7 Reasons Your B2B Business Should Accept American Express

Many business to business merchants don’t accept American Express because of the real or perceived high cost of merchant fees and risk of dispute losses vs. the negative impact on profit margins. Here’s a fresh look at the reality of accepting American Express cards in 2019, including as compared to other card brands.

Top Reasons To Accept Accept American Express

  1. Average higher order. Your best customers are also using American Express for corporate purchasing. You may be losing business by not accepting the cards. For example, an actual merchant 1.7X higher average order than other cards.
  2. Higher annual spend. For example, an actual merchant has 3.0 X higher annual spend from American Express buyers than other cards.
  3. Merchants can completely offset the cost of acceptance, usually by surcharging as explained in this article Credit card surcharge rules and laws 2019.
  4. Amex SafeKey provides card not present fraud liability shift as do other card brands. If merchants support it for customer initiated payments, whether online pay portal, invoice click and pay, or ecommerce, they’re protected from friendly fraud ‘it wasn’t me, I didn’t authorize it’ chargeback losses. Rather than defend the chargeback, prevent it from happening and fighting to get your money back.
  5. Customers can take advantage of your early pay discounts and also use the The Pay Over Time option from American Express to extend their cash flow. You get paid on time to improve your cash flow, and customers extend their credit with someone else to manage their cash flow.
  6. Free business promotion. It depends on your business, but in some cases, especially small businesses, American Express does a lot to promote your business online and via other methods. How valuable is that?
  7. Rates may be lower than you think. Fees have broadened into more categories by card type over the years so it’s not just one rate for everything. You may be able to negotiate if you’re a very large business. The biggest expense for other card brands is interchange; if not managed properly, fees may be the same or higher than American Express depending on the card type.
  8. The Christine Speedy difference. Managing credit card fees is critical, and so is understanding the nuances of credit card processing that impacts all merchant fees. The reality is most players in the payments and consulting industries are not familiar with rules that impact your profit and risk. Call 954-942-0483, 9-5 ET for expert advice about all things credit card processing.

A B2B supplier’s guide to optimizing commercial card payments review

Mastercard and The Strawhecker Group released A B2B supplier’s guide
to optimizing commercial card payments. Selecting the right merchant acquirer and payment gateway, and optimizing interchange, can help reduce suppliers’ collection efforts and costs associated with commercial card payments. By Marie Elizabeth Aloisi and Peter Michaud. Christine Speedy, blog author, reviews the guide. In my opinion some elements, present an incomplete picture for merchants, especially the business suppliers accepting commercial payments that is the target of the paper.

The executive summary cites research that suppliers can reduce the cost of collecting funds from customers by 31% if they accept credit cards. I googled to find that commercial credit card research data, and though this is not the referenced Mastercard and Kaiser Associates, Commercial Card Acceptance Cost-Benefit Study, of November 2016, it has similar data:

  • This study estimated card acceptance at the point-of-sale to be 37% less costly than using other payment collections methods – yielding savings of $12 on a $500 transaction
  • Card acceptance provides a similar sized net benefit regardless of the funds transfer tool it replaces – e.g. check vs. ACH vs. wire
  • The bulk of value from commercial card acceptance lies in its use as a pre-payment tool – providing revenue assurance against bad debts

 

I have a problem with the next line in the report, “That’s because getting paid by check—or even ACH or wire—involves many manual steps, onerous costs, and potential errors that are a burden to a supplier’s accounting, finance, and treasury functions.”  Checks are still the most onerous even with a scanner, but with electronic bill presentment and payment, any other payment method can be automated for increased efficiency. Our cloud payment processing solutions, including integrated with ERP, automate all types of payment processing, including check/ACH, wire, credit card, and can update journals etc.

The paper goes on to explain why working with your acquirer is critical. While it mentions suppliers can benefit from advanced gateways, most acquirers offer a limited number of payment gateways to merchants. In fact, they may offer suppliers only one solution – they’re own- and it may not be the best for the supplier, it’s just the only one they offer. Independent payment gateways, like CenPOS that I offer, can provide significant advantages to maximize profits, efficiency and flexibility. For example, fulfilling the need to simplify wire transactions and match to invoices.

The three best practices cited to work with acquirers are to automate payments, optimize interchange and negotiate pricing. 

The devil is in the details not cited. For example, “suppliers can only take advantage of lower interchange rates if the payment gateway is set up to pass Data Rate 3 information along with the transaction.” This is true. But the bigger problem is compliance with all the other rules required to qualify the transaction for Data Rate 3. For example, suppliers often do a preauthorization, which expires before settlement (but can still settle) or is not the same as the final settlement amount. These common transaction types will nullify qualifying for the best interchange rates, including MasterCard Data Rate 3. There are many more rules that make it tough to qualify and if the payment gateway does not automatically manage for suppliers, passing Data Rate 3 info doesn’t matter. The reality is most payment gateways do not have a solution to help suppliers comply.

Again, if the acquirer doesn’t have the best solution, should suppliers rely on their advice? A supplier client of mine went to their acquirer (top 5 in USA) and told them what I was offering. They would keep their acquirer but switch to my payment gateway; they’d use our electronic bill presentment and payment solution to eliminate paper credit card authorization forms and employees getting cardholder data over the phone. Customers would self-manage their payment methods, including storing & tokenizing if they chose to. Their acquirer did not want them to use any solution other than their own.  They offered them a substantially worse solution- the silliest I’ve ever heard. The acquirer would give them a new merchant account with virtual terminal exclusively for one large client that they knew was using a commercial card. What about all the other clients? What about eliminating employee access to cardholder data and storing data on paper? Advising to use substandard solutions happens all the time.

In summary, Mastercard and The Strawhecker Group put out some great research data for suppliers. I’m a huge fan of the people at The Strawhecker Group and their work. Suppliers should look to cloud payment processing solution providers like myself at CenPOS for advice. Suppliers need the best payment gateway because without it, the rest doesn’t matter. Combining a robust payment gateway, business solutions, and the flexibility to change acquirers without business disruption can provide significant advantages.

All comments and statements herein are strictly my personal opinion and do not represent that of any company.

Christine Speedy, CenPOS sales 954-942-0483. CenPOS is a cloud business solutions provider with end-to-end payments engine that drives enterprise-class solutions for businesses, saving them time and money, while improving their customer engagement.

B2B Credit Card Processing Hot Tips

Compliance with credit card processing rules maximizes profits while mitigating risk. This is especially true for business to business companies. But it’s getting harder and harder with the onslaught of new rules, and virtually impossible if not using a sophisticated cloud solution to help manage compliance.

If your B2B company stores credit cards, there’s a pretty good chance you’re not compliant. For example, Visa’s 2017 Stored Credential Transaction framework outlines merchant responsibilities to obtain customer consent as well as storing credit cards, using stored credentials (token), and managing stored tokens. Failure to comply with Authorization rules, for example preauthorization and final settlement do not match, has far-reaching consequences including higher interchange rates (the bulk of credit card processing fees), penalty fees and new chargeback risks. With so many new rules across multiple card brands that vary based on business and transaction type how can a business quickly ascertain if they’re compliant?

Most processing details occur seamlessly behind the scenes so merchants have not had a simple way of knowing whether they’re compliant. Until now.

Quick tips to validate compliance:

  • Is a transaction receipt delivered to customer when a stored credit card credential (token) is created? Compliant answer is yes.
  • Is cardholder authentication with a zero dollar authorization or a purchase transaction performed at the time token is created? (A small charge is not an acceptable practice.) Compliant answer is yes.
  • Does the receipt include “RECURRING” or “REPEAT SALE” for token transactions? Compliant answer is yes.
  • Review merchant statements, usually the last 1-2 pages with the heading “pending interchange” or “fees” section. Do you see EIRF, STANDARD (STD), or DATA RATE I? Compliant answer is no.
  • Can you produce documentation of customer consent to store their card (including with 3rd party service) and how it will be used?

If you’re not in compliance, your payment gateway is the most likely culprit, followed by ERP or other software integration limitation. For a Microsoft Dynamics AX, Dynamics 365, and other ERP integrated solutions, call 954-942-0483 9-5 ET.

Reference: Card brand links.

Christine Speedy, CenPOS Sales 954-942-0483. CenPOS is a cloud business solutions provider with end-to-end payments engine that drives enterprise-class solutions for businesses, saving them time and money, while improving their customer engagement.

MasterCard Bin 2 Series In Play: Declines and Fines

Previously, MasterCard announced a new card number BIN series, requiring everyone in the payment ecosystem to update in order to support the new card acceptance. Merchants need to update software and or terminals to comply by the June 30, 2017 mandate deadline. The consequences are both transaction declines and heavy fines.

Credit card processing:

  • Traditional countertop terminals may need a software download, contact your processor.

    Verifone vx520 emv terminal

    Verifone vx520

  •  Point of Sale solutions or the payment gateway that drives terminals need to be updated. This may occur seamlessly in the background with no impact to merchants and nothing to download.

    verifone MX915 EMV terminal

    Verifone MX915 EMV chip terminal

    Equipment & Payment Gateway NOT affected:

    • Authorize.net
    • BridgePay
    • Cayan
    • CenPOS
    • Clover
    • Ingenico w/ EMV Chip Card Technology
    • First Data w/ EMV Chip Card Technology
    • Future POS (Version 5.0.96.30)
    • Gravity Gateway
    • Lavu
    • Merchant Link
    • Micros
    • NMI
    • Payeezy
    • Paytrace
    • Shift 4
    • Shopkeep
    • Swipe Simple
    • USAePay/Gravity Link

    Credit Card Terminals Requiring a Software Update:

    • Apriva cellular terminal
    • FD 50 TI (Non EMV Chip Card)
    • FD 100 TI (Non EMV Chip Card)
    • FD 130 (Non EMV Chip Card)
    • FD 200 TI (Non EMV Chip Card)
    • Ingenico (Non EMV Chip Card)
    • Verifone VX520

    Credit Card Terminals Requiring Replacement: These terminals are end of life and cannot be updated.

    • All Hypercomm Terminals
    • Fd 50 (non TI)
    • FD 100 (non TI)
    • FD 200 (non TI)
    • FD 300 (non TI)
    • VX 510
    • VX 570

    Consequences for non-compliance with MasterCard Bin 2 Series

  • Mastercard Transactions for cards beginning with a 2 in the range of 222100-272099 will be declined.
  • If you do not update your software before the deadline, you will fall into a status of non-compliance. A non-compliant occurrence is defined as any attempted and failed transaction that is confirmed as failed due to a merchant’s lack of readiness to support 2-Series BIN transactions.
    • $2,500 per occurrence in the first 30 days.
    • Escalating up to $10,000 in the next 60 days.
    • Up to $20,000 per occurrence for the subsequent violations.

    These fines may be assessed per merchant location per failed transaction for not implementing support of the new cards.

    Fines will be pushed to acquirers. If acquirers are compliant, but the merchant is not, the fines will be passed down. If you’re sitting on old software and terminals, now is the time to change! It’s simple for MasterCard to identify non-compliance.  Contact us for immediate help- keep your merchant account, get new compliant credit card processing technology.

Disclaimer: This list and accompanying information may be out of date at any time. Check with your acquirer for the most current information.