Credit Card Processing 101

Heartland Payment Systems Processing 101

Heartland Payment Systems

Heartland Payment Systems' CEO Bob Carr Wins Ernst & Young 2007 Entrepreneur of the Year Award.

Heartland was named the Financial Services Sales Organization of the Year in the Best Run Sales Organization category by Selling Power

Heartland processes over $80 Billion Dollars every year

It’s Not About Rates!

How the Process Works

How the business owner (aka merchant) is charged

Industry Secrets

The Heartland Difference

How it Works!

Your Costs …

=Discount Rate (%)

+ Per Item Fee ($ amount per transaction)

+ Network fee (the cost it takes for the processor to move the money to your account)

+ Processor’s Fees

How it Works

Inter Change – the cost of each card decided by MC/Visa

Will differ from industry to industry

Visa’s Base Wholesale Rate is Lower than MC

Visa represents about 65% of the average Merchant volume

Base Wholesale Price for Visa has not increased in 3 years

Base Wholesale price for MC was recently lowered

It is the same for everyone based on SIC code– Wal-Mart to Wally’s Market

All Cards Are Not Created Equal!

Check Cards

Money Comes Out Of Checking Account

Less Risk

Lowest Base Wholesale Rate

Check Cards Base Wholesale Rate

Retail

Visa 1.12% MC 1.15% + $.15

Utility

Visa .09% +$.75 M/C .09% + $.45

Supermarket

Visa 1.03% M/C 1.05% + $.15

Consumer Credit Cards Base Wholesale Rate

Retail

Visa 1.63% MC 1.67% + $.10

Utility

Visa .09% +$.75 M/C .09% + $.45

Supermarket

Visa 1.24% M/C 1.48% + $.05

Consumer Rewards Cards Base Wholesale Rate

Retail

Visa 1.99% MC 1.99% + $.10

Utility

Visa .09% +$.75 M/C .09% + $.45

Supermarket

Visa 1.90% + $.10

M/C 1.64% + $.16

Corporate Cards Base Wholesale Rate

Retail

Visa 1.99% MC 1.99% + $.10

Utility

Visa .09% +$.75 M/C .09% + $.45

Supermarket

Visa 2.20% + $.10

M/C 2.65% + $.10

All Cards Are Not Created Equal! Retail (review) 1.12% + $.15 $100 purchase = $1.27 1.67% + $.10 $100 purchase = $1.77 1.99% + $.10 $100 purchase = $2.09 1.99% + $.10 $100 purchase = $2.09 *Plus Processing Fees

Down Grade Rates

Card Not Present (Phone Orders)

Card Not Swiped (Keyed in)

Processed Incorrectly

Lodging as Retail (example)

Industry Secrets What They Don’t Want You To Know & Why it’s not about the rates…

On average

Only10% of your volume will fall under a qualified rate

If your average ticket is less than $50, as much as 50% of your volume could be check card

Most Processors charge the same for Visa & M/C transactions

Most Processors use a three tier platform (Qualified, Mid-Qualified & Non Qualified)

They will determine which cards fall where

Industry Secrets What They Don’t Want You To Know & Why it’s not about the rates…

Batch Fees are a Financial Industry Invention

They are charging you to deposit your money

They will often lease $400 equipment for as much as $70/month (for 4 years)

They will increase all rates whenever Visa or MC increases Any rate. (ex. Visa Supermarket Debit card)

Industry Secrets What They Don’t Want You To Know About Statement Practices

Don't list Rates

Don’t explain designations

Don’t give CheckCard rebates

Charge Batch Fees

Surcharge Everything

Offer a great Qualified Rate and an outrageous MidQual and NonQual Rate

Statement Practices Rate increase not warranted 90% of Volume Surcharged 20% of Volume qualifies for Check Card discounts Quoted Rate is 100% meaningless