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.