Merchant Account Blog - Straight Pass Through » credit card processing

Make Some Money and Feel Good Doing It!

Robb Lejuwaan — Mon, 15 Dec 2008 19:39:15 +0000

Referral or affiliate programs are a dime a dozen. In the industry I’m in almost every merchant account provider has one of these programs. I know this is true because in preparation for creating another website I’ve become referral partners with many of them. That is exactly why I am introducing our Referral Partner program today – I have looked at the merchant account referral programs out there and have found many of them to be wanting. Sure these programs pay well but the key question is, can you feel good about referring your friends, family members and associates to them?

For me, if I am going to refer someone to another business I need to know three things:

The product or service has to be great
The cost must be fair
The customer service better be outstanding

If I can find these three things in a business I refer to then, and only then, do I consider what my compensation will be. After all, my relationships are more important than making some extra money.

This where many of the programs in my industry fail. With some programs it’s the rates and fees (many hidden) that I just can’t encourage people to accept. With others I know that after a merchant signs up they will be just another number with no personal touch to be found. The bottom line is, knowing what I know about merchant accounts, I just can’t feel good sending people to most of these companies. So we at Cocard Synergy have created our own referral program; below are some the benefits:

Merchant Benefits

Transparent pricing – cost plus our profit margin, no super low “teaser rates”
Interchange Plus price model – no “mid-qualified” or “non-qualified” tiers
No annual fee
No early termination fee
No batch header fee
No minimum processing fee
Assigned Relationship Manager who knows them by name
Free authorize.net setup

Referral Partner Benefits

Upfront bonuses up to $750 per merchant
Monthly residual income equaling 20% of our profit

It works very simply, just fill out the referral form here and we take care of the rest. Then every month the check shows up in your mail box. I know this is nothing new but we are very exited about it.

Another “Why” Behind This Program

Each week I receive emails and calls from sales people looking for a job. They are from all over the United States and typically have some experience with merchant accounts. We could be like every other merchant account provider and hire them as agents. Just put them under contract and let them go. The problem with that is that we don’t know who they really are. Do they share our values of transparency and exceptional service? Will they be honest? Will they represent our company the way we want to be?

I have been down this road before; hiring sales people who I don’t know and I learned the hard way that is not the path to go down if you want to build a great business. So we have decided to only hire sales people we know personally or who are referred to us by our clients. What his means is we have chosen to grow primarily through our referral partners. Here is a list of some of the reasons we chose to go this way:

We are accountable to our referral partners; if we do not deliver our business will not grow
We can focus on doing what we do best – serving businesses and managing their merchant accounts
We are able to control what type of service all our clients receive
We can build a community of clients and referral partners who can benefit one another
We can have much more fun – partners, community, new clients, all good!

So now you know all about our referral program. If you have questions feel free to comment below or contact me directly. If you want to sign up and join with us just click the button below.

Why You May Need Multiple Merchant Accounts

Robb Lejuwaan — Fri, 12 Dec 2008 15:58:34 +0000

From time to time I review the search terms and phrases that being people to this blog to get ideas for posts. Today one of the first search phrases was “are you allowed to have two merchant accounts?” So here is a quick answer to that question – yes.

We have many clients that have multiple merchant accounts. For example, wineries typically have at least two accounts, one for their tasting room set up as a retail account and the other account for their wine club set up MOTO (mail order telephone order). Occasionally they will have a third account for their website, which is set up as a ecommerce account. We set them up this way because it helps them track distinctive parts of their business and most importantly, it saves them money.

Each type of merchant account (Retail, MOTO, Ecommerce, Restaurant, etc.) has different guidelines and rates. So if you have a retail merchant account setup for your website, your transactions will not meet the guidelines of a retail account, resulting in being downgraded which results in a higher rates. I am not going to into specific examples n the post but if you want to see an example of how this works read this post: What is EIRF?

Bottom line: Yes you can, and sometimes should, have multiple merchant accounts. Also, make sure your account is set up correctly to match the environment your transactions are being accepted in.

A Little Help With PayPal Please

Robb Lejuwaan — Fri, 12 Dec 2008 01:45:04 +0000

It seems almost every day I get an email or a tweet asking me if my company, Cocard Synergy, has a better solution for accepting credit cards than PayPal. I have reviewed the fees of PayPal merchants accounts many times but I am always left feeling like I am not receiving the full story from PayPal reports. So instead of trying to figure out PayPal on my own I am inviting you who have a PayPal account to leave comments below and share your thoughts, praises and complaints about their fees and service. This way I’ll know for sure if what we have is better than what PayPal offers and so will all the people that ask about it.

So…what do you think of PayPal? What has your experience been with them? How about their rates and fees? Come on, leave a comment blow with your thoughts!

More on Free Authorize.net

Robb Lejuwaan — Wed, 10 Dec 2008 18:42:55 +0000

Back in August of this year I wrote a post about freeauthnet.com offer of Authorize.net for “free;” you can see that post here. I tried to show that a free authorize.net account ended up costing an extra $232.40 more than if you just paid the $15 set up fee for authorize.net through my company, Cocard Synergy. Those numbers are still true today but I have changed my mind on what we are offering. I have decided to pay the $15 set up fee for all our new clients from this point forward and still offer the same pricing on the monthly fees. So here are the two offers side by side:

Authorize.net Fees

Fees	Freeauthnet.com	Cocard Synergy
Setup Fee	$0	$0
Monthly Gateway Fee	$15.95	$12.50
Transaction Fee	$0	First 250 free, then $.05

Not too sexy is it? If you go with Cocard Synergy you would save a whopping $41.40 per year. It’s a good thing that is not where the savings stops! When we compare the merchant accounts offered by both companies the savings jump up.

Merchant Account Fees

Fees	Freeauthnet.com	Cocard Synergy
Base Discount Rate	2.14%	Cost Plus .30 %
Transaction Fee	$.24	$.20
Statement Fee	$8.95	$7.50

As you can see from the chart above the Base Discount Rates differ greatly. Freeauthnet.com uses tiers for their price model, Cocard Synergy uses “straight pass through.” If you do not know the difference between these two price models check out this short video that explains it all – What is Straight Pass Through.

Because I do not know what freeauthnet.com charges for their "mid-qualified" and "non-qualified" tiers I cant figure out the price difference. What I can tell you is it is extremely rare a tiered rate program is cheaper than a straight pass through program. On top of that Cocard Synergy does not have any of the following:

Minimum monthly fee
Annual fee
Early termination fee

Again, I am not sure if freeauthnet.com has any of these fees or not. However, typically when a company chooses to give their customers tiered pricing they have all three of those fees.

Bottom Line: I believe Cocard Synergy has the best free authorize.net program available in the market place today. If I am wrong please leave a comment and let me know; I always invite opposing opinions on this blog.

If you would like to take advantage of this offer just go hear:

Cocard Synergy Free Authorize.net Offer.

Straight Pass Through Highlighted by LA Times

Robb Lejuwaan — Wed, 10 Dec 2008 05:43:13 +0000

Yesterday I saw the traffic of this blog triple and I had no idea why. I did a little research and I found out the Los Angles Times mentioned the term “straigh pass through” in a business focused column written by Karen E. Klein yesterday. You an go here to see the column or just read it below:

Credit treatment can cut card fees

Dear Karen: I saw your recent discussion on credit card fees. I work for a credit processor and found that 85% of merchants don’t know that they can get “straight pass through” treatment to help reduce their fees and surcharges.

Answer: You’re right about the benefits of straight pass through, but it’s likely that more than 95% of small merchants are unaware of it, said Bob Carr, chairman of Heartland Payment Systems Inc. of Princeton, N.J.

Straight pass through treatment, common for larger merchants, means that you’re charged the Visa and MasterCard interchange rates without extra costs added on from various credit processors. The processing fees are listed separately, so your costs are more transparent. Few small retailers get the benefit because they don’t know to ask for it, Carr said.

Ask your credit card processor to separate out what they are charging you from the interchange rates. “You may find as many as 12 middlemen processors, all charging fees you never knew about,” he said.

I wish Karen would have quoted me but I must thank her and the Los Angles Times for mentioning this subject.

Merchant Account Compliance Fees – Legit?

Robb Lejuwaan — Tue, 09 Dec 2008 00:11:44 +0000

As you may know, I review business merchant account statements on regular basis. One thing I keep seeing more and more on statements are terms like “Annual Compliance Service Fee” or “PCI Compliance Program.” The shocking thing about these fees is how much they are; I have a statement on my desk that reads $119.75 for such a fee. So what are these fees for? What do you get from them? Are they legitimate or just another profit center for merchant account providers?

I am sure there are going to be some industry insiders that wildly disagree with what I am about to say, but here goes any way. I believe these fees, for the most part, are just another profit center for this industry. Here is why:

If you pay these fees are you made PCI Complaint? Answer: No you are not.
Are you given tools or guides for becoming PCI Compliant when you pay these fees? Answer: Only sometimes.
If you have a security breach and you were not following the rules of the PCI Security Standards Council are you insured against the fines you’ll receive? Answer: Probably not.

So what are you getting for these fees? Most of the time – zip, nada, and nothing!

I know there are exceptions to this but they are few and far between.

The next issue I have with these fees is they typically are added without any foreknowledge of the merchant. In other words they just show up on the statement, with what seems to be hope that the merchant will not see them. If these fees are legitimate why the secrecy? If these fees bring real value why not communicate what that value is? I think the answer is obvious – they provide little to no value so the fees are snuck on to the statement.

The last issue I am going to bring up (I could bring up many more!) is the lack of choice. Typically these fees are not optional, they are mandatory. These fees almost have a feel like they were mandated by the US Government or maybe even God! How dare we question such fees! Here is why I am puzzled about the lack of an option. I have a client that is a restaurant, they have a band new terminal and pin pad, the software file that was installed on that terminal is PCI compliant, the Pin Pad is PCI-PED approved, they have taken their PCI Self Questionnaire. So why do they need to pay this fee, they are compliant, why don’t they have the option to say no to this fee? That would be fair and logical wouldn’t it? I am afraid the answer is that providing such an option would reduce the profit of the merchant account provider.

The truth is that PCI Compliance has created some much needed data security guidelines while at the same time providing a wonderful tool to increase profits for this industry. We can use the fear of a $50,000 fine for not being compliant to manipulate you into paying fees like these. I know this hard to believe that anyone in the financial services area would use such tactics to increase profit. Wait a minute, that is not hard to believe at all is it!

Here are my suggestions for dealing with these fees:

1. If you see these fees on your statements call your provider and ask what you are receiving in return for your money. If you don’t like their answer find a provider who either does not charge these type of fees or actually provides something of value for the fees.

2. Educate yourself on becoming and staying PCI Compliant. Here are some links check out:

The Basics of PCI Compliance

PCI Compliance Guide

PCI Security Council

Security Metrics (They will assist you in becoming compliant)

PCI DSS News and Information Blog

PCI Compliance Demystified blog

Bottom line: Educate yourself about PCI Compliance, take what ever steps you must to become PCI compliant and stop paying these fees if they provide no real value for your business.

Please feel free to add your comments below. I would love to have someone defend these fees, I am very open to being wrong on this.

Visa and MasterCard Interchange Program Changes

Robb Lejuwaan — Sat, 06 Dec 2008 00:54:30 +0000

I had planned to write this post several months ago but we have been so incredibly busy that I had to put this on the back burner. So finally, here is a summary of the key changes that occurred in October to Interchange from Visa, MasterCard:

Master Card

Change #1 – MasterCard will no longer require the registration of utility merchant locations (MCC 4900); the “U” code is no longer a requirement to qualify for existing Utility Interchange programs.

Change #2 -The following merchant categories with consumer debit transactions will no longer be eligible for the UCAF Debit (Full and Merchant), Merit I Consumer Debit, and Merit III Consumer Debit interchange programs:

Insurance-Direct Marketing (MCC 5960)
Insurance- Sales, Underwriting, and Premiums (MCC 6300)

Change #3 -MasterCard will no longer allow Real Estate merchants (MCC 6513) with consumer debit transactions to qualify for Merit III (Base) interchange rate programs.

Visa

Change #4 -Visa is making two adjustments that will affect U.S. transactions processed under all three commercial products (Small Business, Corporate, and Purchasing Cards):

The Level 2 interchange rate will be increased by five basis points.
The Standard interchange rate will be increased by 25 basis points.

Interchange Program	Old Rate	New Rate
Business Card -Level 2	2.00% + $0.10	2.05% + $0.10
Business Card-Standard	2.70% + $0.10	2.95% + $0.10
Purchasing Card-Level 2	2.00% + $0.10	2.05% + $0.10
Purchasing Card-Standard	2.70% + $0.10	2.95% + $0.10
Corporate Card-Level 2	2.00% + $0.10	2.05% + $0.10
Corporate Card-Standard	2.70% + $0.10	2.95% + $0.10

Change #5 -Additionally, Visa is making adjustments specific to Visa Corporate and Visa Purchase Card products:

For Visa Corporate products, Visa is reducing the Retail interchange rate by 10 basis points and increasing the Electronic interchange rate by five basis points.
For Visa Purchase Card products, Visa is increasing the Retail interchange rate by 10 basis points, the Card Not Present interchange rate by 15 basis points, the Electronic interchange rate by 20 basis points, and the GSA Large Ticket rate by 25 basis points and $4.00 per transaction. The GSA Large Ticket program will no longer have a $5,000 minimum.

Interchange Program	Old Rate	New Rate
Corporate Card-Retail	2.20% + $0.10	2.10% + $0.10
Corporate Card-Electronic	2.20% + $0.10	2.25% + $0.10
Purchasing Card-Retail	2.20% + $0.10	2.30% + $0.10
Purchasing Card-Card Not Present	2.40% + $0.10	2.55% + $0.10
Purchasing Card-Electronic	2.45% + $0.10	2.65% + $0.10
GSA Large Ticket	0.95% + $35.00 (1.35% min.)	1.20% + $39.00

Change #6 -Visa is introducing a new interchange fee program and rate for domestic debt repayment transactions. The CPS Debt Repayment program (Fee Class 177, 0.35% + $0.50) is limited to Visa consumer debit cards on collectible consumer debit for auto loans, credit card payments, mortgage payments, and student loans.

CPS/Debt Repayment requirements:

US Merchant registered with Visa with MCC of 6012 (Financial Institutions-Merchandise and Services) or 6051 (Non Financial Institutions- foreign currency, money orders (not wire transfer) and travelers cheques.
Card must be issued in US
Merchant Verification Value must be present and valid
CPS requirements are met
Processing code must be 50
Market specific data identifier must be B (Bill Payment)
Special condition indicator must be 9 (existing debt indicator)

And you thought you knew something about how merchant accounts work! After reading this I am sure you now have an idea of how deep the rabbit whole can go when it comes to these things. I even held back disclosing all the changes because most of them will not affect 99% of merchants.

Here are some of my summary thoughts on these changes:

Most importantly, unless you are accepting payments from government entities or are primarily taking Visa Corporate Cards these changes will have very little, if any effect on you.
If your rates were increased across the board due to these changes, you may have a good reason to complain since most of the Interchange rates stayed the same.
If you are accepting credit card payments for debt repayment, Visa says you can only accept debit cards and has some very specific guidelines for doing so. If you re accepting regular cards for debt payment watch out a fine may be in your future from Visa.

My next post will reveal all the changes to Discover Interchange programs. If this post has caused a question to pop up in your mind feel free to contact me or leave a comment below; I will be sure to respond to your inquiry.

Introducing the iPhone Virtual Credit Card Terminal

Robb Lejuwaan — Thu, 20 Nov 2008 23:30:08 +0000

Have an iPhone and desire to run transactions from just about anywhere you go? Then this iPhone application is for you. I have included the link below, just make sure you do not get your merchant account from these guys because if you read the fine print you’ll see their rates are very high – non-qualified discount rate at 3.79%!!

iPhone Credit Card Terminal Application

Update: March 16th, 2010

Since I wrote this post much has changed with the iPhone and the programs and hardware are available to work with it. This is also true when it comes to merchant accounts. As a result I have founded another website that focuses solely on merchant accounts for the iPhone. I invite you to check us out by clicking the link below:

iphonemerchants.com

Are You PCI Compliant?

Robb Lejuwaan — Wed, 24 Sep 2008 13:39:36 +0000

We have written several posts about PCI Compliance on this blog, but it is definitely not our strong suit – yet. Therefore, when I run across any good content on the subject I like to point it out to you our readers. So here is an article I just came across on an American Express website:

Are You PCI Compliant – By Dawn Rivers Baker

Enjoy!

Quickbooks Compatible Merchant Accounts Can Save You Big $$

Robb Lejuwaan — Thu, 18 Sep 2008 18:45:05 +0000

I just added a new client that uses QuickBooks Pro 2008 to run their transactions. They were setup with Quickbooks Merchant Services because they thought they had no other choice. Just to make sure that was the case they went searching on the internet and came across this blog. They filled out a form requesting a merchant account analysis and with 48 hours made the switch to Cocard Synergy as their merchant account provider. Why did they act so quickly? Here are the main reasons:

We were able to lower their rates significantly resulting in a monthly savings somewhere between $800 – $1000 per month!
We set them up with a plug-in that allows them to continue to enter their transactions inside of QuickBooks
We guaranteed their effective rate would be 1.01% below their previous effective rate with QuickBooks Merchant Services.
Our guarantee says if we miscalculated the savings we will refund the difference and lower their rate further to match our guaranteed effective rate.

You may be wondering if this is normal experience for merchants with Quickbooks Merchant Services and all I can say is from my experience this is pretty much the norm. In case your wondering what type of credit card volume this merchant had it was about $85,000 per month in Visa, MasterCard and Discover Volume. Now my company’s monthly profit on this deal is about $200 that means QuickBooks’ profit was somewhere between $1000 and $1200 per month!! Wow, that is just amazing!

So if you, or someone you know, uses Quickbooks and Quickbooks Merchant Services stop it! You are over paying for your merchant account services. If you want to start saving on your merchant account and still be able to process transactions through the QuickBooks accounting software fill out the same form my newest client did. I guarantee you will not regret your decision!

Merchant Account Blog - Straight Pass Through » credit card processing

Make Some Money and Feel Good Doing It!

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