Transparency (as you’ll see in this example), Track Record (do they have any Happy Customers?) and Competitive Pricing (fair, not rock bottom) are the three most important things to look at when looking for Merchant Services for your business.

Here’s a great example to illustrate what Point of Sale Companies are leaving out of their quotes to appear ‘CHEAPER’.  Name is changed in this example.

“Thank you for the information.  However I am still checking other companies & so far I have found one that has lower rates than you offered for most of the fees ..

I have found :

• Visa fees : 1.49 %
• Monthly Statement fee :6.95 per month
• Purchase :$849.99
• Transaction Fee :.08 each
• Lease fee was the same

Thanks
Susan”

Here was my response:

“Hi Susan, I hope that when you choose to do business with someone, that you don’t just look at price.  I always look at how someone begins a relationship w/ me and what is their track record.

1. To make a profit, if a company sells the visa & mastercard rates at 1.49% (wholesale from visa & matercard is 1.55%-1.65%), then they have to add 1% for mid and non qualified rates.  Which is stated at 1/2% in my quote to you- 3/4% LESS on your total credit card volume per month.
2. What this person failed to tell you is that it’s $6.95 X two statements (1 for debit and 1 for credit), which equals $13.90/month.  I quoted you $10/month- $3.90/month LESS.
3. They quoted you 8cents/ trans and failed to mention the $10/month debit minimum they impose.  Sometimes a company has a $20/month debit minimum.  My quote has zero debit minimum- $$$ LESS.

Susan, between our two sites: CanadaCardProcessing.com and CanadaPaymentProcessing.com we have OVER 80 POSITIVE CUSTOMER REVIEWS ON OUR LEVEL OF SERVICE & PRICING and over 300 ARTICLES/POSTS on the Canadian Payment Processing Industry and how it affects Small Business Owners.”

One has to always remember that… you ALWAYS get what you pay for, so it is important to prioritize where we want the savings in our lives and where we can sacrifice quality.  When it comes to Merchant Services, this is one area of your business where you DO NOT want to go dollar store quality.  If they truly have the prices that they quoted you, and not just some introductory gimmick, then you will lose in service- every time.

Click Here For a FREE NO Obligation Merchant Account Quote!

1  Pay for Results.  Most local search marketing companies lock you into 1-2yr agreements w/ cancellation fees.  SmallBusinessOnlineCoach? No Long Term Contracts.   Month to Month billing.  No cancellation fees.  You’re not getting results?  Leave w/ no hassle.

2  One flat rate every month.  Most local search marketing companies charge thousands of dollars before they even start in misc fees such as consultation, set up, keyword and a million “extras”.  Then they charge thousands of dollars in fees each month to each Customer.

3  No Conflicts of Interests because SBOC will only choose ONE Client from a specific industry for each major city.  That’s it.  If you become a Client, as long as you’re paying your monthly bill, SBOC will not take on a like business in your city.

4  More value, please visit SBOC’s sales page to see what you get done for your money each month!  If it doesn’t blow you mind, then go look at other Local Search Marketing companies and you’ll see that they offer a fraction of the services at 3-5X’s the cost.

5  More Happy Customers because they are focused only on getting and keeping Happy Customers.  See for yourself all the Raving Fans and Results Screen Shots on their testimonials page.  This is just the beginning!

6  Total Transparency.  There is already tons of FREE Local Search Marketing info on SmallBusinessOnlineCoach.   SBOC will eventually have on their site exactly what you need to learn or do to get the same results.  There will be live one day workshops where all this info is taught.

The way that SBOC makes their money is from the busy Entrepreneur who doesn’t have an extra 5hrs per day to learn and test online practices/ software, etc, two consistent years to implement into their business and probably over $75k-$100k in buying the right information/ software/ tech costs and learning mistakes.  So SBOC provides these services at affordable prices at monthly flat rates and detailed video reports at the end of each month.

7  Amazing Pricing.  SBOC is even after their limited sale prices and every package goes to the regular pricing- it will still be 1/3 to 1/5 less expensive than other local search markeing firms.  If you take a look, like we did at other companies.  We looked at 12 and only two had testimonials from Happy Customers (and only 4-5 each), and only two listed pricing.   It was all smoke and mirrors.

No one, including SBOC can guarantee results, but if you are providing great service, then you should have tons of testimonials.  And if you are getting great preferred ranking results, then they should be displayed to shout to others what you can do for them.  SBOC’s goal is to have a testimonials page that scrolls down endlessly.  This will speak volumes.  They already have over 12.

For any further information, please click here.  We’d love to speak to you further and answer any questions that you may have.  If we already have a business in your city in your business category, then we won’t be able to take you on as a Client.  If there is no search volume that is localized in your particular city, then we cannot help you also.   We can find that out for you for FREE.

“Ms. Smith, I appreciate what you are saying, however, I’ve been talking to thousands of Business Owners just like yourself for over 6yrs (yes, I am biased).  I’ve seen everyone’s numbers regardless of volume or business model.
Credit card acceptance is essential in this economy for any Small Business Owner.  Just consider these ideas below.

Credit card acceptance (payment processing) makes it possible for Potential Customers to pay for things that they can’t afford or have money on them to afford at that specific time that they had the emotional (never logical) urge to purchase your product/ service.

Credit card acceptance ALWAYS makes a difference in a business’ total volume each month.

How many times have you thought to yourself that you will not return to this store because it doesn’t accept debit/ credit cards?  How often do you use your cards?  Do your competitors accept credit cards?

Let’s look at an example:

I quoted you $35/mth PC & Internet Processing (Virtual Terminal), and 2.25% + 10c/trans.
Let’s see how much of that on $1000 of visa & mastercard total volume, then you can multiply easily this variable portion of your expense for Merchant Services.  The $35/mth is fixed no matter how much volume you do,until after 4th year, then it goes down to $15/mth.

2.25 X 1000= $22.50
let’s say your avg sale amt is $100, then that’s 10 trans.   10trans X 10c= $1
variable fee is at $23.50 for every $1000 of sales volume.

total= $35 for the system (fixed)+ 23.50= $58.50 for $1000 of extra volume.

how much for $5000/mth in volume? Also easy to multiply.

23.50 X 5= $117.50 + $35 (fixed)= $152.50 for $5000 of extra volume.

______________________________________________________________

now what’s the gross margin on that?

let’s be conservative and say 20%, so in our two examples:

20% X $1000= $200 and $1000 on the $5000 volume

______________________________________________________________

pay $58.50 to make $200 gross margin

pay $152.50 to make $1000 gross margin

______________________________________________________________

Also, three more points:
1  How much of your monthly fees are TAX Deductible?

You are not losing cash, you are losing the $58.50 cashflow for that month, but are you losing that in cash if it’s deducted at the end of the year?
*Please confirm details of your specific situation w/ a qualified accountant.

2  You get your money in 1-2bus days compared to accepting cheques which have a risk of bouncing on you after the product leaves your hands, and 5 bus day holds on cheques.

3  This is the least expensive form of lending you can get.  When you accept a credit card payment from a Customer, the Credit Card Processor deposits the amount of the purchase in your account in 1-2bus days of THEIR MONEY.  Then they go collect from your Customer’s Credit Card Company.  This is essentially like short term lending.

In the end, you must do what is best for your business long term, and I don’t know the real details of your specific situation.  But I hope this helps with a different perspective.

Take Care, Dat To”

More than anything in this post- WHY would you want to do business with a Sales Rep or a Company that allows these unethical sales tactics that starts a business relationship in deceit?

These companies are NOT in the business of losing money, and neither are you.  You don’t buy something at $1.65, and need $1.75 to breakeven, then sell it for $1.37 or $1.42.   Remember credit card processing is like short term lending, not anything similiar to purchasing a regular monthly business service like a phone line or internet.

How do they make it up in the end (and on your back)?

These are the things that I’ve seen when Business Owners are sharing with me these wacky quotes that they get.  You’ll get a few, if not all these things together in order to get these “fantastic rates” of 1.37% or 1.42%

1  They may charge 25 cents to 55 cents per credit card transaction instead of the standard 10 cents (‘haulage’ fee for transferring the information).  If you have under $100 in average sale amounts for your business models, then this will add up really fast.

2  $20 per card type minimums imposed each month.  That’s $60/mth total for debit, visa and mastercard.  What does this mean?  This means that no matter what they promised you.  That rate X your volume for that card type (debit/ visa/ mastercard) will have to be $20 or more, or you’ll get charged the difference.  Not good if you do under $1500/mth for EACH Card Type.

3  Their Mid and Non Qualified rates will be over 1% to as high as 1.85% on top of your ‘fantastic’ rate of 1.37% or 1.42%.  What’s 1.85% plus 1.37%?  Answer: A TON HIGHER THAN A COMPETITIVE MARKETPLACE OFFER.

This is a quote from our FAQ’s about Mid and Non Qualified Transactions:

“NOTE: Some companies group reward cards under non-qualified, so you can have the exact looking program (every single fee the exact same) from company A compared to company B, and you’ll pay a lot more in the end.  If they group the card type as “non-qualified”, then it doesn’t matter if it is swiped, it will be charged more.  Mid and Non Rates can be as low as 0.6% to as high as 1.85% on top of your Qualifed Rate.  Some companies categorize keyed-in transactions as mid-qualified and corporate as non-qualified and some have the opposite, keyed-in as non’s and corporate as mid’s.”

4  They will raise your rate within 1-3mths to 1.95%.  Ask them if you can speak to JUST ONE of their Customers that have maintained this rate for 1yr.  Do they have any Happy Customers (like our Customer Testimonials)?

5 You will not get any service, if they can’t make enough money from you each month.

Look for a competitive deal w/ great service, not a bottom of the barrel pricing, because you will always get what you pay for in the end.  And frustration has no price!

6  Annual ‘membership’ fees that make up for their super low pricing.  Lots of little fees like this that will add up.

Come get a real quote without fancy hooks and cloak and dagger tactics.  We’ll explain every fee to you and you’ll get an email w/ the details after our first conversation.

You can be sure that Mastercard is similiar in their basic interchange rates, but on their site, you have to request that info, so it’s not just posted.  Since Visa is used 2-4X more at a business than Mastercard, we’ll just talk about Visa in this post.

Now, look at bottom of page 3 at “Standard”: 1.65% (Qualified Transaction for swiped, face to face, traditional retail storefront businesses)/ 1.85% (Non-Qualifed which covers rewards and corporate business cards)/ 2% (Mid-Qualified which covers keyed-in transactions, non card present, over the phone &  e-commerce).  Mid and Non Qualified Transaction categories sometimes are backwards where Mid covers keyed-in and Non covers rewards and corporate cards.  Sometimes it doesn’t matter since both get the same rate adjustment.

Why am I showing you how to find publicly posted information?  Every day I get Business Owners say things like: “ABC Company is offering me 1.61% and that covers everything- mids & nons”.  Impossible.  Just look at your business for a logical comparison.  Would you buy at wholesale an item that is $1.65 and then sell it for $1.61?  of course not?  $1.75?  Then why would the credit card processors?  What about their breakeven point?  What about earning a profit for providing these Merchant Services?

The old saying of “If it looks too good to be true, then it probably is” is right.  If it looks too cheap, then it’ll end up costing a lot more in the end in time, money and frustration.  Look for competitive pricing and good service.   Are they answering your questions?  Are they pressuring you?  And most importantly, do they have dozens and dozens of  Testimonials like us from Happy Customers?

Let’s define as simply as possible the main parties that are involved during a transaction where a Customer pays for a product or service from a Business:

Customer= the Credit Card Holder, or the Customer of the company that issued that specific credit card.  Also is the Customer of the Business where the credit card purchase is made.

Merchant= the Business Owner that is providing products or services to Customers.

Card Issuer= the company that backs the credit card and issues it to a Customer.

Card Acquirer= the company that is connected to the Merchant, the Card Company and the Card Issuers of the Customers.  Card Acquirers are also called Credit Card Processors or Payment Processors.  Point of Sale companies will not be discussed here for simplicity.

Card Company= Visa and Mastercard (see links for interchange rates)

Let’s define as simply as possible how the money flows during a transaction where a Customer pays for a product or service from a Business:

Customer= pays with a credit card issued to them by Card Issuer, then walks off with the product or service offered by the Merchant.  Customer also pays fees and balances owed to Card Issuer.

Merchant= pays a Merchant Discount Rate (interchange rate plus gross profit of Card Acquirer) and fees to his Card Acquirer for the transaction, and then receives payment for the Customer’s purchase 1-2 business days later from the Merchant’s Card Acquirer.  Card Acquirer is essentially extending credit for the Customer’s credit card purchase to the Merchant.  Card Acquirer then gets money for the purchase from Card Issuer.

Card Acquirer= pays fees to Visa or Mastercard in general, and for this particular transaction, interchange fees (Merchant Discount Rate- Interchange Rate= Difference or Gross Profit to Card Acquirer) to the Card Issuer that issued the credit card that the Customer used for that purchase.  We are just talking fees here, not the actual money for the Customer’s purchase.

Card Issuer= pays transaction fees to Visa or Mastercard for this particular transaction.  And collects money and fees from the Credit Card Holder/ Customer for extending credit to them.

Just wanted to write about this topic because the last few weeks probably near a dozen people who I quoted have said that the quote I sent was $5more/mth  @ $36.99, or $100-$150 more @ $999 for the buy-outright price of a Dial-Up Debit & Credit Card Terminal compared to other companies that have quoted them.

Let’s run through some scenarios and see what makes sense, because you can’t compare apples to oranges.  First of all SERVICE is more important than anything because debit & credit card processing WILL BE A NIGHTMARE without excellent service

We have about 4 dozen testimonials on this site with a few dozen Business Owners who said that they will send theirs, (but haven’t yet for whatever reason).  I don’t see that ANYWHERE in Canada for this industry except for one other company’s (but this is one of my best friends)!  I do see a lot of complaint websites popping up about unethical companies preying on Business Owners.

You go to Wal-Mart to buy things that are disposable that you use everyday- no service required (i.e. microwaves, dvd players and vacumn cleaners).  Debit & Credit Card Acceptance for your business is vital and one of the top 5 things needed for you to stay in business, so don’t be fooled by the lowest price.

The companies that promise cheap terminals are only able to do this by:

1. providing used/ refurbished terminals that will have a lot of breakdowns and therefore downtime for you as a business.  What happens when it breaks down every two weeks and how much will that cost you in the end?
2. will not have a helpdesk or proper warranty.  Let’s say that you get a terminal for $750, but the wholesale price for a terminal is in the $400-$500 range.   After programming your terminal, pinpad and shipping out to you, let’s say the Point of Sale Company keep $150.  This is not including staff, building and other business expenses.  My point is that- will they send you another terminal if this one breaks?  Do the math… would you?  BTW: call their helpdesk and test the wait time.
3. there is something that you are missing or they are not telling you like monthly debit & credit minimums that you have to hit or you get charged extra.  Other fees like statement, admin, etc., etc.  BTW: quick way to check if your quote is no good is that you only get 3-4 fees listed, or you only get the fees verbally, or it seems super cheap.

Most Point of Sale Companies have similiar expenses relative to their sales. If that is so, then the only way they are getting you a cheaper is by charging more fees after you’re on board with them, or by not fulfilling their service and warranty promises because they can’t afford to, or they are eating the costs and happy with decreased gross margins.  If they are doing the latter, then they will go out of business soon, and it will cost you in the end in time, money and frustration.

[MINI RANT:

The reason why if they do the latter and will go out of business is because they mistakenly believe that what they lose in gross margin, they can make up in increased sales volume.   This is a business myth taught by broke teachers in highschools, colleges and universities across North America who have never owned a business before- discount and make up in volume.

Example: If you have a 35% gross margin (before counting fixed and variable costs of your total expenses), and you lower your prices by 10%, then you have to almost double your sales to make the same money.  If you have a 25% gross margin, then you will have to triple your sales.  Not to mention that even if you could have that much more sales (that's a huge IF), that you will tax your current infrustrature to death in efforts, cost and ability to provide service because you will have to double or triple your business expenses to keep up with the increased sales, unless you were only running your business on 1/3 to half of it's capacity before.]

Remember: You always get what you pay for. To be a smart business person you save where you can do without frills, but for the important things you get competitive pricing, but focus on service.