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June 12, 2020

The Complete Guide To Cancelling Your First Data Merchant Account & Finding A Better Credit Card Processor

So you have a contract with First Data/Fiserv, and you want to cancel it.

Maybe it’s because you think you’re paying too much in processing fees (you probably are). Maybe it’s because you’ve had enough of their bad customer service and are tired of dealing with their corporate bureaucracy (we hear horror stories). Or maybe it’s something completely different. Whatever your reason might be, you want out of this business relationship.

You may already have tried reading through your contract with First Data and found yourself drowning in 20+ pages of small writing, all in dense legalese, and you still don’t know how to cancel. Is there a shortcut?

Yes! And no.

In this article, we’ll explain how the cancellation process typically works. You’ll still have to read some of that contract, but we’ll help you find the relevant parts more quickly for quick lookups. After that, hopefully, you can cancel the contract without issues.

So let’s get started.

The Trouble With First Data Contract Cancellation

A First Data contract can be hard to cancel right away. The main problem is that it has an early termination fee (ETF), which could get pretty hefty if you cancel at the wrong time. To pay less of the ETF, you might have to wait a few months. But there are other obstacles as well.

First Data Customer Service Usually Holds You To The Letter Of The Contract

If you make a mistake while cancelling, it could get expensive.

For instance, during the course of writing this article, we looked through customer complaints both on our website and the Better Business Bureau site. Generally, the First Data customer service department is portrayed as unfriendly and unsympathetic, and holding you to the letter of the contract. One customer service representative even told a merchant that “It may be beneficial that you educate yourself on the MPA [Merchant Processing Agreement].” Even when they do authorize a cancellation-related refund, it might not be for the full amount they took from you.

As to the contract itself, it’s usually in dense legalese. This is not a commercial contract for beginners. To fully understand it, you’ll need to read — and comprehend — a few sections located in different parts of the contract before you truly understand how these sections work together. Even if you do read the contract, you might not fully understand the implications of each section. All this can lead to expensive mistakes.

The Contract Has A Strictly Defined Cancellation Procedure & Sometimes Narrow Cancellation Widows

The contract itself uses various ways to discourage cancellation. In addition to the ETF, to successfully cancel the contract, you must follow a strict termination procedure, avoid the automatic renewal mechanism, and pay a cancellation fee (which is different from the ETF). While there might be a narrow 30-day window to cancel when First Data increases its own processing prices, it is tricky to take advantage of those opportunities. Most of the time, the safest way to cancel is to follow procedure and cancel at the end of a term.

There Are Related Contracts That Have Longer Terms & Are Not Cancellable

To complicate matters, usually, there are several related contracts attached to the primary contract. One of them is an equipment lease contract. This part of the contract applies to you only if you signed up to lease equipment from First Data. The gotcha, though, is that the length of the lease might be different from the length of the main contract.

Usually, the lease is for 48 months and is not cancellable. The only way to get out of the lease early is to pay all the money due under the lease in one lump sum. If your main contract has a term shorter than 48 months, you might be stuck with an equipment lease contract even after you’ve successfully canceled your main contract.

Maybe you only signed the equipment lease because you liked the Clover equipment. We agree that the Clover line of hardware and software (Clover POS, Clover Go, and Clover Flex) is pretty nice. The trouble is, Clover is proprietary to First Data, so you can’t use it with another processor. If you cancel your First Data contract and wish to continue to use the Clover equipment and software, you might have limited choices on where you can go; ultimately, you’ll have to connect in the backend to First Data. (Fortunately, there is a solution to this problem, and we will discuss it later in this article.)

As to the other related contracts, the agreements we looked through allow First Data to cancel at will. If you wish to cancel, however, you typically have to use the main contract’s cancellation mechanism. There might be additional procedures in these sections that you must follow as well. Because your version of the contract might be different from the versions we were able to find, always double-check your version to understand your own obligations.

Even After You Successfully Cancel, You Might Still Not Be Done

Lastly, in our quick review of customer complaints, a merchant is sometimes not aware that they will have to return the leased hardware after the hardware agreement is cancelled, or they’ll continue to be billed for the equipment lease. Some merchants fail to understand this; others attempt to return the hardware but the equipment gets lost in the mail system somewhere on its way. All this can result in additional charges, which the First Data customer service department apparently holds you to.

Now that you have an idea of what you might be up against, let’s keep these possible issues in mind and go through the specific steps to cancel the First Data agreement while avoiding the issues above.

How To Cancel Your First Data Merchant Account In 11 Steps

To write this article, we did a quick Internet search and grabbed some First Data agreements from the First Data website. However, there are no direct links to these agreements from the First Data home page or menus, so, while we know the agreements are from First Data, we do not know under what circumstances First Data passes the agreements out, to whom, or how current they are.

From the file names, we do know that these agreements are tweaked to fit the needs of specific regions of the world. For instance, we found a version that seems to be for independent salespersons in the US. There’s a version for Canada, a version for the UK (might be used for the entire European Union), and another version for the Asia Pacific region.

To write this article, we looked through all these agreements. This article is meant to give you a general sense of these agreements, so please be aware that we haven’t dissected each paragraph or sentence. You may also have signed an older or newer version of these agreements. So, if you have specific questions about your specific contract, please consult a lawyer to get the “real” answer for your situation.

As we already mentioned earlier, the most pain-free way to cancel the First Data agreement is to wait until the end of the contract’s term, so this is what we’ll focus on below. If you need to terminate your contract with First Data because you need to declare bankruptcy (e.g. because of the economic crisis from COVID-19), please be aware that termination due to bankruptcy will put you on the MATCH list, and you’ll have trouble setting up a new card processing account in the near future. Be sure to talk to your bankruptcy lawyer about this issue and see if he/she can think of a way to avoid the MATCH list.

Bearing the above in mind, here are the general steps to cancel a First Data Merchant Processing Agreement (MPA).

1. Find Your Merchant Agreement

You should have a copy of your MPA. It might be in paper form, or it might be in electronic form. You might have to go through old emails. If you can’t find it, you might have to contact First Data for a copy. Likely, you’ll need your MID for them to be able to pull your contract, so be sure to have it at hand when you call. You should be able to find your MID in your statement.

You absolutely can’t skip this step. Each contract has specific details that tell you when you can terminate your contract without penalty. If you try to cancel your agreement without looking up these specific details, you might be hit with a big payment on something completely avoidable.

2. Find The Effective Date

Finding the Effective Date is very important because this is the date when the clock starts ticking towards the end of the term of the contract. Usually, the contract will define/tell you how to find the Effective Date—it’ll either be in the first few paragraphs of an agreement, or it’ll be in a section called Term and Termination or similar.

With First Data, the Effective Date is typically the date they approved the agreement, but this varies by region, so be sure to double-check by looking at your agreement. If you’re in the US or in Canada, you might have to look through your physical file or old emails from First Data (or its independent sales representative) for a letter telling you that you’ve been approved to do business with First Data in order to nail down the exact date.

3. Find The Initial Term & Calculate The End Date Of The Initial Term

In the same Term and Termination section, you should usually see how Initial Term is defined. Sometimes, it points you to another section to look up the number. Other times, it’ll tell you an exact number starting from the Effective Date.

For the First Data agreements we looked at, the Initial Term might be something your salesperson fills out in your application (so you have to flip to your application form to check) or sometimes it’s specified as a part of the definition of Initial Term. The typical number we’ve seen is three to four years.

Once you have your Effective Date and the length of your Initial Term, you can calculate the end of the Initial Term.

4. If Necessary, Determine The Renewal Term

Once you have the Initial Term, then it’s easy to determine if you’re still in this initial term or you’re outside of it. If you’re still in the initial term, you can skip to the next step. If you’re outside the initial term, then continue to read below.

If you’re outside of the Initial Term, determine how long you’ve gone into your Renewal Term. Renewal Term should also be defined in this section (sometimes it’s in a section or two below the Initial Term section). Look for it. It should be easy to find.

For the agreements we looked at, the Renewal Term can be anywhere from month-to-month to up to six months at a time. You might also have an earlier version of the First Data agreement, where your Renewal Term is defined differently. Double-check the contract and determine the end of the particular Renewal Term you’re in.

5. Determine The Notice Period & Calculate The Exact Date By Which You Must Give Termination Notice

In the same Term and Termination section, you should also be able to find exactly how First Data wants to receive a notice of termination. For contracts in general (with any company and not only with First Data), the notice usually must be in writing. Typically, the contract will also spell out how many days in advance of termination they have to receive the notice. With First Data, typically this is 30 to 60 days in advance, but you should always check to make sure the number of days specific to your agreement. With month-to-month agreements, the notice period is typically 30 days.

Usually, companies want to have the notice in their hands by the notice date, so if your notice deadline is 30 days, don’t send the notice out on the 30th day. Send it out so that they get the notice at least a few days before the deadline.

6. Go To The Notice Section & Find The Form & Format You Must Use To Give Notice

Now that you know by which date you must inform First Data that you’re terminating the contract, go to the Notice section in the contract to lookup more specifics. This section is usually lumped with all the miscellaneous legal boilerplate language.

In the Notice section, you will learn how you have to give notice. Typically, your notice must be in writing and must be sent to a specific address by some specific delivery method—e.g., by mail, by courier, by fax. Follow that section to the letter. Given how strictly First Data holds its customers to the contract, you’ll want to follow this section exactly.

7. Calendar That Date

Now you know the deadline date by which First Data must receive your notice of termination, where to send the notice, and how you have to send it. If that date is several months away, you might want to put the deadline on your calendar so you don’t forget. Note again that the deadline is typically the date by which First Data receives the notice, and not the date on which you send the notice.

Fortunately, you’re free to send your notice any time earlier than the deadline date. However, common sense says you might not get the best service from a company that you have told you no longer wish to do business with, so you might want to hold off sending the notice of termination until just a few weeks before the deadline.

8. Note If There Are Cancellation-Related Fees Such As The Early Termination Fee & The Cancellation Fee

If you terminate your First Data agreement by finding the end date of your Initial Term or Renewal Term and by following the procedure above, you shouldn’t have to pay an ETF. Of course, if you don’t mind paying an ETF, then you can terminate any time by providing First Data with a written notice, following the procedure in Step 6 above.

If you’re thinking of paying the ETF, read through that section carefully so you understand how much you’d have to pay if you terminate early. This could get expensive, so think it through carefully before you do it.

Note that, when you cancel your agreement, First Data will also charge you a Cancellation Fee. The Cancellation Fee is separate from the ETF, and usually it’s a flat fee. Be prepared to pay this cost.

9. When The Time Comes, Send the Notice of Termination

This is a pretty self-explanatory step, but an important one. Send the notice of termination. Don’t put it off. Given how First Data customer service is described on the BBB complaint site, they’ll show you no sympathy if you don’t get this done correctly. Do it early and do it right.

Another thing to remember about the notice is that you should be very specific about the date on which you want to terminate service. Make sure there is no ambiguity on the last date of service, so First Data can’t extend the contract for longer than you wish or even mistakenly terminate the contract early and charge you an ETF.

Whether you send your notice by your country’s mail system or by private courier (e.g. FedEx, UPS, DHL), be sure to request a signed receipt so that you have proof First Data did get your notice and on what date. Too often, people claim they never got a piece of important correspondence, so your return receipt will come in handy to prove that you sent your notice of termination by the notice deadline and to the correct address.

10. Return Equipment If Called For By Equipment Lease

If you leased equipment from First Data, be sure to check all the termination language in that section of the contract. An equipment lease is typically not cancellable during the initial lease term (which is typically 48 months). You could cancel afterward, but there are specific steps involved, and maybe even a separate notice procedure. One of the most important things is that you might have to return the equipment, or pay for it outright (yes, you’d have to pay for the equipment that you’ve already paid for several times over during the initial term of the lease, which is why we hate leasing).

When you return the equipment, be sure to request a delivery receipt. This way, First Data can’t claim that they never received the equipment or that somehow it got lost in transit.

11. Keep An Eye Out For Unauthorized Withdrawals & Dispute If Necessary

Lastly, don’t trust that First Data will close your account correctly. Once you get the delivery receipt of your notice letter, look for something from First Data acknowledging the contract termination. If you don’t get anything, call to follow up.

Keep watching your bank account to make sure they stop taking charges from your account. They might have to withdraw some processing fees from the last day your account was active, and things like chargebacks might happen months after the termination. But if you have any questions, call and talk to them to make sure they’re not withdrawing money that they’re not entitled to. It’s your money, so you need to be responsible for catching their mistakes.

How To Find Alternatives To First Data Merchant Services

Before you completely terminate your business relationship with First Data, we hope that you’re already thinking of which payment processor you’re going to use next. After all, payment processors are a necessity! It’s nearly impossible to do business these days if you can’t accept credit or debit cards.

Fortunately, there are a lot of reputable providers out there, and we can help you find the one that makes sense for you. We recommend you start your research with this Best Of list (here’s one for high-risk businesses as well) and go on from there.

Can You Reuse Your Existing Clover Equipment?

As mentioned above, Clover hardware and software are proprietary to First Data, so you can’t use them unless, somehow, they’re connected to First Data in the backend. This means that if you have Clover equipment and wish to continue to use it, you’ll have to find a processor who does business with First Data. One way to look for such a processor is to investigate whether they sell Clover equipment. If they do, then it’s almost certain that they do business with First Data.

But if you couldn’t get a great deal with First Data by signing with it directly, what hope do you have for a great deal if you go through a middleman? While we don’t know how the business relationship between First Data and its front-end processors truly works, from what we have observed (and from the types of offers advertised on some of these processors’ websites), some front-end processors may indeed have a better deal with First Data than any individual merchant working with First Data directly could ever get.

This makes sense, actually. Front-end processors can promise a certain volume of business to First Data. These processors can also provide their own customer support, so First Data doesn’t have to spend time or resources dealing with these issues. In any event and whatever happened behind the scenes, some of these processors—including our highly-rated ones like National Processing, Payment Depot, and Dharma—can even offer month-to-month contracts and no ETF when you sign up with them. These processors also let you buy the Clover equipment outright, without a cumbersome and ultimately expensive equipment lease. It often makes more sense to work with First Data through a middleman than dealing with it directly.

Are Offers Of Early Termination Fee Reimbursement Too Good To Be True?

We sometimes come across processors that promise to buy out your ETF so you can terminate your existing merchant agreement early and sign up with them. Be careful with these promises. Sometimes, there’s a hard cap on how much they’ll pay, so be sure to first understand the amount they’re willing to pony up before you cancel with First Data. Keep in mind as well that signing with them might mean signing another long term contract that’s difficult to terminate—a contract that has its own ETF.

Be wary of any offer to buy out your ETF, in short. While sometimes the offer is real, other times you might be jumping out of the proverbial frying pan and into the fire. Get all the facts and do your math before you make a final decision.

Cancelling Your First Data Merchant Account Isn’t Easy, But It Is Doable

First Data is a large multinational company, and it’s one of the most “corporate” processors we’ve come across. It is, therefore, fitting that they’d have a very formal contract full of gotchas that newer business owners aren’t used to dealing with. While early termination penalties, strict termination procedures, and precise notice requirements aren’t unusual when large businesses work with one another, they can be shocking to a small business owner who just isn’t used to business-to-business style contracts. (If you wish to learn more about how to read merchant agreements, check out our guide on merchant agreements.)

But every contract can be cancelled, and the First Data contract is no exception. You will have to read the contract very carefully to find out the exact procedure and then you might have to wait a few months, but when the timing is right and you follow the procedure strictly, terminating the contract is actually fairly easy. So don’t be intimidated. If you have specific questions about your contract, it’s best for you to consult a lawyer, but if you have stories about contract cancellation with First Data, we’d love to hear about them. Just leave us a note below!

The post The Complete Guide To Cancelling Your First Data Merchant Account & Finding A Better Credit Card Processor appeared first on Merchant Maverick.

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June 10, 2020

The Complete Guide To Switching From Worldpay To A Better Credit Card Processing Company

Worldpay is one of the largest merchant services providers in the industry and also a direct processor with a worldwide presence. Recent acquisitions have made the company even bigger, with an estimated $1.5 trillion in annual processing volume. Because of Worldpayâs commanding market share, many merchants eagerly sign up for an account with the company, thinking that âbigger is better.â After all, most of us do business with industry-leading companies all the time. We buy our smartphones from Apple, our cars from recognizable brand names such as Toyota or General Motors, and just about everything else from Amazon. Big-name brands can offer better selection, better customer service, and more competitive prices, right?

Well, no. Unfortunately, the merchant services industry doesnât work the same way as the technology, automotive, or retail sectors. Huge direct processors such as Worldpay can be a good deal for a large, well-established business that has the leverage and the negotiating expertise to hammer out a deal thatâs beneficial to both parties. However, small business owners frequently get stuck with the worst possible terms, including tiered pricing plans, long-term contracts with expensive early termination fees (ETFs), and sometimes outrageously overpriced processing equipment leases. Make no mistake — Worldpay and other large processors aggressively market to small businesses. The collective market share is simply too big to ignore. However, as an individual small business owner, you wonât get the kind of favorable terms and competitive prices that a large business can get. Youâll also struggle to get the companyâs customer service department to pay any attention to you.

For these reasons, many small business owners have quickly soured on the idea of having Worldpay as their merchant account provider. Weâve seen dozens of complaints against the company, both on consumer protection sites, such as the BBB, and in the Comments section of our Worldpay review. Unfortunately, closing a merchant account is never a simple process. Providers such as Worldpay go out of their way to make it as difficult as possible in the hopes of discouraging you from terminating your business relationship with them. In this article, weâll discuss why itâs so difficult to get out of a Worldpay merchant account contract and lay out the specific steps that youâll need to follow to do so successfully. Weâll also show you how to find a better provider and give you a few recommendations for you to check out.

The Trouble With Cancelling A Worldpay Merchant Account

In addition to the usual problems with high prices, long-term contracts, and poor customer service, one of the most persistent complaints that merchants have about Worldpay is that it is extraordinarily difficult and frustrating to get out of your contract and close your account once youâve decided to do so. Worldpay — and most other traditional processors, for that matter — seems to go out of its way to make it as difficult and inconvenient as possible to close a merchant account once youâve signed up, regardless of the circumstances. The company is counting on a steady stream of income from your business, and it doesnât want to give it up for any reason.

The following is a brief (and incomplete) list of problems that merchants have had in trying to close their accounts:

Missing Paperwork: The merchant submits a written request to close the account, but Worldpay claims it never received the request. The account remains open — often for many months after the closure request was submitted — and monthly fees continue to be deducted from the merchantâs bank account, even though the account is obviously no longer being used.
Disappearing Equipment: Merchants know that they have to return processing equipment, such as credit card terminals and POS systems, at the end of their contract unless they originally purchased them outright. Somehow, Worldpay frequently âlosesâ returned equipment in transit, giving the company an excuse to charge the full price for the missing equipment. If you leased the equipment, lease payments would continue for the entire length of the original leasing agreement, regardless of when your merchant account was closed.
Inability To Reach Customer Service: Once youâre on Worldpayâs radar as wanting to close your account (often through a voicemail or email requesting help in closing your account), you can be virtually assured that the company will never return your calls or respond to your emails again.
Closing Your Account By Telephone:Â Even if you do manage to reach a real person at customer service, be very wary if they allow you to close your account over the phone. Worldpay requires a written notice, which must be submitted within the required notice period to take effect. If a customer service representative offers to close your account over the phone without that notice, youâll likely find that your account was never really closed, and youâll continue to be charged all of your monthly account fees indefinitely until you figure out that this is happening.
Being Erroneously Charged An Early Termination Fee (ETF):Â Letâs be clear here: If you agreed to an early termination fee (ETF) as part of your contract when you opened your account, and you end up closing your account before the end of your current contract term, you will be charged an ETF as soon as your account is closed. However, if you obtained a written waiver to the ETF when you negotiated your initial contract, or youâre closing your account at the end of the current contract term, you should not be charged an ETF at all.

How To Cancel Your Worldpay Merchant Account In 4 Steps

So how do you properly go about closing your merchant account with Worldpay? Despite what you might think, the company canât legally keep you bound to your contract forever. It has to provide a procedure for terminating your contract and closing your account, and Worldpay has to honor it if you follow this procedure to the letter. Like most providers, instructions for closing your account are contained in your contract documents, usually in very fine print buried somewhere in the middle of the document, where Worldpay is hoping youâll never find them.

Believe it or not, Worldpay is actually a little more transparent than many other providers in this respect. An FAQ on the Worldpay website contains the following instructions:

In order to cancel your account, WorldPay requires that a 30-day written notice be submitted via fax or US mail. On the cancellation notice please verify the purpose of the account cancellation, along with the company name, 5 digit Account ID, signature of the primary contact on record, and an email address to which a confirmation can be sent. Please do not assume your account is cancelled until you receive confirmation via email.

While this information is accurate, it doesnât cover everything you need to consider before closing your account. Youâll want to review your merchant agreement carefully to find the full details of how to close your account. One key takeaway here is that you cannot close your account over the telephone. Worldpay, like most providers, requires that you submit your request in writing. While the company knows full well that this requirement makes it more inconvenient and time-consuming to close your account, having a written record of your request protects you as well. If you find that youâre still getting charged monthly account fees after you thought your account was closed, youâll have a written record of when your request was sent as well as proof that you provided all of the required information.

Weâd also note that the 30-day notice requirement is more or less the industry standard for account closures. Like most financial organizations, processors work on a 30-day billing cycle. You should expect that you might be billed for the month after you submit a request to close your account. However, you should protest any charges beyond that. Weâve seen other providers require a minimum notice of 60 or even 90 days before closing your account, which makes it that much harder to get your notice in before your contract automatically renews for another year. We strongly suggest that you pad the minimum notice period by as much time as you can to minimize any possible delays in mailing your written notice to Worldpay. For example, thereâs no reason why you canât send in the notice 45 days (or even earlier) before the end of your current contract term.

You also need to consider the reasons why youâre closing your account and whether youâre shutting it down at the end of a contract term or in the middle of one. Ideally, youâll want to time your account closure so that it occurs at the end of your contract term. Doing this prevents the contract from automatically renewing and absolves you of any responsibility to pay an early termination fee. However, if youâve decided to close your account before the end of your current contract term, you will probably have to pay the full ETF. If youâre closing your account to switch to a competing provider, thereâs no point in protesting the ETF. However, if youâre closing your business for good (as opposed to selling it or transferring ownership) and no longer need the account, you might be able to convince Worldpay to waive the ETF.

With these considerations out of the way, letâs examine the step-by-step approach youâll need to follow to close your account successfully:

1) Find Your Merchant Agreement

Contract documents relating to your merchant account are critically important, and we recommend that you keep both digital and written copies of all of them. Most contracts usually consist of a Merchant Account Application (which spells out pricing and terms unique to your account) and a Terms and Conditions section (which lays out the boilerplate provisions that apply to all merchants). You might also have separate documents for equipment leases and third-party services (e.g., payment gateways). You should also keep copies of any waivers granted by your sales representative when you initially set up your account.

2) Review Merchant Agreement For Termination & Account Closure Provisions

While the quote above from Worldpayâs FAQ gives a good overview of the account closure process, itâs not legally binding. Youâll want to review the full closure requirements contained in your original contract documents. Worldpay, like most providers, uses a variety of standard contract documents that change over time. Donât assume that a blank contract document you found on the internet is identical to the one that applies to your account.

In addition to identifying specific account closure procedures and requirements, youâll also want to determine your accountâs anniversary date. That is the date when your current contract term expires, and a new term will automatically begin if you havenât initiated the process to close your account. This date can be either the day you signed your contract, the day you first started using your account, or some other date as defined in your contract. Unfortunately, while providers go to great lengths to spell out how your anniversary date is determined in your contract, theyâre not so forthcoming about what date theyâre actually using for your account. A customer service representative should be able to provide this information for you, as your provider uses your anniversary date to determine when your contract automatically renews and when any annual fees are due.

Weâd also note that if you intend to continue in business with a new provider after youâve closed your Worldpay merchant account, the transition will be much smoother if you can have the new account set up and ready for use before your current account closes. That will prevent the unfortunate possibility of being unable to process any credit or debit card transactions while waiting for the new account to activate.

3) Follow Account Closure Provisions To The Letter

Once youâve nailed down your account closure requirements and determined your anniversary date, you need to follow those instructions to the letter. This is not the time to get sloppy. A missing signature, incorrect merchant account number, or any other errors on your part will almost certainly result in your closure request being rejected (or delayed just long enough for the automatic renewal clause to kick in).

We highly recommend that you contact customer service before initiating a closure request, even though theyâre not likely to be very helpful. While Worldpay appears to accept any form of a written request that contains the required information, many other providers will insist that you submit your request on a special form. This form wonât be included as part of your contract and wonât be available from the providerâs website. Instead, youâll have to ask for a copy and hope that the company sends it to you in time.

We also recommend that you print out your account closure request and submit it via Certified Mail. Emails can get lost or âaccidentallyâ deleted all too easily, but using Certified Mail gives you a record of when your letter was mailed as well as when it was received and who signed for it. You might need this information if the company later tries to claim that it never received your request.

Besides a written request, you might also need to return any processing equipment that doesnât belong to you. This mostly applies if you received a âfreeâ terminal as part of your initial merchant account setup. These terminals are provided for your use for as long as you keep your account open, but they remain under Worldpayâs ownership. Youâll need to send any such equipment back to Worldpay as soon as your account is closed to avoid getting charged the full value of the hardware.

Unfortunately, it isnât so easy to get rid of leased equipment. If you made the mistake of leasing your processing hardware, youâre pretty much stuck with both the equipment and the monthly lease payments for the duration of your leasing contract. If youâre switching to a new provider, you might be able to have the equipment reprogrammed to work with their processing system.

4) Monitor Account Statements & Any Additional Charges

Unfortunately, weâve received way too many complaints from merchants whose problems with Worldpay didnât end when they closed their accounts. As weâve discussed above, thereâs a possibility that youâll continue to be charged monthly (and possibly annual) account fees long after you thought your account was closed. The burden is definitely on you to monitor your account statements and your business bank account to catch any of these charges. While itâs normal to be charged fees during the month after your account is closed, anything beyond that should be brought to the companyâs attention immediately.

Worldpay promises to notify you by email when your account is closed, but you shouldnât assume that this is the final word. Any number of hiccups can occur that might prevent your account from actually closing. If this happens to you, your first course of action is to notify Worldpay immediately and provide all documentation related to your account closure request. If the unauthorized charges continue, we highly recommend that you file a complaint against the company with the BBB. Believe it or not, even huge companies such as Worldpay care about their online reputation, and theyâll usually be a lot more helpful in trying to resolve the situation once youâve gone public with your grievances. As a last result, if none of the above actions have worked, you may have to close your business bank account to stop the automatic withdrawals. We realize that this is a tremendous inconvenience, but itâs better than being charged every month for an account that youâre not using.

How To Find Alternatives To Worldpay Credit Card Processing

As weâve discussed above, merchants have found many reasons to leave Worldpay for a better (and more affordable) provider. The processing industry is extremely competitive, and providers are always trying to convince established businesses to switch to them from their current provider. Some companies will even offer to pay your early termination fee from your current provider if you sign up with them. While this might sound like a terrific deal, it usually is not. Why? Because nothing is ever truly âfreeâ in the processing industry, and any provider that will pay your ETF for you is almost always going to require you to agree to another long-term contract with them in exchange for this benefit.

So how do you find a better provider than Worldpay? We can help! Our article on how to choose a merchant service provider can guide you through the fundamentals of evaluating pricing, contract terms, and other considerations in selecting the best provider for your business. We recommend that you narrow your choices down to several of the best providers you can find and obtain quotes from each of them. Armed with this information, you can make an informed decision as to which one will (hopefully) offer you the best combination of fair pricing, flexible contract terms, and top-notch customer service for your business. There isnât a one-size-fits-all solution that works best for everyone, so bear in mind that a company thatâs good for a large, established business often wonât be a good choice at all for a small business. Once youâve decided on a provider, our article, How To Negotiate The Perfect Credit Card Processing Deal, can show you how to get the best terms from your chosen provider. Finally, if you have no idea where to start, our Merchant Account Comparison Chart provides a head-to-head comparison of some of the best merchant services providers in the industry.

Switching From Worldpay To Another Processor Isnât Easy, But It Is Possible

As weâve emphasized above, closing your merchant account is never an easy process, and providers deliberately make it as difficult as possible to discourage you from switching to a competitor. In this regard, Worldpay is no different from any other traditional provider that relies on long-term contracts to keep merchants on the hook for as long as possible. In fact, Worldpay’s willingness to accept a simple written request and offering to confirm your account closure via email puts the company slightly ahead of its competition.

However, you wonât have these kinds of problems in the first place if you sign up with a provider that offers true month-to-month billing with no long-term contracts to all their merchants. Many of our top-rated providers donât use long-term contracts or early termination fees at all, so closing your account is simply a matter of making a phone call or submitting a written request. You wonât have to worry about expensive cancellation penalties or continuing to be charged fees for months after youâve shut down your account.

If youâre unhappy with Worldpay — or any other provider — we recommend that you take a close look at your contract and see what it will really take to get out of it. Weâve outlined the steps above that youâll need to follow to put a bad provider behind you, hopefully without having to pay an exorbitant amount of money to do so. Good luck!

The post The Complete Guide To Switching From Worldpay To A Better Credit Card Processing Company appeared first on Merchant Maverick.

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June 2, 2020

Should You Implement A COVID Surcharge? 4 Ways To Manage Your Profitability During The Pandemic

The ongoing COVID-19 pandemic has created the worst economic disruption for small business owners in the last 90 years. Even in parts of the country where restrictions are being lifted and businesses are slowly starting to re-open, the need to invest in additional sanitation measures and protective equipment to comply with local and state public health requirements has raised costs at a time when incoming revenue is still drastically reduced. Critically important small business supply chains have been disrupted, further increasing the cost of doing business.

As a small business owner, you may feel that you have no choice but to pass as much of your increased expenditures onto your customers as possible if you want to avoid going out of business. In fact, some owners have already done so, implementing what has come to be called a âCOVID surcharge.â This surcharge is a small amount â either a percentage or a fixed dollar amount â thatâs tacked onto a customerâs bill and specifically designated to cover increased pandemic-related expenses.

In this article, weâll discuss COVID surcharges and why some business owners around the country have implemented them. Weâll go over the likely response youâll get from your customers if you choose this course of action (hint: itâs not positive). Weâll also give you several alternative strategies you can implement that will increase your incoming revenue without the need for a surcharge. Finally, weâll show you how you can use business data (often automatically generated by your POS system) to manage your costs and improve your ability to keep up with the additional pandemic-related expenditures.

Why Some Businesses Are Adding Surcharges During The Coronavirus Pandemic

As weâve alluded to above, COVID surcharges are a direct response to the additional costs required to operate a business safely in the middle of a worldwide pandemic. Protecting your customers and your employees from a highly contagious, potentially deadly disease requires a lot of extra equipment and safety measures that werenât necessary just a few months ago. Disposable gloves, masks, hand sanitizer, extra signage to encourage proper social distancing, regular fumigation of your business â it all adds up to a significant cost at a time when youâre likely to be severely limited in how many customers you can even allow into your shop or restaurant at a time. For businesses that operate on a very thin (e.g., 2-3%) margin in normal times, the cost can be too much to bear while still turning a profit.

So, how have COVID surcharges worked out for the business owners whoâve implemented them? To put it mildly, not very well. While some customers are willing to pay a little extra temporarily to support a favorite local business during hard times, many others have responded with anger and disgust.

Consider the unfortunate case of Kiko Japanese Steakhouse & Sushi Lounge in West Plains, Missouri, which has attracted a lot of attention nationally. Faced with rising COVID-related costs and not wanting to raise prices across the board, the owners decided to implement a 5% surcharge. They went out of their way to explain to customers why they were doing so through social media and signs posted at their restaurant. Despite their best efforts to be transparent about the surcharge, they received a tremendous amount of criticism for it, often from people out of the area who werenât even patrons of their restaurant. They eventually were forced to discontinue the surcharge, and instead raised their prices to cover the extra expenses.

If reading horror stories like this one has you thinking that COVID surcharges are a bad idea, youâre probably right. However, there are some circumstances where they might work. A lot will depend on how your usual clientele has been impacted by the COVID-19 pandemic. If youâre located in a well-off area, and most of your customers are still gainfully employed (either at home or working in an âessentialâ industry), they probably wonât mind paying a little extra to support a favorite business.

On the other hand, if youâre in an area that has experienced a lot of job losses and your customers are struggling, hitting them up with a surcharge is probably not a good idea. You should also take a close look at what your primary competitors are doing. You probably donât want to be the first business in your area to start implementing a surcharge. However, if other businesses are already imposing them and havenât faced a significant backlash, it might be safe to add your own surcharge as well. Overall, we consider COVID surcharges as a last resort that should only be implemented if you have no other way of maintaining profitability and staying in business. Here are some other options you should consider first before implementing a surcharge:

Four Alternative Strategies For Boosting Profit Margins

Businesses that operate on tight margins have always had ways of reducing their costs as much as possible, and many of those tricks might have been effective in ânormalâ times. However, in the face of a worldwide pandemic, youâll need to try some new strategies to keep your costs low and your profits high (or at least, high enough to stay in business). Here are a few things that you might not have considered before that can help you stay afloat until the economy recovers:

Modify Your Menu Items Or Goods That You Sell

If youâre running a restaurant, you already know that some menu items are more popular than others, and some cost more to make than others. By shifting your menu selection to emphasize popular items that have a high per-item profit margin, you can increase your incoming revenue and lower your overall ingredient costs at the same time. If youâre not quite sure how to do this, our restaurant food cost calculator can help you get started.

Of course, this technique isnât limited to restaurants alone. Other types of businesses, especially retail stores, can apply the same principles to help improve their cash flow. We probably donât need to tell you that certain items (e.g., toilet paper, soap, hand sanitizer, face masks, etc.) have become much more popular during the COVID-19 pandemic. Besides these obvious items, weâve seen dramatically increased demand for just about anything related to working from home, including items like office chairs, desks, and even webcams for video conferencing.

Offer A Cash Discount

One strategy for improving profitability that was already gaining in popularity before the pandemic is to shift the costs associated with credit card processing onto your customers. Often advertised as free credit card processing, this technique can be implemented by either adding a surcharge for customers who pay with a credit card or providing a cash discount to those who pay in cash. With surcharging, a small fee to cover the cost of credit card processing is added to the bill if a customer pays with a credit card. With a cash discounting program, your advertised prices will include the cost of credit card processing, and these prices will be discounted at checkout for customers who donât use a credit card.

While the distinction between these two programs may seem very subtle, there are important legal differences between them. Cash discounting is legal everywhere in the United States, but surcharging is currently still prohibited in four states and several US territories. Your merchant account provider can help you set up either of these programs (assuming there are no legal restrictions in your jurisdiction), including providing you with the required signage to notify your customers and reprogramming your terminal or POS system to apply a surcharge or cash discount automatically.

For more details on how these programs work and how to implement them in your business, check out our article, Your Complete Guide To Credit Card Surcharges.

Raise Your Prices

If the previous two strategies donât produce the desired results, it might be time to simply raise your prices. You may have to do this anyway if the prices you have to pay for inventory or raw ingredients go up due to supply chain problems.

We recommend that you implement targeted price increases, focusing on high-demand menu items or products. However, raising your prices across the board by an equal amount can also be effective. Which option is better will depend on a variety of factors, so youâll have to evaluate the unique circumstances of your business to determine the best course of action.

While most of your customers will be (grudgingly) understanding about the need to raise prices in the face of a national emergency, be careful that you donât overdo it. Check your stateâs anti-price gouging laws, if any, to ensure that you donât get yourself in legal trouble. California, for example, makes it illegal to raise prices for basic goods and services by more than 10% above pre-pandemic levels.

Lastly, price increases should be temporary. Make an effort to communicate to your customers that you intend to bring your prices back down once you can resume normal operations without the need for additional protective measures.

Implement Surcharging As A Last Resort

If none of the above strategies â either individually or in combination â prove sufficient to turn things around and your ability to continue to operate is imperiled, you may find that you have no choice but to impose a COVID surcharge. Obviously, youâll want to communicate this to your customers before making the change, and you should also set the surcharge as low as possible. Ideally, it should be just enough to recoup your additional COVID-related expenses. As weâve seen from the real-world examples above, you will probably receive at least some blowback for the surcharge. However, it can still be effective if your actual customers are willing to support it.

We recommend an across-the-board percentage-based surcharge rather than a flat âconvenience fee.â The latter option will disproportionately affect low ticket sizes and could discourage some customers from making a purchase at all. Your merchant account provider can help you reprogram your processing equipment to apply the surcharge automatically. Again, itâs critically important that you communicate with your customers before you start adding a surcharge to their bills, and be sure to discontinue this extra fee as soon as itâs possible to do so.

How To Use Your Business Data To Track The Impact Of Pricing Decisions

Youâll need to be able to gauge how effectively any pricing changes or surcharges are helping (or hurting) your bottom line. Make sure that all additional fees are entered properly into your POS system, and keep accurate notes of when prices were changed or when surcharges were implemented or discontinued. Modern POS systems and online data analytics tools offered by your merchant account provider can prove invaluable in quickly analyzing the effect of any changes you make, and they can gather and analyze the data automatically for you.

You should also determine the effective rate youâre paying for credit card processing. If your effective rate is too high, it might be time to switch to a more affordable merchant account provider. While you might be reluctant to make this kind of significant change in the middle of a pandemic, doing so can potentially save you hundreds of dollars per month in credit card processing expenses. Take a look at our Merchant Account Comparison Chart for an overview of some of the providers who can save you the most money.

The Bottom Line: The Pandemic Will Affect Your Bottom Line For The Foreseeable Future

If youâve been reading this far, you probably understand that we donât think COVID surcharges are a good idea. They have a very high potential for hurting your online reputation and driving away customers. As weâve shown, there are many other ways to generate the necessary income youâll need to cover your COVID-related expenditures. Modifying your product or menu item lineup, imposing credit card surcharging (or a cash discount), and targeted price increases can all be used to cover these expenses without the need for a COVID surcharge.

For many businesses, switching to a more affordable merchant account provider can be the most effective strategy of all to improve your profitability and cover any additional expenses you incur during the COVID-19 pandemic.

Hopefully, the techniques weâve discussed above can help you get through the current pandemic, especially if the much-anticipated second wave of infection becomes a reality in the near future. Thanks for reading, and good luck!

The post Should You Implement A COVID Surcharge? 4 Ways To Manage Your Profitability During The Pandemic appeared first on Merchant Maverick.

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May 16, 2020

What Is Square Online Checkout? Your Guide To Using This New Square Payment Option

As businesses everywhere race to prioritize eCommerce in a world ravaged by COVID-19, payments giant Square has launched a new online payment tool called Square Online Checkout. This service is intended to condense the eCommerce experience down to a simple link or button, making online selling easier than ever for both the merchant and the customer. If you want to sell items or services online — or even accept donations — without building an online store, you’ll want to read on.

In this article, we’re going to explain just what Square Online Checkout is, how it works, and how using it can benefit your business.

We should mention that Square Online Checkout is not to be confused with Square Checkout, a separate hosted payment page solution built on top of Squareâs API.

What Is Square Online Checkout?

Seen as an effort by Square to compete with the flexible eCommerce capabilities of PayPal, Square Online Checkout allows all would-be online sellers — particularly those who don’t have a full online store and aren’t looking to build one — to accept payments from customers via a simple link. The buyer does not need to have an account with Square. All the buyer needs to provide is their name, email address, and credit card number.

Let’s look at how this works in practice.

How Square Online Checkout Works

When you use Square Online Checkout, you generate a link or button that can be posted to an email, a text message, your social media accounts, and/or your blog or website. This link can be clicked on by a buyer to purchase whatever product or service you’re offering. It can also be used by the buyer to pay for a prior purchase or to offer a donation — essentially, the link can be used to transfer money for any legal purpose.

An important caveat: Square Online Checkout links can only be used domestically within the US.

How To Set Up & Accept Payments With Square Online Checkout

Let’s walk through the steps required to set up an Online Checkout link and accept payments. Don’t worry — it’s pretty easy!

1. Create A Square Account

To create a Square Online Checkout link, you’ll need to have a Square account. Luckily, Square is free to use, so this step won’t cost you anything.

Here’s our complete guide to creating a Square account. I’ll summarize it thusly:

Go to Square’s home page and click the “Get Started” button
Enter your email address, create a password, and select your country of residence (only US residents can use Online Checkout links)
Enter the information Square will subsequently ask of you (the last four digits of your Social Security number, your home & shipping addresses, your phone number, and some basic questions about how you intend to use Square)

Congrats — you now have a Square account!

2. Get A Link

Once you have a Square account, you can create Online Checkout links from your online Square Dashboard on the website or from the Square app (available for iOS and Android devices).

Square’s guidelines for creating Online Checkout links are as follows:

Head to the Homepage of yourÂ online Square Dashboard.
ClickÂ Create a checkout linkÂ in the Online Checkout section.
Next toÂ Purpose of link, choose eitherÂ Collect payments,Â Sell itemsÂ orÂ Accept Donations.
Enter a name for your link – this will be displayed to the customer.
If prompted, enter the amount you want to charge.
ClickÂ SaveÂ to create a checkout link.
SelectÂ Copy, and share the link anywhere.

And if you want to create an Online Checkout link from the Square app, here’s how to do it:

Enter the amount you want to charge in the keypad
TapÂ Charge.
TapÂ Online Checkout.
Write in the details of what is being paid for.
TapÂ Get link. Have your customer scan the QR code with their phone, or share the link anyway you want â text, email, social, etc.

You can also create Online Checkout links through the Settings tab or the Edit Item page.

3. Embed The Link On Your Website Or Blog

After you’ve created the link via the process outlined above and selected Copy (or Get link if you’re using the app), embedding the link on your blog or website is as simple as going to your blog post editor or website editor and pasting in the link the same way you would copy & paste anything else. If you’re using a Windows PC, you just right-click where you want to put the link and then select Paste from the menu. That’s it!

4. Or, Share The Link

To send the link directly to someone or to a group of recipients, you just go through the process of creating the link and then paste it into an email or a text message. You can also post it to your social media channels. Include the link in a post, put the link in your bio, or send it to someone in a DM using any platform you wish. You can share your link just as you would share any other kind of message.

5. Start Accepting Payments

Once you’ve created and shared your link, you can immediately start accepting payments, assuming you’ve correctly entered your bank account number when setting up your Square account. It’s that simple.

Of course, your ability to accept payments won’t be unlimited. Square has a $50,000 per-transaction limit, so you won’t be able to accept massive payments via Online Checkout. And if the transaction is a donation, there’s a $5,000 per-transaction limit.

On the customer end, the process couldn’t be simpler. Whereas PayPal’s checkout buttons require the buyer to have a PayPal account, your customers will not need a Square account in order to make a payment via a Square Online Checkout link. All the customer is prompted to provide is their name, email address, and credit card number.

Once the payment is made, the customer will be emailed a basic receipt. As of now, you can’t create a customized receipt for customers when they make a purchase via an Online Checkout link.

How Much Does Square Online Checkout Cost?

Payments accepted via Square Online Checkout links will be subject to Square’s standard online processing fee of 2.9% + $0.30 per transaction. That’s the only fee involved here — there are no monthly or annual fees associated with having a Square account.

One thing to keep in mind: Square discounts don’t work with Online Checkout links.

The Benefits Of Using Square Online Checkout

Here are some of the advantages of using Square Online Checkout:

Easy to use, simple to set up
Customers don’t need a Square account — just a credit card
You can run reports to track the number of sales generated from each checkout link — easily see which links are performing best
New sellers can create subscriptions checkouts
You can customize the Checkout Button style and text to reflect your branding
You can create a marketing campaign with checkout links from your online Square Dashboard

Square Online Checkout FAQs

Let’s answer some basic questions about Square’s new Online Checkout service.

Do I have to have a Square account to use Square Online Checkout Links?

In order to set up an Online Checkout link and receive payments, yes, you do need a Square account. Luckily, you can easily and freely get yourself a Square account by signing up on their website.

In order to make a purchase or donation using an Online checkout link, no, you do not need a Square account.

Is there a transaction limit for Square Online Checkout Links?

Yes. Square’s transaction limit for Online Checkout links is $50,000 for purchases and $5,000 for donations.

How much do Square Online Checkout Links cost?

It’s free to set up the link, but Square will take a 2.9% + $0.30 fee from each transaction.

Can I create subscription checkout links?

Yes, but only if you are a new seller. If you’ve just set up a Square account to start selling online, you can set up a subscription checkout link with Online Checkout to accept weekly, monthly, quarterly, or annual payments from buyers — all from a single link. Here’s how to create a subscription checkout link.

Existing Square sellers will have to use Square Invoices to set up recurring payments.

Can I send the same Online Checkout Link to different customers?

Yes. You can send one link to an entire mailing list or even post it to social media for the use of anyone who sees it.

A company just sent me an Online Checkout link. What do I do?

Just enter your name, email address, and credit card number (that is, if you want to pay it!).

Is Square Online Checkout safe?

Yes. Square is regarded as having a high degree of security by eCommerce standards and is fully PCI compliant.

Is Square Online Checkout Right For Me?

If you’re looking for an easy way to sell items or services (or accept donations) online, Square Online Checkout makes eCommerce simpler than ever — for both you and your customers.

If, on the other hand, you’re looking to set up a full eCommerce website, sell internationally, or if you want to take advantage of Square’s more advanced eCommerce features like discounts and customized receipts, you might want to take advantage of Square’s other eCommerce tools. You can also check out Merchant Maverick’s shopping cart software reviews to get an idea of the full range of options available.

The post What Is Square Online Checkout? Your Guide To Using This New Square Payment Option appeared first on Merchant Maverick.

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May 14, 2020

What Is An ACH Payment? Everything You Need To Know About ACH Transactions

If you’ve ever paid employees or received a paycheck through electronic deposit, then you’ve used the ACH payment system. Same with using the “pay bills” feature from your bank account. Whether you are aware of it or not, you use ACH to make payments every day.

In fact, even when a payment is not called an ACH transaction, a portion of that process might still pass through the ACH network. This is because ACH payments form the backbone of money transfer between US banks.

This article is meant to give you a quick introduction to ACH transfers. We have longer articles elsewhere if you want to do a deeper dive, but if you’re short on time, we hope this article at least gives you a general framework on what an ACH transfer is and how it works.

What Does ACH Stand For?

ACH stands for Automated Clearing House…which doesn’t mean anything by itself. ACH transfers are run by an organization called Nacha (in the past, it went by the acronym NACHA, which stands for the National Automated Clearing House Association). The association is responsible for making the rules related to how to make an ACH transfer, even down to the file transfer format a bank must use to transmit the information. It also interfaces with the US federal government, even trying to convince the US Federal Reserve to change its daily operations to make ACH transfers easier/faster for the banks.

Note that Nacha is an organization of/for US banks. While ACH transfers are possible outside the US, they are mostly used by banks in the US, and so Nacha rules mostly work only within the US.

Sometimes, people confuse ACH with eChecks, but they’re not the same. We have an article explaining eChecks in more detail, but, briefly, eChecks typically start as actual physical checks. They’re digitized (e.g. you take a photo of the check to deposit it to your bank account) and then the bank of the payor transfers that amount to the bank of the payee.

(This is where eChecks and ACH payments sometimes get confused. When the banks transfer that money, they could do it over the ACH network or they could do it over the Check 21 network. The precise network used depends on the bank’s preference. Just remember that, for pure ACH payments that started out as ACH payments, they will always go over the ACH network.)

How Does An ACH Transaction Work?

ACH transactions basically form the backbone of money transfer between banks in the US. These transactions are sent over a private computer network called the ACH network, which connects US banks to the US Federal Reserve Bank. The Federal Reserve is where money exchange between all the banks occur; right now, this is done twice a day during regular business days. This means that each bank must keep track of which customer sends how much money to which other person at what other bank until it’s time to send that information to the Federal Reserve at the designated settlement times. The Federal Reserve then makes the actual money transfer between the banks. Here’s an article with a more detailed explanation of the mechanics of money transfer between banks.

Note that ACH transfers can occur between a US bank and a foreign bank. In that case, the transfer information is passed through a different computer network — typically the SWIFT network on which most US-foreign transactions are sent through. These transactions use ACH transfer rules set up by Nacha, and that’s why they’re still called ACH transfers.

From a user’s standpoint, there are two types of ACH transfers: ACH credit and ACH debit. We will briefly explain the two below.

What Is An ACH Credit?

ACH credit payments are often thought of as “push” payments, where money is pushed out of the owner’s account. In other words, the sender of the money must authorize each payment before the money is transferred out.

The recipient of an ACH credit payment first gives the sender their bank account number and bank routing number. The sender then sends the recipient’s bank information to their own bank, along with instructions to pay a certain amount (sometimes, on a specific date). The payment information is batched and then sent to the central bank for settling according to a daily schedule. Once the transfer is settled, the money shows up in the recipientâs account. This type of payment is better suited for payroll or occasional bill payments where you want to control when and how much to pay.

What Is An ACH Debit?

With ACH debit payments, money is “pulled” from an account according to a set schedule. This type of payment is better suited for recurring bills such as utility payments, subscription plans, and similar. With ACH debit, the payor sends the information to the entity where payment is due (e.g., the utility company). The information includes account number, routing number, and payment authorization for a certain date of each month. On that date, the recipient of the payment sends a payment request to their own bank. That bank sends the information through the Federal Reserve to the payorâs bank, which checks for previous authorization and ensures there are sufficient funds in the account. If there are sufficient funds, then the payorâs bank releases the money.

ACH Payment Processing Times

ACH transfers are processed in batches, for efficiency. As of this writing, the Federal Reserve batches payments twice each working day, and Nacha hopes to be able to do three batches per day by 2021. Because of the batching times, ACH transfers can technically be completed on the same day, but typically you’ll have to pay an extra fee for the speed/jump ahead in line. If you do not wish to pay the extra fee, then the bank gets to decide when to make the transfer, and that means the transfer will take at least 24 hours.

Now, some money transfer services, such as Zelle, basically allow for instant transfers, once the account is set up. If ACH is the backbone money transfer service between banks, how do these services almost instantaneously transfer money? The answer is that they don’t. To you, the user and the recipient of the money, the money transfer seems instantaneous. But your bank is actually just lending you the money. The actual exchange of money between the two banks occur over the ACH network and is completed a few days later.

Why Use ACH Payments?

ACH payments typically cost less to process than credit card charges. What’s more, it’s also harder for the payor to dispute the payment and pull it back, once the payment is finalized. And, of course, despite the popularity of credit cards, not everyone wants to use them/can qualify for them. For these reasons, it might be worth your while to look into allowing your customers to pay through ACH payments.

ACH payments are not the best form of payment for all purchases. They are, however, especially suited for recurring payments such as payroll, utilities, installment payments of any sort, subscriptions, and the like, where a certain amount is due on a certain date each month. From a merchant’s standpoint, the money is pulled from the payor’s account always on a certain date, and from a payor’s standpoint, the money is paid on a designated date without fear that it might get lost in the mail.

Are ACH Payments The Best Payment Option?

Like everything in life, one size doesn’t fit all, and so it is with ACH payments. Although they’re well suited for some types of payments, they are not always the best option for others. For instance, for retail purchases where the customer buys an item and wants to take the item home right away, an ACH payment is not suitable. Credit or debit cards are the better form of payment under those circumstances.

However, ACH payments are well-suited for routine and recurring payments. From the merchant’s standpoint, ACH payments tend to cost less to process than credit card payments and, once they’re scheduled, they’re paid on a regular basis, often without the payor needing to pay attention to the process. Finally, ACH payments are harder to pull back, once the transfer is completed. This means that the merchant would have to deal with chargebacks a lot less.

If you wish to learn more about ACH and other forms of payment, we have other more detailed articles summarizing these. If you have any questions, please leave us a note below. We will do our best to help.

The post What Is An ACH Payment? Everything You Need To Know About ACH Transactions appeared first on Merchant Maverick.

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May 7, 2020

Friendly Fraud Survival Guide: How Small Businesses Can Reduce Their Chargebacks & Save Money

The term friendly fraud is a study in contradiction. Fraud is a malicious act. How can it ever be friendly?

Fortunately, there is another term used to describe the same situation: chargeback fraud. At the very least, the term gives a little better clue to the type of fraud it might be. How can fraud be perpetrated through chargebacks, and is there anything you, the merchant, can do to prevent this type of fraud? Read on to find out.

What Is Friendly Fraud?

Friendly fraud occurs in connection with a chargeback claim. In other articles, we give a more detailed explanation on what a chargeback is and why a cardholder’s bank will allow a chargeback, but a quick summary is that a chargeback is a type of refund from the credit card issuing bank to the cardholder, which the merchant has little to no power to contest.

There are quite a few reasons why an issuing bank might initiate a chargeback. Among these are:

No authorization by cardholder
Goods/services returned or refused
Goods/services canceled
Goods/services not received
Goods/services not as described
Goods/services damaged or defective

As you can imagine, these reasons can be abused, and indeed they often are. These are the reasons typically given by a consumer in friendly fraud or chargeback fraud situations.

Some Statistics Related To Friendly Fraud

There aren’t a lot of recent data about friendly fraud. Many studies we found when researching for this article were from companies whose business is to help merchants to fight chargebacks, so we weren’t sure how well we could rely on those statistics.

We did, however, find one study from a neutral source that should be fairly reliable. The study, in the form of a white paper, was done by the Federal Reserve Bank of Kansas City and published in January 2016 as a working paper entitled Chargebacks: Another Payment Card Acceptance Cost for Merchants. The study is a little old and not completely focused on friendly fraud. Nevertheless, it does give some insights:

Total chargeback rate compared to total transaction volume is 0.016%.
Most common reason for initiating chargeback claim is fraud (i.e. transactions reported as being unauthorized by cardholders).
Study also included chargeback numbers for “non-receipt of goods or services,” and “product quality-related reasons,” both of which can also indicate friendly fraud.
Total chargeback rate and fraud chargeback rate are significantly higher for card-not-present transactions than for card-present transactions.
Fraud related charges overwhelmingly resulted in a merchant loss.
Merchants were only able to successfully dispute 20%-30% of the chargeback claims.
Merchant losses are substantially smaller than other credit card processing fees (e.g. interchange fees, markup fees), but the study is not granular enough to calculate total loss, which includes the merchant’s loss of merchandise, labor, capital, and other time-related costs associated with fighting a chargeback dispute.

What Causes Friendly Fraud Chargebacks?

Chargeback fraud can typically be categorized into two types: one somewhat benign and the other slightly more sinister.

On the benign front, sometimes, the cardholder may simply forget making various purchases; when the purchases show up on the statement, the cardholder thinks someone else stole their card and used it to buy things. The cardholder reports this to the issuing bank and asks for a chargeback. Related scenarios include:

Not recognizing the name of a business because the business’s legal name is different from its d/b/a name.
Giving someone (e.g. a child) the permission to use a card without knowing the merchant’s name and/or the cost of the goods/services and then being surprised by the charges.
Not realizing that calling the issuing bank and asking for a chargeback is different from getting a store refund and has very different repercussions for the merchant.

On the slightly more sinister side of things, some card users make purchases with no intention of paying. After a product is shipped, the cardholder calls the issuing bank and asks for a chargeback, claiming that they received damaged goods, that the goods were not received, that the goods were not as described, or similar. The bank credits them, but they never have to send the goods back to the merchant because they never tried to work with the merchant first, to arrange for a return or exchange. While sometimes this is done because consumers do not realize that a chargeback isn’t the same as a return, other times, this is a deliberate act similar to shoplifting. The consumer intended to do it all along and will do it again and again.

What Can Merchants Do About Fraudulent Chargebacks?

The first thing you can do to prevent fraudulent chargebacks is to keep good records. This way, if you want to dispute a chargeback claim, you will have the evidence you need to submit to your processor. In addition to records of purchases, be sure to keep shipping/tracking information and evidence of delivery as well. Even if, at this moment, you have decided that you do not have time to fight chargebacks, you might feel differently in the future.

When a chargeback is actually presented to you, you can decide whether or not you wish to fight the claim. Because you’ve been keeping careful records, you should at least be able to access the evidence you’ll need very quickly.

Is It Hard To Win A Chargeback Fraud Dispute?

As a rule of thumb, chargebacks of any type are difficult to win. After all, from a total volume standpoint, merchants only win 20%-30% of chargeback disputes.

The issuing bank’s relationship is with the cardholder, so they tend to take on the cardholder’s views because they want their business relationship with the cardholder to remain prosperous and mutually beneficial. Additionally, if the issuing bank does not have enough employees to deal with a high number of chargebacks, they might simply allow the chargeback claim to pass down to the acquiring bank and eventually to the merchant instead of investigating the claim early on in the process.

This doesn’t mean that you should give up entirely. You might still be able to win a dispute, but your ultimate success will depend on specific facts, including what the customer claims and what kind of evidence you have at hand. For instance, if the customer claims that they never received the goods, you can show proof of delivery. If the customer didn’t recognize the name of your company because it’s different from your “doing business as” name, you might be able to win the dispute if you can provide the appropriate evidence. Just be aware that you may not win every case even if you do have the evidence.

The Final Word On Friendly Fraud

Friendly fraud is, sadly, not the only type of fraud you’ll encounter when accepting credit cards. While most people are honest — and even honest mistakes can be called fraud, as we’ve shown above — there will always be a segment of the population who intend to cheat and steal. In other words, no matter what you do, you won’t be able to completely stamp out friendly fraud.

The best approach is simply to keep good records. When you see a chargeback that you suspect is friendly fraud, dispute that claim. But bear in mind that you can’t dispute every claim; if you do, you’ll be forced to spend all day on such disputes — or farm the work out to a third-party company. Neither is likely the best use of your time or money. Pick your battles and dispute some but think about letting others go. There are other aspects of your business waiting for your attention.

Friendly fraud isn’t the only type of credit card fraud. If you’re interested in learning about other types of fraud, be sure to check out our longer article devoted to these topics.

And, as always, please feel free to share your thoughts or stories below. We always like to hear from our readers.

The post Friendly Fraud Survival Guide: How Small Businesses Can Reduce Their Chargebacks & Save Money appeared first on Merchant Maverick.

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May 5, 2020

What Is A Chargeback? Everything You Need To Know About Payment Disputes

Chargeback.

Maybe you noticed the term, along with the fee inevitably associated with it, when you signed up to process credit cards. Or maybe you didn’t notice. Now you’re seeing your first chargeback —Â wondering what it is, how to deal with it, and how to get it to go away.

The good news is that chargebacks happen to every merchant, so you’re not unique. In fact, you probably won’t be able to eliminate all chargebacks as long as you keep accepting credit cards. The best you can do is to contain them and reduce them to a small number. What is left is just a part of the cost of doing business.

To find out more about what chargebacks are and how to best deal with them, read on to find out.

Chargeback Definition: What Is It Really?

To start, let’s define chargeback. A chargeback is a payment dispute initiated by the credit card holder by contacting the card-issuing bank, with the goal of getting the credit card charges reversed. It’s a process in which both the card-issuing bank and the merchant’s acquiring bank are involved. Although you, the merchant, do have the ability to speak for yourself to fight the dispute, the final decision on whether or not to reverse the charge is up to the issuing bank. (There are subsequent legal procedures a merchant can follow, but, considering the time and money involved, it’s probably not worth it.)

The issuing bank’s business relationship is with the credit card holder, so it’s natural that they’d want to please the card holder. Expect the bank to rule in favor of the card holder most of the time, even when the card holder is being unreasonable.

Compare chargeback with, for instance, the refund process. There, the customer deals with the merchant, and the merchant decides whether or not to accept a returned merchandise and refund the purchase. Note, though, that the chargeback process can be initiated after an unsuccessful refund request, so the customer gets two bites at the apple.

There can be many acceptable reasons behind the chargeback, and each card association has its own reason code for each of these reasons. In general, some of these reasons include:

No authorization by cardholder
Goods/services returned or refused
Goods/services canceled
Goods/services not received
Goods/services not as described
Goods/services damaged or defective
Canceled recurring billing
Incorrect charge amount
Duplicate charge

ACH Disputes VS Credit Card Disputes

One reason a credit card holder requests a chargeback is that there was no authorization for continuing to charge a card in a subscription service. What they mean, usually, is that they forgot to cancel the service in time, and now they don’t want to pay. One way to solve this issue is to make ACH payments available to your customer for monthly subscriptions.

Both ACH payments and credit card charges can be vulnerable to chargeback claims. However, it’s easier for a consumer to be successful in a credit card chargeback claim than an ACH chargeback claim. Flip this around, and it means that, as a merchant, it’s easier for you to keep your money under ACH transfers than credit card charges.

We have a comprehensive article on accepting ACH payments, if you wish to know all the nitty-gritty details. But before going any further, here’s a brief explanation on what ACH payments are:

Compared with credit card charges, ACH payments work more like cash. An ACH payment is taken directly from the consumer’s bank account, and it costs less per transaction than credit card payments. While ACH can be used for one-time payments, it’s more often used for scheduled, recurring payments.

As listed in the previous section, there are numerous reasons for chargebacks, many of which involve authorization issues or goods/services issues. A credit card user has up to 120 days to initiate a chargeback claim.

The rules for chargebacks on ACH transactions are far stricter. In fact, there are only three reasons under which your customer can successfully reverse an ACH transaction:

The transaction was never authorized or the authorization was revoked
The transaction was processed on a date earlier than authorized
The transaction is for an amount different than what was authorized

The customer will typically have only 90 days to initiate a chargeback (or 60 days after the charges show up in their monthly statement).

While paying by ACH is not always the most convenient thing for your customer, because of the differences above, it might be advantageous for you to steer your customers towards paying with ACH whenever possible.

The Chargeback Process: What Merchants Need To Know

If you’ve been taking credit cards for your business for a little while, you’ve probably had to deal with chargebacks already, but only from the merchant’s standpoint. Below is a quick overview. We hope that a better understanding of the entire process can help you orient yourself when you have to deal with chargebacks again.

The Chargeback Workflow

Briefly, the chargeback process is as follows:

The credit card holder initiates the chargeback process by contacting the issuing bank and giving a reason for wanting a refund/refusing to pay for a specific charge.
If the reason given fits within the allowed reasons for chargebacks, the issuing bank assigns a chargeback code to the incident, provisionally refunds the money to the card holder, and then contacts the acquiring bank to notify the bank of the chargeback claim and to pull back the money already paid to the merchant.
Depending on whether the merchant has a direct or indirect relationship with the acquiring bank, either the acquiring bank or the merchant’s processor performs an investigation to see if they have evidence at hand to refute the chargeback claim. If they do not, then they contact the merchant about the chargeback.
The merchant can elect to accept the chargeback or fight it. Either way, the merchant incurs a chargeback fee. If the merchant decides to fight the chargeback, then the merchant submits evidence to rebut the reason for the chargeback.
The evidence is passed back to the issuing bank, which then makes a decision on whether the chargeback is justified. If it is justified, then the card holder gets to keep the provisionally returned money. If not justified, while the merchant gets to keep the bulk of the money, a chargeback fee is nevertheless assessed against the merchant.
If either the merchant or the credit card customer is not satisfied with the decision, they can escalate. Typically this means some sort of arbitration, but, because a lot of time and money must be invested in the process, probably most people do not pursue this path.

Why Small Businesses Get Hit With A Chargeback Fee Per Incident

A chargeback fee is considered a markup fee. This means that the fee is charged by your processor, so, technically, it’s negotiable. However, smaller businesses have less leverage when negotiating with processors, so they might not always get the best deals.

Chargeback fees typically cost $25. We have seen more, and we have seen less. Often, the fee is assessed against you even when you win a chargeback dispute, on the theory that any chargeback, no matter the outcome, means extra work out of the typical credit card processing flow. Extra work typically means an extra charge.

If you’re worried about chargeback fees eating into your profit, the next time you think of changing processors, be sure to ask about the charge. It can’t hurt to ask if they will reduce the fee. After all, the worst they can say is “no.” You’ve got nothing to lose.

Chargebacks Aren’t The End Of The World, But You Still Need To Be Wary Of Them

If you take credit cards, you will have to deal with chargebacks. There is really no way around it, even if you have happy customers. It’s just a cost of doing business. Don’t sweat it too much if you get one once in a while.

But, if you have too many chargebacks, you do need to be wary. An excessive number of chargebacks could destroy your business. Your processor might force a reserve fund on you so that it takes you longer to get paid when a customer uses a credit card. If things don’t improve, your processor might terminate your contract altogether and put you on the MATCH list. Once you’re on the MATCH list, it would be very difficult for you to find another processor for five years.

So, whenever possible, get a dissatisfied customer to contact you directly for a refund, instead of calling their bank for a chargeback. Be friendly and accommodating. Hopefully, you can resolve the issue directly instead of pushing the customer to try a chargeback.

If you have questions or interesting stories about chargebacks, leave us a comment below. We’d love to hear from you.

The post What Is A Chargeback? Everything You Need To Know About Payment Disputes appeared first on Merchant Maverick.

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April 28, 2020

The Complete Guide To Customer Financing For Small Businesses

There are many ways to build a successful business. Some business models involve selling lots of items each marked at a lower price, while others work by selling fewer things at a higher cost. With either path, the financial resources of your customers will come into play. You might soon realize that not everyone can afford the more expensive things you sell; similarly, not everyone has the resources or desire to buy a lot of small items in one purchase. Is there a way to solve this problem and increase your sales without cutting your prices?

Of course there is. In fact, there are many ways. One way is to advertise, so that a larger number of potential customers are brought to your door. Statistically, you should make more sales. Another way is to offer financing to your customers. Financing allows those who are wavering on a purchase because of the price to buy from you right away and then pay for the goods/services in installments in the future. This way, you don’t lose a sale to sticker shock. This is called customer financing or, sometimes, consumer financing.

Broadly speaking, you can provide customer financing yourself, or you can use a third-party financing specialist. As to how to do either, along with their pluses and minuses, read on to find out.

How Does Customer Financing Programs Work?

By customer financing, we mean any sort of buy-now-pay-later arrangement. Typically, the customer will have to pay a portion of the total cost before the goods/services are released. This sort of financing is usually a business-to-customer (B2C) arrangement instead of a business-to-business (B2B) arrangement.

If you want to offer customer financing, you can either provide that service in-house or you can work with a third party. We’ll discuss each option in more detail below.

In-House Customer Financing

By in-house financing, we mean that you, the merchant, take all the financial risk — and possibly reap all the financial rewards — when letting a customer walk away with your merchandise (or receive the benefit of your services) before you’ve collected in full. If you wish to consider this avenue, there are some items you might want to think through first.

Cash Flow

If you wish to tackle in-house customer financing, you’ll need to consider your business’s finances first. Understand your cash flow and maybe do some financial projections.

Know that when you actually start to finance your customer’s purchases, you’ll have a period of reduced income because you’re not receiving the full payment for the goods or services you sell. At the same time, your customers might be making a greater number of purchases, so you would need to pay out to replenish your inventory. You’ll need to make sure that you have enough money to run the day-to-day operations of your business while you wait for the installment payments to come in and become a regular part of your cash flow.

If you are right and your customers start to buy more than before because they can now finance their purchases, then your cash flow should eventually increase after an initial dip.

Legal Risk

When it comes to lending money and charging interest, both state and federal usury and debt collection laws may apply. If you fail to follow them, you might have to pay fines or be subject to other penalties.

When you provide financing to your customers, you might want to charge interest on the loan. If that is the case, be sure to check your state’s usury laws that govern, among other things, the highest interest rate you can charge. To complicate matters, if you sell online and a customer is in another state, you might be subject to that other state’s usury laws as well.

If your customer defaults on a loan, you might wish to collect that debt. Unfortunately, what you can and cannot do are also governed by federal and state laws. The laws typically restrict you on the amount you can collect per type of asset and how you are allowed to collect it. Again, the laws differ by state, so this can get fairly complicated fairly quickly. (Here’s an article from the consumer’s standpoint.)

If you wish to start an in-house consumer financing operation, be sure to talk to a lawyer specializing in this area first. They can help you design a set of best practices that are best suited for your type of business — and that stay within legal limits.

Operational Considerations

If you decide to start your own financing department, you’d probably have to hire new people. For instance, for every application, you might want to pull a credit report before deciding whether or not to lend. There would be additional paperwork and internal records to keep as the customer pays off the debt. If the customer fails to pay the debt, you would have to have someone to work on the failure to pay in some way, even if it’s just sending the account to a debt collection company.

Additional internal processes will have to be set up to smoothly move a customer through each step, from application to approval to installment invoicing. All this requires additional employee hours. So, whether you hire one person or ten people to handle the financing, you would have to consider these operational changes and expenses before making a final decision.

Bad Debt

Lastly, not every customer will pay off their loan. We covered the legal aspects of debt collection above, but the more important aspect of bad debt is the financial impact on your business’s cash flow. Know how much bad debt your business can absorb without running into cash flow issues before you decide if you wish to move forward.

Third-Party Customer Financing

It’s always nice to be able to keep your hard-earned money, but now that we’ve gone through some of the major considerations for providing customer financing in-house, you might start to see the headaches that are involved as well.

Fortunately, there is an alternative. There are companies specifically set up to do customer financing or just debt collection (if you continue to wish to keep a portion of the work yourself). Some of these companies charge you nothing for sending a customer to them for financing, but others want a fee so that they charge you for sending a customer to them. They will also keep all the fees/interest the customer will pay to obtain financing. In return, they take care of all the legal and operational complications of customer financing for you.

If you continue to be interested in working with a third-party financing company, be sure to understand the details of how the financing company works before signing a contract. Understand your expected sales increase and your expected profit. If you sell low margin items, make sure that these financing charges do not exceed your profit margin. Otherwise, you would have gone through all this trouble for nothing.

Is Consumer Financing A Good Fit For Small Businesses?

Many large businesses provide consumer financing. For instance, you can finance a car purchase through any one of the major car manufacturers. Consumer financing is also available from some chain store home furniture sellers or large electronics stores. These are all large businesses that can afford a separate department–and sometimes even a separate corporate subsidiary–to take care of consumer financing.

But you’re a small business owner. Maybe you have only a handful of employees, and each of them is already busy taking care of other things. You already work twelve-hour days and things are still not done. How do you provide consumer financing when you’re already stretched so thin?

You might want to consider using third-party customer financing companies. This doesn’t preclude you from trying in-house financing in the future, if you pick one with a contract with no early termination penalties. It’s a quick way to get started, and it introduces you to an industry that you can become more familiar with, so you can make a more informed decision in the future.

Below are some pros and cons for your consideration.

Pros To Offering Third-Party Customer Financing

No Need To Increase Staff: The most obvious advantage is that you won’t need to hire more people to run the financing. As a small business owner, you know how difficult it is to find the right person–one who has the knowledge needed as well as the proper “fit” for your business. It might take several tries to ultimately find the right person, but with third-party financing, you won’t need to do that.
No Need To Worry About How The Details Work (e.g. credit checks): There are a lot of things you would have to set up from scratch to start an in-house customer financing operation. You’ll have to have the application forms, know where to run credit checks, figure out how much risk you can take, and give the customer the credit needed to make the purchase. With third-party financing, you won’t have to worry about any of this. You just send the customer to the financing company, and they take care of the rest with their existing workflow.
Legal Compliance:Â As already touched on above, when it comes to lending money, there are a lot of legal issues that could arise. If you’re in the US, then not only would you have to understand federal laws that could affect your operations, you’ll have to understand multiple state laws as well, if you operate an online store. These laws change from time to time, so you can’t set up a process and forget it. It would be easier to let a third-party financing company worry about following the laws. They might still (hopefully only accidentally) violate these laws, but at least if they do, they would be responsible for it. (Be sure the contract clearly states they’re responsible for any legal compliance issues.)
Less Need To Worry About Cash Flow:Â While you might still have to invest more money into your business to have enough inventory for increased sales, you are less likely to have to worry about a healthy cash flow by using a third-party financing company. A lot of these companies will fund you within two to three days of purchase, so you shouldn’t have to worry about cash flow at all.

Cons To Offering Third-Party Customer Financing

The Reputation Of The Financing Company Will Affect Your Own Reputation: A company’s reputation, especially where money is concerned, matters. When you recommend a financing company to your customer, like it or not, you’re guaranteeing that the company is reputable. If this turns out to be incorrect, then the bad reputation rubs off on you too. A business’s reputation is everything, and a bad one will run customers away from you.
Customers With Bad Experiences Might Not Come Back: Even if customers clearly understand that the financing company has nothing to do with your business, a bad experience with the financing company could still prevent them from coming back to you. Their shopping experience is ruined, and it’s highly likely they will subconsciously connect that bad experience with you. It’s not difficult to imagine that they might go elsewhere to shop in the future.
Customers With Bad Experiences Might Blame You: Related to the above, we know that people don’t always notice things that they should. This is why there will always be a portion of the customer base that thinks you and the third-party financing company are one and the same. If anything goes wrong, it’s very likely that they will blame you for the financing company’s mistakes. They might go online to complain, giving you a bad reputation that you don’t deserve.
You Must Share Revenue:Â Naturally, these third-party financing companies can’t provide their services for free. In fact, in addition to keeping the interest and fees paid by the consumer for the loan, many will want you to pay them for their services as well. Maybe your margins are high and you don’t mind, but if you do mind, then you’ll need to pick the financing company carefully.
Possible Long-Term Contract: Some third-party financing companies will require you to sign a long-term contract. As with all contracts, you’ll need to look at the possible penalties if you need to get out of the contract early. One contract we reviewed when researching for this article allows you to cancel but requires a 12-month notice period, which is basically the same as not being able to cancel at will. Make sure you’re not stuck with a company that you won’t want to work with for one reason or another (e.g. bad reputation) for longer than necessary.

How To Offer Financing To Customers: Options For Online & Brick-and-Mortar Businesses

If you have decided to offer financing to your customers, the way you tell your customers that financing is available and invite them to apply will depend on whether you operate a physical store or an online store — or both. It also depends on whether you’ve decided to do this in-house or through a third-party specialist.

If you’ve decided to offer financing in-house, then you can advertise any way you want to, as long as you have the application readily available for an interested customer to sign up. However, if you’ve decided to go with a third-party provider, then there are several ways to deliver information about the financing offer and payment options.

Online Customer Financing

For webstores, customer financing is often offered at checkout. The customer sees a financing button, along with other payment choices such as credit or debit cards. If the customer clicks the financing button, they must respond to a few questions. A “soft” credit check is performed. With some companies (e.g. Affirm, Afterpay), a decision to lend is made based on the soft check. With other companies (e.g. Square), a hard credit check is eventually required. (If you’re curious, this article explains the difference between soft and hard credit checks.)

After this, the customer is presented with a choice of how they want to finance the purchase–i.e. how many installments, how much per installment, and interest or other fees. Once the customer makes a pick, the online merchant is paid by the financing company, typically within a day or two after shipping.

As to the rest of online financing, a merchant is often supplied with banners and buttons that they can place on their website to announce that financing is available.

In-Store Customer Financing

If you run a physical store, then customer financing is done a little differently, though you’ll still need a connection to the internet just like online financing.

There are several ways a customer at a physical store can apply for financing. One financing company offers free-standing kiosks that customers can use to apply. Tablets can also be loaded with financing application software for the store clerk to hand to the customer. Yet others simply have the store clerk ask a few questions of the customer at checkout and enter that information online. Lastly, a customer can apply for some specific amount beforehand, the financing company can issue the customer a single-use virtual card, and the card number can be keyed in by the merchant just like any keyed-in credit card charge.

How Much Does It Cost To Offer Customer Financing?

The cost to offer customer financing runs the gamut, from free to something similar to the swipe of a credit card. It’s not always easy to find this cost on the provider’s website, however. (It’s much easier to find out how much the customer will be charged for taking the financing offer.) Very often, the company simply does not disclose the charges to the merchant but instead tries to sell their services as a way to increase sales. You can only find out the cost after you contact them.

Ten Customer Financing Programs For Small Businesses

For this article, we did a quick survey of the companies currently providing customer financing services for small to mid-sized businesses. We briefly discuss the companies we found below, but we haven’t reviewed most of them, so please be aware that we pass no definitive judgment about the quality of service each provides. We hope to have some reviews for you in the future.

In looking through these companies, we find that they can generally be categorized into three groups. The first group contains more traditional financing companies. Financing applications may take a day or two to process and be approved. A second group includes the so-called fintech companies–they have their origins in the tech startup world, and they’re here to “move fast and break things.” These companies tend to do a soft credit pull and then give you a loan within seconds. These loans tend to be of a smaller amount and they typically must be paid back within a year. Some of them are fee-based and do not charge interest. The third group seems to be a hybrid, featuring some characteristics of both the traditional and the fintech companies. They also do a soft credit pull and sometimes can offer you a loan for a very small amount very quickly. Typically, larger loans are also available with these companies.

Grouping the vendors we found below into the three categories above, we have:

Traditional: Flexxbuy, LendPro, Snap Financing
Fintech: Affirm, Afterpay, ViaBill, Vyze
Hybrid: PayPal Credit, Square Installments, VIP Financing Solutions

With some of these companies, it was hard to find merchant-related information–i.e. sign up cost, processing fee, contract terms, etc. These companies tend to try to sell their services by touting how much more a merchant can sell if the customer had the ability to buy more. Signing up with them might mean that you never get to see any income from the financing side. Still, they seem to be worth investigating, so we encourage you to find a few that you might be interested in and contact them for details.

Lastly, if you look at the way these companies work–especially the fintech companies–you’ll see that there’s a strong potential that they might replace the entire merchant processing side of the credit card industry. If you look carefully about the nature of the credit approvals, loan amounts, and repayment terms, you’ll see that they work like charge cards, where each charge is judged separately based on the person’s current debt load and creditworthiness. It’s very similar to the American Express model. From a merchant’s standpoint, it might be a good idea to understand how these financing companies work, in case they do replace some credit card company functions in the future.

With the above in mind, here are some of the customer service companies we found that you might wish to look into further.

Flexxbuy

Flexxbuy seems to fall into the more traditional side of the consumer lending business. It has a relationship with over 20 lenders in its backend and can quickly set a customer up with the right lender, depending on the customer’s credit score.

With Flexxbuy, the customer can get a loan of up to $50,000. The website isn’t quite clear, but the wording in various places suggests that smaller loans might be approved instantly, but the larger ones can take up to 48 hours. There is a formal application to be submitted by the merchant. The customer doesn’t have to pay a penalty for pre-payment, and loan payback can be from 12 months to a few years.

Flexxbuy says the cost to the merchant is “customized,” and, since they work with several lenders, this probably just means that the cost varies depending on the lender. To sign up with Flexxbuy, there is an enrollment/setup fee for the merchant.

LendPro

LendPro, like Flexxbuy, seems to fall towards the traditional lender side of the industry. They claim that they have lending relationships with more than two dozen lenders on the backend to provide financing for a wide range of amounts and for all types of credit scores.

When a customer finances through LendPro, the lending relationship is directly between the customer and LendPro. LendPro can integrate their financing application software with your website, so customers can see their financing options at checkout and file an application if they are inclined. They also have physical kiosks for physical stores, where a customer can apply for credit in person. A merchant can also buy a tablet and install LendPro’s software on it and then hand the tablet to the customer to apply for financing.

There are no other disclosures about how a contract with LendPro would work or how much they would charge the merchant per transaction.

Snap Financing

Snap Financing calls itself a “lease to own” company. This means that, as a merchant, you might be sending your merchandise out to consumers, but you still own the item until the lease term is up. Then, the consumer can either buy the item outright or return it to you.

Lease-to-own arrangements are typically used for large furniture, appliances, electronics, and computers. If the goods are damaged during the lease, they still belong to you. (Presumably, you can deduct the damage from the price.) With Snap Financing, you’re working with a somewhat traditional business model. While it’s not clear on the website, it seems from the nature of the business model that the merchant still owns the sales contract. If the customer defaults on the (unsecured and high-interest) loan, then the matter is between Snap and the customer.

Snap funds your business within 2-3 days once the leased goods are delivered, so you are fully paid.

Affirm

Affirm falls squarely within the fintech label, and it has the pedigree to prove it. The company was founded by Max Levchin, who was one of the founders of PayPal. Even now, it’s still taking money from venture capital firms, with the latest round of funding raising $300 million USD.

Affirm’s website is geared more towards the consumer than the merchant, so there are not a lot of details on how (or if) they charge the merchant to process a customer’s loan. On its backend, Affirm’s loans are financed by two banks: Cross River Bank and Celtic Bank.

The Affirm financing application can be integrated into various eCommerce shopping platforms and be shown to a customer at checkout as a push-button option. When a consumer applies, Affirm performs only a soft credit pull and then makes a decision to lend based on that pull. There’s no stated loan limit. If the purchase is made from an online store, then the payment can be applied at checkout. If the payment is at a store that’s not affiliated with Affirm, then Affirm issues the customer a single-use virtual card that can be used like a credit card.

Afterpay

Afterpay is yet another fintech company. It has a business model that looks very similar to that of Affirm, and it is also funded by venture capital investors. While Affirm seems to focus on providing financing for goods and services that cost a bit more, Afterpay seems to be focused on things that cost a little less.

Afterpay discloses a little more on their website on how they work with merchants. When the merchant makes a sale, the purchase is made between the merchant and the buyer. But the merchant immediately assigns the purchase contract to Afterpay so that Afterpay has the right to recoup nonpayment. After that, the merchant is still responsible for taking care of complaints and returns, but any questions on payments belong to Afterpay.

Afterpay’s services integrate with many existing online shopping carts. Consumers are presented with Afterpay as a payment choice at checkout, and they can apply for credit that way.

Afterpay checks the consumer’s credit with a soft credit pull and, once approved, the consumer is presented with several installment payment options and can see fees and the payment amount for each. The consumer picks whichever option that appeals to them. They can be charged a late fee, but there’s no interest or service fee on the amount borrowed, and of course, the customer can prepay or fully pay before the payment is due.

To borrow from Afterpay, the consumer will have to have an Afterpay account. A credit or debit card must be linked to the account, so Afterpay can automatically withdraw the installment payment from the account. (Which begs the question: why not just use the credit card instead?)

ViaBill

ViaBill is a European fintech startup. Merchants in Denmark, Norway, and the US can sign up with ViaBill.

Like Affirm, ViaBill focuses on bigger ticket items. They offer easy integration with online shopping platforms, easy and fast approvals, and installment payments linked to the debit or credit card used to set up the consumer’s account. The payment is broken into four installments, with the first installment due immediately at checkout. Afterward, ViaBill assumes the risk of fraud and credit risk. If the customer fails to pay, they are charged a late fee (but no “penalty fee”), and ViaBill handles everything related to non-payment/collections.

For merchants, ViaBill charges 2.90% + $0.30 per transaction, which is comparable to some credit card processing charges. After the goods are shipped, the merchant assigns the right to receive payments to ViaBill, but ViaBill may assign the right back to the merchant to deal with chargebacks, disputes, item returns, and some other conditions.

When a merchant signs with ViaBill, the contract can be terminated by ViaBill at any time for any reason or no reason, while the merchant can only cancel for any reason or no reason in the first three months. Thereafter, the merchant must give ViaBill 12-months notice before the contract can be canceled.

There is a setup fee to connect up to ViaBill. They fund the purchase five days after shipping. Be aware that if you sign with ViaBill, they don’t want you to work with any other consumer financing provider unless you both agree in writing that you can.

Vyze

Vyze is a fintech startup that began in 2008. It was acquired by Mastercard in 2019, so if you sign up with them, you at least know that they are backed by a reputable business. Vyze doesn’t seem to be doing anything too different from the other fintech startups, however, so there might not be any other specific benefits to working with Vyze.

Like other fintech companies, it seems Vyze only does a soft credit pull; consumers can apply with just a few quick personal details. A customer can apply online, or if at the checkout of a physical store, apply from the store’s tablet loaded with Vyze’s app.

Once Vyze has the customer’s credit information, the software queries a first lender for approval. If the first lender rejects the application, then the software automatically pings a second lender in the queue, and then a third, and so on until one lender approves the financing.

Vyze’s website does not have much information for the merchant, so it’s difficult to tell if/how much they charge you for each customer you bring them, how they would handle returns or chargebacks, or any other details of a merchant’s contract with them.

VIP Financing Solutions

VIP Financing Solutions has an interesting business model. It seems to be a credit card processor that also does consumer financing (or vice versa). You can get Clover POS stations from them (it’s unclear if they sell or lease them, so be careful). They also have multiple lenders in the backend to support their financing activities.

No matter what you do with VIP, whether it’s credit card processing or customer financing, you’re charged the same rate: a 3.0% “Merchant Fee.” The website also claims that you’re not charged a credit card processing fee, but that 3% seems to cover more than enough of the usual fees associated with credit card processing. Once the charge is cleared, you are funded within 48 hours.

As to financing, VIP offers three types of financing:

A Store-Branded Credit Card:Â The shopper can be instantly approved and walk out with a card, which basically is a revolving line of credit specific to your business.
A No-Credit-Check Loan: The amount can be between $500-$35,000. The repayment is divided into four installments, to be paid within a short period of time.
A Traditional Personal Loan: Approval can take a few days, with repayment plans of up to 60 months.

We couldn’t find a merchant contract on VIP’s site, so we don’t know other details about how VIP works with its merchants.

PayPal Credit

If you are already a PayPal merchant, then you can offer consumer financing through PayPal Credit. Just activate the service as a form of permissible payment. Then you can advertise that the service is available by adding promotional banners already prepared by PayPal to your website.

When a customer uses PayPal Credit, the merchant is paid upfront (i.e. no need to wait for the customer to completely pay back the loan to PayPal). PayPal does not disclose how much it charges per transaction, but it also doesn’t say that the cost would be different from other PayPal transaction charges. So, each transaction likely costs the same as other PayPal payment transactions.

From the consumer’s standpoint, PayPal Credit is a loan between PayPal and the consumer. Once PayPal’s underwriter approves the loan, the consumer has to make minimum monthly payments. For purchases over $99, as long as the consumer pays the loan back within six months, there’s no interest on the loan. However, if the loan is not paid back completely within six months, interest is charged from the date of purchase.

PayPal will pull a soft credit check before approving a loan. The minimum starting credit is $250, and this might be increased from time to time. You can use the money in PayPal Credit to send to family and friends, just like sending cash. And, just like sending cash, you pay 2.9% + $0.30 per this person-to-person transaction.

The service is available to US consumers only.

Square Installments

As with PayPal Credit, if you’re already a Square merchant, you can use Square Installments. Square Installments can be used from the point-of-sale or from your virtual terminal, and they cost 3.5% per transaction. You can also integrate Square Installments into your electronic invoice, and that service costs 2.9% + $0.30 per transaction.

For a merchant to sign up, navigate to your dashboard and look to see if you’re already approved for Installments (approval sometimes depends on industry or location, business type, and/or volume and price of goods sold). If you are, then you’ll have to watch a video and answer a few questions to make sure you understand the terms of service. That’s all you need to do. You can cancel the program at any time. There’s no added integration needed, and Square can provide all the buttons and banners you need to advertise online to your customers that the service is available.

For your customers to apply for financing, they follow a link customized for your business and then enter their information. They will quickly get an offer after a soft credit pull, and the offer will include various monthly plans and total fees. Square pulls a full credit check if the customer elects to go forward with financing. Square Installments are used for purchases of $150 and up and the repayment terms are for up to 12 months.

For physical stores, Square Installments can be used with a digital card, which can be keyed in like any other purchase. The merchant is paid right away, and if the customer misses a payment, it doesn’t affect the merchant.

Here’s a more detailed article about Square Installments, if you’re interested in learning more.

Should I Offer Third-Party Financing For My Customers?

There are a lot of data-based arguments out there that suggest that making financing available to your customers translates to more sales. As a small business owner, the easiest way to do this is to go through a third-party financing company so that you won’t have to deal with the paperwork, the possible cash flow issues, the legal aspects of lending, and the defaults when a customer refuses to pay.

Third-party lenders aren’t willing to do all this for free, of course. Some will charge you a fee, and it’s important to understand how this fee works. It’s also important to think through other issues, such as how chargebacks and returns will be handled. Of the companies we surveyed above, many do not disclose much about how they work with the merchant at all. If you decide that you’re interested in working with one of these companies and contact them, be sure to ask questions such as:

Do they charge you for sending a customer to apply for financing?
Do you get a finder’s fee for sending customers?
How do they deal with merchandise returns? Are you required to accept a return, or can you simply refuse? Do you have to return the money to the customer? Or is that handled between the financing company and the customer? And if so, will the merchant have to return the money to the financing company?
How do they deal with disputes/chargebacks? What about fraud, such as a customer claiming that you didn’t ship a product when you actually did?
How do they deal with defaults? Some companies assign defaults back to you and you’d have to deal with that, so that seems to create more headaches for you.
Who handles customer service? If this is divided between the merchant and the financing company, how do you share the responsibility?
How quickly are you funded, and at which point in the process does a sale count as a sale?

You might have more questions, so be sure to write them down before you contact a financing company. That way, you won’t accidentally leave out a question.

If you decide that providing customer financing is just not for you, but you still want to explore ideas on how to increase the cash you have at hand to grow your business, be sure to check out some of our lending articles. We have picks for the best small business loans, advice on how to get a line of credit, and even information on startup grants. You might also want to consider invoice factoring or invoice financing.

Lastly, if you have had any experience with any of the providers above or want us to do a detailed review of a specific provider, do let us know by leaving a note below.

The post The Complete Guide To Customer Financing For Small Businesses appeared first on Merchant Maverick.

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April 6, 2020

The Complete Guide To Credit Card Networks: Visa, Mastercard, American Express & Discover

When was the last time you used your Wells Fargo card? How about your USAA card?Â

No, this isn’t a trick question.

If we asked when was the last time you used your Visa or Mastercard, you’d probably be able to answer right away. Given that the banks’ names are printed on the cards at least as prominently as the brand names Visa or Mastercard, why is it that people think of these cards by their brand names instead of the banks’ names? Especially–at least for Visa and Mastercard–since cardholders only deal with the banks that issued these cards instead of the card brands themselves. And why is it that Discover and American Express work differently? (Do they work differently?)

These questions probably don’t keep you up at night.

But, if you’re ever curious about what these card networks, card associations, or card brands are and what these entities actually do (other than make you pay fees of various sorts), you’re at the right place. We’ll explain what card networks are, give you a little history about each, and provide a general framework for understanding how they fit into the business of credit card processing.

At the end of the day, we hope that this article will at least explain why merchants are charged pesky fees for taking these cards. So, grab some coffee and read on!

What Is A Credit Card Network Anyway?

Major credit card networks around the world include Visa, Mastercard, China UnionPay, American Express, Discover, and JCB (Japan Credit Bureau). But this doesn’t really help you understand what a credit card network is. So, let’s go into a little more detail below.

What Do They Mean By “Network”?

Let’s clarify the term “network” before we start. Typically, a network is just a group of entities that have some sort of relationship with each other–think social networks or computer networks. For this article, by default, we use the word network to mean a group of entities that participate in the credit card processing workflow. Usually, this means each entity has some sort of contractual obligation with another entity in the workflow.

Note, though, that the credit card associations also maintain advanced computer networks, which they rely on to process credit card transactions. In fact, some of them even want to be known as technology companies that just “happen” to work in the payments space.

A Credit Card Network Can Be Analogized As A Franchisor

If you’re familiar with the franchise business model, then you already have a fairly intuitive understanding of what credit card networks do. In this analogy, Visa and Mastercards are like franchisors, the banks that issue the cards are franchisees, and the consumers who use the cards are the customers. Following this analogy, American Express and Discover would be like franchisor-owned stores that work with customers directly.

In the franchise model, both the franchisor and the franchisee enter into a long contract setting out a complex set of rules for the franchisee to follow; the same goes for card networks and issuing banks. The franchisor changes these rules from time to time and enforces them, just as card networks change and enforce guidelines. The franchisors also have other obligations, such as marketing their service to the general public –that’s why they are better known to the general public than the franchisees. You know there’s a McDonald’s in your town, but you probably don’t know or care who’s running it. Likewise, you know you have a Mastercard, and that’s the most pertinent piece of information; the issuing bank may seem irrelevant.

Of course, real-life is far more complex, and this analogy doesn’t cover a lot of what the card networks do. But, hopefully, it gives you a quick, general framework to go back to if you get overwhelmed. For a more detailed explanation of what a card network does, read on to find out.

How Does A Credit Card Association Fit Into The Credit Card Processing Work Flow?

There are a lot of players in the credit card processing business, and each player occupies a unique spot in the overall business model. Here are the major players:

The consumer/cardholder
The issuing bank
The acquiring bank
The card networks/card associations
The processor
The merchant

Once a consumer uses a card to make a purchase, whether at a physical store or online, the following process begins:

The card information is encrypted and transmitted from the merchant to the processor.
The processor determines which acquiring bank is associated with the merchant. Note that sometimes the processor is the same as the acquiring bank, but often it is not.
The payment information is sent to the correct acquiring bank.
The acquiring bank sends the information to the correct credit card association–i.e. Visa, Mastercard, Discover, or American Express.
The card association matches the consumer with the correct issuing bank and often performs some fraud checks. If the card purchase is a tokenized purchase, the association further matches the token to the actual, primary card number (PAN) and forwards the information to the issuing bank. With Discover and American Express, they are their own issuing banks, so this step is skipped.
The issuing bank checks the credit availability of the cardholder (and potentially performs additional identity verification checks), and either authorizes or declines the purchase.
This message is transmitted to the acquiring bank directly. If the purchase is authorized, the acquiring bank releases the funds to the processor, which, in turn, releases the funds to the merchants in a proscribed time period.
The money owed between the issuing bank and the acquiring bank is settled later.
The cardholder pays the issuing bank back at a later date.

As you can see, card associations do have a role in the transaction process flow. And for this, they wish to be paid.

Are Credit Card Networks The Same As Debit Networks?

This is actually a fairly tricky question. We have an entire article explaining how debit and credit cards are related, but below is a quick summary.

There are two types of debit transactions: PIN debit and credit-based debt. For a PIN debit, once the transaction information reaches your processor, it’s routed through a different computer network than a credit-based debit, and a different payment procedure is followed. A credit-based debit transaction is routed through the credit card network, but the money is pulled out of the cardholder’s account almost immediately (much like a PIN debit transaction), instead of waiting for the cardholder to pay at the end of a credit card statement cycle.

Just to complicate matters, some card associations own debit networks too. For instance, Discover owns the PULSE network, which is an ACH debit network. But, to answer the question posed by the subheading, under some circumstances, a credit card network can indeed be used as a debit card network.

Meet The Major Credit Card Brands

For this article, we’re going to focus on the four major credit card brands in the US: Visa, Mastercard, American Express, and Discover. We limit our discussion to these four US brands because they all have a substantial international presence and our readers are mostly in the US. Just be aware that there are other card brands doing business in other parts of the world, the most noteworthy of which is China’s UnionPay (it’s the third-largest card network in the world, behind Visa and Mastercard).

Regardless of the actual name of the card brand, they all work in a substantially similar way as the card process flow presented above.

Visa

Visa is the oldest modern credit card brand. It started in 1958 as a part of Bank of America, and it was called the BankAmericard. Bank of America operated the business exclusively until 1966, when it started to license the program to other banks. In 1970, Bank of America transferred control of the program to a consortium of banks. In 1976, the entity was renamed Visa, and the name continues today.

Visa started to electronically authorize and then clear and settle payment card transactions in 1973. Today, Visa has four data centers around the world handling credit card transitions in Virginia, Colorado, London, and Singapore. In 2018, it processed over 188 billion transactions through its worldwide computer network. Its products include debit, credit, and prepaid cards, all under the Visa brand name.

Mastercard

Mastercard traces its origins to 1966, when a group of bankcard associations joined together to form the Interbank Card Association. At first, this was a loose association with weak brand recognition, so in 1969, the association rebranded itself as Master Charge. The brand became a global brand when it entered the European market in 1968. In 1979, the association changed its name to Mastercard.

In 2018, Mastercard processed 73.8 billion transactions. In addition to its credit card processing business, it also has debit and prepaid cards under the brand. Mastercard prefers to be known as a payments technology company, and, as such, has invested heavily in its computer network around the world.

American Express

American Express started as an express mail company in 1850. A little over 100 years later, in 1958, it started its charge card business. Today, charge cards are only a portion of American Express’s business, but, because this article focuses on payment card brands, we will limit our discussion to charge cards only.

Somewhat different from the other card brands, the American Express card is a charge card. This means that the cardholder must repay the entire charged amount by the due date instead of having the option of only paying a portion of the amount at the end of the billing period, like a credit card.

American Express is the fourth largest card brand in the world based on purchase volume, behind China Union Pay, Visa, and Mastercard. The American Express business model differs slightly from the Visa and Mastercard models. American Express typically acts as its own issuing bank and acquiring bank. There are some exceptions, however.

Under the OptBlue program, merchants who process under a specific dollar amount can sign up to process American Express through a processor. Once they process over that limit, though, they must enter into a direct contract with American Express, so that American Express becomes both the processor and the acquiring bank for the transactions. Recently, American Express has also started to allow a small number of banks, like the Bank of Hawaii, to issue American Express cards. So, while there are some exceptions to the rule, American Express continues to be its own issuing bank and acquiring bank under most circumstances.

Discover

Of the major branded payment cards, Discover is one of the youngest. It was introduced by Sears in 1985, and even from the start, it had just one issuing bank: the Greenwood Trust Company (now called the Discover Bank). Discover issues its own cards and maintains a direct relationship with most of its customers, servicing them through the Discover Bank. There are some third-party issuing banks that work with Discover, but these are in the minority.

Generally, for small and mid-sized merchants, Discover works through third-party acquirers/processors to process card charges. However, it does maintain a direct relationship with large merchants, and in those cases, Discover serves as both the issuer and the acquirer in the payment card process flow.

In 2018, Discover processed 6.8 billion transactions, 2.5 of which were on the Discover Network and 4.4 on the PULSE Network (ATM debit transactions). In addition to its credit and debit card business, Discover is a full financial services company, providing traditional direct banking services (e.g. student loans, mortgages) as well as payment processing services.

Credit Card Brand VS Credit Card Issuer

So are the credit card brands the same as credit card issuers? From what’s already been covered above, the answer necessarily must be: maybe.

A credit card issuer is typically a bank that works with a consumer to get a credit card–in a way, giving the consumer a personal revolving line of credit that can be paid back immediately or later (if later, typically with interest). It is the issuing bank that lends the money to the consumer for the card purchases. The card brands typically have nothing to do with lending (this is always the case with Visa and Mastercard).

The card brands set certain pricing (i.e. interchange fees and card brand fees) and make certain rules that the issuing banks, acquiring banks, processors, and merchants must follow. Failure to follow the rules means that the card brands can stop doing business with you, effectively shutting you down.

Things are slightly different with American Express and Discover. Each of these companies is a large financial services company that owns both a card network business and a bank business. In most cases, they use their own banks to issue cards and lend money to consumers, but they also use their own network (business network and computer network) to process the card transactions. So, American Express and Discover are both their own card brands and their own issuing banks.

What Do The Credit Card Associations Do?

Now that we’ve generally described the credit card associations’ place in the payment transaction workflow, let’s look in a little more detail of the major duties of credit card associations.

Determine Individual Card Brand/Network Rules

You may or may not know that each card brand has a thick book of rules and regulations you must follow as a merchant. Your contract with your processor typically will say that if you do not follow these rules, they can terminate your contract. You might even be put on the MATCH list for violating some of these rules.

What is alarming is that these rules are not uniform, so the Visa rules can differ from the Mastercard rules which can differ again from the Discover rules. These rules are there to ensure that all merchants who accept a particular brand of card act in the same way, with the same level of service. Naturally, this doesn’t always make your life easier.

The rules aren’t all bad, though. The financial services industry is highly regulated by governments around the world. As a small business owner, it’s very difficult for you to keep up with changes in these laws. However, generally speaking, if you follow the card brand rules, you should be able to stay well clear of any legal violations, at least as far as payment processing is concerned.

Though these rules can be complicated, the one big thing you should always keep in mind is to always treat the card brands the same–whatever procedure you use when taking one type of card should be used for all card brands you process. Other than this, do some quick research on the internet before you make any process changes, to stay on the safe side.

And be sure to search our site. We try hard to point out anything in the rules that may pertain to things you might want to implement, things like a minimum charge or a convenience fee. Reading our articles might save you time and headaches in the future.

Determine Data Security Standards

Another fairly important thing the card brands do is to make and implement the data security rules that govern the secure storage and transmission of payment card data. To do this, the four card brands, plus JCB of Japan, started the standards-making organization called the PCI Security Standards Council. Today, the council includes many other members, and they meet periodically to improve on existing rules and agree on new rules.

The PCI security standards cover only the transmission and storage of cardholder and/or sensitive card authorization data, but they do this from end-to-end. So, the standards cover things like what sort of data encryption schemes to use when transmitting card payment data, what sort of hardware security minimums are required on a credit card machine, what security requirements are needed for a physical payment card, and even what sort of employee access restrictions should be instituted if a merchant wishes to store card information on-premise.

While these security standards cover a lot of ground, there are items that they do not cover. For instance, the standard does not mandate any sort of technology to actively detect fraud. Instead, fraud detection software is privately run by processors or the card associations, and if fraud is found, the merchant would be notified.

In addition to the PCI Security Standards Council, the card networks also participate in other standards-making organizations related to data security, organizations like EMVCo, which we will cover in a separate section below.

Set Interchange Rates

If you are familiar with the credit card processing business, then you know that the interchange rates are rates that you cannot negotiate with your processor–it’s their cost for processing each card, passed down from their own service providers. A large portion of the interchange rates go to the banks, but it is the credit card associations that set them. This way, the multiple banks that take part in the payment card processing business are all compensated in the same way.

Build & Maintain Payment Processing Computer Network

Even in the earliest days, computer and computer networks held prominent roles in the credit card processing workflow. Starting with VisaNet in 1973, a lot of the authorization, clearance, and settlement was processed over networks privately operated by the various card brands. Today, computer networks are so important in the payment processing workflow that Visa and Mastercard think of themselves as technology companies instead of financial services companies.

If you read their websites, you might think that the card brands built and operate the entire credit card processing network, but that’s not true. The fact is, while credit card associations do operate and maintain a very important part of the processing network, other entities (like the banks) also own and maintain hardware and software connected to this network. Still, the portion owned by the card associations directs traffic and routes different information to the appropriate banks, so they do function a little bit like the nerve center of the network.

Today, a processing request can be transmitted from the merchant to the issuing bank (and go through all the entities along the way) and back again in the blink of an eye, all thanks to the payment processing computer networks that the card associations helped build.

Preventing & Detecting Payments Related Cybercrimes Through Technology

As touched on earlier, the card associations form the PCI Security Council, but the council’s job is limited–it only works on rules that would prevent unauthorized access to the payment processing network. The card associations, however, do a lot more than that. They each have sophisticated hardware and software that help detect and prevent cybercrime. To do so, they analyze large sets of data to detect patterns that suggest fraud, data breach, use of stolen cards, and other unusual activities.

Tokenization is another example of how the card associations use technology to prevent cybercrimes. Every card association has its own way of generating a token, but lately Visa, Mastercard, and American Express have worked together on a standard for creating tokens. They have submitted a preliminary proposal and are working with EMVCo. to finalize the standard. (Discover has not joined this standard-setting effort.)

So, in addition to the more visible PCI security rules, the card associations work on other security matters as well.

Marketing

Last, but not least, the credit card associations advertise their cards to increase consumer awareness, as well as use. As a result, consumers know the card brand names better than the issuing banks’ names.

As an example of marketing decisions that affect how a card network operates, Mastercard/Master Charge only came into being because consumers were confused by the weaker trademark Interbank card. When the association learned that the consumers didn’t see Interbank as a strong, unified brand, they changed their name to Master Charge for better uniformity. Today, the brand name Mastercard is known throughout the world.

Accepting Different Credit Card Brands Through Your Merchant Account

Years ago, some merchants only accepted Visa or Mastercard. Restaurants often only accepted American ExpressÂ because restaurants were given a lower interchange rate in exchange for taking American Express exclusively. Discover card, being the newest card, seemed to simply have had trouble with market penetration so that many merchants didn’t take the card.

This is no longer the case. Today, a merchant can accept all four major brands through most processors. Still, this is not always desired. For instance, some government agencies take only Visa or Mastercard because these brands offer an easy way to set up a convenience fee charge. If you are a merchant who wishes to take all four major credit cards, to be safe, be sure to confirm with your processor before you sign the contract.

How Do The Credit Card Networks Affect My Small Business?

By now, you should have a fairly good general idea of what credit card associations do, and how they affect your everyday business operations. The fact is that you, as a small business owner, probably have no direct contact with these entities — but what they do and what they decide directly affects you. Sometimes, these decisions force you to tweak the way you must run your business, but other decisions could benefit you or even keep you safe from violating financial services laws and regulations around the world.

At the end of the day, credit card associations are vital to how credit card payments work. We hope this article has given you a better understanding of what they do, and how they do it.

Credit card associations are not the only players in the credit card processing flow, however. If you’re curious about how other entities fit into the credit card process flow, we’ve provided links to other explanatory articles throughout, so be sure to check them out.

The post The Complete Guide To Credit Card Networks: Visa, Mastercard, American Express & Discover appeared first on Merchant Maverick.

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March 24, 2020

Stripe VS Authorize.Net: Which Is Better?

If you’ve been searching for a payment gateway, you’ve probably come across these two names: Stripe and Authorize.Net. Or heck, maybe you were just searching for a way to take credit card payments online, and these appeared near the top of your search results.

Both companies offer a powerful suite of payment services along with robust support for developers who want to integrate their services into their websites. Both companies provide excellent support for foreign eCommerce transactions.

While Stripe and Authorize.Net aren’t exactly the same type of company — Authorize.Net is not a “full-stack” payment service — it is possible to get most of the same services through either company.

Stripe VS Authorize.Net: Quick Comparison

Evaluating Stripe vs. Authorize.Net comes down to the sheer volume of features vs. flexibility.

Both Stripe and Authorize.Net provide payment gateway access, but Stripe does so as merely one part of a gigantic payment services package. Authorize.Net gives you the option of pairing its gateway service with any merchant account, potentially making it a better choice for businesses with established, stable merchant accounts. On the other hand, Stripe — which has no monthly fee — will probably be the more efficient option for newer businesses.

Features

I struggled with this one for a bit despite, at a glance, it being pretty obvious that Stripe is just a far more massive service than Authorize.Net. That begs the question of whether it’s a fair comparison. Stripe is designed to be a one-stop-shop for your payment processing needs. Authorize.Net focuses on a much smaller part of the payment processing environment. If it offered everything that Stripe does, it wouldn’t be Authorize.Net anymore. In fact, Stripe can be overkill for a lot of businesses, and if all you’re looking for is a payment gateway, it just doesn’t make sense to choose Stripe over Authorize.Net.

Authorize.Net has some niches where it excels, particularly where security is concerned, but let’s give credit where credit is due: Stripe can just plain do a lot more than Authorize.Net. From its more comprehensive support for global eCommerce to its more flexible development environment to its plethora of add-on features, it lives up to its “full-stack” claims.

Stripe Payments

Stripe is a powerful brand for international eCommerce. Stripe is available to businesses in 34 countries. The company’s reach, however, is significantly greater; you can accept payments from all over the world thanks to Stripe’s support of over 135 currencies and numerous regional payment methods.

Stripe Supported Payment Methods

Stripe breaks its support for payment methods into two categories: universal, for payment types accepted throughout the world, and local, for payment methods that are only supported in specific regions, with particular attention given to the US, European, and Chinese markets.

Stripe accepts the following universal payment types:

Alipay
Apple Pay
Google Pay
Microsoft Pay
Amex Express Checkout
Masterpass by Mastercard
Visa Checkout
WeChat Pay

Stripe supports these payment methods in their markets:

ACH
Bancontact
EPS
Giropay
iDEAL
Klarna
Multibanco
P24
SEPA Direct Debit
SOFORT

Stripe Core Features

Listing all of Stripe’s features would make this article unreadable. It’s an enormous ecosystem, with numerous optional features. Here’s a quick rundown of the main features:

Payments:Â Stripe Checkout is a prebuilt form that you can just drop into your site. But if you need something more customizable, Stripe Elements will let you design a form that suits your needs. You can build payments into your website or your mobile app.
Connect: Stripe’s Marketplace tools are some of the most robust out there, allowing you to build and manage your platform, including automated payouts to your merchants. Connect also facilitates connecting Stripe to other services (such as building native payments into eCommerce software).
Billing:Â “Billing” now encompasses all of Stripe’s subscription, invoice, and recurring billing tools. Stripe’s subscription tools have always been powerful, but with the addition of invoice capabilities and the option for metered billing, it’s safe to say that you really can’t beat what Stripe has to offer.

Additional Stripe Features

Sigma: Stripe offers an assortment of standard reporting tools in its dashboard. However, if you want advanced reports, then you’ll need Sigma. For an additional monthly fee (based on volume, see the Pricing section below for more details), you can generate custom reports based on SQL queries.
Radar:Â Stripe’s fraud monitoring tools include machine learning to identify and flag suspicious transactions. Merchants can review and override transactions they know to be legitimate or set up custom rules for fraud transactions, all with far less fuss than you’ll see with Braintree. If you’re very comfortable with fraud management, this is definitely an advantage.
Multi-Currency Displays & Conversions:Â Stripe has spent a LOT of time billing itself as the platform of choice for global businesses. It should come as no surprise then that Stripe allows merchants to display pricing in local currencies and automatically handles the currency conversion. You can connect multiple bank accounts to save money on conversion costs, too.
Account Auto-Updater:Â Keep recurring transactions from failing when customers get new cards. Stripe will automatically update card data in your vault to ensure continuity of subscriptions.
Atlas:Â Atlas allows international businesses to incorporate in the US, set up a US bank account, and get tax and legal guidance. Stripe says it has had more than a thousand startups apply in more than 120 countries, and it has added more than 100 partners to the network since the launch.
Payouts:Â ThisÂ is an automation toolset designed to help you send mass payouts to sellers, freelancers, or service providers. It’s also designed to help simplify compliance requirements with third parties and global markets.
Relay:Â Relay’s features allow merchants to link their eCommerce catalogs with your app or directly upload product information. Relay creates in-app buy buttons and forwards all the sales information to the merchants to fulfill the order.
Integrations: Stripe has more than 300 integrations with all kinds of other software and services that a business might need. The sheer number of supported integrations could be a significant advantage for some merchants. You can browse the integrations by category on Stripe’s “Works With” page.

Stripe Developer Tools

Stripe’s built a reputation on being extremely developer-friendly, and, to be fair, it’s largely earned it. Stripe’s SDK is easy to work with for novices and extremely customizable for experts. Stripe’s documentation is also second-to-none, with detailed tutorials, clone-able boilerplates, and support for mobile platforms.

Stripe supports the following server-side languages:

Go
Java
.NET
Node.JS
PHP
Python
Ruby

Authorize.Net

Authorize.Net’s business support isn’t quite as widespread as Stripe’s; it’s only available to merchants in the United States, Canada, United Kingdom, Europe, and Australia. Its currency support is also more limited. Authorize.Net supports different currencies, depending on the region in which your business is located.

US & Canada: USD, CAD
The UK & Europe: CHF, DKK, EUR, GBP, NOK, PLN, SEK, USD
Australia: AUD, NZD, USD

Authorize.Net Supported Payment Methods

Authorize.Net supports the following payments methods:

Visa
Mastercard
Discover
American Express
JCB
PayPal
Visa Checkout
Apple Pay
Chase Pay
eCheck payments

Authorize.Net Core Features

Authorize.Net’s feature set is considerably smaller than Stripe’s, but at their core, they do many of the same things.

Payment Gateway:Â If you’re working with Authorize.Net, you’re there for the payment gateway. Or even more likely, the payment services company you signed up for is using Authorize.Net as its gateway. It is, however, possible (though not necessarily advisable) to work from the other end and sign up directly with Authorize.Net, in which case the company can help set you up with a merchant account through one of its partners. Just be aware that, unlike Stripe, the merchant account isn’t in-house.
Virtual Point Of Sale, Mobile Point Of Sale & Simple Checkout: Authorize.Net offers ways to accept cards both on the web and through mobile devices. The virtual terminal also allows you to key in card information manually. Authorize.Net is integrated into a dizzying number of third-party shopping carts through Simple Checkout, which allows you to generate HTML snippets for “Buy Now” and “Donate” buttons to add to your website easily.
Billing:Â Authorize.Net allows you to process recurring subscription payments and permits you to not only customize pricing but also offer free trials and installment packages.

Authorize.Net Additional Features

Advanced Fraud Detection Suite (AFDS):Â Included for free with your account, AFDS consists of a set of thirteen filters that you can customize to your own needs to help flag and block potentially fraudulent transactions. This feature helps to prevent inventory loss due to fraud and lowers your liability for chargebacks. While Stripe’s security features are nothing to sneeze at, Authorize.Net’s have a reputation for being some of the best in the business.
eCheck.Net:Â This is an optional feature. You can addÂ echeck processingÂ to your existing merchant account or sign up for the eCheck Only Pricing Plan. Pricing is 0.75% per echeck, a much lower rate than you’ll pay for credit or debit card transactions.
Customer Information ManagerÂ (CIM):Â The CIM, one of Authorize.Net’s most powerful standard features, allows you to securely store customer information, such as billing address, shipping address, and payment method information. Because this includes your customers’ sensitive credit card information, the data is securely encrypted. As we’ve noted, however, this security comes at the expense of data portability (see Negative Reviews & Complaints).
Sync For QuickBooks: While a QuickBooks integration is fairly standard these days, it’s still nice to have and will keep your accountant happy, especially if that accountant is you.

Authorize.Net Developer Tools

Authorize.Net also has a healthy developer subculture with excellent online resources and the option to create a sandbox account in which to test out your code. It doesn’t support quite as many languages as Stripe, but where the two overlap, you’ll probably see variable preferences from developer to developer.

Authorize.Net supports the following languages:

PHP
Ruby
Java
C#
Python

Pricing

Both Stripe and Authorize.Net offer similarly priced services, although making a direct comparison isn’t easy. For purposes of this comparison, I’m only looking at the costs of features the two companies have in common. If you want a complete look at Stripe’s pricing, check out our guide.

If you take Authorize.Net up on its merchant account partnership offer, you’re looking at identical flat-rate transaction costs for both Stripe and Authorize.Net. Beyond that, you have to dive into the secondary fees. If you process a lot of subscriptions, you may incur a processing fee with Stripe. On the other hand, Stripe’s chargeback fees are $10 less. International transactions are more expensive with Authorize.Net unless you need to do a currency conversion, in which case Stripe is more expensive.

And then there’s the gorilla in the room: You can buy Authorize.Net as a humble gateway service without any of the other bells and whistles. With Stripe, if you want to use the gateway, you’re also getting the payment processing bundled up with it.

What ultimately breaks the tie in Stripe’s favor is its lack of a monthly fee. Stripe’s fees are almost entirely usage-based, making it easier to get a sense of where you’re getting value and where you’re not. By comparison, if you’re interested in Authorize.Net, it’s often cheaper to get it bundled with another service than directly from the company.

Authorize.Net Fees & Transaction Costs

Authorize.Net breaks its services into three plans:

All-In-One (includes a merchant account with one of Authorize.Net’s partners)
- Monthly Gateway Fee: $25
- Per Transaction: 2.9% + $0.30
Payment Gateway Only
- Monthly Gateway Fee: $25
- Per Transaction: $0.10, daily batch fee $0.10
Enterprise Solutions (for companies processing over $500K/year)
- Contact Authorize.Net for pricing info

International transactions cost an additional 1.5%. Chargebacks cost $25 per occurrence. Note that, should you choose the All-In-One package, you may be subject to additional fees associated with the merchant account provider you are paired with.

Stripe Payments Fees & Transaction Costs

Since Stripe has a lot of add-on features that Authorize.Net does not, we’re going to ignore those for purposes of this comparison and just compare pricing for those features that they both offer.

Card Transactions:Â 2.9% + $0.30
Subscription Fee:Â 0.4% after the first $1 million

Stripe charges $15 per chargeback incident. International transactions cost an additional 1%, with another 1% added on if currency conversion is required.

Ease Of Use

Both companies are reliant on a mix of do-it-yourself developer culture and third-party services that integrate Stripe or Authorize.Net into their product.

Starting with the first case, as we touched on above, both companies offer extensive documentation for developers who want to add payment functionality into their websites and apps through the services’ APIs. Stripe’s documentation, support, and interfaces feel just a little more extensive and modern than Authorize.Net’s, but your mileage may vary.

Some users report that Authorize.Net is a little bit faster on average when it comes to payment processing time (one to seven business days vs. two to seven business days).

On the third-party side, your ease of use will depend entirely on the method of integration you’re using, for example, a shopping cart such as WooCommerce. With most of these services, activating your payment gateway is pretty simple, just tweaking some toggles and entering security keys; the challenge with most of these is mastering the eCommerce environment more than the payment integration.

Customer Service & Support

Both Authorize.Net and Stripe offer numerous ways to resolve problems should they arise.

Authorize.Net offers:

Phone Support: This avenue of support is available 24/7, minus major holidays.
Support Center: The online resources include a knowledgebase, articles, white papers, and video tutorials.
Ticketing System:Â You can open a support case online through the integrated ticketing system.
Social Media: You can reach out to Authorize.Net on Facebook, LinkedIn, and Twitter. You can also check out video tutorials and customer testimonials on YouTube.

Stripe offers:

Phone Support: This avenue of support is available 24/7.
Live Chat: This is also available 24/7 to customers.
Knowledgebase & Documentation: Stripe’s documentation is the gold standard. Developers will have no trouble here, whether they’re searching for a term or clicking through the sidebar. The knowledgebase is a little more sparse but serviceable.
Email: Stripe offers 24/7 email support but doesn’t give an exact time frame on how quickly someone will get back to you.
Freenode IRC Chat: Stripe’s developers seem to spend their time in the #stripe channel if you need technical assistance. Unsurprisingly, most developers seem to like this aspect of support.

While Stripe offers more methods of contact, Authorize.Net seems to have a better reputation for quick, responsive, and useful customer service. Stripe’s made efforts to improve — including offering phone support — but it still has some ground to make up.

User Reviews, Complaints & Criticisms

Both Stripe and Authorize.Net have avoided any scandals grave enough to drop their BBB ratings below an A+, though both do register a fairly typical spread of complaints. They tend to garner similar scores on various review aggregators, with a few outliers here and there rating one substantially higher than the other.

Stripe High Points

Pricing:Â While it’s not the cheapest possible option, it does offer a lot of functionality for the price.
Global Utility:Â Stripe is a truly international platform, giving businesses the ability to conduct eCommerce all over the world and in different currencies.
Freedom & Control:Â Stripe’s API allows for great flexibility for developers and makes it a good fit for various integrations.

Stripe Low Points

Account Holds & Terminations:Â Like all third-party processors, Stripe ends up doing a lot of its due diligence after the fact, which means it’s easy to run afoul of its opaque quality control processes. Most user complaints about Stripe fall into this category.
Lack Of Fraud Protection: While Stripe’s security features are strong, most of the advanced ones cost extra, leaving some users more exposed to chargebacks than they’d like.
Unresponsive Customer Service:Â While Stripe’s customer service is much improved, many customers were frustrated by Stripe’s inability to resolve or contextualize sudden account holds and terminations.

Authorize.Net High Points

Recurring Billing Support: Many users were pleased with how easy this feature was to activate and use.
Flexibility:Â Between Authorize.Net’s robust API and the ability to pair the service with any merchant account, users were generally happy with the amount of freedom it offered them.
Customer Service:Â Many positive user reviews involve good experiences with Authorize.Net’s customer service.

Authorize.Net Low Points

Billing Issues:Â Most of the complaints you’ll see about Authorize.Net revolve around that pesky monthly fee. The timing of the monthly payments seems to cause confusion for a number of customers, resulting in disputes over what interval of time they were paying for.
Non-Refundable Fees: Related to the previous issue, customers found it difficult to recover fees for which they believed they were wrongly charged. Be aware that if you sign up for an account online, you will be charged the gateway fee.
Data Portability:Â Authorize.Net has a reputation for being a difficult platform to migrate from, although some of this appears to be due to issues that have been at least partially addressed.

Integrations

If you’re running your credit card through any eCommerce site, there’s a very good chance it’s passing through a Stripe or Authorize.Net gateway. The number of integrations for both services is staggering, and both can be easily plugged into most eCommerce environments with just a few lines of code. In general, you should have very little trouble getting either to play nice with the program of your choice.

Since we are splitting hairs, however, it’s worth mentioning that Stripe is just a bigger fish in the pond, possessing a higher market share and more widespread adoption. That translates to more integrations, should you need to work with something more niche and obscure. But again, both are extremely well-supported.

Which Is Best For My Payment Gateway Needs?

We’ve arrived at the moment of truth. If you’ve been following along until now, you probably already have a sense of the recommendations I’m about to make. If you’re impatient and skipped to the end, and who can blame you, here are my recommendations.

Choose Stripe Payments If…

You Need Payment Services In Addition To A Gateway:Â Stripe works best as a comprehensive, all-in-one platform offering both a payment gateway and third-party payment processing. It delivers the gateway functionality at the same per-transaction cost as Authorize.Net and without the monthly fee.
You’re Doing Business Globally:Â Authorize.Net’s support for foreign transactions is good, but it’s not anywhere near as extensive as Stripe’s. Stripe supports local payment methods in addition to the popular international brands and can handle over 135 currencies.

Choose Authorize.Net If…

You Already Have A Merchant Account You Like:Â If you’ve been taking card payments for a while and are pleased with your merchant account provider, you won’t be able to take it with you if you migrate to Stripe. On the other hand, you can simply add Authorize.Net onto your existing services.
You’re In A “High-Risk” Industry:Â Because it’s a third-party processor, Stripe isn’t keen on taking chances with industries that are flagged as high-risk. As a payment gateway, Authorize.Net has far fewer restrictions regarding the types of businesses it’s willing to partner with (just make sure your merchant account provider is also cool with your industry).

Neither Option A Good Fit For You? Try These Alternatives To Stripe & Authorize.Net

Stripe and Authorize.Net are both excellent gateway options, but they’re not the only ones. If Stripe has too much bloat and Authorize.Net feels too much like a clumsy add-on, consider one of the following options.

PayPal

If you’re looking for a Stripe alternative with brand name recognition, PayPal’s a no-brainer. PayPal covers most of the same bases as Stripe. It’s a third-party processor/gateway combo that plays nice (even better, arguably) with international markets. Like Stripe, it’s a sprawling platform with tons of optional buy-ins. Just be aware that it doesn’t support recurring billing.

Square

Square is another popular “full-stack” payment services provider. Compared to Stripe and PayPal, Square is a bit more focused on brick-and-mortar transactions, offering a wide variety of productivity-related functionality as well as POS hardware. Square supports eCommerce, but don’t expect the international support that Stripe offers.

Payline Data

It may not be a household name, but Payline Data is one of our favorite merchant account providers here at Merchant Maverick. It offers stable merchant accounts with interchange-plus pricing, not to mention its own proprietary payment gateway free of additional charge.

Comparing Authorize.Net & Stripe Payments: The Final Verdict

The battle between Stripe and Authorize.Net comes down to a big hearty buffet vs. a tasty side dish that can be served with almost any meal. Newer businesses that don’t want to add unnecessary complexity will probably prefer Stripe’s comprehensive payment services. Veteran businesses with stable merchant accounts that want to add gateway functionality may appreciate the flexibility Authorize.Net offers them.

If you’re scratching your head over a lot of the terms used throughout this post, don’t feel bad; payment processing is a very confusing industry. If you want to learn more about it, start with our complete guide to getting a merchant account. You may also want to read more about what a gateway is and how it fits into accepting payments online.

The post Stripe VS Authorize.Net: Which Is Better? appeared first on Merchant Maverick.

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