How can merchants leverage legislative debit fee changes in 2011?

The Fed has opened the comment period for proposed debit fee reductions. There are many facets to this, including impact on card issuing banks, acquirers, merchants and consumers. This article is to address only once aspect- putting your company in a position to take advantage of low debit fees.

Pull out your merchant statement. Do you have a section titled INTERCHANGE FEES?

Below are examples that might appear on this page:

This is an example of a MasterCard swipe debit transaction. The customer signed a receipt and did not enter a pin number.
mastercard debit interchange

This is an example of a Visa debit, card not present, ecommerce transaction for a non-profit.

visa debit interchange non-profit

The items above are listed in INTERCHANGE FEES. The image below appears in FINANCIAL ADVICE. They do not appear in interchange fees chart because these are pin entered debit transactions that went through the debit networks, in this case, Star, Pulse etc.

debit networks fees

Are you on a PASS THROUGH INTERCHANGE price plan that enables you to take advantage of low debit fees like those shown? If you do not see the data above on your merchant statements, the answer is no. To maximize low debit costs now and in the future you need:

  • The right price plan.
  • The right software/ hardware solution to drive transactions to the lowest cost.
  • The right software/ hardware solution to eliminate cashiers, order takers, and gateways from having any impact whatsoever that can increase which debit fees you qualify for.  See related article What is interchange management?

If you’re processing at least $1,000,000 annually, please contact us to discuss solutions to reduce your credit card processing fees. Don’t put this off! Call 3D Merchant now at 954-942-0483. You may even be able to keep your existing processor if you wish to.

See also
Federal Reserve proposes debit card interchange fee standards

non-profit credit card processing rate video generates threat

I made a video about Non-profit credit card processing rates telling non-profit merchants what to look for on their merchant statements to know if they are qualifying for special credit card processing interchange rates they are entitled to as a non-profit. If a non-profit does not see this data on their merchant statement, I tell them to call me and I’ll help them out. I give free information to non-profits all the time, to enable them to use more dollars for their intended programs rather than paying it in credit card processing fees.

Captain Morgan (his youtube handle) is threatening me saying this is misleading advertising. “there are NO special interchange rates for Non-Profit businesses”. He’s going to report me to the card associations and everyone else who will listen.

Here’s an example of interchange rates. All “for profit” merchants can qualify for .95% signature debit. All  501(c)(3) merchants can can qualify for .80% signature debit for the same transaction.  Is that not a special rate?  CaptMorgan would have  you believe that Visa/Mastercard simply hands over these rates to everyone. But that’s not true. By rule, any non-profit can QUALIFY for these rates. But that doesn’t mean their PROCESSOR GIVES them those rates. The card associations set the interchange rates, but it’s up to the payment processor to decide what they’ll actually charge merchants.

Technically the two rates above are called CPS/RETAIL and CPS/RETAIL2 EMERGING MARKETS. There are a select few types of businesses that can participate in EMERGING MARKETS interchange rates. If the merchant is one of the qualified types of business, the proper corresponding SIC code on the merchant account set up will drive the ability for the merchant to hit emerging market interchange rates.

If all the credit card processing companies were doing such a bang up job, I’d have never made the video. But after seeing one too many merchant statements with the non-profit not qualifying for emerging market rates, I did something about it. Here’s the kicker. On a ‘pass through’ or wholesale price plan, the merchant pays interchange plus a merchant discount. (That’s the short version, though it’s much more complicated than that.) If the non-profit is set up incorrectly, they’ll pay .95%, for example, instead of .80%. The processor does not make any money on interchange.  NONE of the .15% difference goes to the processor.  But because some salesperson has no idea what they are doing, and it happens ALL THE TIME, the non-profit frequently pays more.  The salesperson doesn’t benefit, the processor doesn’t benefit, and the merchant pays.

CAPTMORGAN comment: “Are their special credit card processing rates for non-profits….? The answer to that is NO… NOT in any way…. ? This lady is full of it….. Visa / MC considers all markets by which they have limited presence in to be “emerging markets”. These markets are specifically; government, schools, utilities, insurance, cable / broadband, and pay television (OD); – nothing more…”

I think his comment is contradictory. YES, there are other types of merchants that ALSO qualify for emerging market interchange rates. I could have mentioned all of them in the video, but then, it would have been too long. If I did mention it, I’d give the same information and advice. Because I’ve also rarely seen a merchant statement for a government, school, utility, insurance, cable / broadband, or pay television that had emerging markets on their interchange qualification. How does this happen? If the merchant has been with the same processor for a long time, the emerging markets category may have been created after the account was established. With the wrong SIC code, the merchant never qualifies for the special interchange rates because nobody at the processor is watching out for their client and the client doesn’t know these rates exist, what to look for, or they are not given enough information to figure it out.

I listened to my Non-profit Credit card processing rates video two more times to see if I have some potential liability.  Hey- who want’s trouble? I could, and probably should,  take it down just to avoid any remote chance of trouble. But after listening again, I don’t see anything wrong with it. You be the judge. Watch the video. Do you think it’s misleading or false advertising? Does this guy not have anything better to do than to try and make life difficult for others?

Please write your comments on the video or blog. Thanks!

monthly fees for non-profit merchant account

Today’s inquiry is where can I get a merchant account with no monthly fees? The question is for a new non-profit 501c3 with less than $25,000 annual projected in credit card processing. The group needs a both a virtual terminal and online donation capability.

Answer: I don’t know any suppliers with zero monthly fees that would meet the requirements for the specifications above. My recommendation is to get a paypal Website Payments Pro account for $30 per month. The non-profit rates for the volume are as good as it gets. You’re going to pay fees whether it’s higher monthly and low rate or low monthly and high rates. I think Paypal offers some benefits for newbies with their instant online donor form, and the contract is month to month.

Step by step on paypal:

>Payment Solutions

>Accept Credit cards non-profit

>Sign up for a PayPal Business account If you don’t need a virtual terminal, you’ll select business/standard account/type of business, non-profit.

Discounted fees for nonprofits with 501 (c)(3) status

More than $100,000 in monthly volume: 1.9% + $.30 per transaction

Less than $100,000 in monthly volume: 2.2% + $.30 per transaction

There is no monthly fee. All other nonprofits are charged regular transaction rates. Discounted rates do not apply to transactions made using Website Payments Pro or Virtual Terminal.

If you need a virtual terminal, you’ll select Business>website payments pro. The non-profits rate do not apply! Pricing as of 12/15/2010:

  • $30 monthly fee
  • 2.2% – 2.9% + $0.30 USD per transaction* (Visa, MasterCard, Discover)
  • 3.5% and no fixed fee per transaction (American Express)

Note- fees are likely to go up again in April 2010, as a result of the bi-annual interchange update.

For a new non-profit you need to estimate how many transactions you’ll have a month, and a dollar volume. Assume 50% of your transactions will be a the lowest quoted CARD NOT PRESENT rate. Assume 50% will be at the highest quoted ECOMMERCE rate. This is a general guideline to help you compare different options you may be considering.

The above information does not apply to larger volume non-profits. Click this link for related article:

industry insider reviews merchants fees for non-profits

Annual New Jersey non-profits 2010 Trends research

The recession continued to take a deep toll on New Jersey non-profits in 2009, and the outlook for 2010 remains uncertain, according to a new report released by the Center for Non-Profits. New Jersey Non-Profits 2010: Trends and Outlook is the latest in a series of surveys by the Center to gauge trends, experiences and projections of New Jersey non-profit organizations. The survey provides further evidence of how the recession has been stretching the state’s charitable community. Full report available at New Jersey non-profits 2010 report.