Credit Card Processing - FAQs

							                  Angelo Business Solutions
                                    PO Box 62122
                             San Angelo, TX 76906
                             325-300-HELP (4357)
                  www.AngeloBusinessSolutions.com




Credit Card Processing - FAQs
Credit Card Processing - FAQs
You will generally increase the volume and dollar amount of your sales by accepting
credit cards in your business. However, don't fall for the 'FREE Terminal - No Contract'
gimmicks. Let's face it, there is nothing FREE in the business world. Those gimmicks
usually make their money in the fine print and/or higher monthly rates and fees and
whether you call it a 'contract' or an 'agreement' (poe-tay-tow or poe-tat-o) you are
going to sign 'something'. Many have fine print that says if you stop using their service
before a certain time; you will pay a very high price for that 'free terminal' that may
range between $1,500 - $3,000.

Keep in mind the fees associated with accepting credit cards are part of your operating
expenses as a business owner and therefore eligible for tax deduction purposes.

Let me start with a basic explanation of the 4 tiers involved in credit card
processing. This is throughout the credit card industry, even though some sales people
hide this information, we want you to be fully informed so when you receive your
monthly statement, there are NO surprises to you. This is NOT meant to scare you
out of accepting credit cards but rather to educate you to all the fees associated with
accepting credit cards, even though you may never see many of these charges.

The 4 basic tiers are called Debit, Qualified, Mid-Qual’d and Non-Qual’d. In your
rate quote you will see varying discount rates in each category. Our main objective is to
try and keep your expenses down as low as possible based on your unique business
transactions on the average.

Debit – this is your typical ‘non-credit’ bank cards that are tied to the customer’s
checking accounts but have a MasterCard or Visa logo on it. These are one of the most
common cards used and among the lowest rates for accepting these cards.

Qualified – this is your LOWEST rate ‘credit’ type cards you will process. These are
typically your swiped (as opposed to keyed in and telephone order type transactions)
check cards and consumer credit cards. These are your typical bank cards such as
MasterCard and Visa and check cards.

Mid-Qual’d – this is your next tier up, and a higher percentage than your qual’d
cards. These are your Keyed check, consumer, or Rewards cards w/AVS (see below),
swiped World cards. When you see the word ‘keyed’ it refers to when you have to
manually enter in the credit card number into the terminal rather than swiping the card
through. Rewards cards are like the cards you see advertised on TV with Cash Back or
free airline miles etc. etc.. AVS stands for Address Verification System, which is a fraud
protection system which may require the card holder’s zip code or other data to ensure
security. For most of your transactions you will not use this as they are person to person
transactions (they physically hand you a card and you swipe it through the machine.)
Non-Qual’d – This is your HIGHEST rates that you can be charged. This is any keyed
cards w/o AVS, corporate cards, international cards, most Reward Cards, at times the
hand-keyed or MOTO rates, and keyed World cards. This catches ‘all the other’ cards
but you ‘normally’ don’t see them on a regular basis.

Again, the following fees are part of your 'normal business expenses' and as such are tax
deductible. The other 'normal' fees you will see with a credit card processing company
are:

Monthly Minimum Fee: This is the minimum TOTAL amount that will be charged
each month for the service - a lower thresh hold amount - normally around
$25/mo.. Since there are other fees that factor into the total monthly cost, as long as
you are doing a fair amount of business in credit card transactions each month, you
normally would not have to worry about this being a problem. If you did enough credit
card transactions that added to $30 in fees one month, then it would surpass this
'monthly minimum' $25 fee so this would not be an issue. It is a guaranteed minimum
amount that the credit card processor will charge to ensure they are making money each
month.

Customer Service Fee: This is what is charged to create, maintain and mail out your
monthly statements. This is normally $6.00 - $10 per month.

Annual Fee: This is a fee often charged, especially for new merchants. Most contracts
are 3 years the fee is $99 per year. This is normally charged on your 3rd monthly
statement, to give you time to get your credit card transaction volume up and going and
not to have to incur immediate expenses in starting to accept credit cards. In certain
cases this may be able to be waived.

Transaction Fee: This is a fee charged per each credit card transaction. This is
normally around $0.25 per transaction but may vary.
Batch Fee: Normally at the end of each business day, the terminal will add all the
credit card transaction and batch them together according to types (Visa, Mastercard,
Debit cards, etc..) and then take that 'batch' and send it to the credit card processing
server for processing. This charge is normally around $0.20 per batch. Although the
terminal is normally programmed to do this for you automatically, you can do it
manually. NOTE: some may think they would save money by waiting several days
before batching but by doing that, the Discount Rates will likely change from a 'Qual'
rate to a 'Non-Qual' rate, costing you as the merchant more money for that
transaction. Bottom line - batch each and every business day.

Voice Authorization Fee: Although most transactions are either swiped or keyed in,
in the unlikely event that you actually have to pick up the phone and call for
authorization, this is the fee for doing that. This is normally $1.50 per transaction but
very unlikely that you will actually use this.

Address Verification System (AVS) - If the transaction was not swiped but ‘keyed’
in, the machine may ask for the zip code of the billing address of the card holder or
numbers of their mailing address in order to minimize fraud. This is also for your
protection as well. It would be rare that you would use this if you swipe most all your
transactions but is normally $0.05 ea..


Non-Qual Authorization Fee - in the event of processing a non-qual’d card, such as
a World Card, this is the fee that is associated with that transaction - normally $0.10/ea.
(but I normally get this charge waived)

Return Charge Back Fee - This is in the unlikely event that a customer disputes their
charges on the card. For example, Joe Smith gets his bill in and sees a charge for $1,000
from your business and calls his credit card company and says for example that he has
never been there. The charge is reversed until the investigation is completed. This is
similar to a ‘returned check charge’ that a bank would charge for a bounced check except
this is for credit card transactions. The charge for this is normally $35.00/transaction.

Security Fee - This is a standard fee that covers our cost for our Charge Back and
Fraud departments, which we have the largest in the industry. This is a department that
monitors your credit card transactions and watches for red flags, such as high amount of
refunds from a dishonest employee using your machine etc.. for example. This is
normally $3/mo..

We can set you up to accept whatever cards you want to accept. If you choose to accept
American Express or Discover cards, their rates are different. In the past they have
been much higher than other cards but the economy has recently forced them to
LOWER their rates to be more competitive. There is normally a one-time $25 set-up
fee to set up to accept AmEx or Discover.
Online Access Fee - $9.95/mo. This is an OPTIONAL service but it basically allows
you online access to your accounts to pull up past transactions and accounts. It is FREE
for the first 30 days and may be canceled at any time.

Will the rates ever go up during the contract?
Every March and October the credit card companies adjust their rates. Although we try
and absorb any minor changes in rates, if the rates rise substantially, there may be a rate
increase but you will be notified in writing if/when this happens. Since no one can
predict the future of the economy, nor what the credit cards companies will do at that
time, there is that chance it may go up. Companies with larger credit card volumes may
be able to get contracts that fluctuate with these changes, charging a fixed percentage
above the 'cost' charged by the card companies but these statements can be hard to
interpret at times.


Accepting Debit cards may be worth considering:

Depending on your average ticket amount, you may wish to consider accepting Debit
cards.

Debit cards are the cards that most banks issue that require a PIN code to be entered for
the transaction, which creates a lower fraud risk, thus lowering your rate. Normally
most transactions over $20 will be beneficial if processed as a 'debit, even though they
may display the Master Card or Visa logo.

The rule of thumb is normally that any type of processing of a card that minimizes a
fraud risk, the better rates you will get. Just like your rate for a 'swiped' card will always
be lower than a card accepted over the phone and keyed in or over the Internet, because
you cannot check ID to ensure the card holder is actually the person whose name is on
the card.

In a Debit case, let's take a $50 transaction and compare the cost.

$50 - Transaction amount.
$0.88 - @ 1.75% example Discount Rate
$0.25 - transaction fee
$1.13 - total processing as credit card

$50 - Transaction Amount
$0.38 - @0.75% Debit Rate
$0.50 - transaction fee
$0.88 - total processing as PIN based debit
Now that may not look like much but multiply that even 100 times per month - your
savings would be $50/mo.. That's also appx 22% savings. It is something to think
about. You get the idea and can play with the numbers to see if you feel it would be
advantageous. One thing to keep in mind that the risk of 'Charge Backs' on a debit is
eliminated, unlike a credit card, as it requires a PIN code to be entered in order for the
transaction to go through.

You may also wish to consider being set up to accept your own GIFT CARDS which are
great to promote your business and since the funds are prepaid, you have the added
benefit of knowing the money is there. If you accept checks, we also have a Check
Guarantee system you may wish to consider. Please contact us for more information on
those if you are interested.

EQUIPMENT - terminals
Here is where you CAN save some money if you are able. Many companies will try and
get you to 'lease' the equipment rather than buying it out right. The difference can be
quite staggering. Equipment terminal leases are on 4 year contracts and start at
$25/mo. and go up from there. Add that up and you have paid $1200 for that piece of
equipment - which you may be able to buy out-right for $400. The warranty is the same
either way, but an optional equipment protection plan is available for $10.95/mo. which
includes free printer paper excluding shipping charges and a loaner terminal in the
event your terminal must be repaired/replaced. If you want to keep your up-front out of
pocket expenses down, then you may want to lease the terminal, which again is a tax-
deductible expense. However, if you can afford to pay for the terminal up-front, then it
would save you money to do so. We signed up a doctor one time and was told she paid
$1,400 for the same terminal we were selling at the time outright for $395. We are very
reasonable with our rates if you wish to buy a terminal.

Our terminals are programmed prior to shipping but if you live in the local area, we will
personally come and oversee the installation and the first transaction and batch to make
sure things operate smoothly. If you do not live in the local area, the company’s tech
support line will walk you through the process, which usually will have you running in a
manner of minutes. Please keep in mind you may wish to consider getting a separate
phone line to use your credit card machine on or sharing it with another low traffic line,
such as your fax line. We also have machines that can be used over the Internet.

We have a 'standard' printer that will accept all credit cards and gift cards with a built in
printer for only $318 cash + S/H. If you are on a tight budget we may have some
'refurbished' terminals available, depending on what you are looking for. We have
everything from simple terminals with no attached printers to wireless mobile terminals
that you can use in the field, great for flea markets or mobile merchants.
At this time there is a one-time shipping fee of $20, regardless of the number of
terminals and accessories you order You may also wish to invest in a (what we call)
'knuckle buster' manual imprint machine. They cost $20 and can be a life saver in the
event of a power failure or where you are unable to process a credit card because the
phone lines are down etc..


Last, but certainly not least, we at Angelo Business Solutions have what is called a
Community Support Program. We take a percentage of the monthly profit revenue
we make from your credit card traffic and donate it to a charitable organization of YOUR
choice. We have some that are listed on our form to select from such as orphanages and
ministries but if you wish to have the donation sent elsewhere, just fill in the
information at the bottom and as long as they are a family friendly 501 c 3 organization,
they will receive on-going donations made under your name for as long as you continue
your service with us. This is at NO additional cost to you as the merchant; it is just
something that we do to support our community.

As you can see, we want our customers to be informed and strive to maintain a high
level of honesty and integrity. If these are important factors to you in doing business,
then give us a call at 325-300-HELP (4357) or you may visit us on the web at
www.AngeloBusinessSolutions.com and use the Contact Us link. If you are thinking of
starting to accept credit cards for the first time, of course we would love the opportunity
to earn your business so let us get you a quote. If you are an existing merchant wanting
to switch service providers, feel free to contact us for a FREE analysis. Our goal is to
save you money.

We look forward to hearing from you soon!