Short introductory video message for building suppliers looking to improve profit margins.

Where does all the money go for your credit card processing costs?

We’ve answered this before. Most of it goes to the banks. In a few moments, you’ll read about their blatant promotions to make more money at your expense.

If you process a transaction at the best interchange qualification, they make a little money. If you process a transaction that downgrades to a higher interchange qualification, they make more money. In fact, the worse you qualify, the more money they make.

This is a key reason why banks may not be the best choice for your credit card processing. With their inherent conflict of interest, do you trust your bank to help you hit the best interchange? You can influence your interchange qualification. It’s complicated. It’s more than what customers can do, it’s up to professionals like us to not only spot problem areas, but to take the corrective actions to fix the underlying causes- either behind the scenes, through programming changes or by contacting you and providing tips for staff.

Today I received a direct mail piece from a bank. The promotion rewards me for SIGNATURE BASED gold debit mastercard purchases. Pin based debit transactions are ineligible. That’s right. The bank is strongly encouraging consumers not to enter their pin number. They make lots of money that way.

How can you combat this kind of promotion and encourage pin based debit?
1. Do you have a pin pad? Consumer oriented businesses processing $1M annually, will almost always benefit. Call us for a free analysis.
2. Are you processing $1,000,000+ per MONTH (all card type transactions), please call me regarding new technology that will dramatically lower your debit processing costs.

I don’t have the answer for which Retail POS Solution you should choose, but I do have some extremely important tips.

1. Do not enter into a long term contract for your payment processor unless you have been in business for at least 3-5 years.
2. Do not choose a POS solution that has limited choices for who will do your credit card processing.

This is a true story. I contacted a specialty retail shoe store that I shop at to discuss their credit card processing. They are using http://www.ricssoftware.com/ which seems like an excellent solution for this merchant store. In fact, it seems like a great solution for any shoe retailer, their target audience. But no where does it mention, that I could find, that the customer has NO CHOICE about who their payment processor is. That’s right, no choice! RICS is only compatible with ONE merchant service provider.

I talked to RICS about who they use. It’s a quality company, but they don’t necessarily provide the best solution for the retailers. In fact, I’d bet that 50-70% of their retailer merchant accounts could save significantly on credit card processing with a different merchant service provider. I’m not guessing. I know that a certain portion of them are too small to realize any significant benefit. Most of the rest of them are on a price plan usually reserved for very small businesses, or new businesses.

New businesses always pay a premium for merchant card processing fees. That’s because they are higher risk than established businesses. The most stringent underwriters, those that you can get the best deals from, require two years healthy financial statements. Once your business is established you are in a better position to get a permanent solution for managing credit card costs. What do I mean by permanent? One that enables the merchant to see how they are qualifying for interchange levels and what interchange levels they are hitting. Without that transparency, you can’t even begin to manage your costs.

In summary, make sure you choose a retail POS solution that is OPEN and doesn’t lock you into a single vendor solution- whether it be hardware, merchant service provider, or some other service. The more flexibility you have, the easier it will be to grow and expand later without disruption to your business.