4 Ways to Save on a Merchant Account

Almost any business can now accept credit cards with little to no start-up costs.

So how do you make sure you are getting the lowest costs for the long run?  Following are four ways you can save money on your credit card processing, and avoid frustrating traps.

1) Don’t Sign an agreement with a long-term commitment!

Signing a contract or an agreement with a term and termination fees commits you to staying with a processor regardless of your satisfaction or pricing changes.  Many times these fees are hard to find in an agreement so check if there it a term listed and then find charges for cancelling before the termination date.  Don’t take “we never charge that” as an answer from a sales rep.  If it is in writing, they will charge it.

• Cancelling in the midst of your term means paying a steep termination fees or remaining monthly fees, many times up to $1,000.

2) Never Focus Exclusively on Percentage “Discount” Rates.
Companies who quote extremely low rates are usually trying to distract you from ‘gotchas’ that will have you paying much more in the long-run.  Almost all processors have the same general costs so if something seems much lower, assume they are taking a loss to recoup revenue somewhere else.

• Getting the lowest rates doesn’t necessarily mean that you’re getting the best deal.  Remember, the different between tenths of a percent are almost immaterial.

3) Look to Save on Processing Equipment. 
Most equipment can function with any processor and costs have declined dramatically.  Many companies now even offer free applications for processing on an iPhone, Blackberry, Android and Windows Mobile platforms or over the Internet.  There is no reason to pay a lot out-of-pocket if your processing needs are basic.

• Never lease equipment. Leasing is extremely costly, and involves long-term agreements.

4) Ensure You Have the Right Type of Merchant Account for Your Business.
There are different types of merchant accounts based on the way credit card transactions are accepted. It is always cheaper to have the right merchant account type for your business.

• Always work with a firm that can explain the differences between the different merchant account types and which asks questions about your specific processing environment.

On February 17, 2010, Merchant Warehouse Co-CEO, Henry Helgeson spoke with PaymentsSource.com regarding the Housing and Economic Recovery Act passed by George W. Bush in July 2008, which requires merchant acquirers report their merchants’ credit and debit card transactions to the IRS as of January 1, 2011.

The article, “Processors, Not ISOs, to Bear the Brunt of Legislation”, addresses the impact these regulations will have on the industry, and Helgeson believes that the majority of the responsibility should be on the Processors since they have easier access to the information needed. However, Helgeson also believes that ISOs and merchants will need to get educated about the requirement to ensure all are abiding by the new law.

To view the article in its entirety, click here.

On February 11, 2010, Network World featured Co-CEO of Merchant Warehouse, Henry Helgeson and Phil Lieberman of Lieberman Software in a Tech Debate on who should be held accountable for ensuring the necessary security measures are taken to prevent data breaches like that of Heartland Payment Systems, Inc.

Lieberman believes that Heartland did everything they were obligated to do to prevent the breach and the card issuers are to blame for not issuing smart cards to consumers. Meanwhile, Helgeson believes that, while Heartland didn’t deserve the industry scrutinization when it was already victimized by the breach, it’s important that payment processing providers make more of an effort to lock down systems and protect cardholder data.

To read the article in its entirety, click here.

In 2008, everyone at Merchant Warehouse  made it clear how important Corporate Philanthropy is to our organization. We aren’t just another credit card processing company.  We are members of our community.  Here is a summary of what we accomplished:

MW Casual Friday Charity Donations
Last year, our average donation to charity each Friday was about $250.00. We increased that for 2008 to $300.00 per week. In addition, we raised a total of $14,770.00 which was donated to local, national and international charities. Here is part of the snapshot of where your donations went:

• Organization in the fight against cancer: $4,487 (72% increase from 2007)
• Organization benefiting children: $3636
• Organizations battling hunger and homelessness: $1,660
• Neighborhood & Community Organizations: $772
• Organizations battling specific diseases: $1,181

MW in the Community
MW employees donate a lot more than money; they also donate their time and efforts in the community. We began the year with the Dash for the Difference through Boston Cares. This “Amazing Race” style service event found the MW team taking home the first place finish in the corporate division. In doing so, we helped contribute to the $25,000 raised for Boston Cares.

In May, we completed our second annual Corporate Volunteer Day with Boston Cares where employees cleaned, painted, organized and planted at the Saint Ambrose Shelter in Dorchester. The work they did allowed St Ambrose to continue providing shelter, support, and hope for homeless families in transition.

Through our work with Habitat for Humanity, MW employees helped rehabilitate a house. They did everything from scraping and painting to securing flooring and building a porch.

MW finished up the year with their highest participation of any event with Frosty’s Friends. Through this program with Boston Cares, employees doubled the number of gifts they gave in 2007, reaching out to 80 children at the East Boston ABCD Head Start Center. In addition, MW donated hundreds of dollars worth of sports equipment and art supplies to the Casa Nueva Vida shelter for women and children in Jamaica Plain.

Walks and Runs
In May, employees participated in the 20 mile Walk for Hunger. Participants raised money and walked for Project Bread who funds more than 400 emergency food programs in 135 communities statewide.

At the JPMorgan Chase Corporate Challenge we had 22 employees who walked and ran the three mile race through Boston. The proceeds from the challenge went to Camp Harbor View, giving at-risk children from Boston the opportunity to attend summer camp.

In September, MW participated in the Boston Marathon Jimmy Fund Walk, joining in the battle against cancer, and raising $2,651.00 in the process. The money raised benefitted the Dana-Farber Cancer Institute to help change the odds for patients facing all forms of cancer.

We finished the year by with the Best Buddies 5K Gobbler. This Thanksgiving 5K helped raise money for Best Buddies in their quest to enhance the lives of people with intellectual disabilities.

Partnerships in the Community
Merchant Warehouse was extremely excited to begin its partnership with Best Buddies through their Jobs program which has received national recognition. The President’s Committee on the Employment of People with Disabilities has recognized Best Buddies Jobs as a national model of supported employment focusing on white collar and other non-traditional employment opportunities for people with cognitive disabilities.

In addition, MW sponsored Boston Cares through their Summer Nights, Fenway Lights fundraiser. As a Grand Slam sponsor of the event, Merchant Warehouse helped support Boston Cares and their ability to run more than 100 volunteer projects every month.

Greening our Company
Over the course of the year, MW purchased 519 green tags to offset our carbon emission by investing in clean, renewable energy through the Bonneville Environmental Foundation. These tags represent the offset of 389.25 US Tons of carbon emissions to our environment. We also made the switch to using 30% recycled paper in our office for all of our printing needs.

In addition, we have set a course to introduce a number of new initiatives to help our company be more green in 2009. Keep an eye on the About Us section of our website for a new Green Page which will be coming out soon.

Thank You
Thank you to everyone who contributed their time, money and passion over the past year. We saw a huge increase from 2007 in how we were able to contribute to the community, and we have set 2009 up to be a truly great year of giving back.

In my last blog, I discussed how different terminals were capable of performing different functions, or processing different types of transactions. This time, I will be discussing another factor which separates terminals apart from each other: connectivity. During a transaction, the credit card terminal will connect to the processor and then within seconds, a result response will come back to the terminal. Though this is a simplified description of the process, it should make clear that the terminal must be connected to some sort of telecommunications network in order to work at all. There are many different types of terminals out there, but they can all be separated into three categories based on how they connect to your Merchant Account processor.

Dial-up, phone line based terminals: This is your basic terminal which you’ll find in a majority of small to medium sized businesses. If you do some research, you’ll find that these are overall the least costly machines and the ones that have been around the longest. In order to use this type of equipment, you’re business will need a dedicated, analog phone line. By analog, I mean a regular landline, not digital or Voice Over IP.. By dedicated, I mean that it shouldn’t be a phone line which is part of a greater office phone system, such as a PBX or IP-PBX System. Though your office can use one of these, you should speak to your phone people about getting a dedicated phone line which is separate from your system. Many times, a merchant will already have a fax machine which runs off of a dedicated line. One good thing to note is that almost all dial-up credit card terminals come with an extra phone port so that they can share the phone line with a fax machine or a single phone. The one problem here is that you wouldn’t be able to use your credit card machine and your phone or fax machine at the same time. The next type of terminal connectivity eliminates this problem

IP-based terminals: These terminals work off of your broadband internet connection, and they are great for merchants who use Vonage or other Voice Over IP solutions. Basically, you’d attach your terminal to a Cable Modem, DSL Modem, or into your IP Router in order for the terminal to process transactions. Two great advantages to IP terminals is that they process transactions faster and that they allow you to process transactions and leave phone lines open, allowing you to conduct business without having to wait to free up a line or receive phone calls without worrying about disrupting your credit card terminal. There are also two disadvantages: Firstly, these terminals are usually more expensive than dial-up terminals. Secondly, if you’re experiencing problems with your IP-terminal and need to perform a download to correct programming problems, you may need an analog phone line. Though your terminal will work over IP for authing credit cards, there’s a great chance your processor won’t have the ability to have your terminal pick up your merchant information over IP. It’s been my experience that many merchants who use the internet or VoIP for their phone service won’t have a backup analog phone lines for situations like this. I’d advise you to invest in a phone line for this very reason. It can prevent downtime your business would experience from your Internet Connection or VoIP connection being down.

Wireless terminals: No in-depth explanation necessary. Just like a cell phone, these credit card terminals access a cellular network such as GPRS or CDMA to send info to the credit card processor. Although these are usually the most expensive of the three connectivity types, they are definitely worth it for merchants who process a volume of credit card transactions at trade show sales events or in on-site situations like a plumber or carpenter who comes to your house to make improvements. With this terminal, you will have the piece of mind knowing whether or not a customer’s card will go through at the actual point of sale instead of writing down their information and bringing it back to your office to be keyed in. Not only will it give you piece of mind, but swiped credit card accounts generally get lower rates than those of a MOTO or Keyed Face to Face merchant account would so it may end up saving you money in the long run.

If you are interested in finding out more about which terminal you should use with your existing telephony setup or about how you could benefit from a wireless terminal, call up Merchant Warehouse and let one of our account representatives help you figure out what type of terminal would work best for you. We will definitely have the solution to your credit card terminal needs.

Joseph Fitzgibbons – Senior Support Specialist

Not every terminal is built the same. Different terminals have different features and perform different sets of functions. The same goes for merchants; not every merchant is the same and not all require the same functions from their credit card terminals. If you are looking to purchase the POS equipment that best fits your business, you will first need to know how you’ll be conducting business. In addition, you’ll need to know which kinds of payments you’re looking to accept. Determining what you actually need, instead of having someone telling you what you should buy, can keep you from spending unnecessarily.

First, how will you be conducting business? Are you generally going to see the customers or do you do business via the Internet or telephone? If business is done face to face and payments are accepted directly at the point-of-sale, you’ll probably want to purchase a credit card machine. However, MOTO or Internet merchants may want to consider an Internet Gateway, which integrate with a website’s shopping cart, or with a Virtual Terminal such as MerchantWare. One advantage to using an Internet Gateway, Virtual terminal, or both, is that these can be used on a computer with a broadband internet connection. If you already have this in place, all you have to buy is the software or a license. Not having to invest in new hardware will save you both money and work-space.

Secondly, for regular Retail merchants, do you have customer demand for more secure, PIN-based transactions? If so, you might want to get a POS terminal with an internal PIN-pad (no additional hardware to purchase, besides the terminal itself), or one that is compatible with an external PIN-pad. If you have a compatible terminal, I would recommend that you get an external PIN pad. With the external option, the PIN-pad is usually already facing the customer so there wouldn’t be a need for you to hand over the entire credit card terminal for the customer to use. This also means that your credit card terminal is more secure and there is less of a chance of the terminal falling into the wrong hands, literally. Using a customer-facing, external PIN pad should also cut down on transaction time.

Credit and Debit transactions aren’t the only electronic payments you can accept as a merchant. Gift Cards could be a great way to strengthen customer loyalty, beef up your customer retention, and broaden your customer base. If you are considering taking these cards, you will need to either make sure that your existing POS solution can work with your Gift Card service provider, or purchase a new solution which will.

However, like I first mentioned, not all terminals are the same and different merchants will require different functions out of their terminals. If you want to learn more about how to accept Gift Cards, Debit, or even simply credit card transactions and want to know what POS solution will best suit your needs, give a call to Merchant Warehouse and allow one of our friendly and knowledgeable Account Representatives to assist you. They can help you figure out what kind of merchant account you will need and what POS Solution will best fit your business. Check back for my next blog which will discuss POS Solution connectivity.

Joseph Fitzgibbons – Senior Support Specialist

Working in the merchant services industry with the Technical Department of Merchant Warehouse for the last 4 years has put me in steady contact with merchants and their POS solutions. Over that time, I’ve worked with and helped out countless merchants who were experiencing difficulties with their credit card machines and equipment. Many times, merchants will experience technical difficulties that are caused not by defective credit card equipment itself but by buying the wrong equipment in the first place; there are many problems that can be avoided by buying the right solution the first time.

There are many types of credit card terminals out there and many times a particular terminal may not be the right stuff for a merchant and their business. Finding the correct POS solution isn’t very hard, as long as the merchant knows what they need to be looking for. I’d like to impart some advice, some general guidelines to search by for the merchants out there who believe it is upgrade time or just need to replace an existing solution.

I’ve been around the POS block long enough for it to become clear to me that there are three important things to be looking for when purchasing POS equipment. I’ve never been in the merchant’s situation of needing to find the best solution for my business, but if I was and had thought about what kind of functionality I needed to get out of my POS equipment, how I would fit this technology into my current business environment in terms of connectivity, and where I could find the best deal on this POS equipment, I would be ahead of the game and would probably be setting myself up for smooth sailing when it comes to accepting all sorts of electronic payments.

To explain a tiny bit more what it is the merchant should consider heavily, they should know
A) The types of payments they want to accept be they Credit, Debit, Gift Cards, or Checks;
B) What kind of telephone or Internet services they have (usually both nowadays, but sometimes there is neither!) which the POS equipment would work on so that transactions can take place; and lastly
C) Where to find the best prices for these solutions.

This does not really paint the entire picture of the landscape a merchant must take a good look at and think on. It’s only exposing the outlines which need to be filled in with accurate information in order for a merchant to make sense out the whole thing and to come up with the best POS equipment for their business. In forthcoming blogs, I will be explaining this further and hopefully helping merchants choose wisely and make informed decisions concerning the technology they’ll use to accept electronic. This should make business for the merchant much easier and hopefully even much more successful in the long term. Stay logged on!

Joseph Fitzgibbons – Senior Support Specialist

One of my important responsibilities as an employee of Merchant Warehouse is to assist businesses in having their First Funds application approved. First Funds is our cash advance program offered to businesses. Personally, I think it is a wonderful opportunity for business owners. It allows them the benefit of reaching their goals in a faster timeframe than they envisioned.

Today’s business owners are interested in cash advances for many reasons. Capital can be used to improve or expand the business, pay off debt, advertise, purchase equipment, and make down-payments, just to name a few..

Unlike a loan, a cash advance does not have fixed payments or collateral. Instead, First Funds deducts 20%-25% of the borrower’s daily transactions until the advanced amount is paid in full. Depending on their eligibility, merchants can be approved for a cash advance of up to $150,000.00. In order to qualify the business must be retail/store front, it cannot be out of home, it must have at least 13 months of longevity, and have been processing credit cards for at least 6 months. If the merchant does not yet process through Merchant Warehouse, they will be required to do so before they are funded.

The application is only one page and needs to be submitted along with the four most recent processing statements. The landlord reference or mortgage verification must be listed on the application. In addition, First Funds will be required to conduct merchant interviews and site inspections with all merchants who apply for advances.

Once a merchant is approved, a six page ACH Agreement will be provided for the merchant’s review and signature. This Agreement will disclose the advance and payback amounts. Three days of previous batching (which must be at least 70% of the merchants daily average processing) must also be submitted. Once this information is received, the merchant can be funded as early as the following morning.

Through my experience I find that merchants who applied for First Funds have benefited greatly. Many of them come to realize what a wonderful program this actually is, and decide to renew. Before the advance is paid off, First Funds will contact the merchant and handle the renewal. Renewals are usually funded much faster than the original advance.

The advantages of First Funds are many. There are no personal guarantees required, the payback is completely automatic based on your credit card sales, merchants with bad credit qualify, there isn’t a limited timeframe to pay back the advance, and there are no late, setup or application fees. Those are just to name a few.

If you are interested in making your business the success you dream of, please contact us to get started!

Eve Miceli – Account Manager

TJX, Hannaford, Okemo Mountain and others have drawn massive attention as large merchants who have
been breached and had millions of consumers’ data compromised. While breaches at these large
corporations certainly represent more data than that of most of the 6 million small merchants nationwide,
small businesses are not exempt from having consumer credit card information stolen, or from meeting
the same requirements for protection of sensitive consumer data. In reality, it is imperative that these
businesses begin to see themselves as targets and put steps in place to combat data theft.

However, there is a lack of education for small merchants about data security and compliance issues.  According to Visa and the National Federation of Independent Business (NFIB), 57 percent of small
businesses do not view securing customer data as something that requires formal planning, and 39 percent say they rely on ‘common sense’ to keep their data safe. What these businesses must realize is that common sense is simply not enough to comply with the payment card industry data security standards (PCI DSS), which must be met by any merchant accepting credit card payments. And as more and more of the larger merchants become compliant and the high-profile breaches slow, industry attention will turn to the small merchant.

PCI DSS compliance can be costly; large companies are spending millions on complex technologies to protect cardholder data. But there is good news for small merchants: depending on the method of
processing and transaction volume, compliance can be achieved relatively easily and quite affordably. Here are several steps small businesses can take to work towards the safety and security of customer’s
data and that can also aid in becoming PCI compliant:

- View compliance as a necessity, not an inconvenience. Merchants should view compliance as an opportunity to improve and verify the security of their customers’ card data.

- Educate yourself on PCI. Research the recent data losses and the growing acronym PCI DSS. Additional information can be found at https://www.pcisecuritystandards.org/tech/saq.htm.

- Keep yourself up-to-date on compliance. Requirements and timelines for compliance are continually amended; small businesses need to ensure they are armed with the most up-to-date knowledge and
equipment. This is especially important for those considering opening their own establishment, since new Level 4 merchants must be compliant by October 1, 2008. There are merchant education strategies for those independent merchants seeking reliable direction in addressing PCI DSS.

- Opt for services that ease the burden of PCI compliance. When implementing your POS system; look for solutions that simplify PCI compliance by choosing a solution that encrypts card data at the ‘read
head’ such as the MerchantWARE solution from Merchant Warehouse – to ensure sensitive customer data is never exposed. With no access to consumer credit card data or personal information businesses will automatically meet five of the twelve PCI DSS security standards, including the most intensive and costly.

While adhering to these tips will not guarantee compliance or that a business will not be hacked, they can help forge a path towards better safety and security for customer data, while building a solid foundation for mandatory compliance requirements. And just as important is the invaluable asset of customer trust; putting customers’ minds at ease by informing them their data is safe and secure will only contribute to their ongoing loyalty and keep business growing.

Henry Helgeson – President

Ever hear the old phrase “Nothing is for free?” Every day we are given “free” offers from numerous fast food chains, restaurants, and more. Now think back to whether you’ve ever heard the phrase “Buy none, get one.” Or, “Free small coffee, no purchase required.” Doesn’t happen too often, does it?

While researching merchant account services providers and equipment you must certainly have seen offers for free terminal deals. But before you walk into a trap, ask yourself the following questions:

What is the contract or termination fee? Always ask for the schedule of fees and the program guide to make sure that neither the provider nor the back end processor has a contract or termination fee. When you’re locked into a contract, you might be paying for that “free” credit card terminal with increased rates every three months or a surprise “added” annual fee. Merchant Warehouse has no contract or termination fee, which means that A) We have every incentive to keep you happy and processing with us for a very long time, and B) We can’t arbitrarily raise our rates or provide lousy customer support, since it is so easy for you to leave us.

What kind of terminal are they giving me for “free”?  Our site is a good point of reference for you. Since we buy all of our equipment wholesale, we can offer credit card terminals at guaranteed lowest prices. So, if you are a new business being promised a “free” terminal that is worth hundreds of dollars on our website, that should raise a red flag. If you own a fine dining establishment, would you run a promotion where you’re giving away free lobster tail and filet mignon?

What happens if the terminal breaks? If you read the terms and conditions, you may find a hidden clause that states if the terminal breaks you have to wait weeks while it’s being repaired. Merchant Warehouse’s free terminal program includes overnight replacement insurance. If you drop the terminal, spill something on it, or it’s struck by lightning, we overnight you a replacement, no questions asked.

What is the condition of the equipment you are purchasing?
Is it new or used? Merchant Warehouse only sends out new units for our free terminal program that are programmed and tested in house before it gets to your door.

So remember, if a deal seems too good to be true, it is. Make sure you are getting the best package deal, because when you think about it, if you walk into a car dealership and try to get something for free or with no strings attached, you’re likely to end up with a piece of junk that breaks down on the highway.

Shannon Andrade – Account Executive