Merchant Services BasicsWhat does PCI Stand for?
Payment Card Industry. There is actually a separate council whose sole mission is to “enhance global payment account data security by developing standards and supporting services that drive education, awareness, and effective implementation by stakeholders”. This council was founded in 2006 by the card brands.
PCI consists of two parts in an analysis of the payment processing system:
- The first part is a series of questions that you are provided to educate a merchant on best practices for safely and securely accepting credit cards for payment.
- The second part varies based on the questions to part 1. This digs deeper to find or demonstrate any potential vulnerabilities based on the current system used to process payments.
- For over 15 years, our clients have received direct, hands on support with free onboarding and training, best practices for payment acceptance, on-going training and live help desk support as well as custom solutions to suit the unique needs specific to the business/business owner.
- A bank merchant services is typically an outsourced service to a service provider like TransAct, who is their referral partner. They may private label the service or simply refer their banking customers to this 3rd party provider.
POSWhat does POS stand for?
Point of Sale.
Features that can be found in POS Systems include: Integration with QuickBooks, loyalty program integration, processing/issuing and tracking gift cards, inventory management, time sheets, employee scheduling, clock in/clock out, membership management, appointment setting and e-mail marketing integration and more!
Selecting the correct POS System can help a business owner save time and money, while creating better data to help analyze and understand the business.
Often, business owners believe they have to pick an industry specific or affiliated POS. That is often not the case. For example, Hair Salons = Millennium, Spas = Mind Body… There are many POS platforms that are well known in an industry, but often are more expensive than others that give the owner more freedom, cost less and do more.
Digital PaymentsWhat is the difference between traditional merchant services and digital payments?
- What are Traditional Merchant Services? Traditional Merchant Services has been the industry standard for many years of payment collection typically using a designated piece of hardware to receive payment from their clients, customers, patients etc.
- What is a Digital Payment? Digital Payments provide a merchant with tools to collect payments in absence of a hardware device.
E-Commerce is the process of conducting payment transactions electronically through the internet.
An electronic check, or e-check, is a digital form of payment that allows either a merchant or a merchant’s client to process a check through the bank’s network and mirrors a conventional paper check. Benefits include saving processing steps and increased cash flow as e-checks typically arrive sooner than paper checks.
- ACH and EFT payments are often confused. They are similar in that they are both forms of electronic payment:
- ACH – Automated Clearing House
- EFT – Electronic Funds Transfer
- However, EFT refers to all digital payments, whereas an ACH is a specific type or subset of EFT.
- ACH payments can take longer, have larger fees and sometimes has a percentage-based fee. Most business owners will never use or process ACH.
ACH or Automated Clearing House, unlike e-checks, can take several days to process, like a paper check might. Important to note, while TransAct does not assess a percentage-based fee on a digital check transaction, some merchant processors do charge a base fee AND a percentage of 0.5% to 1.5% on the amount paid.
Rates & PricingWhat is the difference between rate and cost?
Each card brand has worked with banks worldwide to issue credit cards.
When issuing, cards typically fall into a specific category the card brands have defined. Debit, Credit with Rewards, and Brand type etc. They are assigned a series of tags. For example, one popular card type is Visa’s “Card Type: Rewards 1”.
The rate for this card type is different than others within this same card brand. TransAct educates our clients that the rate is only part of the cost equation and you should be interested in the total cost and the services that will support the fluidity of your payment deposits.
A rate is defined by the specific card brand and you should be able to google any card type listed on your merchant statement to verify the rate. For example, a Visa Rewards 1 card rate is 1.65% +.10.
- Flat rate providers typically take the base cost of merchant services (rate, item fee, and monthly fee) + Card Brand costs + profit, and bundle them together to charge a simple percentage on each transaction processed by a merchant.
- Traditional aka variable percentage Merchant Services with Transact typically proves to be more cost-effective and secure.
- You are charged on what you actually process.
- Fees are specifically outlined and not hidden in bundling.
- Some retail clients have saved a half to three-quarters of a percent per transaction over a flat rate provider when switching to TransAct.
TransAct does not always need a statement because the manner in which we work with prospective clients typically does not lend itself to needing the merchant statement up front. We can get the answers we need from asking you questions about your business and the types of transactions processed.
A monthly minimum means this particular merchant services provider is requiring you to have a minimum amount in sales per month, generating a minimum amount in processing fees. If you do not meet this minimum in sales, you will be assessed the minimum fee.
SurchargesWhat is a payment card surcharge?
A payment card surcharge, also known as a checkout fee, is an additional fee that a merchant adds to a consumer’s bill when he or she uses a card for payment.
As a result of a legal settlement to resolve claims brought by a group of U.S. merchants, merchants in the U.S. and U.S. territories may add a surcharge to certain credit card transactions (no surcharging debit and prepaid cards), starting January 27, 2013. Merchants who choose to surcharge must follow consumer disclosure and other requirements agreed to as part of the settlement.
Yes, however, merchanges must surcharge each card brand on the same terms and conditions as any equal or higher cost competitor that imposes limits on surcharging.
U.S. merchants have the option to add a surcharge at the “brand level” to all credit card transactions, to particular types of credit card transactions at the “product level” (e.g. Visa Traditional, Visa Traditional Rewards, MasterCard World Pay), but not both.
U.S. merchants must first notify Visa, MasterCard and their acquirer of their intent to surcharge at least 30 days prior to implementing surcharging. Merchants can submit a surcharging notification form to Visa by clicking here. Merchants can email MasterCard by clicking here and providing the following information:
- Merchant name
- Merchant contact information (address, phone and email)
- Number of locations surcharging
- Business type accepting credit card (face-to-face, eCommerce, mail order or phone order)
Before choosing to surcharge, U.S. merchants may want to consider a number of factors, including:
- The potential impact on your customers, how are they going to react?
- What your competitors might be doing?
- What information must be disclosed to your customers, and how?
- Cost of credit cards and other forms of payment
- At the time of this writing, 10 states have prohibited surcharging and they including California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. Be sure to check your state’s legislature if you make the decision to implement a credit card surcharge to determine if it is allowed.
No. If a merchant is prohibited from surcharging in one state, Card Brand rules do not prevent the merchant from surcharging in other states that allow the practice.
No. The settlement agreement impacts Visa and MasterCard’s rules to surcharging credit card purchases made in the U.S. and U.S. territories only. Surcharging remains prohibited outside the U.S. unless there is a local law or variance that requires merchants be permitted to engage in the practice.
- Notify Visa, MasterCard and your acquirer at least 30 days in advance of beginning to surcharge
- Limit surcharging to credit cards only (no surcharging debit and prepaid cards) and limit the amount. The surcharge must not exceed the merchant’s cost of acceptance for the credit card.
- Disclose the surcharge as a merchant fee and clearly alert consumers to the practice at the point of sale – both in store and online – and on every receipt. Merchants that surcharge must disclose the surcharge dollar amount on every receipt. In addition, disclosures that a merchant outlet assesses a surcharge on credit card purchases must be posted at the point-of-entry and point-of-sale.
No. The ability to surcharge only applies to purchases made with a credit card, and only under certain conditions.
Yes. U.S. merchants may assess a surcharge on credit card purchases that does not exceed the merchant discount rate for the applicable credit card surcharged. In cases where the merchant’s cost exceeds 4% of the underlying transaction, in no event can the merchant assess a surcharge greater than 4%.
Yes. U.S. merchants that surcharge must disclose the surcharge dollar amount on every receipt. In addition, disclosures that a merchant outlet assesses a surcharge on credit card purchases must be posted at the point-of-entry and point-of-sale. Disclosure requirements and sample compliant signage can be found here.
Yes. The chargeback can be for the full amount of the transaction, including the surcharge amount.
MORE USEFUL LINKS TO FIND OUT MORE ABOUT CREDIT CARD SURCHARGES:
Links for merchant information regarding their ability to surcharge:
Links for merchants wanting to register with the Card Associations in order to begin surcharging:
Visa Links that are helpful: