Accept payments via mobile, internet, and at fundraising events all with a single gateway solution that provides optimum security and cost containment. Fundraising solutions for any candidate must include a variety of payment methods, cost controls, reporting tools, and be simple to implement. This article explores how our solution achieves this.

Just like a business, accepting funds via credit card can be expensive when running for Congress, Senate, President or other offices. However, thanks to debit legislation under the Durbin Amendment that went into effect October 2011,  it’s not nearly as much as it used to be. With a wholesale cost of .05% and $.21 per transaction for non-exempt debit cards, the overall cost of credit card processing has been greatly reduced. With a wholesale merchant account, you’ll pay interchange fees at all levels plus a small merchant discount.

Understanding merchant accounts.

1. You can apply for an ecommerce merchant account, MOTO (mail order/phone order), or Retail (card present /swipe). It’s against card association rules to process ecommerce transactions on a MOTO or Retail merchant account. But if you have an ecommerce merchant account, you’ll pay higher card not present rates on swiped transactions. The solution? Our CenPOS gateway  automatically identifies the transaction method and sends the appropriate data so that the transaction will qualify for retail. The CenPOS patent pending switching technology is not available from other vendors and saves big money. For example, save .3% on Visa Rewards cards- the difference between retail and card not present.
2.  Fees are made up of fixed non-negotiable interchange fees, network fees, card association fees, fees that vary by vendor (some hard costs vendors incur may vary), and negotiable merchant discount fees. Altogether when you divide your total fees by the net transactions we call this your effective rate. With a wholesale merchant account, an estimated effective rate for political fundraising campaigns is 2.2%, or 3.5% for very small campaigns. If you’re not paying any where near that, contact us for alternatives.
3. Different payment acceptance points can result in disparate reporting, which is never a problem until you’re trying to research something and then it becomes a nightmare.
4. A gateway is required to accept payments online. You need both a merchant account and a gateway. CenPOS is a universal gateway, compatible with all major processors.

Campaign Fundraising Concerns and how we solve them with the CenPOS gateway:

• Need to accept payments via many methods:  At the core of CenPOS is a Virtual Terminal for card swipe, online payments, mobile payments and any other method. CenPOS automatically switches payment routing for least cost.
• Need to accept multiple payment types: Check and credit/debit cards are currently accepted, and more options will be available in 2012.
• Large volunteer base may assist in payment collection. This creates potential liability for data security, but also a need for simple solution. Have you ever handed out donation cards at a fundraising event that requests credit card information to be written down? Identity theft is a major threat. Instead, use smart phones with the free CenPOS app and get cards swiped at the table or door, or add a card reader to any laptop. Micro manage user permissions and shut them down on demand. CenPOS prompts both the user and the donor for the appropriate actions. “Dummy proof” your payment collection to reduce costs and improve record keeping.
• Donor Management: An API (application interface) is available to exchange data with your donor management software. CenPOS supports recurring billing and can send the appropriate secure token to your software as well. CenPOS stores 7 years of data storage vs the typical 18 months of merchant services providers and gateways.
• Finance scrutiny and Fraud protection: CenPOS mitigates risk of fraudulent cards and also offers advanced protection to block certain payment types including anonymous and foreign issued cards. You’re in control of how tight you want to control donations.

If you use Costco’s credit card processing partner, Elavon, which acquired Nova in 2009, or another processor, then your price plan likely includes prices tiers such as qualified,  mid qualified, and non-qualified. This is where merchants have a difficult time comparing processor quotes and get upset when the bills come in.

We reported the latest 2011 rates in the Costco program with Elavon earlier this year. They offer a low Visa/MasterCard qualified rate. It’s an attention getter, no doubt. Here are some 2010 statistics about cards being used by consumers:

• Visa’s overall volume is 60% check cards, MasterCard 35% check cards.
• Only 10% of all card volume is traditional cards- no business or rewards.

Here are the Costco member Elavon published 2011 rates  again:

Visa/MasterCard Qualified (Traditional Credit & Signature Debit) 1.48% plus $0.20 (reduced)
Visa/MasterCard Qualified Rewards 2.20% plus $0.20 (increased)
Visa/MasterCard Partially Qualified 2.96% plus $0.33
Commercial Non-Qualified 2.96% plus $0.33
MasterCard Non-Qualified 3.80% plus $0.33

As previously reported in April 2010 Costco, Elavon, Nova and merchant rates, I’m still neutral for accounts processing under $100,000 annually. Qualified means retail card swiped in the above numbers. Why neutral? As I’ve said before, if you process $5000 or $10000, there’s not much difference in suppliers if you saved even .5% in fees.

At $20,000/mth, the difference in what you’re really paying- remember most cards are rewards related-on the Elavon plan vs a plan we can put you on can start making a difference.

3D Merchant Services specializes in mid-size businesses. As part of our  giving back to Help American Businesses Prosper program, we’re now accepting up to four small businesses per month into our partner portfolio. After all, we were a small business at one time too. Businesses will receive preferred partner credit card processing terms and education to make their businesses secure while controlling costs.

No, all our processors charge a fee for statements which cannot be waived even if you select electronic statement delivery instead of having them mailed to you. I have two thoughts about this. First, we have to pass through fees and it’s a hard cost that is never waived for us. Second, there is an expense associated with printers, printer maintenance, ink & paper, stuffing envelopes, postage etc. There are also expenses with having an IT team that develops and maintains secure systems for making electronic delivery available. So in both cases, there is a cost to providing an essential service- the timely delivery of your merchant statements.

What if someone else doesn’t charge a statement fee? Can you match that? No. Again, all the processors we work with have a statement fee that can never be waived.

With ever tighter margins in credit card processing, it’s critical to charge for actual costs and work more closely with customers on managing variable costs.

Video message about the high cost of rewards cards also includes information about three tiered pricing and interchange rates. A partial merchant statement is shown to demonstrate what the best rates and price plans look like on a merchant statement.

What 3 things do you need to know to compare credit card processing rates?

1. What is the quoted rate?
2. What are the criteria to qualify for that rate?
3. What is your cost if you do not qualify for the quoted rate?

The same questions put in merchant account lingo?
1. What is the qualified rate?
2. What are the criteria to qualify for the qualified rate?
3. What is your cost if you do not the criteria for qualified rates?

Notice these questions don’t even ask what is the monthly minimum or what is the statement fee. If your business is doing any volume, these are just not a factor. Most businesses that do their research online will only find the quoted rate. There may be some fine print about rates, but in many cases, the information is missing. What’s almost always missing are the non-qualified rates. So you sign up online with a preliminary application, then afterwards they send you an email saying you have been approved and now they need more information. The full details must be disclosed at this point, but most businesses don’t understand or don’t want to spend any more time looking for another deal because they already spent all their time finding that one!

Always request via the contact form or email the full contract details.

As previously reported, Visa & Mastercard rates typically increase this time of the year. Most merchants have seen the effect in their May statement, or will on their June statement.

One merchant I recently analyzed received a notice that their non-qualified rate was increasing to 4.09%! As a construction industry supplier, they have a large base of commercial customers, and good portion of them use corporate cards or rewards cards. In effect the merchant was going to be paying 4.09% on more than half their orders. It’s hard to remain competitive in their industry with those kinds of rates.

My first recommendation was to get them off the pricing plan they were on, that gave them a qualified and non-qualified rate. Instead, I recommended an interchange cost plus pricing plan. This ties every transaction directly into the actual card processing costs set by Visa & Mastercard instead of some bank defined plan that is designed to increase profits of their processor.

It’s very important for all merchants to closely examine their rates this month. Divide your actual processing costs into your net sales to get your effective rate. Is it what you expected? If you are not sure if you are at the average for your industry, please call us for an independent opinion.

VISA INTERCHANGE HIGHLIGHTS
Retail Swipe Debit 1.03% + $.15
Hotel Swipe 1.58%+ $.10
Key Entered Credit 1.85-2.25%+ $.10
Internet 1.85%+ $.10
Signature B2B Card 2.1%+ $.10
Rewards 2 1.90%+ $.10
Restaurant 1.19%+ $.10

The above categories are some of the most common interchange rate qualification buckets that our target market encounters.

As a reminder, merchant costs are composed of:
Interchange (above)
dues and assessments ($.0925)
transaction fees sometimes called network fees- another hard cost for authorization, settlement, and capture per transaction $.08-$.10
Merchant Discount