Your SlideShare is downloading. ×
Why Do Business With Us
Why Do Business With Us
Why Do Business With Us
Why Do Business With Us
Why Do Business With Us
Why Do Business With Us
Why Do Business With Us
Why Do Business With Us
Why Do Business With Us
Why Do Business With Us
Why Do Business With Us
Why Do Business With Us
Why Do Business With Us
Why Do Business With Us
Why Do Business With Us
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Why Do Business With Us

244

Published on

There many processors, ISOs, agents and banks out there. But few are willing to work for pennies over cost. WE ARE! Every Business deserves to save money!

There many processors, ISOs, agents and banks out there. But few are willing to work for pennies over cost. WE ARE! Every Business deserves to save money!

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
244
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
4
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Presented By: Jesse A Roldan WHY DO BUSINESS WITH US?BVCC. is a register ISO | MSP with Transfirst, LLC., a register agent for the following banks: Fifth Third Bank, Cincinnati, OH 45263 | Columbus Bank and Trust Co., Columbus, GA 31901 | Merrick Bank Corp., Woodbury, NY 11797Business Ventures Capital Corporation 546 Hamilton St. Suite 313, Allentown PA 18101 610-572-1712 (M) 610-572-1722 (F)
  • 2. THE BASICSUnderstanding How Credit Card Processing WorksTo appreciate the value that our company brings to your business, you must first understand howcredit card processing truly works. Most merchant’s do not fully understand this process. My goal is toeducate you because an informed Merchant is our best customer.I hope to rationally explain the following in laymen terms: 1. How does a typical credit card or EBT processing transaction truly work? 2. What is Interchange, and why should it be important to you? 3. How are you currently being charged for credit card processing? 4. Why is our Company a better choice for your Credit Processing Business?The primary source for my information was the US Government Accountability Office Report toCongressional Addresses (GAO-10-45 Credit Card Interchange Fees) that stemmed from the 2009Credit Card Accountability, Responsibility, and Disclosure Act.Transfer of Fees in a Credit Card Transaction Sources: GAO (analysis); Art Explosion (images) 1. Notice the Majority $2.20 in total fees for this transaction goes to the financial institution that issued the customers card. 2. This $1.70 is referred to as the interchange rate, and is non-negotiable for you the merchant. It is set by the issuing bank, and will be applied no matter who your processing company is. 3. The remaining $.50 is split between the Acquiring Bank, and your processing company. This is your only room for negotiation. 4. Please keep in mind, these numbers are greatly skewed due to large companies processing the majority of transactions. Chances are that you are paying much higher fees on the acquiring end of the transaction due to economies of scale.
  • 3. THE BASICSFollowing the Money Understanding who is getting paid is half the battle. Once you identify where your money is going, you will be better suited to negotiate your best possible terms. Below is a diagram that explains who is receiving the money from each fee your merchant account is charged. Issuing Banks Card Network Merchant Bank (Card Holder) (Visa / MC) / Processor Interchange Fees Assessment Fees All Other Fees Vary From: Charged in many 0.11% varying and $0.20 & 0.95% creative ways to $0.10 & 3.25% Non-negotiable Markup over Interchange Non-negotiable Ex: $0.20 & 1.80% Flat Fees Ex: Statement Fees Surcharges Ex: Batch Fees Negotiable Sources: GAO (analysis); Art Explosion (images)
  • 4. THE BASICSWhat is Interchange?• Interchange is the classification of rates that member banks of a general processing card network , such as VISA or MASTER CARD, charge the merchant for the privilege of accepting their cards.• These fees typically offset risk to the card issuer, pay operating expenses, and provide rewards to card holders.• These interchange fees generally vary from 1 to 3 percent of the total transaction.• Four main factors determine which interchange fee rates apply to a given transaction 1. Type of Card 2. Merchant Category 3. Merchant Size 4. Processing Mode• Due to economies of scale certain large merchants, such as grocery stores or gas station chains qualify for lower interchange rates. However, the vast majority of all merchants do not have this ability.• Visa currently has 60 categories of interchange rates, and Master Card has over 240.Do you, the Merchant, have the ability to minimize interchange fees?Yes, by training your staff to use a little common sense when processing a transaction, you can affectthe interchange rates applied to your transactions.1. Use Pin Based Debit whenever possible. These transactions have the lowest risk of fraud, and the lowest rates to reflect this.2. Card Swiping is always better than manually entering the card numbers, as it takes out the aspect of human error, therefore it is considered less of a risk and merits a better interchange rate.3. When a card is not present, the risk of fraud is the highest, therefore, the increased risk will be reflected in the interchange rate. Try to use address verification in this instance.4. Be sure to close out your batch each day. If a payment sits on your terminal and is not batched by the end of the next business day, it will be charged a higher interchange rate.
  • 5. THE PUZZLE OF TIER PRICING
  • 6. THE PUZZLE OF TIER PRICINGHow am I currently charged? Standard Tier Pricing ModelAs with any complex financial transaction of thissort, the devil is in the details. Mid- Non- Qualified Qualified Qualified TransactionsAlthough there are literally more than 200 Transactions TransactionsInterchange rates, most merchants are payingonly 3 different rates. Over 90% of all Generally Generally Generally Interchange Interchange InterchangeMerchants work on some type of tier system. Rates from Rates from Rates from 0.95% - 1.60% - 1.95% - 1.05% 1.90% 2.99%First Tier - Qualified RateThe qualified rate is most commonly quoted to amerchant when they inquire about pricing. Aqualified rate is the percentage rate a merchant 1.45% 2.40% 3.29%will be charged whenever they accept a regularconsumer credit card and process it in a mannerdefined as "standard" by their merchant accountprovider using an approved credit card Are my Transactions Qualified?processing solution. What Percentage of mySecond Tier - Mid-qualified Rate Transactions are Qualified?This is the percentage rate a merchant will becharged whenever they accept a credit card thatdoes not qualify for the lowest rate (the qualified 35% 20%rate). This may happen for several reasons such Qualifiedas: Mid-Qualified•A consumer credit card is keyed into a creditcard terminal instead of being swiped Non-Qualified•A special kind of credit card is used like a 45%rewards card or business cardThird Tier - Non-qualified Rate The Ugly TruthThe non-qualified rate is usually the highestpercentage rate a merchant will be chargedwhenever they accept a credit card. In most Your Merchant Processor hascases all transactions that are not qualified or the freedom to determinemid-qualified will fall to this rate.•Many Reward Cards, which have higher where to set the tiers ininterchange fees are processed at this rate. relationship to interchange,•If you fail to run your batch by close of businessthe next day, all of your transactions will be and each processor uses thisprocessed at this rate. to their advantage.
  • 7. Seeing Through the Fog THE PUZZLE OF TIER PRICING Study this chart carefully and determine which of these two processors provides a better overall value to you the merchant, assuming the static fees (statements, etc.) are equal among both providers. Which Is The Better Value? Below is a sample of 35 commonly used interchange rates Tier 1 Tier 1 Visa CPS Retail Debit Qualified 0.95% + $0.20 1.85% + $.20 1.65% + $.18 M/C Merit III Retail Card Present Swipe Rate Debit 0.95% + $0.20 Visa CPS Retail Qualified 0.95% + $0.20 Tier 2 M/C Merit III Retail Card Present Swipe Rate 1.05% + $0.15 Visa CPS Retail Key Enter, Debit Mid Qual 1.80% + $0.10 2.20% + $.18 Visa CPS Card Not Present, Debit Mid Qual 1.80% + $0.10 Visa CPS e-commerce, Debit Mid Qual 1.60% + $0.15 M/C Retail Key Enter Debit Mid Qual 1.64% + $0.15 Tier 2 M/C Merit I Debit, Timing & transaction tolerance limits 1.73% + $0.15 exceeded or Electronic commerce 2.40% + $.20 Visa CPS Retail Qualified Rewards 1.90% + $0.10 M/C World Merit III, Card Present Retail Swipe 1.82% + $0.10 M/C Enhanced Merit III – transaction detail data req 1.82% + $0.10 Visa CPS Retail Key Enter, Mid Qual 1.94% + $0.10 Visa CPS e-commerce, Mid Qual 1.94% + $0.10 Mail/Phone Order & Electronic Commerce – Con Debit 1.96% + $0.10 M/C Retail Key Enter, Mid 1.98% + $0.10 Visa CPS Retail Key Enter, Mid Qual Rewards 1.99% + $0.10 Visa CPS Card Not Present, Mid Qual Rewards 1.99% + $0.10 Visa CPS e-commerce, Mid Qual Rewards 1.99% + $0.10 Visa Commercial Level III0.82% 1.89% + $0.10 Tier 3 Visa Commercial Level II – Purchase, Bus, Corp T& E 2.09% + $0.10 3.30% + $.18 Mail/Phone Order & Electronic Commerce – Con Credit 2.13% + $0.15 M/C World Elite Commercial Face to Face Corp 2.29% + $0.10 Visa Commercial EIRF – Corporate T & E 2.29% + $0.10 M/C World Elite Merit III 2.29% + $0.10 Visa Commercial Card Not Present - Business 2.34% + $0.10 Visa EIRF Electronic Interchange 2.39% + $0.10 Tier 3 M/C Commercial Face To Face or Data Rate II Business 2.41% + $0.10 3.50% + $.20 M/C World Elite Commercial Face to Face Business 2.41% + $0.10 Visa Commercial Card Not Present – Purchasing 2.49% + $0.10 Visa Commercial EIRF – Business 2.54% + $0.10 Visa Commercial EIRF – Purchasing 2.79% + $0.10 Visa Standard Interchange 2.79% + $0.10 Visa Commercial Standard Interchange 2.79% + $0.10 M/C World Key Enter 2.14% + $0.15
  • 8. When We Run the Numbers THE PUZZLE OF TIER PRICING Assuming you processed a $100 transaction in each of the 35 interchange classifications below for a total of $3500 in transactions processed. Company A Company B Tier 1: ($100 x 1.85% + $.20) x 9 = $18.45 Tier 1: ($100 x 1.65% + $.18) x 4 = $18.45 Tier 2: ($100 x 2.40% + $.20) x 21 = $56.40 Tier 2: ($100 x 2.20% + $.18) x 16 = $56.40 Tier 3: ($100 x 3.50% + $.20) x 5 = $52.20 Tier 3: ($100 x 3.30% + $.18) x 15 = $52.20 Total Expenses: $91.55 Total Expenses: $97.60 Below is a sample of 35 commonly used interchange rates Tier 1 Visa CPS Retail Debit Qualified 0.95% + $0.20 Tier 1 1.85% + $.20 M/C Merit III Retail Card Present Swipe Rate Debit 0.95% + $0.20 1.65% + $.18 Visa CPS Retail Qualified 0.95% + $0.20 M/C Merit III Retail Card Present Swipe Rate 1.05% + $0.15 Tier 2 Visa CPS Retail Key Enter, Debit Mid Qual 1.80% + $0.10 2.20% + $.18 Visa CPS Card Not Present, Debit Mid Qual 1.80% + $0.10 Visa CPS e-commerce, Debit Mid Qual 1.60% + $0.15 M/C Retail Key Enter Debit Mid Qual 1.64% + $0.15 Tier 2 M/C Merit I Debit, Timing & transaction tolerance limits 1.73% + $0.15 exceeded or Electronic commerce 2.40% + $.20 Visa CPS Retail Qualified Rewards 1.90% + $0.10 M/C World Merit III, Card Present Retail Swipe 1.82% + $0.10 M/C Enhanced Merit III – transaction detail data req 1.82% + $0.10 Visa CPS Retail Key Enter, Mid Qual 1.94% + $0.10 Visa CPS e-commerce, Mid Qual 1.94% + $0.10 Mail/Phone Order & Electronic Commerce – Con Debit 1.96% + $0.10 M/C Retail Key Enter, Mid 1.98% + $0.10 Visa CPS Retail Key Enter, Mid Qual Rewards 1.99% + $0.10 Visa CPS Card Not Present, Mid Qual Rewards 1.99% + $0.10 Visa CPS e-commerce, Mid Qual Rewards 1.99% + $0.10 Visa Commercial Level III0.82% 1.89% + $0.10 Tier 3 Visa Commercial Level II – Purchase, Bus, Corp T& E 2.09% + $0.10 3.30% + $.18 Mail/Phone Order & Electronic Commerce – Con Credit 2.13% + $0.15 M/C World Elite Commercial Face to Face Corp 2.29% + $0.10 Visa Commercial EIRF – Corporate T & E 2.29% + $0.10 M/C World Elite Merit III 2.29% + $0.10 Visa Commercial Card Not Present - Business 2.34% + $0.10 Visa EIRF Electronic Interchange 2.39% + $0.10 Tier 3 M/C Commercial Face To Face or Data Rate II Business 2.41% + $0.10 3.50% + $.20 M/C World Elite Commercial Face to Face Business 2.41% + $0.10 Visa Commercial Card Not Present – Purchasing 2.49% + $0.10 Visa Commercial EIRF – Business 2.54% + $0.10 Visa Commercial EIRF – Purchasing 2.79% + $0.10 Visa Standard Interchange 2.79% + $0.10 Visa Commercial Standard Interchange 2.79% + $0.10 M/C World Key Enter 2.14% + $0.15
  • 9. THE PUZZLE OF TIER PRICINGIf Company A is the better value, how does Company B win your business? So how would Company B possibly win your business as a merchant? Assuming you are currently working with Company A for your merchant processing. The sales rep from company B will ask for your most recent 3 months transaction statements. From this information he will find the following information and put together a proposal that will probably look very similar to the sample below. • Your Tier Rates are already fixed by Company A, and your bill will read. • X number of charges Tier 1 (Qualified) • Y number of charges Tier 2 (Mid-Qualified) • Z number of charges Tier 3 (Non-Qualified) • However, this does not account for which interchange rates each Tier Includes. • Company B will then use this information to compare tier rates, not the true cost. • As you can see below, Company B will lead you to assume that his Tier Settings vs. Interchange will be exactly the same as Company A, and then simply compare Tier Rates for you. • This will always appear to provide a savings to you the merchant, but now you know better.  Notice, that Company B boasts that they will save this merchant over $150 every month.  In reality, we now know that Company B will most likely cost this merchant well over $150 more each month.  They do this by comparing Tier Rate Charges, not where their Tier Rates are set according to interchange. With this many moving parts, you can now see why so many merchant are in the dark. It leaves you at a clear disadvantage, as you can never compare apples to apples.
  • 10. INTERCHANGE PLUSA BETTER WAY TO DO BUSINESS
  • 11. A BETTER WAY TO DO BUSINESS Wiping the Slate Clean In order to understand Interchange Plus pricing, you have to first shake off the your current way of thinking about merchant services. Very often the first question anyone asks us when we approach them on the subject is: “What’s your rate?”. These merchant’s have been trained to think this way from years of working with the “Tier System” and the countless sales reps that continually push these numbers and promises of savings to the merchant. As we have pointed out in the previous pages, a better question might be what is that merchant paying to their service provider? Due to all the moving parts of the Tier System it is virtually impossible for the merchant to know. As with any financial transaction, the less you know, the more it will cost you. .. Literally. So let’s change the game. Instead of focusing on what the merchant processor is offering as a rate, let’s focus on what the merchant processor is actually grossing as a profit margin. Follow your Money What is Interchange Plus Pricing •Between $.20 & 0.95% - $.10 & 3.25% Put simply, Interchange Plus is nothing moreInterchange •Variable / Non Negotiable than adding our merchant account pricing to the Fees interchange rate from the Issuing Bank and the Assessment Fee from the Card Network . •0.11% from Visa or Master CardAssessment •Fixed / Non Negotiable We wipe the slate clean of the Tier Rates. You Fees essentially will see exactly where every penny of your money goes. You will be able to tell how •Interchange Plus, 2 Fixed Fees much money our firm, is making from your Payment •Fixed / Negotiable business on each and every transaction. There Corp are no hidden fees, every penny is accounted for. The numbers This form of transparency has most likely never been offered to you before. For years, only the Example: A $100 transaction largest of corporations, such as Big Box will cost this merchant $2.49 Stores, Fast Food Chains, and large retail merchants have had the negotiating power to overcome the Tier Rate Game. Business Ventures Capital Corp 0.45% + $.18 = $0.63 We , believe every business owner VISA/MC Assessment Fees has the right to know exactly how 0.11% = $0.11 much they are paying for merchant services. Interchange Rate (Sample) 1.60% + $.15 = $1.75
  • 12. Revisiting the Numbers Let’s look at our same Interchange chart again. But this time, let’s apply the interchange plus pricing model to the interchange rates. Revisiting our same parameters from earlier, a $100 transaction in each interchange category for a total of 35 transactions and $3500 Below is a sample of 35 commonly used interchange rates INTERCHANGE MADE SIMPLE TO UNDERSTANDVisa CPS Retail Debit Qualified 0.95% + $0.20M/C Merit III Retail Card Present Swipe Rate Debit 0.95% + $0.20Visa CPS Retail Qualified 0.95% + $0.20 35 Transactions / $3500M/C Merit III Retail Card Present Swipe Rate 1.05% + $0.15Visa CPS Retail Key Enter, Debit Mid Qual 1.80% + $0.10Visa CPS Card Not Present, Debit Mid Qual 1.80% + $0.10 Total Expenses: $91.92Visa CPS e-commerce, Debit Mid Qual 1.60% + $0.15M/C Retail Key Enter Debit Mid Qual 1.64% + $0.15M/C Merit I Debit, Timing & transaction tolerance limits 1.73% + $0.15 Profit to the Payment Corp:exceeded or Electronic commerce $15.75Visa CPS Retail Qualified Rewards 1.90% + $0.10M/C World Merit III, Card Present Retail Swipe 1.82% + $0.10M/C Enhanced Merit III – transaction detail data req 1.82% + $0.10 • No Tier RatesVisa CPS Retail Key Enter, Mid Qual 1.94% + $0.10 • No Hidden FeesVisa CPS e-commerce, Mid Qual 1.94% + $0.10 • No Guessing GamesMail/Phone Order & Electronic Commerce – Con Debit 1.96% + $0.10M/C Retail Key Enter, Mid 1.98% + $0.10 • Just FactsVisa CPS Retail Key Enter, Mid Qual Rewards 1.99% + $0.10Visa CPS Card Not Present, Mid Qual Rewards 1.99% + $0.10Visa CPS e-commerce, Mid Qual Rewards 1.99% + $0.10Visa Commercial Level III0.82% 1.89% + $0.10Visa Commercial Level II – Purchase, Bus, Corp T& E 2.09% + $0.10Mail/Phone Order & Electronic Commerce – Con Credit 2.13% + $0.15M/C World Elite Commercial Face to Face Corp 2.29% + $0.10 As your processor’s feesVisa Commercial EIRF – Corporate T & EM/C World Elite Merit III 2.29% + $0.10 are the only negotiable 2.29% + $0.10Visa Commercial Card Not Present - Business 2.34% + $0.10 fees in the entireVisa EIRF Electronic InterchangeM/C Commercial Face To Face or Data Rate II Business 2.39% + $0.10 transaction, doesn’t it 2.41% + $0.10M/C World Elite Commercial Face to Face Business 2.41% + $0.10 make sense to focus onVisa Commercial Card Not Present – PurchasingVisa Commercial EIRF – Business 2.49% + $0.10 2.54% + $0.10 these costs, as they areVisa Commercial EIRF – Purchasing 2.79% + $0.10 the only costs you canVisa Standard InterchangeVisa Commercial Standard Interchange 2.79% + $0.10 2.79% + $0.10 control?M/C World Key Enter 2.14% + $0.15
  • 13. A BETTER WAY TO DO BUSINESSThe PAYMENT CORP Fixed Fees It’s Time To PartnerNow that you understand the Interchange Pluspricing model. I’m sure you want to know whatfixed fees can be expected from our company.Batch Fee: $0.18All batch closing and batch inquiries areconsidered “transactions” and will be billed atthe same rate as V/MC/Disc trans fees unlessspecified.Monthly Service Fee: $9.95Also referred to as the Statement Fee. This fee isused to offset our fixed cost of processing andmailing out statements each month to you themerchant.Monthly Breach Coverage: $6.95Consider Breach Coverage as a form ofinsurance. In the event you are found The Fine Printresponsible for a secure informationleak, resulting in identity theft, this coverage will Cross border international transactioncover you responsibility for the losses up to assessments/program support, MC network$100,000. It is mandatory on all new accounts access/brand usage (NABU), Visa US acquirerthrough our processor, but can be removed after processing fee (APF), Visa Zero Floor Limit, Visathe account has been opened for 1 month. misuse of the authorization system may apply. Further Visa/MC/DISC mandated fees, including association Base II and kilobyte fees, may alsoMonthly Minimum Fee: $25 applyApplies to Discount Rate & capture fees. It costsus money to keep your account open and active. BVCC does not add any additional hidden feesIf for some reason, your processing fees do not we pass interchange pricing directly through toequal $25 in gross profit to our company in a the merchants at 100% of cost.given month, we will charge you the remainderof the $25 minimum fee. This will not beassessed on most accounts.
  • 14. NEED NEW EQUIPMENT?
  • 15. NEED NEW PROCESSING EQUIPMENT?Retail Processing EquipmentRetail VeriFone Vx510LE - $575.99 Retail Hypercom T4205 - $485Retail VeriFone Pin Pad 1000SE - $150 Includes Internal Pin Pad Hypercom P1300 Pin Pad $150In the field Equipment Financing Equipment Model Monthly Pricing Hypercom, T4205, 24 Mb, Dial $19.95 Hypercom, Pin Pad P1300, 6” $5.85 VeriFone Vx 510LE $22.50 VeriFone Pin Pad 1000SE $5.85 Way 1581 GPRS, Wireless Terminal / Cell Way, 1581, TDES/SDES - $23.00 Phone Wireless Retail: $485.00 Way S40 Printer - Retail: $242.00 Way, S40 Printer $9.50 One time SetUp: $99.00 Additional: $24.99 Monthly Gateway Fees $0.15 per transactions ASK ABOUT OUR FREE TERMINAL PLACEMENT PROGRAM OR RENTAL PROGRAM

×