually they don’t stack up to CenPOS after a consultation.

For more comparisons, search for this subject title: iPad credit card terminal.

For CenPOS sales, please ask for Christine Speedy.

iPad credit card terminal: LightSpeed Mobile vs CenPOS

This mobile POS review compares 6 features for swiping credit cards via an iPad mobile app. The features are:

 FEATURE LightSpeed Mobilelightspeed mobile payment app  CENPOScenpos mobile payment app
Credit card processing- is the app compatible with many merchant services companies or is it proprietary?  proprietary * Site lists preferred partners, does not indicate exclusivity.  universal
Can the app store or use tokens in the transaction process. Tokens replace sensitive payment data. By enabling tokens for repeat customers, merchants can gain insights into customers.  no yes
Scalability: is it one app = one account, or can a merchant access data by user, by location, etc. Is it part of a suite of solutions to reduce PCI burden? centralized control & reporting  centralized control & reporting
Multi-channel: are all channels integrated with one reporting hub?  yes, not clear to what extent for reconciliation  yes
Fee relief: does the app have any intelligence to help merchants manage the cost of accepting payments, including swipe vs. key entered?  no  yes
Data storage: How long is data retrievable for? Searchable and exportable data helps reduce reduce audit costs, creates efficiencies, and improves business insights ? 7 year minimum
Worthy Notes: Mac front and back end with inventory management across stores. Robust POS solution- the payment portion is 3rd party CenPOS is a private cloud suite of solutions compatible with light integration options to other software.
Business model: User licenses per location SaaS, per merchant ID

The review is based on publicly available information at the time of this writing. Technology products can change rapidly and readers are encouraged to review respective web sites for the latest information.

There are 62 Point of Sale (POS) apps listed on Infinite Peripherals App Partners. Infinite Peripherals is a leading provider of POS hardware for Apple products including the iPad.

To keep the list manageable the topics list is relatively small so merchants can see at a glance key differences. Your blog author, Christine Speedy, sells the CenPOS private cloud suite of payment processing solutions, that includes a free mobile app, compatible with all Infinite Peripherals products. Although other apps are also available from our partners, usually they don’t stack up to CenPOS after a consultation.

For more comparisons, search for this subject title: iPad credit card terminal.

For CenPOS sales, please ask for Christine Speedy.

Selecting a virtual terminal for credit card processing shouldn’t be a marathon

Christine Speedy’s tips for choosing a virtual terminal for credit card processing in ‘card not present’, often business to business, companies. Reduce the amount of time spent from hours, days, or just plain permanent procrastination, to a ‘today’ decision. Ask these 3 questions:

  1. How will your virtual terminal help us manage interchange? Interchange is the biggest expense of credit card processing. Did you know that most cloud virtual terminals work pretty much the same as your old dial up terminals?  A good answer is, “Our VT automatically prompts and requires extra information based on each card presented.” A bad answer is, “We prompt for level 2 data.” Or worse, the salesperson doesn’t understand the question.
  2. How long can we retrieve and export transaction records for? A good answer is at least 7 years, to match potential IRS needs.
  3. How will your solution help us improve PCI Compliance? A good answer is, “the virtual terminal is one element in our suite of tools to help reduce PCI Compliance.” For example, a hosted pay page is available so customers can pay online instead of using fax credit card authorization forms.” A bad answer is, “our virtual terminal is level 1 PCI Compliant”.

Answers about MY virtual terminal:

  1. How will your virtual terminal help us manage interchange? Our intelligent, rules-based virtual terminal automatically prompts customers and users for the right action. All the guesswork is taken out of how to process credit card transactions in the cheapest, most beneficial way based on each card presented.
  2. How long can we retrieve and export transaction records for? Minimum of 7 years.
  3. How will your solution help us improve PCI Compliance?  The virtual terminal is one element in our suite of tools to help reduce PCI Compliance burden. Our secure, hosted pay page, mobile app, tokenization technology, and other tools eliminate the problems of storing card data and taking cards over the phone.

Running can be a lot of fun, but sifting through virtual terminal vendor choices doesn’t need to be nearly as exhausting. With no long term contract, no big capital investment, and customers you can call to affirm their decision,  the choice is simple. If you’re ready to make an easy, fast decision, call Christine Speedy 954-942-0483 to learn more about CenPOS solutions today.

christine speedy marathon

Christine Speedy, blog author,  after the Fort Lauderdale A1A half marathon. Join me next year!