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Merchant Services- Ask and Answer (1 Viewer)

Chadstroma

Chadstroma

Footballguy
My new gig is in payment solutions. Primarily in credit card processing but other payment options for businesses as well. 

Any business owners or anyone else have questions.... ask here and I will answer. 

 
I recently worked as a regional sales manager for a company that produced an iPad-based POS. I found it comical that most merchant services reps I networked with were attempting to tote the company line of "We're in the relationship building business..." (Heartland, Global Payments, etc). But you ask them what 'Relationship building' meant to them, and it got murky. 

C'mon, just recognize that it's a race to the bottom, and that all merchants really care about is rate, and that your customer service doesn't suck ###.

 
skycriesmary said:
I recently worked as a regional sales manager for a company that produced an iPad-based POS. I found it comical that most merchant services reps I networked with were attempting to tote the company line of "We're in the relationship building business..." (Heartland, Global Payments, etc). But you ask them what 'Relationship building' meant to them, and it got murky. 

C'mon, just recognize that it's a race to the bottom, and that all merchants really care about is rate, and that your customer service doesn't suck ###.
Click to expand...
I was a business owner and this is exactly right. 

 
skycriesmary said:
I recently worked as a regional sales manager for a company that produced an iPad-based POS. I found it comical that most merchant services reps I networked with were attempting to tote the company line of "We're in the relationship building business..." (Heartland, Global Payments, etc). But you ask them what 'Relationship building' meant to them, and it got murky. 

C'mon, just recognize that it's a race to the bottom, and that all merchants really care about is rate, and that your customer service doesn't suck ###.
Click to expand...
I think "relationship building" in corporate America is often just another buzzword that is used so frequently because others use it and it sounds good when most have no idea what it means just like "synergy" or "mission critical". They get parroted without any real understanding or putting them into practice. 

I would say for most merchant service providers like Heartland and First Data etc. There really is no relationship building. Their idea of relationship building is often building rapport leading up to a sale. Very often there is very little interest in any relationship after the sale unless perhaps they perceive that customer as a center of influence. 

One thing that I like about my new position is that there really is a lot of relationship building in my job and that is a strength of mine to leverage. The reason for this is that I work for a bank that has a merchant services provider and I work with the bank branches, business bankers and other partners where they provide me leads and I also provide them leads as well. So, it is "mission critical" (sorry, couldn't help myself) for me to build relationships. First, with my branches, bankers and partners so they continue to trust me to send their customers to me and secondly to the customers themselves for the same reason but also because if you do build those relationships the right way then those customers also become unpaid (and actually paid in some cases) salespeople for you. Just like any relationship- that means there is a premium on communication and listening is crucial. But in the business world, relationships only take you so far and you have to show that you can provide value in some way or else you are just collecting friends. 

I would then say that yes, all merchants almost always only care about cutting costs. However, there is value to be brought that goes far beyond that at times. A better POS that provides inventory control and business analysis that helps a customer grow their business is a great example of that. It is much like the general consumer who never knew they needed a smart phone until Apple showed them what they could do with one and now everyone needs one. Sometimes merchants don't know the possibilities or how they could improve how they are doing things and we have solutions for pain points that they would have otherwise never known about. Why? Well, because they are not experts in payment solutions and POS systems etc- they are experts at doing their business. So, if you approach it with that mindset you can open their mindset to other possibilities and yes, save them money on the processing as well in most cases. 

 
Soootch said:
does anyone still have one of those carbon paper credit card machine things?
Click to expand...
Yes. As part of equipment we typically send a template for the knuckle busters for them to use as a backup. However, now these days there are so many options to have a backup that if you invest in them you would never really need that. 

 
cstu said:
I was a business owner and this is exactly right. 
Click to expand...
As I touched on before, without bringing anything else to table, yes, this is what the focus is. However, if I can show you as a business owner how I can save you time or help you retain/acquire more customers, provide analytics that help you make better business decisions and so forth- would you not be interested? A whole lot of sales people in the merchant services industry only care about getting that sale and don't care much about how they do it- so if a business customer just cares about cutting cost on processing then that is what they tend to talk about. However, someone bringing value to the table can consult with you as a business owner and listen to the pain points of your business and areas of opportunity and look for solutions in that. And yes, save you money in processing is part of that process but I think it is a disservice to a business owner to not give him other options in helping build their business. 

 
I'm a business owner (chronicalled elsewhere on this site) but outside the US.

Why should a (US) business owner engage with you and not with e.g. Paypal?

 
cstu said:
What is the difference from the processor's point of view of the merchant levels?
Click to expand...
Great question. In my world it doesn't really matter. It is more about underwriting and compliance which I am only starting to touch the surface of. I will see if I can get more info next week.

 
avoiding injuries said:
Can you briefly educate me on Apple Pay and where you see it evolving?
Click to expand...
Apple Pay essentially replaces the plastic cards in your wallet and allows you to pay with your iphone or watch. If a retailer supports it then after setting it up on your phone you put your thumb on the phone and then put the phone over the reader. It is pretty quick and eliminates the bulkiness of your wallet with a bunch of cards in it. 

 Apple is not alone as more and more mobile payments and digital wallets are coming out. Samsung Pay, Chase Pay, etc. Wal-Mart just launched it's own Wal-Mart Pay (which I believe is only usable in Wal-Mart stores). It clearly is the future. The biggest obstacles currently are concerns over security and not all retail taking it (yet) and even if they do signage is often an issue. However, I think that as people get use to it then more and more will migrate to it and even more so as people see how much faster it is than EMV cards and you don't have to carry cards as well. 

At this point, I think it is obvious that it will replace cards. As younger people replace the current population (almost half of millennials are said to have used a mobile payment app at least once) and as I said before- as people get more comfortable with it while more people have smart phones as well. Beyond that, I am not sure at this point. It would be interesting to see if a big player like Apple or Paypal or another company that likes to disrupt industries like Amazon- came in to try to replace interchange and offer lower costs and use this as the gateway to that. 

On a side note, I have heard rumblings about Mastercard being a possible acquirer of Paypal. Not sure what the benefit to Mastercard would be in that though. 

 
Chadstroma said:
Apple Pay essentially replaces the plastic cards in your wallet and allows you to pay with your iphone or watch. If a retailer supports it then after setting it up on your phone you put your thumb on the phone and then put the phone over the reader. It is pretty quick and eliminates the bulkiness of your wallet with a bunch of cards in it. 

 Apple is not alone as more and more mobile payments and digital wallets are coming out. Samsung Pay, Chase Pay, etc. Wal-Mart just launched it's own Wal-Mart Pay (which I believe is only usable in Wal-Mart stores). It clearly is the future. The biggest obstacles currently are concerns over security and not all retail taking it (yet) and even if they do signage is often an issue. However, I think that as people get use to it then more and more will migrate to it and even more so as people see how much faster it is than EMV cards and you don't have to carry cards as well. 

At this point, I think it is obvious that it will replace cards. As younger people replace the current population (almost half of millennials are said to have used a mobile payment app at least once) and as I said before- as people get more comfortable with it while more people have smart phones as well. Beyond that, I am not sure at this point. It would be interesting to see if a big player like Apple or Paypal or another company that likes to disrupt industries like Amazon- came in to try to replace interchange and offer lower costs and use this as the gateway to that. 

On a side note, I have heard rumblings about Mastercard being a possible acquirer of Paypal. Not sure what the benefit to Mastercard would be in that though. 
Click to expand...
Thnks. I have Apple Pay and wallet setup, just haven't used them yet to make purchases. 

 
Chadstroma said:
Apple Pay essentially replaces the plastic cards in your wallet and allows you to pay with your iphone or watch. If a retailer supports it then after setting it up on your phone you put your thumb on the phone and then put the phone over the reader. It is pretty quick and eliminates the bulkiness of your wallet with a bunch of cards in it. 

 Apple is not alone as more and more mobile payments and digital wallets are coming out. Samsung Pay, Chase Pay, etc. Wal-Mart just launched it's own Wal-Mart Pay (which I believe is only usable in Wal-Mart stores). It clearly is the future. The biggest obstacles currently are concerns over security and not all retail taking it (yet) and even if they do signage is often an issue. However, I think that as people get use to it then more and more will migrate to it and even more so as people see how much faster it is than EMV cards and you don't have to carry cards as well. 

At this point, I think it is obvious that it will replace cards. As younger people replace the current population (almost half of millennials are said to have used a mobile payment app at least once) and as I said before- as people get more comfortable with it while more people have smart phones as well. Beyond that, I am not sure at this point. It would be interesting to see if a big player like Apple or Paypal or another company that likes to disrupt industries like Amazon- came in to try to replace interchange and offer lower costs and use this as the gateway to that. 

On a side note, I have heard rumblings about Mastercard being a possible acquirer of Paypal. Not sure what the benefit to Mastercard would be in that though. 
Click to expand...
What's in this for me as a consumer who earns rewards from paying for everything by credit card (preferably Amex)? 

 
djmich said:
Should most small businesses now accept PIN debit since PIN PADS have been deployed with EMV
Click to expand...
The cost for debit transactions for the merchant is a lot less than credit so they should absolutely accept debit transactions if at all possible. It is why a number of years back, big retailers changed how you got to process a credit. The default would be a debit PIN transaction and you would have to hit 'cancel' or some other counter intuitive course to run the transaction as a credit if you had a debit card- merchants were trying to steer customers to use debit PIN to cut costs. While at the same time banks and acquirers certainly prefer credit transactions because it is more income to them.

 
msommer said:
I'm a business owner (chronicalled elsewhere on this site) but outside the US.

Why should a (US) business owner engage with you and not with e.g. Paypal?
Click to expand...
It depends on the specifics of the business as there may be other value found in offering other products/services but in the most basic review the Paypal Payments Standard and Express at 2.9% + .30 per transaction is real easy to beat in pricing.

My company is one of the largest end to end providers backed by one of the largest and stable banks in the country and both highly respected for integrity.

My specifically? I do what I can for my customers to bring them the most value I can and continue to act as a resource to them among our many other resources for a point of customer service. (most sales people in this industry... not so much or like Square where there is no contact at all)

 
Chadstroma said:
It depends on the specifics of the business as there may be other value found in offering other products/services but in the most basic review the Paypal Payments Standard and Express at 2.9% + .30 per transaction is real easy to beat in pricing.

My company is one of the largest end to end providers backed by one of the largest and stable banks in the country and both highly respected for integrity.

My specifically? I do what I can for my customers to bring them the most value I can and continue to act as a resource to them among our many other resources for a point of customer service. (most sales people in this industry... not so much or like Square where there is no contact at all)
Click to expand...
So its all about relationship building? :pickle:  

 
tone1oc said:
Do you have an API?  
What is your rate structure?
Click to expand...
Yes, we do. We have several rate structures. Which one is best depends largely on volume, average ticket, cards taken, how they are taken etc. There is no one size fits all. If you have a business and are interested in options- feel free to PM and we can discuss details to see what may make sense.

 
Chadstroma said:
Great question. In my world it doesn't really matter. It is more about underwriting and compliance which I am only starting to touch the surface of. I will see if I can get more info next week.
Click to expand...
Can you explain the merchants responsibility for fraud.  

 
sbonomo said:
Can you explain the merchants responsibility for fraud.  
Click to expand...
My memory may be dusty, but this is how I understand it (feel free to interject Chad)

Merchants have a duty to protect cardholder data by adhering to strict PCI standards yearly - if they are not PCI compliant (etiher in the card reader becoming obsolete or data encryption/storage practices not being up to par), responsibility shifts to Merchant. If they are PCI compliant and a data breach event occurs, then blame can be shifted to processor. This is amplified even more so with the new EMV (microchip) requirements that merchants were to abide to by October 2015.

 
cstu said:
What's in this for me as a consumer who earns rewards from paying for everything by credit card (preferably Amex)? 
Click to expand...
As for rewards, you are actually using your cards. You upload them into the mobile ap (assuming your card allows for this as I don't believe all cards do) and then you can simply use the mobile pay instead of getting the card out. It is very secure and is much faster than the EMV. So, you still get your rewards but can thin out your wallet (in theory or eventually but right now merchants taking it is spotty so having your card is still going to be the route to go for now) and checkout faster while not losing out on anything like security of the EMV.

 
msommer said:
When you lose or break your phone you'd be even more ####ed than if you lose it today
Click to expand...
Life feels like it is over when I think I lost my phone.... what is one more thing to add to that fear? :unsure:

Right now, you really don't have a choice of just using it to pay for everything as the coverage of merchants who can take it is far from being universal. In the future though- you will have to decide as to the best way to do it. For me, I think I foresee where I keep my primary card in my wallet and perhaps my debit card and lock up the rest where as now I have a couple more cards on top of that.

 
Jackstraw said:
What's it like to effectively be a lamprey on the american economy?  Good grift tho. 
Click to expand...
It is a nice gig.

I have a friend who learned the business from First Data and then started his own company.

He's maybe 2 years from retiring with a few million.

 
Jackstraw said:
What's it like to effectively be a lamprey on the american economy?  Good grift tho. 
Click to expand...
It is really an ignorant statement to make. Just like anything in the economy value is offered and added in exchange for a cost. If there was no value then no one would pay the cost and there would be no business.

This is true even more so now than ever before in this industry as technology is taking it from a simple matter of "here is a machine and here are our rates so you can take credit cards from customers" to integrating services that actually help business run smarter, faster, leaner and meaner. I get excited when I get a merchant to break out of the thinking of "how much money can you save me" and allows me to help them reinvest marketing dollars to better grow their business.

But regardless, no one forces anyone to take credit cards as payments. It is your choice as a merchant. Some merchants choose not to- in fact, many do, because they think the cost is too much. More times than not- they are actually costing themselves business from customers. I am a perfect example of this (well before I got into this industry) as a customer, I pay exclusively via credit card. At our old place there was a Mexican joint under 5 minutes walking distance from our house which we really enjoyed. Good authentic Mexican food. But for the majority of the time that we lived there, they did not take credit cards. So, we would go there maybe once every few months. Mostly when my wife wanted to and had cash on her. One day, I walk in and see they are taking cards. We went from once every three months or so to going there once every couple of weeks. I don't go to places that don't take cards or even if I really like it then I rarely go or at least not nearly as much as I would if they do.

 
Did you see a lot of VAU volume from Amex bins following the June 20 switchover of all those costco "sponsored" (if thats the right word) Amex cards to Visa?

 
sbonomo said:
Can you explain the merchants responsibility for fraud.  
Click to expand...
In regards to EMV chip it is real easy. If a merchant does not have EMV capable equipment and someone pays with a chip card and later disputes all that they do is check that the card is a chip card and what the merchants equipment is, then does a charge back to the merchant. Merchant has 100% liability with this. 

If a merchant upgrades their equipment then it is harder to answer. Essentially it comes down to a case by case basis. But if the merchant responds to the process, they generally have a good level of protection.

 
sbonomo said:
Can you explain the merchants responsibility for fraud.  
Click to expand...
In regards to EMV chip it is real easy. If a merchant does not have EMV capable equipment and someone pays with a chip card and later disputes all that they do is check that the card is a chip card and what the merchants equipment is, then does a charge back to the merchant. Merchant has 100% liability with this. 

If a merchant upgrades their equipment then it is harder to answer. Essentially it comes down to a case by case basis. But if the merchant responds to the process, they generally have a good level of protection.

 
Chadstroma said:
In regards to EMV chip it is real easy. If a merchant does not have EMV capable equipment and someone pays with a chip card and later disputes all that they do is check that the card is a chip card and what the merchants equipment is, then does a charge back to the merchant. Merchant has 100% liability with this. 

If a merchant upgrades their equipment then it is harder to answer. Essentially it comes down to a case by case basis. But if the merchant responds to the process, they generally have a good level of protection.
Click to expand...

 
The Hank said:
My memory may be dusty, but this is how I understand it (feel free to interject Chad)

Merchants have a duty to protect cardholder data by adhering to strict PCI standards yearly - if they are not PCI compliant (etiher in the card reader becoming obsolete or data encryption/storage practices not being up to par), responsibility shifts to Merchant. If they are PCI compliant and a data breach event occurs, then blame can be shifted to processor. This is amplified even more so with the new EMV (microchip) requirements that merchants were to abide to by October 2015.
Click to expand...
Even if PCI complaint there are costs associated if a merchant is breached. Which is the reason to get tokenization. What's nice with my company is that we give breach coverage with the tokenization.

 
Been doing this for a bit now and I am still amazed by people. 

It is a complicated business and a lot of shady people and a whole lot of business owners who think they know more than they do. 

 
I have been doing this for just about a year now. Customers over paying the most are usually one of the following three situations: 

1) Immigrant business owners where English comfort level is lower and they find someone from their own background that does merchant services. They then get taken advantage of. 

2) Customers who have been with the same processor for a very long time. It is a very common practice to increase costs over time even more so with the Interchange Plus pricing which is the most common pricing stucture. 

3) A propriety POS. The often will set up for the first year or so at a fairly competitive rate but increase greatly over time with the bet that with the time/money invested in the POS system that many business owners will stick with them even with the higher margins because otherwise they have to move forward from the sunk costs of the POS system. 

 
Chadstroma said:
I have been doing this for just about a year now. Customers over paying the most are usually one of the following three situations: 

1) Immigrant business owners where English comfort level is lower and they find someone from their own background that does merchant services. They then get taken advantage of.  
Click to expand...
I have been talking to the business owner of a little Asian grocery. She has a heavy accent and her understanding of merchant services was next to nothing. She kept shrugging off my offer to look at her statements because 1) All she knows is that she is in a contract and 2) She didn't even know how to get her statements and when she called they didn't help her.

I nudged her to call them again and they knew she was being talked to by someone else so they sent her an email which she showed me the last time I stopped by to pick up a Duck for my MIL and get some Mogu Mogu for me. They email says she is currently paying 84 bps over interchange. They were offering to cut it to 40 bps after her contract is up. I have no idea what other charges she is paying (most likely there are much more) but even if she had no other charges- this is ridiculous in terms of cost!

It really is sad how some people can apparently feel fine with taking advantage of other people.

 
avoiding injuries said:
Thnks. I have Apple Pay and wallet setup, just haven't used them yet to make purchases. 
Click to expand...
It's awesome... especially so in the wake of these damn chip cards that suddenly quadrupled the time it takes to swipe a card and get a transaction approved. 

#### chipcards. I use Applepay anywhere I can. 

 
[icon] said:
It's awesome... especially so in the wake of these damn chip cards that suddenly quadrupled the time it takes to swipe a card and get a transaction approved. 

#### chipcards. I use Applepay anywhere I can. 
Click to expand...
Yea, I got in a debate with an industry veteran about Apple Pay, Android Pay etc. His position was that it would take 10 years to change people's behavior and adopt these. Mine was- not unless the speed of the chip payments is made faster because people in line are going to see people using their phones, tapping and signing and going and then walk up and take 15 seconds (which seems like 1 minutes) staring at the device with your card in it to say- man, I need to try that. Speed and ease of use will get people to switch. They need to see it though. And they eventually will standing in line. 

 
I've used Apple Pay probably a dozen times since I made that post last July. Only when I didn't have my wallet on me and just had my phone. If more places accepted it, I'd use it more because I would be able to leave my wallet in the car. Right now, I can't risk it. 

 
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