What’s stopping potential customers from buying from your online store? Although there likely are many factors at play, if the cost of your products and services is discouraging would-be users from purchasing from you, it may be time to come up with an outside-the-box solution.
One option? A buy-now-pay-later (BNPL) solution that gives customers the ability to spread out payments in a budget-friendly fashion. Issuing short-term loans to customers yourself, in the form of financing or installment plans, can be risky, both financially and legally. So the smart choice might be to partner with an established BNPL partner like Klarna to give customers financing options while keeping your own risk low.
What Is Klarna?
Klarna is a so-called fintech company â the name indicates the company’s origins in the tech startup world â that partners with businesses to expand consumers’ payment options. Founded in Sweeden in 2005 with the aim of making online shopping easier, Klarna currently functions as one of Europe’s largest banks. The company serves 85 million consumers and more than 130,000 merchants in 17 countries; it facilitates one million direct pay, pay after delivery, and pay by installment transactions each day.
In the United States, where it has been operating since 2015, Klarna is headquartered in Columbus, Ohio. Recently, Klarna launched a customer loyalty program, Vibe, that allows users to earn reward points they can redeem for gift cards and special offers. Although Klarna originated as a means to facilitate online shopping, the company is focused on expanding its in-store POS financing opportunities too.
Consumers who choose to use Klarna as a BNPL option are subject to a “soft credit search,” meaning the search won’t affect their credit score, although users who fail to pay off their accounts with Klarna could see a negative effect on their credit rating. Klarna’s financing decisions are almost instantaneous, and once consumers have opened a Klarna account, they can apply for payment plans by entering minimal personal information at POS.
Popular Merchants That Use Klarna
Although Klarna offers financing to consumers, it all begins with a partnership between Klarna and an individual merchant who decides to make Klarna available as a payment option.
With more than 3,000 merchants in the U.S., Klarna is gaining market share here as the company adds up to six million users each year. It’s especially popular in the apparel industry, where notable users include Abercrombie & Fitch, Adidas, Bearpaw, Clarks, and Dr. Martens, to name a very few from just the top of the alphabet. Scroll through the rest, and you’ll find big names like Givenchy, H&M, Hollister, Hugo Boss, Hurley, JanSport, and a slew of others.
While clothiers may form a large portion of Klarna’s base, many other industries are connected as well. From beauty products like Sephora and Shein to electronics vendors like Bose, and Cleer Audio and home goods purveyors like Brookstone, it almost seems easier to find an industry that isn’t represented.
How Klarna Makes Money
Consumers who use Klarna to spread out their payments over time at partner merchants essentially activate a revolving line of credit. It’s similar to using a credit card, but instead of having an open line of credit, each transaction is judged at the point of sale. Klarna almost instantly sifts through publicly available credit information after consumers enter their email and ZIP Code.
Some consumers will pay Klarna interest on their purchases, although the majority are offered as no-interest options â provided the buyer makes payments on time and pays in full within the agreed-upon time frame. On every sale, Klarna collects from the vendor a small percentage of the sale. In exchange, Klarna assumes the financial risk of offering instant credit to consumers.
And don’t worry. Even when customers take time to pay, the merchant still gets paid right away.
How Klarna Works For Businesses
Although Klarna shaves a percentage off of each sale a business makes, the company’s data shows that giving customers the BNPL option can be a smart strategy. The company claims big increases in average order size and conversion rates when vendors offer Klarna’s interest-free installment payment options.
Consumers can choose from these BNPL options:
30-Days To Pay: Shop online and try out the purchase for 30 days before making a payment. If items are returned, or if they are kept and paid in full within the payment window, consumers pay no interest.
Installments: Activate interest-free payments with four equal payments due. Consumers pay the first 25% at the time of purchase, using a credit or debit card. The remaining 75% of the purchase price will be charged automatically to that card every two weeks until the amount is paid in full.
Financing: Take a loan to purchase products and make monthly payments over a period that can range from three to 36 months. The full cost of an item and the minimum monthly payment using Klarna is displayed at checkout, where customers can choose their payment timeframe.
Offering Klarna as a payment option is simple. Sign up as a Klarna partner, then add it as a payment option at checkout, and your customers can choose what type of installment plan they want to pay for their purchases. Klarna integrates with some of the top eCommerce platforms, including:
Salesforce Commerce Cloud
You can also use Klarna’s API or SDK to integrate without any system or on a custom platform. And, if you want to offer Klarna as an option for in-person sales, you can use Verifone or Vend to make that possible. Custom solutions are available through Klarna as well. Klarna promises materials you can use in marketing initiatives to let your customers know you’re offering the service.
How Klarna Works for Customers
From the perspective of customers, Klarna is an attractive option. The 30-day payment option gives them a chance to test items out before paying for them, and consumers who are able to adhere to the repayment schedule will appreciate the financial flexibility that no-interest installment payments offer them.
What’s more, Klarna offers a Buyer Protection Policy that covers all online transactions. If a shipment goes missing or arrives damaged, Klarna assumes the role of mediator between vendor and consumer. You’ll still get paid while the details are sorted out, even if customers do not pay before the matter is resolved. Consumers’ security and data protection are guaranteed. Transactions are conducted with high levels of security, and Klarna promises never to sell or pass on confidential information to third parties without receiving express permission first.
Klarna Fees & Pricing
If Klarna sounds like an attractive option and you’re considering adding it to your online store, you may have one unanswered question, and it’s a big one: “What’s this going to cost me?”
The answer to that question depends on what installment plan customers choose. All Klarna fees include credit-card processing fees, which could normally cost you between 1.5% and 2.9% of each transaction, depending on your arrangements with your third-party gateway processor.
30 Days To Pay:Â The vendor pays a $0.30 transaction fee and a variable fee of up to 5.99%. Customers pay no interest if they pay in full within the 30-day period.
Installments: The vendor pays a $0.30 transaction fee and a variable fee of up to 5.99%. Customers make four equal payments, with the first due at time of purchase and the other three at two-week intervals. They will pay no interest as long as they stick to that payment schedule.
Financing: The vendor pays a $0.30 transaction fee and a variable fee of up to 3.29%. Customers can choose the term of their loan, and they will pay interest accordingly, with the full cost available as they decide at checkout.
Is Klarna The Right Buy Now Pay Later Solution For Your Small Business?
Klarna offers solutions to businesses of all sizes. But is what Klarna has to offer the kind of solution that your business needs? Here are some of the advantages:
Shoppers Love Payment Options
Because Klarna is an addition to your payment menu and doesn’t replace more traditional methods, it should be seen as a benefit for those who want to use it. Klarna is especially attractive to younger shoppers, who may not have extensive credit card limits or sufficient cash flow to pay in full upfront.
Order Sizes Increase
Klarna reports a 68% increase in average order value after merchants begin offering Klarna.
Secure Transactions Build Trust
Klarna offers consumers one-click transactions. Though they’ll provide their credit or debit card information to Klarna, they won’t have to enter it on every website they want to buy from. That should make them more secure about doing business with you, especially for first-time customers.
The downside is plain. If you offer Klarna as a payment option, you’ll be giving away a portion of each sale you make. The calculation you must make is whether increased order size will make up for the additional charges you will incur on transactions processed using Klarna.
If you’ve looked at the numbers and feel Klarna is a good option for you, sign up as a partner and get started!
If you’re feeling unsure, or if you’ve decided Klarna isn’t right for your business, keep looking. There are plenty of other BNPL options out there, and with a little due diligence on your part, you’re sure to find one that makes sense for your business â and for your customers.
The post Klarna for Business: Is This Buy Now Pay Later Solution Right For Your Small Business? appeared first on Merchant Maverick.
When you’re thinking of getting into eCommerce, or if it’s time to expand your online sales presence, you probably have realized that you have many choices of shopping cart platforms. Each of them has something to offer your eCommerce business, but at the same time, each seems a little … small. If that sounds like you, it may be time to take a long look at a different eCommerce solution: Shopify Plus.
In this article, we’ll help you dig into Shopify Plus, giving you the key information you need, including:
How much does it cost?
Is it right for your business?
How does it work?
How can you make the right decision on Shopify Plus?
If you’re part of a large and growing online business, looking for an eCommerce solution that can support your company’s robust growth and ever-increasing sales, keep reading to find out everything you need to know about Shopify Plus.
What Is Shopify Plus?
Shopify Plus is a fully hosted, cloud-based eCommerce platform aimed at high-volume merchants who anticipate large amounts of both traffic and sales. It’s fast — delivering unlimited bandwidth that can handle up to 3 million visitors per second and 10,978 orders per minute, with 99.99% uptime. And it’s appropriate for merchants selling direct to consumers, with products shipped or picked up in-store, as well as for those selling to wholesale customers.
With Shopify Plus, you can sell in 175 countries using 20 languages. And it promises multichannel selling that brings your products to wherever your customers want to shop — including Facebook, Snapchat, Amazon, eBay, Pinterest, GooglePlus, Instagram, and more. You can set up your site to accept payment from 100 different providers, including PayPal, Apple Pay, Amazon Pay, and Shopify Payments.
Flow lets you automate tasks, by building a library of templates and workflows to manage customers’ experiences, inventory, merchandising, and more.
Launchpad lets you pre-plan, schedule, coordinate, and execute eCommerce events.
Don’t worry that all those customization choices will slow you down, though. Shopify Plus prides itself on ease of use and fast development. Recently, new customer Lindt, the chocolate purveyor, decided to open its first-ever eCommerce store, due to customers’ changing habits in the face of the COVID-19 pandemic. Lindt’s Shopify Plus store opened in just five days.
Shopify VS Shopify Plus
Shopify is known as an easy-to-use, relatively agile platform. So is Shopify Plus. So when it comes down to Shopify VS Shopify Plus, how do you know which is the right choice for you? The two services work in essentially the same way, using the same dashboard. But there are some big differences between them. Let’s take a look:
From startups to established sellers, Shopify provides solutions for all sizes of eCommerce businesses. Shopify Plus takes aim at the very highest level. It’s an enterprise-level platform that features scalability as a primary advantage. Shopify Plus promise unlimited extensibility, integrations, and customization through Shopify’s own apps as well as partner apps.
Shopify Plus also appeals to companies doing global business with the ability to create a total of 10 stores, allowing for true global reach. And where the range of Shopify plans allows anywhere from two staff members to 15, Shopify Plus allows unlimited staff permissions.
With Shopify, you can choose from a range of popular plans priced from $29 to $299 per month. There’s also a Lite plan, priced at $9 per month which doesn’t include a web store but gives you basic options for online sales. Those plans all include transaction fees on top of the subscription price, ranging from 2% of each sale, on the Basic plan, to 0.5% of each sale on the Advanced plan. That’s in addition to fees charged by your Gateway processor. You can avoid the transaction fees by using Shopify Payments. Some users have reported difficulty in being approved for Shopify Payments participation. When you use Shopify Payments, you won’t be charged a straight transaction fee, though you’ll still be charged credit card processing fees ranging from 2.9% plus $0.30 to 2.4% plus $0.30 per transaction, depending on your plan level.
Screenshot of Shopify webpage, captured 8/20/2020
When you upgrade to Shopify Plus, it’s no surprise that your monthly fees rise accordingly. The Shopify Plus plan starts at $2,000 per month for standard setups and integrations. For those with complex needs and a high volume of business, the monthly fee will vary depending on your requirements and what level of support you need to get up and running. Your plan comes with a “launch engineer” who can connect you with developers and designers to customize your site if you are not interested in doing that on your own.
As far as transaction fees, you’ll pay none on the Shopify Plus plan, if you use Shopify Payments. If you use a third-party payment processor, you’ll pay $0.15 per transaction, which Shopify says goes to pay for the costs of additional security requirements, maintaining PCI compliance, and protecting data integrity for users on both ends of the transaction.
Any Shopify plan offers an impressive amount of features, including unlimited bandwidth and storage, staff accounts, POS, analytics, financial reports, analytics, customer support, and many more. As the top-tier plan, Shopify Plus includes all of those and then goes beyond.
For example, when you set up a Shopify store, you can choose from more than 100 themes, including 11 that are free. You can purchase one of the others for up $180. Every Shopify plan allows you to add up to 20 themes per account. When you upgrade to Shopify Plus, you are allowed up to 100 themes.
In addition, Shopify Plus offers its merchants exclusive access to these tools:
Wholesale Channel: Sell direct to businesses
Shopify Flow: Create automations
Launchpad: Schedule, coordinate and execute events such as sales, product drops, and restocks
Script Editor: Coding that lets you personalize transactions for customers
Transporter App: Import customers, products, and order records into your store
Bulk Account Inviter: Invite customers to activate their accounts after you import customer accounts from another platform or store
GiftCard: Alternate payment method
Multipass: Direct customers from your website to your Shopify Plus store with a seamless login
User: Manage staff accounts
All levels of Shopify service offer support for customers, including by phone, email, live chat, written help library, video tutorials, webinars, and a community forum. That means that when something goes wrong, or you have questions, usually you can find an answer without shelling out a lot of money for it.
Shopify Plus offers an even higher level of support and includes an Academy that features educational content tailored for your needs with online courses. You’ll even get a consultant to help you decide if you’re a good candidate for Shopify Plus, including assessing your needs and identifying opportunities for growth. A “solutions engineer” will continue working with you to ensure your store set-up and integration goes smoothly. And of course, as mentioned above, you’ll work with a “launch engineer” to help you migrate data and set up your store, including international storefronts and custom checkouts.
What Can You Sell on Shopify Plus?
With 5,300 merchants selling online through Shopify Plus, it’s already a vast yet still growing platform that specializes in five broad categories of products:
Beauty & Cosmetics
Fashion & Apparel
Food & Beverage
Among the biggest names using Shopify Plus, you’ll find a huge variety. From Unilever to Kylie, from Rollie Nation to The Cambridge Satchel Company, from Heinz to Death Wish Coffee, from Magnolia Market to International Military Antiques, there’s no one “mold” that fits all merchants that find a home with Shopify Plus. What many of them share in common is high sales volume, international reach, and a desire for an online sales platform that’s ready to grow with them.
How Does Shopify Plus Work?
Like Shopify, Shopify Plus is an all-inclusive online selling platform that lets you create and develop an online store that you can use to promote, sell, and ship your products. Shopify Plus is designed specifically for high-volume sellers. It’s a cloud-based, fully hosted SaaS (software as a service) shopping cart solution.
Shopify typically offers an impressive array of features and available add-ons. Shopify Plus matches that list and goes further with included offerings like these:
Shopify Admin: Manage all your organization’s stores from a single location.
Apps Designed For High-Growth Merchants
Customizable Checkout: Control your branding.
Advanced API: Integrate with custom apps using an application programming interface.
Merchant Success Program: A dedicated liaison will help you get the most value out of Shopify Plus.
Launch Engineer: You’ll be online faster when you have help with third-party integrations and finding development and design partners.
Unlimited Staff Accounts: Grow your business without worrying about incurring extra costs as you expand.
Expansion Stores: Add up to nine stores for international sales, physical locations, or other needs.
Shopify Plus Academy: Access self-guided training to help you grow your business.
Additional Themes: Add up to 100 themes, allowing you to test new themes, maintain seasonal variations, and more.
Wholesale Channel: Create a separate, password-protected store for wholesale customers.
The Benefits Of Shopify Plus
Without a dedicated team of experts, designing and maintaining a website is a challenge â and even with an expensive team on staff or on speed dial, it’s a labor and time-intensive proposition — especially when your business is growing and expanding. Shopify Plus takes over a lot of the burden, managing the mechanics of your eCommerce website and freeing you to market and sell your products. And like all Shopify stores, a Shopify Plus store includes secure, reliable site hosting. You won’t have to worry about your site crashing or hackers hijacking your data: Shopify Plus supports stores that can handle nearly 11,000 orders per minute and boasts 99.99% uptime.
Additionally, Shopify Plus offers a personalized level of support that could help you take your business to the next level. When you’re focused on expansion and growth, you will appreciate all the help you can get. Shopify Plus’s help features a dedicated support staff; that means you’ll have the help you need to put your eCommerce vision into action.
Shopify Plus Pros
Personalized service and support
Speed and reliability
Exclusive access to management tools
Multichannel, multi-store, and international sales
Wholesale eCommerce possibilities
The Drawbacks Of Shopify Plus
The majority of user reviews of Shopify Plus are positive. Some common complaints are the cost. Plans start at $2,000 per month, but you’ll likely receive a custom quote that’s higher, based on your needs. Users who switched from other premium platforms were generally positive about the cost of Shopify Plus.
Other users complained that common add-ons can slow site performance, although no specific apps were mentioned. Not every user expressed satisfaction with their customer service support. It may be that Shopify Plus is experiencing some growing pains of its own as more eCommerce vendors sign up for its services.
Shopify Plus Cons
High price point
Customizing is necessary but can be difficult
Can be difficult to manage in-house
Who Should Use Shopify Plus?
Shopify Plus offers a good solution for merchants who are selling â or who hope to be selling â at high volume online and especially for those selling at high volume internationally. Shopify Plus merchants generate between $1 million and $500 million or more in annual sales, and they experience an average of 126% yearly growth.
When Should You Use Shopify Instead?
With monthly fees starting at $2,000, no matter how ambitious your plans for growth, if you’re not already selling at high volume, you should not rush to sign up for Shopify Plus right now. You can opt for a lower-level Shopify plan and upgrade when you’re ready. Even the most expensive plan below plus, the Advance plan at $299 per month, would offer significant savings over the Plus plan. That’s money you can set aside until you can really benefit from the advanced features and capabilities that Shopify Plus will deliver.
How To Get Started With Shopify Plus
If Shopify Plus sounds like the right solution for your eCommerce needs, you can request contact from a member of the Shopify Plus team. You’ll have to enter some basic information, like your name, your business email, your company name, and business URL. You’ll also be asked to select the country where your operations are based as well as your annual revenue range. You can also click a button to chat now with a salesperson.
The Bottom Line
Shopify Plus is fast, it’s flexible, and it comes with a price tag that may put it beyond the reach of many smaller eCommerce merchants. For companies that need what Shopify Plus has to offer, the price may be well worth it. On the other hand, if you’re not quite at that level yet, knowing how Shopify Plus can help you improve your sales and your business practices may just motivate you to reach the next level.
The post What Is Shopify Plus? appeared first on Merchant Maverick.
If you’re doing some research into Fattmerchant pricing and fees, you’re in the right place.
While Fattmerchant is a company that offers transparent pricing, and we don’t see the typical red flags, we think a post discussing its pricing model is needed. That’s because most merchants aren’t necessarily familiar with how a subscription-based, 0% markup company works. Below you’ll find answers to some of the most common questions we’ve come across about Fattmerchant fees and costs.
If you have a question that is not covered in the post below, feel free to leave us a comment, and we’d be happy to help!
How Does Fatthmerchant Pricing Work?
Fattmerchant is a subscription and volume-based processing company. Once you understand the basics of how Fattmerchant approaches their fee structure, monthly packages, and add-ons, you’ll find the cost is predictable.
Fattmerchant does not have a percentage markup, but that doesn’t mean they don’t charge you to process.Â Keep in mind that any processor you go with incurs fees from the card brands to process payments. These interchange rates are set by each card brand and will fluctuate based on the type of business, type of card, and how you process it. Fattmerchant passes these charges on to you in addition to the transaction fee. While the card brands may fluctuate their rates and transaction fees, Fattmerchant has steady pricing depending on which plan you’re in. We’ll discuss what these are and some additional opt-in services in the next section.
If you’re new to the world of credit card processing, it’s worth taking a minute to understand how pricing may work with other companies so you can have some point of reference. For instance, some credit card processors use a somewhat confusing tiered-rate pricing structure with rates that can vary wildly and make it hard to pin down costs. Other companies, like Paypal, charge a percentage rate markup and a fixed transaction charge.
So which one is best for you? That depends. In this post, you’ll find out everything you need to know about Fattmerchant’s fees so that you can determine the answer to that question for your business.
What Are Fattmerchant’s Fees?
Fattmerchant offers two main plans: Swiped Payments & Keyed Payments. After choosing which plan works for you, you’ll then be put into a subscription plan based on your sales volume. The lower-cost plan covers you until 500K/annually.
Here is what’s included in each of Fattmerchant’s plans:
Swiped Payments Fattmerchant Screen Capture
Swiped Payments Up To 500K annually
The Swiped Payments is for in-person sales and covers the following for $99/mo:
$0.08 per transaction (in addition to the interchange rate)
0% markup on interchange
Omni Platform (this is your dashboard with access to reporting and back-end features
Level 1 PCI compliance
EMV / NFC and swiped payments
Same-day payment data
Heat map reporting
Tokenized and encrypted customer data
In-house customer support (chat, email, and phone support)
No statement fees
The Swiped Payments over 500K annually
This plan is for larger businesses and comes with everything in the basic plan plus a dedicated account success manager and priority risk monitoring for $199/month. You’ll also get a lower processing rate of $0.06 per transaction plus interchange and zero percent markup.
Screen Capture of Fattmerchant Keyed Payments Pricing
Keyed Payments up to 500K annually
The Keyed Payments plan is for businesses that primarily process card-not-present transactions like invoices and recurring payments and is $99/mo. Here’s the breakdown of the features:
$0.15Â per transaction plus interchange
No batch fees
No PCI fees
No statement fees
Securely stored payment information
Recurring bill payments
Custom payment links
Text2Pay SMS Invoices
Lifetime payment data
In-house customer service with chat, email, and phone support
Level 1 PCI compliance
Tokenized and encrypted data
Keyed Payments Over 500K Annually
This plan is built for businesses that process higher volumes, and it comes with a lower processing rate of $0.12 per transaction plus current interchange rates set by the card brands. You’ll get everything that comes in the basic plan plus a dedicated customer success manager and priority risk monitoring.
Contactless by Omni
Screen Capture of Contactless by Omni at Fattmerchant
Contactless by Omni is an optional package priced at $49/mo, in addition to your basic subscription. Any transactions processed by these means are at the keyed-in rate per the subscription plan that you’re currently subscribed to. Features include:
Virtual terminal portal
Using NFC card readers for touch-free payments in-store
Text message payments with two-way communication
Omni-channel reporting to sync data in one dashboard
A demo is available upon request
For businesses that already are on the swiped plan, adding Contactless by Omni for $49/mo to their subscription expands how they can accept payment without having to add the full price of the keyed-in package, which starts at $99/mo.
Note On Fattmerchant Higher-Volume Pricing
If your business takes in more than 5 million per year, you can request a custom plan for the Enterprise Plan.
That’s it for the main plans offered by Fattmerchant. You do have some options to add additional features to your plan. We’ll cover those and pricing in a minute, but first, let’s take a look at interchange fees.
What are Fattmerchant’s Interchange Fees?
Let’s focus on interchange fees for a moment: No matter what processor you go with, you will have a fee, regardless of what a salesperson or website says. In Fattmerchant’s case, the zero percent markup sounds appealing â and it is â but keep in mind that you’ll also pay the interchange rate, which can vary.
To review, an interchange rate is a non-negotiable fee that any bank charges for card transactions. These fees are set up by the card brands themselves, are variable, and they’re always passed on to you, the merchant, in one way or another. Fattmerchant’s subscription model passes those costs along to you, just like any processor would. How a processor passes it along can make a huge difference. Some companies pass the interchange rate along with a fixed transaction fee (like Fattmerchant), some charge a percent rate markup that lumps the interchange rates and fees within that cost, and some charge both a transaction and percent markup (e.g., PayPal, Shopify, Square).
Additional Costs For Using Fattmerchant
While Fattmerchant doesn’t list all of its options and fees on the site, we got in touch with them to find out what other features they offer. Here’s what they shared with us:
ACH Subscription: $49/mo and $0.25 per transaction
How do Fattmerchant Fees Compare To Other Processors?
As a general rule, the higher your average ticket transaction is, the more you can save with Fattmerchant’s fixed transaction rate vs. the additional percent markup offered by companies like PayPal and Square. For instance, a locally owned home goods store may get hit pretty hard with percentage markups as it takes more cash from each sale.
For a simple example to illustrate my point, imagine you sell a decorative accent for $300, and we’ll assume for this example that it also represents your average transaction price point when you account for smaller and larger-ticket purchases.
PayPal Here charges 2.7% = processing fee of $8.10
Fattmerchant charges just the interchange rate 1.5% and $0.10 (example rate) of the card brand plus Fattmerchant’s fee of $0.08 = processing fee of $4.68
If you want to consider Fattmerchant’s monthly fees to find out how much you’re really paying per transaction, take the $99 subscription fee and divide your number of transactions into it. As an example, if you had 70 transactions, you would have to consider an additional $0.71 per transaction, which still makes Fattmerchant a better deal by a large margin compared to the percent PayPal would take.
Now let’s see what happens with a cup of coffee at $5.00Â
Paypal Here charges 2.7% = processing fee of $0.14
Fattmerchant charges just the interchange rate 1.5% and $0.10 (example rate) plus Fattmerchant’s fee of $0.08 = processing fee of $0.26Â
Again, if you want to consider Fattmerchant’s monthly fees to find out how much you’re really paying per transaction, take the $99 monthly fee and divide your number of transactions into this.
As an example, If I had 1,000 transactions a month at my coffee shop, I’d need to consider an additional $0.09 per transaction to account for the monthly fees that cover the features in your package.
For the smaller ticket or micro-payments industries, PayPal would likely be the better bet (if you just looked at processing costs), but for everyone else, Fattmerchant’s structure can likely save you money.
Is Fattmerchant The Cheapest Credit Card Processor?
I don’t want to make too many promises in this section. The truth is that I cannot tell you if Fattmerchant is the cheapest choice for your business based on their fees alone. As you can see in the above section, two different businesses can yield very different results depending on the pricing structure and their individual business. Average transaction size, volume, features, as well as what you expect from a processor all factor into what makes the best processor.
In my book, if a processing company runs effectively and offers stable and consistent service, with clear pricing, good software, and doesn’t bog you down with unnecessary fees and a binding contract, it can save you both time and money â without a doubt. I recommend comparing rates with a few different companies or using the general formula above as a guide. Take a look at our full Fattmerchant review as well, because you can see how we’ve rated each category, including consumer reviews. Fattmerchant seems to consistently earn high praise on review sites like TrustPilot, which is a great sign, in my book.
If you want to check out some other companies we think have a great value for the cost (including Fattmerchant), check out These 8 Cheapest Credit Card Processing Companies Will Save Your Small Business Money.
The post The Complete Guide To Fattmerchant Fees & Pricing For Small Businesses appeared first on Merchant Maverick.
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 receivesthe 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.
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.
These days, we see delivery options everywhere. You can request on-demand delivery for your groceries, prescriptions, and take-out orders. With so many consumers turning to these options for convenience — and safety in light of the coronavirus crisis — you may be wondering: Is there space in the market for you?
Owning a delivery business is a great opportunity for many entrepreneurs. Depending on the niche you plan to serve, you can start your own business with just one vehicle and no employees. What’s more, you can quickly scale your delivery business as demand increases.
Are you considering starting your own delivery business, but you aren’t sure how to start? Keep reading for a step-by-step guide to starting a delivery business.
Why Start A Delivery Business?
One of the main reasons you should consider starting a delivery business is the steady increase in demand and market share.
According to the State of Logistics Report 2019, the market size of same-day delivery services in the US is expected to reach $7.4 billion in 2020 (up from an estimated $6.1 billion last year). What’s more, this report projects market size will increase to $8.5 billion in 2021.
The same report reveals how same-day delivery services are divided by delivery types. Fourteen percent of the market share of same-day deliveries are C2C deliveries (for example, transactions from Craigslist, eBay, and Facebook Marketplace), while 23% are B2B deliveries, and 63% are B2C deliveries.
By starting your own delivery business, you can take advantage of this demand for same-day delivery.
How Much Does A Delivery Business Cost?
Startup expenses for beginning a delivery business vary, depending on many factors. That said, you should plan for the following expenses:
Purchasing or leasing vehicle(s)
Time (your time and your employees’ or contractors’ time)
Cost of operating a physical location (if you have one)
As you plan for your business, make sure you create a budget that accounts for all the expenses listed above as well as any other relevant expenses.
How Much Does It Cost To Become An Amazon Delivery Service Partner?
Perhaps you’ve seen advertisements online for Amazon’s Delivery Service Partner (DSP) program for entrepreneurs. These advertisements state that with Amazon, you can start your own delivery business for as little as $10,000 capital. These advertisements make running a delivery business look easy. All your business comes through Amazon, so there’s no need to find customers, and with very little startup cost, you can begin managing a team of 100 employees who drive a fleet of 10-40 vans.
Amazon makes this program look very desirable, stating that its DSP program is highly competitive and that you’ll profit $75K-$300K per year. However, I advise you to do your research before applying to become a DSP. I’ve seen numerous reviews that break down the costs of operating this type of business, revealing that according to Amazon’s numbers, you’re only likely to profit $7,500 per van each year. This is a very slim profit margin, and to earn this profit, you have to take on a lot of liability.
For more information on the potential downsides of becoming an Amazon DSP, check out this video from Franchise City.
Types Of Delivery Services
There are many possible niches your business can fill. We recommend that you consider partnering with local businesses that frequently need to deliver their products to consumers or other businesses. Here are a few niches you should consider:
Yard supplies delivery
Dry cleaning delivery
Starting A Delivery Service: The Step-By-Step Guide
Once you have an idea of the type of delivery business you want to start, it’s time to take action! Here are the first nine steps you should take to start a delivery service.
Step 1: Make A Business Plan For Your Delivery Business
The first step in starting any business is to make a business plan. We recommend starting with a one-page business plan, in which you list the following information about your business:
The problem your business solves
For more information on writing a business plan, try our article: The ‘How-To’ For One Page Business Plans. You’ll even find a downloadable form on this page that you can use to create your business plan.
Step 2: Look For Funding
Every startup requires capital, and with a delivery business, you have to invest in a lot of equipment up front. If you don’t currently have the funds you need to start your business, we suggest looking into financing options. Here are a few options you might consider:
Business lines of credit
Business credit cards
Merchant cash advances
For more information on each of these financing options, read our article, 8 Ways To Finance Your Small Business.
Step 3: Find Business Software
Finding the right software for your business can streamline your day-to-day operations, and it can even reduce the number of people you have to hire to get your business started. Here are a few types of software that you should consider adding to your business, along with a few software recommendations:
GPS Software: Use this software to locate delivery pickup and drop-off locations. You can use a device such as Garmin for your GPS navigation, or you can use a free app on your mobile device (such as Google Maps).
Mileage Tracking Software: Mileage tracking software helps you bill clients accurately, and it can help you claim business expenses during tax season. One of our preferred accounting software, QuickBooks Self-Employed, has an app that you can use for tracking mileage. Or you can use an app such as MileIQ.
Accounting Software: Every business needs good accounting software. We likeÂ QuickBooks Online and Xero.
CRM Software: CRM (customer relationship management) software helps you track customers’ contact info and interactions. A couple of good options are Salesforce and Zoho CRM.
Website Builder Software: Build a website for your delivery business using an affordable and easy-to-use website builder. We recommendÂ Squarespace and Wix to most business owners.
Time Tracking Software: If you hire employees or independent contractors to drive your vehicles, you’ll need a tool to track their time. Some time tracking software packages even include GPS tracking features. Check out our article, Must-Have Time Tracking Software Businesses Should Know About, for a few recommendations.
Step 4: Source Equipment For Your Delivery Business
One of the big startup costs you should anticipate is the cost of equipment. Depending on the types of products you decide to deliver, you’ll need to choose equipment that can help deliver shipments safely and efficiently. Here are a few examples of equipment you may need:
Vehicles (sprinter vans, pickup trucks, freight trucks, trailers, or refrigerated trucks, depending on your shipments)
Cell phones or radios for all team members
Tablets and card readers for processing payments and signing off on orders
As you create a list of the types of equipment you need, you should also consider how you’ll pay for that equipment. Will you purchase it outright or use equipment financing? Make sure you calculate the interest rates you pay for equipment financing into your business’s budget.
Step 5: Register Your Business & Get Insurance
To legally register your business, you first have to decide on a business structure. The business structure you choose depends on the amount of liability you are comfortable with and if you plan on hiring employees. Business structures include:
Limited Liability Partnership
Limited Liability Limited Partnership
Limited Liability Company (LLC)
If you are just starting up, and you plan on working independently for a while, a sole proprietorship is a good option. However, if you plan on hiring employees, you should look into setting up an LLC. For more information on the pros and cons of each business structure, try our complete guide to business structures.
The next step is to register your business name. As you choose a name for your business, consider using keywords, such as “delivery,” “same-day delivery,” or even “floral delivery.” That will help your business appear in Google searches. During this step, you should also look into available domain names. Choosing your business name and domain name at the same time can help you create consistent branding and make your site easier to find online.
Your final steps are to register your business with the IRS, register for business licenses and permits, and register with your state’s revenue office. For more information on these steps, see our article, How To Register Your Business: The Complete Guide.
As you set up the legal part of your business, make sure you sign up for any necessary insurance. These insurance plans protect you and your business, and they also protect your employees. Here are some types of insurance you should purchase:
General Liability Insurance: This insurance package covers delivery services and delivered products. This insurance protects companies against lawsuits related to delivery services. Learn more about small business liability insurance.
Commercial Auto Insurance: Commercial auto insurance covers damage or theft done to a fleet of vehicles, an owner’s vehicle used commercially, or an independent contractor’s vehicle. Also, commercial auto insurance covers bodily injury and medical expenses. If your business operates trucks, you may also need commercial truck insurance. Read What Is Commercial Auto Insurance & Do You Need It? for more information.
Garage Liability Insurance: If you plan on storing vehicles on-site, you’ll also need garage liability insurance.
Commercial Property Insurance: To protect your employees’ property (things they store in their vehicle while they are at work), you can also sign up for commercial property insurance.
Workers’ Compensation Insurance: Workers’ compensation insurance is required in most states. This insurance covers medical costs and lost wages for work-related injuries.
Step 6: Create Your Online Presence & Marketing Plan
The next step you should take in starting your business is to create a solid online presence and marketing plan.
Your business’s online presence is the overall impact of your brand’s website, review pages, and social media interactions. Essentially, your online presence is made up of everything your brand has done online. Work to create a strong online presence from the very beginning by building a beautiful and easy-to-navigate website and registering your business with business directories, such as Google My Business and Yelp. For more information on developing an online presence, read How To Build An Online Presence For Your Business In 9 Simple Steps.
Finding & Keeping Customers
As you build up your business’s online presence, you should also consider the ways you will draw customers to your business. Make a plan for acquiring and retaining clients. Will you purchase online advertisements or claim an ad spot on the radio? Will you place ads on billboards or in the local newspaper? Will you partner with local businesses and rely on them for new customers?
No matter what you decide, make sure you have a plan for your marketing approach. And if your attempt doesn’t pan out, adjust your marketing strategy, and try again.
Once you have found customers, do your best to draw them back to your service by giving them a great experience and having quality marketing strategies. We recommend using CRM software to keep track of your former customers and reach out to them again in the future. Learn more about how to retain repeat customers with our article, 11 Ways Businesses Should Be Using CRM Software.
Step 7: Determine Your Rates For Delivery
Your next step is to decide on how much you’ll charge for deliveries. There are a few different ways you can price your services.
Many delivery companies charge on a per-mile basis. Each mile driven costs a set amount. In another model, you can charge a base rate and then add per-mile costs on top of that base rate.
As you set your prices, you should also determine the boundaries in which you will deliver orders. You can choose to not make any deliveries outside of these boundaries or charge a distance surcharge.
Make sure that your prices account for your company’s total overhead (including fuel, vehicle maintenance, time, and other costs) to protect your profit margin.
Step 8: Set Up Payment Processing
As more businesses transition to accepting digital payments, you should also consider what your payment solutions will be. If you choose to accept digital payments (which we recommend), you need to set up a payment processor.
The payment methods that are best for your business depend on who your delivery business serves. If you deliver directly to consumers (and consumers pay upon delivery), you’ll need a good method for accepting credit card payments. A mobile device with a card reader would work well in this instance. A couple of good payment processors that allow you to accept payments this way are Square and Payment Depot Mobile.
If you serve other businesses, however, you should consider alternative payment methods. Businesses that sell B2B can often qualify for lower credit card processing rates, so it might be worth pursuing a processor that caters specifically to B2B companies. On the other hand, ACH (automated clearing house) payments are cheaper overall, and they are a good alternative to credit card payments. For additional guidelines on accepting payments as a B2B business, check out The Complete Guide To B2B Payment Processing: Credit Cards, ACH, Software & More.
Step 9: Manage Expenses For Your Delivery Service
As you operate your business, you should have a plan for how you’ll track and manage expenses.
Use good accounting software to track tax-deductible expenses, such as fuel, repairs, and new equipment. Take a look at our article about tax write-offs for more information.
In addition, you should make a plan for how employees will purchase fuel on the road. Will you give drivers access to the company credit card, or will you reimburse your employees for their gas purchases? Make plans for these expenses before you begin your first delivery.
Is Starting A Delivery Business Right For You?
Does starting your own delivery business still seem right for you? Are you prepared to handle the challenges of planning delivery routes, and are you ready to face the competition of the ever-popular delivery apps?
If you’ve answered yes, we’re here to support you as you begin! Sign up for our newsletter to get up-to-date information on owning and operating a small business. To read more about starting your own business, take a look at these articles:
The ‘How-To’ For One Page Business Plans
8 Ways To Finance Your Small Business
How To Register Your Business: The Complete Guide
Types Of Business Structures: The Complete Guide
How To Build An Online Presence For Your Business In 9 Simple Steps
The Complete Guide To B2B Payment Processing: Credit Cards, ACH, Software & More
The post How To Start A Delivery Business In 9 Easy, Hassle-Free Steps appeared first on Merchant Maverick.
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.
Related: Why Point Of Sale Data Is The Secret To Understanding Your Business And Making More Sales
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.
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 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.
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.
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 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.
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