Category: ‘merchant-credit-cards’

Credit Card Processing Fees, Refunds and Customer Returns

January 8, 2012 Posted by merchant

Credit card processing fees are not refunded when a customer returns an item that they’ve purchased. Not surprisingly, this is a point of contention that many business owners have with merchant accounts and credit card processors. Credit card processing charges are not returned when a transaction is reversed. In fact, many merchant account providers will charge additional fees such as a return fee to reverse a transaction.

Money lost on credit card returns is an issue that many business people haven’t considered, but when they do, it contributes to the frustration that sometimes accompanies merchant processing. If this article has enlightened you to this new source of lost revenue, we apologize for being the bearer of bad news, but rest assured we’ll explain how you can minimize or even eliminate lost revenue due to unreturned processing fees.

First, let’s take a look at why processing fees aren’t reversed when a credit card transaction is returned by a customer. Perhaps the most obvious reason, and a speculative one at that, is because banks don’t like to lose money. Returning processing fees and losing money doesn’t quite fit the business model that most banks utilize.

On a more serious note, the Interchange system that the processing system uses to operate isn’t really set up to run in reverse. There are a lot of issues and legalities that would need to be dealt with in order to refund processing charges. The task of creating a system to effectively and accurately refund credit card processing fees is a gigantic logistical undertaking that the card originators and acquiring banks aren’t eager to tackle.

Luckily, you take matters into your own hands and minimize or even eliminate lost revenue due to credit card processing fees not being refunded when a customer returns a purchase. The solution is to charge your customers a return fee or a restocking fee. You can call this fee whatever works best for your business, but there a few very important suggestions that you should follow to adhere to Card Association guidelines and to avoid losing business.

Clearly post your return fee policy in a prominent place, preferably near the point of sale or checkout.

The Card Associations require all policies involving credit card sales and returns to be clearly posted. If you have the capability, you should consider printing your return fee policy directly on sales receipts.

A return fee should be a percentage of the original purchase amount.

To offset processing fees as accurately as possible, a return fee should be expressed as a percentage of the original purchase amount. We don’t recommend that you try to profit from a return fee, so it’s best to figure out what percentage to charge by adding your qualified discount rate with your non-qualified surcharge and rounding to the nearest whole number. Check your merchant account statement or contact if you’re not sure what your qualified and non-qualified rates are. The number you arrive at should be about 4% if you have a card-present merchant account and 5% for a card-not-present merchant account.

A return fee must be charged for all types of payment or not at all.

To comply with your merchant service agreement, you can’t discriminate against customers who choose to pay with a credit card. If you impose a return fee on customers who pay with a credit card, you must impose the same fee on customer using any other form of payment that you accept such as cash and checks.

More merchant account information is available at MerchantCouncil to help you find the best merchant account for your individual processing needs.

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All You Need to Know About International Credit Card Processing

January 8, 2012 Posted by merchant

Very few of us are aware of international credit card processing. It refers to multi-currency credit card payment processing. With the help of this facility, a person is able to offer the products or services to over 169 different currencies and he can even receive payment for these services in more than 29 remittance currencies. Business firms are able to expand their business in new regions where they can make a lot of sales and hence revenue. This is because of the fact that they can also offer payment method to buyers from various parts of the world.

There are various banks and other institutes which can issue these international cards. A single international credit card is valid in all countries and transactions in dollar can be made. With the help of these cards, it is possible to make airline reservations, hotel bookings and car rentals across nation. Some of the plans included in these the cards also provide insurance coverage for fraud and theft. This is one of the biggest reasons why people prefer to keep one of such cards. In order to process an international card, there are some steps required such as authorization of the credit card, withdrawing money and placement of the funds in the bank account of the merchants.

In order to process it, the merchant requires an international account. This account can be treated as an agreement between the merchant and credit card processor. This is capable of establishing rules for accepting the purchases made by the international card and funds transferred. There are a number of cards available which can be used world wide such as Diners Club, Visa, American Express and MasterCard. These cards are processed automatically with the help of appropriate software.

A processor can offer the merchant account and expertise to help the business owners accept international cards from various customers all over the world. The companies are able to provide internet account to the merchants so that they are able to accept the payments through credit cards online.

Reportedly, there have been various frauds and scams associated with international credit cards and this is one of the reasons why it is recommended to take preventive measures so that they can be avoided before anyone can misuse the credit card information. These cards have made the life easier for travelers who frequently travel to other places as they do not have to carry cash with them.

You can search on the internet to find out more about global payments. Click here to know more about online payments

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What You Need to Know About Credit Card Processing

January 8, 2012 Posted by merchant

Accepting credit cards has become a big priority for nearly every business in the U.S. today. There are an infinite number of credit card processing companies to choose from, and many business owners find it to be a painful and confusing task to try to select the best one. As a busy merchant, the last thing you want is to have to spend a lot of time looking for the right processing company.

In today’s economy, keeping costs down is a huge priority for many businesses, so it’s important for business owners to understand the fees that they will be charged. For starters, there are set-up fees, one time fees, annual fees, and transaction fees that you should be aware of because they definitely add up.

But what many merchants don’t know is that finding the right credit card processing company can actually save them a small fortune. Below are some suggestions for businesses that are looking at adding credit card processing.

Ask lots of questions

One of the most important things you can do as a merchant when talking with credit card processing companies is to be sure to ask a lot of questions. One of your primary goals should be to understand which fees you will be charged and a ballpark figure of how much they will add up to. It’s a good idea to have some real numbers on hand to share with processing companies when you speak with them. Based on your average sale and an average of your total daily sales, credit card processing companies should be able to give you an idea of what you will be paying in fees.

Written agreements – good or evil?

It’s important to understand that a written contract is a “two-sided” agreement, and therefore a great way to protect your business. Most processing agreements include an early termination fee that you are required to pay if you do not stay with that processing company until the end of the term. But if your processing company is not delivering on the fees and service outlined in your agreement, you have every right to switch companies without consequences.

But if your processing company is holding up their end of the agreement, why switch?

Some credit card processing companies will want to lock you into a long-term contract. One advantage of having a contract is that your processing company will be responsible for explaining fees and honoring their part of the agreement in terms of the services provided, fees assessed, etc.

There are also processing companies that do not require you to sign an agreement. One advantage to not being under contract with a company is that you are not “locked in” so if you did want to switch processors you would not be required to pay a termination fee.

You don’t have to take it

If your credit card processing company is failing to deliver the service and fees they promised, then you have cause to cancel, which would waive the termination fee. Your number one goal should always be to fully understand, as best you can, the fees and services that the processing company is offering. If you’re like most merchants, price will be their number one concern, and most processing companies understand this concern.

Making sure you understand credit card processing companies’ fee structures are an important step in the process of signing up with a processor. Once you understand the services and fees you will be charged, you can make an informed decision as to which processing company will be the best fit for you.

Card Network Services is a nationwide leader in debit and credit card processing solutions. At CNS, we pride ourselves in providing simple, straightforward programs that won’t “nickel and dime” you. For more information, visit us at [http://www.CardNetworkServices.com]

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Understanding the Credit Card Processing Industry – Part 1

January 8, 2012 Posted by merchant

Almost every small business owner that I have met, has complained that they have had a bad experience with a credit card processing company. Examples of grievances range from, I was promised a certain rate which I did not receive, or my bill is not the same as it was last month even though i did the same volume, or that my processor is charging me junk fees and so on.

Let us be clear on one thing. More that 90% of your fees are taken by Visa/MC/Discover and Amex, the banks and the actual processors such as First Data, Elavon, etc. However, 90% of the blame and anger is placed on the company that makes 10% of the money. (a lot of it is deserved)

Let us start by tackling a subject called interchange.

Interchange is a rate set by the Visa/MC/Discover on any card that they offer. These rates vary from card to card. For instance, interchange on a debit card can be 0.95% whereas a visa rewards card can be 2.65%. (The exact interchange rates can be found on Visa/MC websites. Be warned there are hundreds of different types of cards). Processing companies pass though these costs to the merchants. Now the processing company that helped you set up your account will make money when it charges anything over the passthrough charges. These interchange charges make up the bulk of you processing bill every month.

Time to answer one major question. Why does my bill differ month to month. Take for example New York City. I have a merchant whose bill rises exponentially during the summer. Why? Since NYC has a large number of tourist who visit from overseas, they use international credit cards. Interchange on international cards are the highest (why interchange differs from card to card is an article for another day). When 70% of your business is on international cards, the cost is bound to be higher. If 70% of your business was in debit cards, it is guaranteed your processing cost would be lower, but a merchant is in the business to make money and he has to accept whatever card is presented to him. (it annoys me when I offer my Amex card to pay, and the store guy says, “we do not accept Amex”)

In the next article, I ll go more indepth of how credit card processors price merchants.

Raj Kothapalli, of Statewide Merchants, is a single person trying to demystify the credit card processing industry for business owners http://www.statewidemerchants.com

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