Purchasing Cards, Level 3 & Some Things You Should Know About Business To Business (B2B) Processing

It still amazes me every time I review a B2B merchant account where their processor sold them a counter top credit card terminal and established their account as a retail merchant. 

Today I went through a merchant statement with over $250,000 in monthly credit card volume.  Over $200,000 of that volume cleared interchange as either B2B Business or B2B Purchasing Card at 2.2%.  That only reflects interchange not including the assessments and processing fees.

If they had known the information that I'm about to share with you their fees would have been approximately $18,000 less over the past year. 

You don't have to make any major changes.  You don't have to install any type of elaborate system.  You don't even necessarily have to change merchant service providers.  (Though many merchants like to patronize those processors and agents who keep them up to date on important information like this and we would certainly not try to talk you out of making a smart move like that.)

First, allow me to take some of the confusion out of the terms like P-Cards, Level 2 & Level 3 processing.

There is no such thing as a "Level 2 card" or a "Level 3 card".  Level 2 & 3 refer to the amount of criteria or information that the merchant is required to obtain and transmit to receive the most favorable pricing.

The more common type of B2B transaction is when a corporation's owner or officer uses the company's corporate credit card for business expenses, office supplies, entertaining, etc.  Often these transactions only need a minimal amount of information (Level 2) in order to qualify for the best interchange rates.

Level 2 includes all the basic info required on a keyed transaction such as the entire credit card account number, expiration date, zip code and then a couple additional items, the invoice number and the sales tax amount.

An example of a Level 2 transaction would be a business owner using his corporate card to purchase new computers for his office.  Merchants are still required to collect sales tax on these transactions.  As long as the merchant transmits the invoice number & sales tax (assuming all other criteria is met), the transaction should qualify for Level 2 resulting in the best possible rate.

Purchasing Cards and Level 3 require a little more detail.  If you're a wholesale distributor accepting large amounts on purchasing cards you can reduce your costs with a few easy steps. 

First you need software installed that will allow you to process payments directly on your PC.  Be sure to confirm with your agent that the software will process Level 3, B2B data.

Once you have the correct software installed it's simply a matter of 5 - 10 minutes training to make your employees aware of the additional data that they need to input at the point of sale.  By capturing a few simple things like the actual item description, item quantity, item price, etc. your transactions can qualify for interchange rates between 1.4% and 1.8% instead of the 2.2% charged for transactions that do not qualify for Level 3.

Even without negotiating a better processing rate and by doing nothing more than qualifying for a more favorable interchange category, a merchant can significantly reduce their processing expense.

Using simple math let's say that a merchant reduces their interchange cost by 50 basis points (or 0.5%) on $100,000/month in volume.  That's $500.00/month or $6,000.00 in annual savings.  If your business processes $500,000 then the savings are easily calculated at $30,000 each year.  What would it mean to your business to add $150,000 directly to your bottom line over the next 5 years?

Lastly you just have to make sure that you have a merchant services provider that you can trust to ensure your account is setup properly, you're using the correct software and that they have you on a fair & competitive pricing plan.

Quick Service Restaurants (QSR) Benefits & Perks

If you own a coffee shop, ice cream or pizza parlor, deli or any other quick-serve-restaurant, you should take a minute to read below and make sure you're receiving all the benefits afforded to your industry. 

Even if you're a vendor to any of these merchants, banks, restaurant supply, chamber or trade association, a partnership with FDIS to help serve your clients in these areas could prove valuable.

You will have to go back about ten years to remember a time when fast food restaurants like Taco Bell or Wendy's only accepted cash.

There were two big obsticles hindering the QSR owner from accepting plastic payments.  First, when your average ticket and margins are small, the fees associated with accepting credit cards was simply cost prohibitive at one time.  More importantly the QSR owner simply could not allow their lines to be slowed down by having to go through the steps to process a card at the point of sale.

First Data & McDonald's were two of the strongest advocates who persuaded Visa & Mastercard to make special allowances in regards to the specific needs of the QSR, resulting in special pricing & other benefits for this segment.

Unfortunately for some merchants, not all payment processors have programs that allow their clients to avail themselves of all of these special perks.

SPEED

First, speed is king!  That's why QSRs are able to bypass obtaining a signature on tickets below $25.00.  You only have to provide your customer with a receipt if they request one.  When you combine this with the speed of an IP or WiFi point-of-sale device you can process a sale up to eight times faster. 

Picture the difference under the old scenario:  your customer hands over their card, your cashier swipes it and waits for the system to dial for an authorization, once it's approved they hand the ticket to the customer to sign.  After signing the customer returns the ticket to the cashier and she returns their card and their receipt.

In constrast, today the customer would present their card, your employee would swipe it and ask the customer if they want a receipt.  If the customer declines your employee says, "Next customer may I help you?"

If you're not already using IP or Wifi equipment the time it takes to connect and obtain an authorization on dial can take as long as 8 - 15 seconds compared to 1 - 2 seconds on IP.

SECURITY

FDIS provides full chargeback protection to the QSR on tickets below $25.00 even though the merchant is not required to obtain a signed receipt.

To protect the QSR from being attacked by hackers and having your clients' credit card data stolen, the new TransArmor solution offered by FDIS will effectively encrypt the data during the authorization.  More importantly it will replace the real card number with a randomly generated "tokenized" number while the data sits in your point-of-sale system throughout the day, rendering the information useless to criminals.

SAVINGS

Now let's talk about pricing.  It's no secret that a QSR has small tickets and a fairly large overhead.  The last thing you need is to have your processor taking 2% plus 20 - 25 cents out of every transaction.  Visa & Mastercard have special interchange categories for the small ticket QSR so providing you have a processor like FDIS who has a QSR program in place, you can pay as little as 1.37% and 15 cents depending on the size of your average tickets. 

Since the typical QSR will process more than 1,000 small tickets each month, many times for less than $10.00, reducing your fees by as much as 11 to 12 cents on every transaction can mount up to substantial savings.  It's common for a restaurant to lower their monthly fees by as much as $250 just by being correctly placed on a QSR program.

SERVICE

Visa & Mastercard, along with FDIS have made payments faster, cheaper & safer for the merchant but it doesn't stop there.  FDIS has gift card programs, business cash advances, and local QSR experts to guide you in all the options afforded QSRs to help your business grow.

Studies prove that as fuel prices increase so does the volume of the QSR segment over the "sit down" or "fine-dining" establishments.  Your place in the economy is important.  Be sure that your payment processor is treating you like the VIP that you are.

Jason Banther, CEO

Dynamic Payment Innovations, Inc.
A First Data Independent Sales Agency
FDIS - QSR Program

In Chattanooga, click here for more information about FDIS' QSR program.

Jason can be reached at 423-648-9877

Business Branded Gift Cards

Business Branded Gift Cards

Sell Dozens (Or Hundreds) of Gift Cards For Father's Day!

If you've never tried some of the ideas below, you just might sell more gift cards next week than you've ever sold before!  

Unfortunately, Father's Day gets less attention than it deserves.  A typical celebration for Mother's Day lasts two hours longer than that of Father's Day and we are much more likely to skip getting dad a gift than we are our moms.  Estimated spending for Mother's Day is $16 billion compared to $9.9 billion on Father's Day.  For every dad who stayed, worked, provided, played catch, taught us to drive a car and all the other wonderful things that our fathers do, we should celebrate them.

Many Americans are going to Google the phrase "ideas for Father's Day gifts" this weekend and guess what most of the articles are going to recommend.  You guessed it!  1.) Gift Cards to his favorite restaurant  2.) A Gift Card to his favorite retail store  3.) A Gift Card to a place that has items he likes but ordinarily wouldn't buy for himself.  (That's how I got my Ipod.)

Did you know that over 32% of the gifts purchased for Father's day will be gift cards?  That's more than electronics and tools combined!  That's a massive chunk out of the $10 billion being spent over the next few days.

So how do you get your share of the $3 billion that will be spent buying gift cards next week?  I'm glad you asked.

First, think about the fact that most of us have more than one father figure in our lives that we want to recognize.  However, we typically want to show the greater appreciation for the father who raised us.  You can give us a great opportunity to do something really nice for Dad and still remember those step dads, uncles, mentors, grandfathers, etc. who have meant so much to us.

Father's Day Gift Card Ideas:

1.) Offer a Father's Day Special where your customers can buy one card for $100.00 and receive two $20.00 gift cards free!   (If your store has higher or smaller average tickets feel free to tweak this to suit your business.)  A restaurant could do "Buy a $50 gift card for Dad and get two $10 cards free".

This puts several hundred dollars into your cash flow next week prior to any merchandise leaving your store and you'll increase your traffic.  You probably have customers who were going to spend $60 or $70 but because of your promotion they go ahead and spend $100 to receive the free cards!  (We've seen this happen over and over with our clients.) 

And if you're worried about losing money, it's impossible.  Gift card recipients only redeem 61% of the value on the card.  So for every $100 you sell, $39 is going directly to your bottom line, making it easy for you to afford marketing promotions like this to increase traffic.  If giving away two cards is unreasonable for your particular business you might offer a "Buy 1 Card For $50 & Get ONE $10 Card Free".

2.) Tweak that first idea a little and offer to anybody who spends X amount of dollars (i.e. $100) on any item in your store and they receive two $15.00 gift cards free.  This works great for the customer who sees exactly what they want to purchase for their father, it's $79.95 and now they have an incentive to spend just a little more to hit the $100 mark for their free gift cards.  You just increased your revenue and planted two "miniature billboards" in a couple wallets out there.

3.) Let's say you own an auto parts store.  You've put together some car cleaning kits made of of a few different items and you've put a sign up that reads "Great Father's Day Gift - Car Cleaning Kit - $24.95".  I think that's a great idea for my uncle or father-in-law but I want to do something a little more for my dad.  Offer your kit for free to anyone who buys a $100 gift card. 

4.) Make sure that your gift cards and any promotions you're offering are displayed prominently throughout your store. 

If you're like many of my merchants the ideas listed above will not be the exact plan that will work for you.  But after reading these ideas and thinking about your particular business and the items you sell you will easily be able to create a plan that will work.

Your customers will appreciate you for solving their challenge of what to get their dad, uncle, and football coach for Father's Day.  You'll reap the nice cash flow and gain a few new customers.  Ask yourself what you spent on advertising last year compared to how many new clients you gained.  For a fraction of that amount you can add dozens of new customers next week by being creative with your gift card program. 

You'll also be doing your part to make sure that fathers everywhere are remembered this Father's Day.


Jason Banther, CEO
Dynamic Payment Innovations, Inc.
A First Data Independent Sales Agency
http://www.fdis-chatt.com

Jason can be reached at FDIS Chattanooga, 423-648-9877

What's In A Name?

If I asked you to make a list of things that you know to do in order to grow as a human being, to be a better person, more successful or to improve your business you could probably write your own book on the subject.

At the very least you could fill up two or three pages of wise & practical strategies, tips and pointers we could all benefit from. But if I then asked you to tell me the ways that you’re actually implementing those things into your daily life I would be willing to wager that your list would become much shorter.

One of those skills you know you should improve is to remember and use the names of the people you come into contact with.   Most people hide behind the worn out excuse, “I can remember faces but just can’t remember names.” 

Now there are plenty of good courses and good books out there that teach systems for improving your memory.  The thought that led me to this post is not so much “how” to remember, but rather what it means to remember names.

I believe it goes further into our innate desire to be important, to matter, to think that somebody actually notices that we’re taking up space on this planet.  To remember someone’s name, if done for the right reason, says to that person that you’re actually interested in the person behind the name.

If you’re in business it says to your client, that you see more than just a dollar sign on their head when they walk into your store. Taking the time to memorize names is, in my opinion, just the beginning.  It’s the first step to making an effort to get to know the people who share this space in time with you.

If you can remember that much you can also remember details about their family, the fact that their son just started his first year playing baseball or that their daughter just won a prestigious award at school.

Whether you own a retail store, restaurant, service air conditioners, own a dry cleaner, install phone systems or detail cars for a living, how much impact do you think it would have if you took time to get to know the people you come in contact with every day?  How would that make someone feel as they walked away from your business?

What kind of feeling would they associate when they think of you or your store? Of all the things we know to do but fail to practice I challenge you to make some effort today to practice this simple but extremely important of all social graces and see what kind of difference it makes.

Jason Banther, CEO

Dynamic Payment Innovations, Inc.

A First Data Independent Sales Agency

http://www.fdis-chatt.com/

Jason can be reached at FDIS Chattanooga, 423-648-9877.

Will Google Wallet Change The Way We Do Business?

There are those who would see Google Wallet in the same light as the “Smart Card” that was supposed to take over plastic payments at the beginning of the last decade.  Even the impact of the “contactless card” that was introduced under the brands MasterCard PayPass, Visa PayWave, Chase Blink, etc. didn’t live up to the hype associated with their release.  But those of us in the industry knew that the introduction of NFC (Near Field Communication) technology had more to do with the future than just simply giving consumers the ability to “tap” or “wave” a card instead of swiping it.

What is Google Wallet?

Put simply Google Wallet is an app that will allow you to store your credit card accounts, offers from retailers, loyalty cards, gift cards, etc. into one place without the bulk of a real wallet.  You would then load the Google Wallet app to a smart phone thus enabling you to leave home, armed with your phone and little else.  Your cell phone which is enabled with NFC capability could then be used to make purchases at the point of sale with any account you choose.  You checkout as you normally would but instead of reaching for your wallet you simply reach for your phone, tap your Google Wallet app, enter a 4-digit pin number and tap it at the point-of-sale device on the counter.

So why will Google Wallet be different from any of the other new technology that was supposed to change the way we make purchases? 

I believe the biggest difference is that Google Wallet will actually improve the way we do business.  Merchants want to make it easier for you to do business with them.  Early research by marketing experts cited the fact that even a teenager going to the beach for the day might walk off and leave their house keys, their checkbook, their credit cards, and maybe even their Ipod.  The one thing that would absolutely not be left behind would be their cell phone.  By turning this little device into another method of payment retailers have opened up a whole new world of possibilities.  Imagine you are trying to decide where to go for lunch so you pull out your Iphone, search for restaurants in your vicinity and an offer from Subway pops up, buy one sub get one free.  You click “add to Google Wallet”, pull into the closest Subway location and not only do you have your credit cards available in your GW account but the “buy one, get one” coupon is also there waiting to be redeemed.  The possibilities are limitless.

As much work as Google, Citi, MasterCard & Sprint have put into this product launch, I’m proud that we’re part of the First Data family.  Without First Data the infrastructure and technology to make all this possible would be non-existent.  In a competitive industry where merchants have literally hundreds of processors and merchant service companies to choose from, one name consistently stands out as the leader in pioneering payment processing beyond the transaction.  In my office we’ve made a point to install the new “contactless” equipment in all new merchant accounts as well as upgrading existing merchants as the opportunities present themselves.  Only time will tell but I believe that you will see apps like Google Wallet emerge and become commonplace.  This time next year as you stand in line to pay for your groceries you might see more cell phones being used for payments than credit cards.  If that sounds strange just think if I had told you in 1975 that you would see plastic cards being used for payments instead of cash.  To show how consumer opinion is evolving, at the Google Wallet Press Event it was revealed that 70% of consumers said that they would never use the internet for financial transactions in 1988.   In 2009 however, 70% of consumers regularly access their credit card accounts online.  Yes, consumer opinion is always evolving and I have a feeling we’re just getting started.