Thursday, October 28, 2010

Merchant Services

Our own personal credit card statement/agreements are confusing enough.  Being a merchant who will accept credit cards takes it to a whole new level!

As part of my conversation with my point of sale software vendor yesterday, I asked him to have their merchant services person contact me with additional information on what they can provide to me for credit/debit card processing.  Gina was very responsive and sent me information yesterday afternoon.

This morning, I printed it all out for review and starting writing down my questions for Gina.  There is so much new terminology that I spent quite a bit of time researching and trying to understand what it all meant!  I did not want to go into my conversation with her sounding like a complete idiot!

I will make the statement that the whole credit card process is a win for the banks and not a win for merchants and consumers.  The myriad fees charged to merchants for everything imaginable:

  • A percentage of each sale
  • A flat swipe fee
  • An additional fee if you have to type in the credit card number (as opposed to swiping)
  • An additional fee if you have to call in an authorization
  • An additional fee if you accept foreign credit cards
  • Higher fees for accepting corporate cards, loyalty cards or rewards cards (you know those cards that give you cash back?  Your merchant pays a higher rate to take them)
  • A minimum fee (in case you don't reach a certain fee level)
  • A fee for sending in your batch every night (and if you don't send it within 24 hours, there can be additional fees)
Gina told me to budget (once all the fees are added on) for 2 - 3% of my sales to be taken up in credit card fees.  I thought it would likely be around that 2% mark.

There had been some problems in the past with people setting up merchant services accounts without having any type of retail business.  They used these accounts to process stolen credit card numbers and commit fraud.  So, once I do sign up, they will perform a site visit to authorize that Zoe really does exist!

The good news is (and we had discussed this in earlier blogs) is that I will be able to accept debit cards (for actually a lower rate than credit cards) but I will not be able to offer the cash back feature that is available from some merchants.  (I won't have the PIN pad feature).  But many of you had privately contacted me and said you hoped I could take debit cards so I am glad to report YES!

There is a lot going on in the credit card world these days.  This recent article from the Wall Street Journal discusses a settlement that Mastercard and Visa have come to (but American Express is still fighting).  Very interesting read from both a consumer and a merchant standpoint.


  1. Yikes - they really have you over a barrel, don't they?

  2. I was so grumpy after this conversation I refused to use my credit card for anything for two days! It's all a necessary evil.

  3. Merchant Processing Services has excellent customer service, no contracts or cancellation fees and very reasonable rates. I have never had any issues with them, and plan on keeping them as my processor for a very long time. My sales rep was Great! Call at (877) 877-9592.

  4. Thanks, Donna! This is very helpful!