Wireless Credit Card Guideline
by artist Kay Cummins
distributed to the Sonoran Arts League membership 
September 29, 2010

I went through Buyers Zone (online comparison of processors) where you put in the basics about your company, what you are looking for and then a bid request is generated with several companies. I found this site to have a lot of useful information and it generated quotes from larger processors that are competitive. I also contacted a local company for comparison. Outlined are the things I learned from research and from talking to users and processors. I hope it will help you to negotiate as well. I found that the contract terms and rates had become much more competitive in the last 2 years. A nice surprise, but like anything you need to understand what you are getting and then follow through and CHECK to make it is. 

Things to ask when considering a credit card processor

  1. What terminals do you support? 
  2. What network is used to transfer data
  3. Describe what you are looking for….I needed wireless with long battery life, real time processing, with a printer. I wanted low rates, low transaction fees and I needed a terminal for the lowest cost.
  4. Ask what fees are charged? Here are a few that are unavoidable: 
     * Wireless Fee ($15 a month.)
     * Statement fee ($5-8 per mo.)
     * Debit gateway ($5 a mo.) only needed if you wish to accept debit with PIN entered (may result in lower chargeback numbers, not important if the majority of sales are large ticket)
     * Monthly minimum in discount fees (best I could get was $10 but this is not a big deal if you process sales each month…more so for people who only use it seasonally for shows).

Other fees: Cancellation fee? You want this to be 0. Or if you have to go with a contract term make sure it is as short as possible. I was able to get a “free” terminal Nurit 8000 or 8020 with a 12 mo. Contract. Remember FREE is not always free, so go over everything in detail. Do they charge to program your terminal? Do they have any other “gateway” fees? Do they have a cancellation fee? 

5. Does the processor have Seasonal processing? This is useful and will save you if you have months that you do not have transactions (i.e. you only do summer shows). However, please note that you will not have to pay gateway fees or minimums; you will likely still pay a monthly statement fee. Minimum processing fees are really only a factor if you have charges under $600 a month. If you have charges above that, you are meeting the minimum and it doesn’t really matter.

6. Where is customer service located? What are the hours? Wait time? Call the number and see. I prefer companies providing service 24/7 in the US. I think wait time should be less than 5 min.

7. What happens if your terminal goes down or breaks? How will it be handled? Will they overnight one to you? What happens if it breaks at a show? (Typically you go with the knucklebuster and call in for authorization on the larger tickets).

8. What cards can you accept? Visa/MC and Discover are usually a standard package. AMEX often requires an additional separate contract. If you wish to take AMEX ask about this. There are several companies that offer this without a separate contract, but I am not taking AMEX so I didn’t research it more. AMEX has higher fees and slower deposit. I haven’t had many customers ask to use AMEX, and those that did all had Visa or MC so I personally didn’t lose a sale. 

9. Fees, this is where it can get tricky…and this is sometimes the hardest area to understand and compare between companies. Here are some tips:

* Compare companies, get them to sweeten the deal and match the rates. It is interesting that they will.
* Companies provide Discount Rates as split, blended and interchange plus.

Split rates are one rate for Debit Cards and another for Credit Cards for example 1.19% Debit with signature and 1.69% Credit Card

Blended rate would be the same rate for Debit and Credit or 1.59% on all charges.

Interchange Plus Interchange is the actual rate that Visa/MC charges PLUS the amount the processor charges. These rates vary for Debit and Credit and by qualification level. Interchange are the lowest rates and can be the most competitive if the PLUS % is competitive. I think that monitoring this would be difficult. You may be overcharged if you don’t check what is being processed from time to time. On the flip side if you have high volume, this should work in your favor.

Debit rates with a PIN are lower than the split or blended rates I use in my example above. They are often 0.95%; however they require an additional Debit Gateway costing $5 a month and the per transaction fees are around .35 cents. Generally the break even point on using a PIN and getting a better overall rate is a $50 or higher transaction. If transactions are above $50 and people are using their debit card and your volume is high enough, this will work to your advantage. Chargebacks are reduced when the person inputs a PIN.

Qualified/Mid Qualified and Non Qualified rates: This is the credit card category that the transaction falls into and it will tell you how high the discount rate will be. Here is an example from my contract: Qualified 1.69%, Mid Qualified 2.49% and Non Qualified of 3.18%. Here is a simple rule: a manual entry or phone entry is usually considered Mid Qualified. A Rewards card, business account or a foreign card is usually Non Qualified. Ask about this and read the contract. If you are swiping you should be getting mostly the Qualified rate unless your customers are using reward or incentive credit cards.

·     The next fee is the Per Transaction Fee. Fees can be broken down into what the processor charges and the Visa/MC banks. There are sometimes additional wireless/internet processing fees. These matter when you have lots of transactions at low amounts. Here is an example: Processor gets .19 + Visa/MC of .02 (current amount average) + Wireless transaction fee .10 = .31 per transaction.  If you have a website there is also a fee for the shopping cart transaction. Similar to the “wireless transaction fee” but usually called a Internet transaction fee. So when shopping prices MAKE sure you have the whole breakdown of fees, I have found that many processors only talk about their fee, even when you ask SO this is a good reason to read contracts closely before accepting it. I was hit with a .10 fee that was never discussed, I was able to negotiate it to .07, but all the same, I could have easily missed it. Note: PIN Debit fees are higher, but breakdown pretty much the same way.

·     Batch Fee: .20 - .35 cents. This is needed at the end of the day to close out your transactions. Unless you close your transactions multiple times a day (multiple units?) this isn’t much to worry about.

·     AVS fee (address verification) used for NO card present processing (phone orders, ans some manual transactions) mine is .05 per transaction. Negotiate here if you do your business in these areas.

·     Voice Authorization 1.00 – 1.50, this is when you call in a card and have the funds held/approved for payment, if you are using a knucklebuster (your system is down) this will protect you from taking a bad card, so determine your loss threshold and call when necessary.

·     Touch Tone Transactions - .50 (call an 800# and follow prompts to enter card info and process sale. *note a BATCH fee (.35) happens each time you do this, but no additional entry or forcing is needed) For me this is much better than doing a Voice Authorization where you talk to a live operator.

Other Tips:

BBB status: Check every processor and company out www.bbb.org , I only reviewed A and A+ ratings. Make sure you get the name exactly and the address of the office as there are MANY companies and you don’t want to review the wrong one.

Terminals: Verifone currently owns Verifone and Nurit terminals. They are the leader in wireless terminals. Another terminal was the Way MTT 1581 but it seems that while it is lower cost, not all processors are supporting it. My research with Jewelers and Artists in 2 large groups is that most of them doing large shows in the SW are using Nurit 8000 and 8020 and are very happy with them. A few mentioned batteries being a bit tricky, but no one felt this was significant. I repeatedly asked for information on the Verifone VX670 and did not get any feedback, except from processors & Terminal support people saying it was the best and was easier to reset in the event there was a problem. Note: I requested a Nurit 8020, but was shipped a Verifone VX670 and am trying to resolve this with the processor. Please note that you should NEVER pay more than wholesale for a terminal. Even if you are in a contract leasing a unit, there should be an option to buy the terminal at wholesale. This is usually done in the sales department, NOT customer service (where they will charge full retail….$1100 vs $395).

Payment using your phone (Iphone, Droids,etc). I did review these briefly; they didn’t work for me because I don’t have a good signal at many of the shows I do. If you don’t have a signal you can’t process. However; if you get a good signal at the shows you do, have good battery life, and already have an upgraded phone and large package, data etc. This might be the one for you. You get an adapter that lets you swipe cards and can also get a wireless printer to print receipts. On the review that I did, the best system was e pay. Go to www.toptenreviews.com and enter mobile credit card processing. They have a nice comparison. I originally was looking for a system that integrated with Quickbooks, Intuit has a phone processing program that integrates, but it is missing a lot of the features that e pay has. My research did show the Squared Up is still in beta testing and not ready in my opinion for someone entering a busy show season. You can capture a lot of detail on the buyer with this system. A definite plus. You can email receipts or use a printer. Please note that the fees in the above sections will all come into play as well. It is an option for live processing of cards without a wireless terminal.

Printer Paper and supplies: Getting this through your processor is generally costly. You can buy printer paper at Walmart or office supply stores for $2-3 a roll. If you do really high number of transactions and go through paper quickly then this feature can work to your advantage. Sometimes a contract will sign you up for free, just remember to cancel if you don’t want to pay. 

Cancelation: Read this carefully in every contract, you should always be able to renegotiate fees if yours get out of line with the market. It costs the company more to get a new client than to keep an existing one. If you are currently in a contract and can’t get out without a penalty….keep the account open until the date that you can. You can have 2 accounts open at the same time. Make sure you put all cancellations in writing and do them the necessary time in advance (often 60 days). You can also call and speak to your sales rep or customer service and see if they will let you out early. It never hurts to ask, but they may match the offer and that wouldn’t be bad either. If you like your current company, you should always give them a chance to compete.