Categorized | Finance and taxes, Management

Electronic noncash transactions facilitate fast cash flow

By Cathy Bracken    

A commonsense business rule is “make it easy for customers to pay.” Credit cards do that. So do other non-cashcreditcard swipe forms of payment, such as debit and purchasing cards. All of these things increase customer satisfaction and contribute to increased business volume.

These electronic non-cash transactions are processed through a merchant account, facilitated through  point-of-sale (POS) solutions,  only offered by merchant services providers.

The goal of a merchant account is to facilitate fast, reliable cash flow. Almost all types of businesses—even nonprofits— can qualify to have a merchant account, provided you have a business checking account and satisfy the processor’s underwriting credit guidelines. The size of your business really doesn’t matter.

To decide what kind of merchant account or POS solution is right for you consider asking the merchant services provider these questions:

• How do you want to process transactions? It is important to select the right POS solution(s) for your business. For example, a brick-and-mortar business may best benefit from a traditional retail POS merchant account—using a swipe terminal. But if that business also conducts transactions on the Internet, through mail order or telephone sales, or on-the-go, it would need additional types of POS  solutions.

Hint: Work with a merchants services professional who will customize a POS solution to meet your unique needs. There is no “one size fits all” solution in merchant accounts.

• Do you want to lease,  or buy your POS solution? Talk with your merchant services provider about the advantages and disadvantages of owning vs. leasing POS solutions.

• What do you get for the money? POS solutions come with fees. Ask questions to get the full picture about the services and their costs. Is there a set-up fee? Monthly service fees? You have a right to understand fully your merchant account services, how the transaction process will work for you, when you will be funded, and who you are paying each month.

• What are your risks and responsibilities? Ask about your responsibilities in having a merchant account, and find out if there are some types of transactions that carry a higher  risk  of chargebacks and what you must do if you process these types of transactions.

• What other services can be added to the merchant account? Most merchant service providers offer other value-added services, such as electronic check processing, as well as gift-card, specialty-card, and loyalty-card acceptance. 

• How much will a merchant account cost? The merchant account pricing options available today allow for you to be custom-fitted for services based on who your customers are and what types of cards you accept. There are three basic pricing programs— flat-rate pricing, break-out rate pricing, and interchange pass-through pricing. All three offer cost benefits, depending upon your business:

Flat-rate pricing is the most traditional type of pricing program. This pricing program is best for low processing merchants that accept only consumer credit cards. The program is the easiest to understand and reconcile on your monthly statement. It is still very popular, and the most widely marketed to date. If you are considering this type of pricing program, ask for rate detail and fine print in this pricing program to make sure it is the best fit for you.

Break-out rate pricing prices each transaction by the basic card-type categories— non PIN debit check cards, credit cards, reward cards, and commercial cards. These categories are cross-bucket into transaction types as well. Those transaction types are called qualified, mid or partially qualified, and non-qualified transactions. Depending on the processor, you may have from three to 12 different rates for Visa, MasterCard and Discover Cards in all the available categories the processor offers. Each card brand can have a different applicable rate for the card and transaction type categories.  Although it sounds complicated, this type of pricing is excellent for most merchants.

Interchange pass-through pricing prices each transaction at its base cost then adds a processing mark-up.  With more than 160 categories a single transaction can bucket into, this pricing program assures the greatest flexibility in processing venues as well as the most accurate lowest per transaction cost versus the standard averaged costing methods traditionally used.  Interchange pricing is the pricing method of choice traditionally reserved for high transaction volume merchants who accept many types of bankcards originating from several card issuing banks.

Work with your merchant services provider to create a win-win in providing the best processing services and POS solutions at a cost that makes sense for your business.

• What kind of commitment is required? Signing up for a merchant account is easy. There will be an application containing a contractual agreement, with some fine print that usually has a length of term provision and early cancellation penalties. Review the fine print carefully before signing the agreement. It’s also a good idea to inquire about the circumstances, if any, under which you may request to have fees waived.

Before your application is accepted, you will be required to provide basic business documents such as a company check, a business license, Web site(s), and marketing materials to support information provided on the merchant account application.

Merchant services are a great value to businesses. With so much uncertainty affecting businesses today, you can better prepare for future growth and prosperity by strengthening all processes within your control that are certain to yield improved cash flow. 

Cathy Bracken is the CEO of Cyberauthorize.Com (, a 10-year-old local merchant services provider that services merchants nationally. She can be reached at 904-564 1228, Ext 204.

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