The 6-Second Audit

Nobody reads their merchant statement anymore... nobody. The number of times I have been told that [a client] doesn't have one and a half, two, or four hours to take a calculator and decipher their monthly statement is larger than I can count; and quite simply, is a fair thing to say. Granted, it's one's business and one should make time, but the monthly report is made to be so complex that it's actually designed not to be read.

Why? Because whatever gets measured gets improved. If one were to be able to quickly read through and understand their merchant statement, the travesty that would befall the industry would be great. The industry doesn't like a business to understand its fees, so they design it to be glanced at, (it seems to spill everything before you), and then be tossed aside. 84% of all businesses do not read their statements. This includes people that open it, copy a couple of numbers into a spread sheet, then file it forever. This is no reading. This is being a stenographer. Stenographers are great I'm sure. So are phlebotomists and sketch artists, but neither of these jobs help here. These should be read. If you can't do it, call the group that set you up and have them explain it ... line by line. If they won't do it, fire them and call me.

However, there is another way. It is not perfect, but it can help you keep an eye on what you do and where your money goes and all without you taking hours to decode, decipher, learn and re-learn how to do it every month when the new statement comes in. Here's how:

1. Start a file marked "Merchant Statement"

2. Put your copy of your merchant account contract in it. Don't have one? Don't be embarrassed. OK, be a little embarassed, but don't dwell on it. Maybe you have taken over for someone else and their records weren't the best. Call your group and have them send you a copy of the signed agreement, not a blank document. Do not re-sign anything. This is just for good record keeping and to establish a base line.

3. Take your monthly merchant statement and have someone you trust (I can even do this for you. Simply fax it into me and me and my team will help you track this at no costs. We just think you're that neat) circle your discount rate, per transaction fee, and monthly fee. This is the most important step because if you get this wrong, everything else is worthless.

4. Highlight those numbers in a bright highlighter. I Like Pink or Green as they fade very little over time. File it in the front of the file.

5. Every month, use the last month as a template and highlight those same numbers. File that month's statement in the front of the file.

6. Every month grab the last three or four statements. Flip through them and see if your numbers are descending as you flip through them. If they do get smaller, then you know your rates are increasing.

If you like, you can even write your starting numbers from your contract on the outside of your file. This will make it so you may compare immediately your original vs. current rate.

Warning; Do not drink anything while you are doing this. Neither I, nor Meridian Merchant Services are responsible for any fried keyboards, monitors, nor office cleaning, nor ruined documents when you spray everything with spewed coffee when comparing the differences.

Cut Lines to Cut Cost and Save $720 Annually

Over and over again one of the number one questions I get asked is how to cut costs. It makes sense that there are some things a business must have and are simply the cost of doing business. However, they simply want to go to the horse's mouth and say, "what would you do?"

Simple: Remove a land line.

Phone line that is. Most businesses have their lines set and really have no choice in the matter. However, times they are a changing. No longer does one need a dedicated line for their credit card machine. They just need the internet. This makes sense for businesses that are all cell phone and don't need a hard line at all, and also for businesses that have everything through their internet. Some businesses just need to remove one of their land lines. Either way, the savings are real.

One example is that of a mall style kiosk. For them to have a phone line, the phone company will charge them a minimum of $60 a month before any calls are made. They can simply use a wireless terminal. Most companies are not in the mall in the middle of the aisle, but instead have a hard and fast location. In this case, use a splitter and run the credit card terminal and the fax though the same line (both are considered seldom use items compared to a phone).

One can also route their credit card terminal through their internet connection. This is not hard to do, but you must tell your provider that you want an internet setup and you will need a piece of Cat5 or internet/ network cable (Cat3 is a regular old phone cable). This can be bought at Wal-Mart, Best Buy or where ever for $10 (better yet, ask the group that set you up to bring you the cable and set it up for you. We do it for our clietele, and yours should do it for you....) Then, simply plug your credit card terminal in to your switch or hub and you can have the old phone line removed or used for another system or phone.

If you really want to spice it up, remove the terminal altogether and get a virtual terminal that resides on your computer. If you are retail you will need a mag-swipe (magnetic stripe credit card swipe). It's about the size of a candy bar and plugs into the back of your computer. Using this method, one doesn't even need to plug into the switch/ hub, the computer does that and your virtual terminal sits on the computer.

It's cheap. It's easy. It leaves you with more money at the end of the month.

Hablo Espanol? Your Merchant Account Does...

One thing that has been asked for years is, "Can we get that in Spanish, Chinese (Traditional and Simplified), and any other number of languages here in our great melting pot? Oddly enough, it's not the businesses that ask that. It's us the ISO's (independent sales organizations) and MLS's (merchant level sales) that are asking that of our processors for our businesses. Unfortunately for years the answer has been a nearly unqualified 'No'. I say nearly, as the main issue has always been the big one: the contract. Contracts are the hinge pin of the whole environment and incredibly important. After all, 99% of my business is not brand new customers opening doors for the first time, but cleaning up the train wrecks business owners have gotten themselves into. Let me say that in another way: 99% of my business is cleaning up the train wrecks that native English speaking business owners have gotten themselves into after signing contracts written in English. The contracts that processors use have spent years in legal being constructed, reviewed, refined, and re-refined to the point where they are at now. To get them in other languages was always presented as a Herculean task, and was not made an actual labor of Hercules as Zeus thought it would have been unfair to ask the mythical hero to perform such an impossible feat.

However, it has been done.

After years (actually going on four now of Meridian asking its processors to produce), a customer can get their contract in Spanish as well as Merchant Support, Tech Support, and even their credit card machine prompts, menu items, and read outs in Spanish. This is a coup of an extraordinary level.

It is also well timed. The Southeast has many businesses that are native Spanish speakers and this level of Business-to-Business support is a great boost. It allows business owners to read a contract in their native tongue lifting their comfort levels immensely, as well as allowing them to have exchange program students and employees such as from Armstrong's H.O.L.A. (Hispanic Outreach & Leadership at Armstrong) program to come in and not have to concentrate on the machine's prompts and messaging, but to fulfill orders and demands of the business.

Meridian's own due diligence in this area over the years has always shown a large need. This is because Savannah has distributors that service 3,000 Mexican restaurants in the Southeast alone. As well, many of our referrals come from CPA's that want us to review their clients' merchant statements. A follow up of this showed a CPA firm that had added a single Spanish speaking accountant, who once hired had more business than he could possibly handle. Add into the mix L.A.S.O. (Latin American Services Organization), and Savannah's own La Voz Latin periodical, and you have a business case for some real business.

Now forgive me if this part sounds like a commercial, but due to the years invested in getting this done, my own firm was rewarded as the first group (and so far only) that has this capability to provide for their Spanish speaking clients in the Southeast. We would have been happy just to get the contracts translated. However with the addition of Merchant Support and Tech Support being in Spanish so that any questions from day-to-day operations that come up, a business owner does not have to fear that they will not properly explain the issue properly. After all, it's hard enough for native English speakers to explain a merchant account issue due to the technical language barrier, much less explain it in one's second language. As well, add the fact that the machine itself is available to have all of its menu and actionable items come up in Spanish, and you have a business owner which is empowered to achieve their American dream.

Questions From a Reader:

QUESTION: Why is there so much data needed from me? They are going to be processing my money, shouldn't I be getting 30 pages of data on them?

This is a great question that is so often echoed in the frustration of people and businesses while setting up a merchant account. Yes, there is a lot of information required of you. Be happy of that. Why? Let me give you a scenario...

I am a crook and I want money. How do I get it? Well, I have a computer, an internet connection, a camera, and a merchant account. I go trolling for old cars. I find a 1968 Dodge Charger with a Straight Six in triple black sitting in someone's driveway. I get a good picture of it. I then go home to my den of crime and upload my new photo on my computer and post it in eBay. I say that it's my recently deceased grandfather's; and though I love it, I cannot bear to have it around now that he is gone and I put a price of $5,000 on the car. As that is a fraction of the car's worth, it is snapped up immediately, they pay via credit card, I get my money in 48 hours and the buyer wonders where the car he just bought is. Why? I am gone. Long Gone. I am a crook after all.

Now it is not as easy as that for one important reason: it isn't that easy to get a merchant account. That is because one doesn't need a mask, a horse, a six-gun, and an empty sack with a dollar symbol on it to be a crook anymore. You just need a computer, an internet connection, and a way to process money (hint: insert the term merchant account here). Merchant accounts deal with money; and that's the one thing everyone wants. More importantly, it deals with the way money is passed from Person A to Person B. My father is an attorney and he has always said that, "99% of all laws are about money, and 99.99% of those laws are about Person A passing money to Person B. Because THAT is a taxable event."

Not to mention, there is substantial underwriting and risk involved in merchant accounts due to possible fraud. Although the world will tell you that credit cards aren't real money, they are magical gift making machines that taste like happy; in fact someone does have to foot the bill. If a credit card transaction goes bad, either the issuing bank (the company that created and sent out the credit card), MC, Visa, Discover, American Express, the business where the bad transaction happened, the Fed, or the card holder is going to foot the bill. Somebody, and I do mean somebody is absolutely going to have to pay it. Whether it's for $1.35 or $50,000, somebody must pay the bill and generally that someone is the business involved and their merchant account.

In fact, we normally think of the majority of all credit card law protecting the card holder. That though is patently un-true. They protect in this order: the Fed, MC/Visa, the card issuing bank, the card holder, the processor, and finally the business. Unfortunately part of this is simply because a business can be run so poorly as to violate the system and run costs up, while the card holders are voters and their senators want sound-bites saying that they should be protected, even if they buy $100k more than they make in two years.

Finally, let it be said that the processors which are getting all of this sensitive data on you are to be trusted. They have to go through extreme measures to make sure they are protected in ways that most people could never dream of. Secondly, they have their hands all over not just the money, but the most sensitive of all: card holder data. That is to say the name, card number, and expiration date on the credit cards themselves. If they were to ever get hacked (and there have been some extreme cases), they are very liable for all of it and can be sued by each and every card holder, as well as getting delisted by MC/Visa.

In short, all that data is to make sure you are a real person and you have a real business. They are weeding out people signing up their deceased relatives with fake addresses at the mall or post office. You are real. Your business is real. You have a real address.

Welcome to the world of business.

It's Not Finding a Leak and Plugging It...

It's Finding A Problem And Getting Rid Of It.

All too often something happens.

A company is having their rates reviewed. They are high, sometimes really, really high. The would be new merchant services provider quotes the company that is paying too much a number that is not just lower, it's a good rate. The company that has been paying way too much reviews it, but never signs with the new firm. Instead, they go back to their existing provider, tell them the quote, and when they say, "We can match that," they stay with them.

Did you see what just happened?

The company was paying too much. They were paying too much because their current provider was rooking them on fees, or didn't monitor their account, or any number of reasons; but when the rubber meets the road, they were being overcharged. A new, prospective firm quotes them and saves them mucho dinero. Is the new firm rewarded as they should be by giving them the account and switching? No. They are used. Please understand what I am saying when I use the word 'use'. I mean it in the sense of something dirty. Like someone who had been lied to just so the user could get what they were really after. The new firm was used, because the company didn't really have an intention of switching. It's too much hassle. They just want to make sure they aren't paying too much. To them, it's like they found a leak in the roof and they plugged it.

In fact, it's more like they found a thief in their midst. Think about it. If you caught someone with their hand in the till, you don't tussle their hair and say, "OK now, I caught you. Quit stealing you little scamp...". No, you fire them. I was once in a man's office giving him his quote which apparently was much lower than what he was paying now. He asked me to wait a moment, put his phone on speaker phone, dialed a number and waited while it rang. When Bobby (the names have been changed here to protect the guilty) answered, he said who he was, and stated that he had a competitive quote on his desk from a competing firm. He gave Bobby the numbers from the quote and Bobby quickly replied in a very sunny voice, "We can match that for you", as if he was doing this man a great service for his years of loyalty. He asked Bobby, apparently just to make sure, "OK, so you can match this for me?" "Yes, of course," answered Bobby.

I couldn't believe it. I knew this scenario. This man was actually going to cut me out of the deal even though I was saving him thousands of dollars a year. His old company would have kept charging him the exorbitant fees unless I had given him a good rate to compare to. That's when it got really interesting...

"You're fired!"

""Sir?!"

"You are fired. Unless you can answer three questions to my absolute satisfaction."

(dead silence... on the other side)

"One: Why is my business only important to you now that I'm leaving you?

"Two: Why didn't you give me this rate to begin with? And

"Three: Are you going to retroactively pay me back all of this money that you have overcharged me since I opened my account with you and issue a formal apology?"

I have never been so proud of an individual that wasn't in a cowboy movie.

Your Merchant Account: Beware Any Sign Up Fee

"This is great. How much is it going to cost me?" This is a question I get asked over and over. Bear in mind that the business owner/ manager already knows all the processing fees. What they are asking is in fact: "How much do I have to give you to enact all of this?"

Zip. Zero. Zilch. Nada... Sorry, but there were no more 'z' words.

They don't understand. It can't cost nothing, so they re-ask. "I know, but how much is it going to cost me to get started?" Nothing. "OK, but if I were to say right now, 'Let's sign the papers', How much would I have to write the check for?" The only check you should give your merchant provider is a VOID-ed check so that they can send the money to your bank account. "Yes, yes, but how much do I write the check for to you?"

Here's the issue: These poor souls have been rooked for years by salesmen that charged them a fee to get signed up. A fee that does not exist. On many of my competitors' contracts though it has areas for sign up fees. They will be called anything from contract fee, paperwork fee, assessment fee, debit network sign up fee, installation fee, or just about anything else. They are not real. Back in the 80's there were fees when quite simply the infrastructure was not really in place, and even into the 90's, but now they do not exist. There are only two reasons the fees are still in certain contracts. The first is so that a salesman can look you right in the eye and say something like, "You know what? Just because you are the handsomest devil (or prettiest/ sweetest business owner) I have ever seen, and just because I like you and we went to different high schools together, I am going to waive this fee." Then they strike through it, or write in zeros. This is to make you feel very good that due to your size and importance (which mean very little to MC/Visa), and because of your business knowledge and influence ...and let's face it: sheer, magnetic power, they gave you the inside deal. Everyone loves the good old boys network who's in it, and now you are.

The second is the real culprit. This salesperson has been chatting you up with more enthusiasm than a kid trying to explain to his mom that he really, really needs a chainsaw and a motorbike, and he senses that he's got a whale on the hook. Not a small fish that you would have to tape several together just to get a fish stick, but a whale. All he has to do now is real you in. That's when he explains that there are some fees to get you setup, but the savings he is going to give you will more than offset that, and you'll be richer than Midas in no time. After all, if you balk at the numbers, he can always go back, and if you are willing to sign today, probably get his boss to waive those (nonexistent) fees. Problem is, most people don't balk. They don't jump the hook. They pay it. I have seen businesses pay anywhere from $200 to $900 in these bogus fees and it stinks.

Let's put this in perspective. If I am selling you a car for $22,000 and I look at you and say, "OK, now before you give me the $22k, I am going to need you to give me $400 so that you have the honor of paying me $22,000 in order for me to sell you this car." Would you laugh at me? Would you get angry and explain that one of us is waisting the other time? Would you look for something to throw? All of these answers would fit someone. The truth here is that you wouldn't accept it. However, you might when it comes to your merchant account. After all, only nuclear physicists with advanced math degrees really understand the numbers involved in the world of accepting plastic. Easier just to pay the bill and make it go away.

Wrong. Dan't pay it. Throw them out and never let them back in your doors again. I believe this is such an unforgivable sin that my company will write no contracts for any processors that have a section where a fee could be written in. As well, if an agent ever tries to add a fee to ours for any reason they are terminated and they lose their residuals stream. Why so fierce? The money goes to one person and one person only: the salesman; and it is something that when the customer finds out will create a lot of bad blood and probably make the customer leave. Any salesman who is willing to jeopardize my company, our integrity, and our income for a couple of hundred bucks has no place working for me.

Don't let them work for you either.

Your Merchant Account: Greater Risk Means Greater Costs

Time and again when I am reviewing with potential clients about their businesses, they tell me they don't understand where the money is going, they ask why certain transactions cost more, and how to possibly track them. This is understandable. After all, the industry secretly prides itself on its ability to seemingly report everything to its customers all the while making them more confused than ever. To put this in perspective, 84% of businesses do not read their monthly merchant statement. Seriously, ...84%! People read their electric, gas, water, and phone bills, but not their bill for accepting credit cards.

Let's make it easy shall we? The riskier the transaction, the more expensive. Think of it in terms of underwriting. It costs a lot more to insure a Corvette than a Chevette. The same goes with a business's merchant account. The bigger the risk, the bigger the cost to cover it. If a customer comes in with a credit card, it swipes as it should, the planets align, God is in His Heaven, then boom: you get a better rate. If the customer's card won't swipe, then greater risks have entered in while your employee is hand-keying the card in. Congratulations, your rate just went up. It will go even higher at this point if they don't capture secondary data like billing zip codes and CV numbers (the 3 digits on the back unless it's an Amex who has four on the front). Your costs however, have not hit their ceiling. If the customer is using a Rewards card [see: Rewards Cards] such as a card that gives them sky miles, bonus points, or cash back; your rate will shoot straight into the stratosphere.

It's not all bad though. Your rates can also go down. If a customer comes in with a debit card, your rate drops. If they put in their PIN (personal identification number: in truth merely an electronic signature which is verifiable by the Issuing Bank), then the highest your company can pay is going to be about $0.87 and PIN-based debit is good up to a $500 purchase. Isn't that nice? This though is merely the other side of the coin: the safer the transaction, the less expensive.

These standards also apply not just to transaction type, but business type. In the credit card world, there are only three types of businesses: Retail, Hand-Keyed, and eCommerce. The way to determine what makes a business what is to look at how the customer pays the business. If they are face-to-face, it's Retail, over the phone it's Hand-Keyed, and online it's eCommerce. Businesses can be a combination of the three. Nowadays, many businesses do at least two if not all three options. However, I must be very clear here. In nine out of ten cases a business must have a separate merchant account for each way they accept credit cards or they are inviting trouble. This doesn't mean simply from fraud, but by possibly getting delisted by their merchant service provider. When in doubt ask your professional.

Most of my industry (which I apologize for, a lot) is kind of like speaking with a doctor, or your average computer geek (I use the term lovingly...). There is a lot of jargon that if you boil it down is mostly common sense. You, yes you, can understand it; if you make them take the time and avoid 'industry only' words when everyday language will more than suffice. Here is a good trick to know: Go to your merchant statement and look for the numbers of transactions by card type. An example of this would be: Visa Card Merit II ................236. This means that for that type of card, your business had 236 transactions. Once you have found that area, look for the card type with the single largest number of transactions. Ask your merchant professional if that is the safest card type, and what you can do to have lower cost cards make up the majority of your statement.

Beanstalks Aren't the Only Things That Grow, Jack...

I apologize for my industry... a lot.

One of the things that is often the toughest point to get across to potential clientele is that the rate they signed up for a few years ago, is not necessarily their rate now. I often have to show them their current statements showing what they are paying last month and compare it to the contract that they signed three, two, even one year ago. It's often much, much worse when they have not switched for four or five years.

"But I have a contract...?!"

Unfortunately people believe two things: 1) that just like leasing an apartment, that rate is the rate for the term of the contract, and 2) that if they look at the sheet with the rates on it, they do not have to read the rest of the contract. The problem is that the contract says the rate can change. It might as well say that the rate will absolutely change, and that right soon. When businesses have our firm review their rates they are often aghast at what they see and how much they save. Most often it's between $500-$2,000 annually, but in the past fiscal year we have seen businesses overpay by $4,000, $8,000, $11,000, and $22,000+ for a single year. What's worse is that while some are large, others are just average size businesses paying through the nose and not even knowing it.

In these cases we tell people that they more than likely weren't duped, and probably had a fine rate in the past, but they didn't watch it. Well my grandmother had a saying, "Whatever gets measured, gets improved." Boy howdy. Our industry shows that on average 84% of businesses do not read their statement. They throw it in a box, a drawer, and say that eventually they are just going to plow through it. They never do. Included in that group are the 'stenographers.' Bookkeepers and business personnel that open it, but all they do is copy two or three numbers to a spreadsheet, but they don't read it.

An industry paper (which is a VERY boring periodical... avoid it) reviewed a senior man who has been in the industry for about the past thirty years or so and is richer than Croesus where he spoke of his one main job which was the creation of his company's monthly merchant statement. The thing that really made the article interesting was his statement that [he] "couldn't read his competition's statements." In other words they are made to contain as much data and as little information as possible. This is because it is to work hand in hand with the knowledge that no one reads their contract. Well guess what? If you don't read your contract, and you don't read your monthly statement (which is designed not to be read), then when your rate is climbing up, you'll never know it.

Again, I apologize for my industry, but a lot of the burden is square on the businesses' shoulders. They should read the contract and they should read the monthly statements. If you can't read your statement, ask your merchant account rep to come over and explain it to you line by line. If they don't have the time, channel Donald Trump, fire them right then, and get someone who will. My firm actually helps our clients by auditing their account for them every 11.5 months; however, we are not the only ones. I have heard of two other groups that also do this and that's only counting North America. The objective is to allow the business to do what they are in business to do, and take some of the work off their plate.

Responsibility though always rests with the business and they need to learn what they need to do. Education as always is the key. Most do not read their statements as they are designed not to be read, but you do not have to spend three hours with a slide rule and an advanced mathematics degree breaking down your statement every month. There are two methods that we call the '30-Second Audit' and the '6-Second Audit'. Anybody can do either, and both should be done every month. Do them both every month and you will see the spikes as they happen in your account. The rest is up to you.

Call or email us and even if you are not with our firm we will teach you these audits at no charge.

Bigger Doesn't Always Know Better...

I have spent so much time talking to people and their companies, from large to small, that I really don't get shocked anymore. We often deal with significantly larger groups and I have to warn junior agents that just because they are bigger, doesn't mean they know better.

"But they have people."

I have spoken to numerous groups at length and just last week spent time with a company that had 500+ stores; and they did the unthinkable: they leased their machines. What is worse, they were setup on a monthly minimum which is only done when you are given a free terminal placement (opposite of leasing a terminal wouldn't you think?), or in essence were double-tagged for the same machines I would have given them for free. In short, they paid a little over $100k in four years that they didn't need to pay.

And it happens everyday.

I use it to help train my people to shoot for the rafters. After all, the brass ring is only there for one reason, so that you will reach for it. However, I also warn larger groups that there is always room to sharpen the pencil. After all, the only way I was in front of a 500+ store company was that they were over paying in the first place.

Per usual there are multiple places to look for corrosion:

Terminal Fees

Terminal Fees for out of date machinery

Contract fees

Additional lines that are unneeded

3-Tier vs. Interchange Plus

Multiple income streams smashed into one account

Mid Qualified Charges

Non Qualified Charges

and finally...

Discount Rate and Per Transaction Fee

Know what you process, how you process, and look for overages. If you can't read your statement, get your merchant provider to explain it and the overages to you. After a while, they will starting popping out at you.

The Painful Truth About Signing Up...

...Reprinted from 2007 by popular demand...

OK, so maybe you signed up for a merchant account a year ago and your business is already taking credit cards; or you are just now looking into it. Either way, learn for the next sign up or the first one. Sit down, and oh... you may want a drink.

First and foremost, one of the worst things about the industry is the salesmen. Chuck, Alicia, whomever, I'm sorry but it's true. 99% of merchant account sales people give the rest a bad name. Why? Because they make money by up-charging you the client. This is not always the case, just in 99.99999999% of all cases I have everseen. After all, there has to be an incentive plan for keeping these guys and gals hitting the bricks.

Well, here's an incentive: a sign-up fee. A sign-up fee? Are you kidding me? You want me, to pay you, in order for you to make money off me? I am supposed to pay you for that?!

...Anyhoo, this is a fee that goes one place and one place only: the saleman's pocket. Oh yes, make sure you know this. The only reason that it is on the contract is so that they can scratch through it with a pen and say, "but because it's you, we are going to waive that fee". How sweet. However, if they think they have a nice, fat fishy on the line they will charge it and simply put it in their pocket. Yay! Sushi's on me tonight!

This I cannot be clear enough about. If you have someone who wants to charge you a fee to get set up when their company will be getting a percentage of your hard earned money for the rest of the contract, you need to introduce him and his plaid, reversible, polyester jacket to the door. Would you pay a fee to a car company in order to be able to pay them for a car? "OK, let's see... that Ford costs $26,000, but I will need you to pay us a $100 fee in order for us to be able to give you the privilege of buying from us." Goodbye and get out.

I have seen so many established businesses doing high sales that have paid this fee that I cannot imagine the level of salesperson that would actually charge it . Seriously, their bio would have to start, "Leaving a trail of slime wherever he goes..."

Bottom line: your business is worth something and there are fifty other companies out there willing to take very good care of you simply in order to beat out the other guy. My daddy always said, "Vote with your feet." In other words, if you don't like it, there are a lot of other choices out there.

Cut Your Phone Bill With Wireless

Now, this is sadly not a solution that works for everyone, but for those it does it's gangbusters.

When wireless first starting hitting the market, it had a limited niche. It was for trade show people and traveling salesmen. Later even contractors jumped in on the game as now they could get retail rates by taking the terminal to the client on site. However now there is a whole new list of retail clientele lining up to get wireless where you would have never thought.

Ever been to the mall?

Mall kiosks can be great business these days. I know of several people that have several each. They do well, but they have their own trials and tribulations as well. One such issue is the cost of a phone line. This particular customer happened to serendipitously mention that it cost him $60 a month just to run a phone line to his kiosk. That's $60 a month before any phone calls are made whatsoever. What's worse is he had family with kiosks in differing malls, some of whom had monthly phone rates as high as $75. We even saw one that paid (those with sensitive heart should leave the room...) $120+ a month before any calls were made.

Wireless is a good choice for these merchants as even though it's more expensive than a standard terminal due tom its $15 per month wireless fee and $0.05 extra per transaction, it saves bucket loads of cash for otherwise unnecessary expenditures.

The reason it even has the $15 a month wireless fee added as it is basically a credit card terminal with a cell phone Frankensteined in. The $15 pays for an unlimited cell phone plan. Before you ask, the answer is an emphatic "No". You cannot use this terminal to call home or order a pizza. It is an unlimited cell phone plan, but the only calls it makes is to the processor you work with. No one else.

I have to say, I always love it when a customer is overjoyed at the good news you have for them such as, "Besides all the other fees I am reducing, I am dropping your phone line costs down from $60 or more a month to $15."

I have been promised that they would dance at my wedding...

Paying for Someone Else's Coupon

You clip a manufacturer's coupon for a $1 off a gallon bleach. You go to the store. You select the bleach which is $1.79 and take it with your coupon to the cashier who then subtracts the $1 and the new bill before tax is $0.79.

Who pays for the coupon? The store? No. They electronically capture all the coupons for the month and forward them to Johnson & Johnson or Proctor & Gamble or what have you. Then they get a check for the amount of the coupons that were offered by the manufacturer, and the process repeats. Not the circle of life Elton John sung about, but still the world goes on turning...

However the story changes completely if we change one thing. You go to the store, you buy whatever you buy with no coupons. You go to the cashier. You give them your Sky Miles card, Rewards card, Bonus back card, Cash back card (whatever) and give it to the cashier who rings you up. You get your sky miles, bonus points, cash back, whatever, the company who gave you the card gets all the glory, and who foots the bill? The card company right? After all its their card, kind of like going in their with their coupon right?

Wrong.

The business where you bought your groceries, gas, meal, clothes, crafts, insulin, business supplies and everything else just picked up the check. And they had no choice. If they take Visa and a customer goes in with a Visa rewards card of any type, it cost them substantially more money than if you had a regular card. Why is this? Why is the local burger joint where you go every Saturday about the crack of noon paying for your Delta Sky Miles? If you're using your Delta Sky Miles card shouldn't Delta be picking up the extra?

If you are a business beware. Better yet, be aware. Be aware of where your fees are going. This is not your merchant services group gouging the day lights out of you. It's the deals made with MC-Visa, Discover, and Amex. What's worse if you take Visa at your place of business, you CANNOT turn away a Visa Rewards card without running the risk of being delisted. Delisting means your merchant account just got cut and you can no longer accept credit cards. It is a damning process at best.

Be aware. Know that your business pays for someone else's coupon. Know that your Rewards card punishes businesses you like to shop at. Be aware that people are foolish and make bad decisions that look good for the present and are very bad for the future. We are continuing this trend of punishing businesses by now making Rewards debit cards. The cards that used to save businesses money will soon help tighten a stranglehold.

If you think this is OK, go back and look at the housing market over the last four years. Predatory lending was great for the people doing the lending, but a beast can only be beaten so many times before the back is broken. Forgive the ugly sentiment.

And forgive me for editorializing, but America's businesses have always been the ox that pulled us out of the mud. We can strangle them or reward them. One gets us out; the other drowns the ox with us.

Double-Tagged for Fees

I apologize for my industry. A lot.

This is one of those cases...

I am with a customer and I am looking over what they are doing now; as in how they process and the fees they pay before I take it over. In the course of the conversation, the customer tells me about how they are paying a lease for a machine. I explain to them how this is unneccessary as there is a way to get a free machine [see: Terminals are Generally Free] if they will sign up for a minimum, which I know they will easily clear as I have already reviewed their monthly numbers. That's when they inform me they pay a minimum.

Let's review that a moment: (Lease) + (Minimum) = Fees Double Tag

How? Simple, but we have to understand the components.

Lease: A monthly fee for a specified term which pays for the usage of a credit card terminal which a business does not own. Example: $48 a month for a terminal for 48 months.

Free Placement Credit Card Terminal: A credit card terminal given to a business to use which the business does not own. Paid for by a Minimum set on the account which is garnered generally from fees that the business would pay anyway. Example: If a business does a $1,000 a month in credit cards, they would generate about $25 in fees for the processor. The processor then gives them a machine to use for the duration of the life of the business as long as the processor gets its $25 Minimum a month in fees.

Account Minimum: A base dollar amount guaranteed to the processor for the usage of a credit card terminal which a business does not own, and is gathered first from processing fees of the account. This generally works hand in hand with a Free Placement Credit Card Terminal to pay for its use.

Confused? Let me say it like this: a business needs one, or the other. Not both. A lease pays for a machine. A minimum pays for a machine. If a business pays for both, they are paying twice for the same thing. Imagine getting an electric bill and a power bill in the same month for the same service. If your business leases a machine, the machine is paid for via the lease. If you add a minimum, then you are guaranteeing you will give them money for a machine that is already paid for via the lease. If you have a Free Placement machine and they put a minimum on your account to cover it, AND try to add a lease, the lease would be there to pay for a paid machine.

Simple Rule: Minimum or a Lease. Not both. And a Minimum should get you the machine for free. Always get a free placement over a lease.

The reason there are all of these double tags is quite simply that the merchant company gets a bonus if you sign a minimum. If a business is doing $10k monthly, then they obviously do more than $1k a month required to get a free placement. However, the merchant company makes a lot more money if they sign you to a lease. The problem is people get greedy. They want both.

They shouldn't get it.

No Contract Term, No Cancellation Fee...

But please don't read the paperwork!

Please forgive the very insinuating picture I used with this, but many people actually believe what people in my industry say without backing it up by reading the fine print.

Buyer beware...

I recently spoke to a business and he asked me my term of contract. I told him 3 years. Standard. Some people try to slip in four, but's dirty pool. He told me that my competition said they had no term. That there was no contract period. I replied that I would bet my car against whatever he had in his pocket be it lint, a stick of gum, and a paper clip. He asked me why I was so sure and I informed him that MC/ Visa required a contract. A contract not only locks them in, but protects them in many cases as well. Imagine a customer that is told he will get 1.71% and $0.15 per transaction. It's a decent rate, but when his deposits to the bank show that 10% was taken out has has no leg to stand on... because he has no contract. The numbers changed since he signed. The real reason that MC/ Visa will not allow n account with no contract is that their would be no guarantor. The merchant could do anything and not be help responsible.

(By the way, he signed with the other guy and called me 2 months later furious that he had been taken advantage of and wanted me to explain it to him.)

Plain and simple: There must be a contract. With any contract, there is a contract term.

In the same way, people are often duped when they are told this, but unfortunately they rarely read the paperwork. One of the last cases I worked on a man was told that his terminal would have no cost, but he signed the paperwork including the lease stating that he would be charged $32.95 a month for four years. he didn't know wheat to say when I pointed it out to him except to repeat that he was told there would be no hardware fee.

As well, he was told there was no termination fee. Of course there was, and there always is. Read the fine print. Truly it is only fair for a company to charge a termination fee. Why? There is no cost to setup. More accurately, there is no cost to you the merchant to be setup, but there is a cost. If you were to leave quickly, the cost to the companies involved would stack up quickly. Most reputable firms will charge about $300 to terminate. This number however will normally degrade over time as they not only get their fees, but recoup the costs. Normally after the second year the cost is $100, $50, or nothing. The way to make it nothing is generally to call the group that has your account and ask them to close your account for you. If you call your processor directly and close your account, you could get hit with the whole fee. Call your merchant group, and they can generally get you out for free.

The real reason there is a termination fee though is this and only this: the industry does not want you hopping about like a frog on a hot plate. In the early '90's the long distance wars created such a company-hopping environment that millions were lost. Everyone started under cutting their fees so greatly just to get clients to stay that they undercut sustainability. It all eventually crashed.

The long and the short of it is this: the sales person can say anything, but paperwork is where the noose is found. Read it. Know it. Understand that some requirements and limitations are fair. Just make sure that they are no so high that you hang yourself.

Terminals Are Generally Free

Free.

That bears repeating: Free.

Why do I take the time to say it like that? Frankly, in my industry I setup two types of businesses. One is opening its doors for the first time and has never taken credit cards. The other has been open for years and has taken plastic for years. 95% of what I deal with is the latter. They are in business now, have a history of card usage, and unfortunately a history of over paying for their hardware.

One of the last businesses I have spoken to had a chain of 500+ stores and most of their machines were still on (all had been on at one time) a lease. The lease was for $48 a month per machine for 4 years. they could have gotten their machines for free, but instead they paid $26,736 a year or $106,944 over the course of the 4 year agreements when they could have gotten it for free.

How it works

First of all, almost any merchant service provider worth his salt (or her salt ladies) will get you the machine for your business for free if you process $1,000 monthly. They do this by giving you a monthly minimum that you must meet of $25. That does not mean you only have to process $25, it means the processor must earn $25 in fees. That means if you process $1,000 in a month you should have about $25 in fees more or less (as always it depends on your rates: higher rates earn the the fees more quickly, lower rates more slowly, ...but you knew this already didn't you?).

Now this is different from a lease in several key ways:

• A lease is for a set period of time. Even if your business fails you have to keep paying a lease until your four years run out.
• If you have a lease you pay for your terminal no matter how much you do a month. Seriously, if you have a lease of $48 a month and you process $5,000,000 a day; you will have to pay all the fees on the $5m + the $48 lease.
• Most leases are non-cancelable. this is so that if you find a better merchant rate, your still stuck paying your old company for your lease.
• Leases often have provisions stating that non-performance is not an option for cancellation.
• Leases are often significantly higher per month than rentals, flat out purchases, free placements, or anything else.

The only real provisos I can mention here are these: First and foremost, does your company do $1,000 per month? Are you close? If so go for free placement, because unless you melt it down to slag, they will generally replace it free twice a year (ask your provider to make sure). This includes if you drop it, fry it via a lightning strike, or spill coffee on it. The second is: do you need more than one machine per location?Normally they will give you one for a $25 a onth minimum/ $1,000 a month in processing dollars, but most will only place a second one for free if you process $100k monthly. I know it doesn't make sense, but it's their ball game. Either way, most businesses need one and can get it.

Free.