Merchant Services- Ask and Answer (1 Viewer)

[pollardsvision]

Hi @Chadstroma or anyone else familiar with the merchant services game. I'm considering a switch from Harbortouch to Square for the restaurant. I know there are drawbacks and risks with Square, but I'm considering it anyway.

Harbortouch is mostly fine, but the equipment has been a royal PITA and slows us up in busy times. They don't have a fix. I'm not dying to go another "regular" merchant services provider. I never understand the damn fees.

I've used Square in the past (old catering, BBQ vending business) on a smaller scale. I like the simplicity, but know there a million complaints about them. I'm hoping I might be safe considering they will all be small ($5-30) transactions made in a brick and mortar location. Total monthly CC sales are usually around $8000. From what I gather, most issues with Square are for high risk, high single transaction, or card not present type of stuff. Is this accurate? I assume you spend a lot time telling people why Square sucks.

 

[Chadstroma]

Hi @Chadstroma or anyone else familiar with the merchant services game. I'm considering a switch from Harbortouch to Square for the restaurant. I know there are drawbacks and risks with Square, but I'm considering it anyway.

Harbortouch is mostly fine, but the equipment has been a royal PITA and slows us up in busy times. They don't have a fix. I'm not dying to go another "regular" merchant services provider. I never understand the damn fees.

I've used Square in the past (old catering, BBQ vending business) on a smaller scale. I like the simplicity, but know there a million complaints about them. I'm hoping I might be safe considering they will all be small ($5-30) transactions made in a brick and mortar location. Total monthly CC sales are usually around $8000. From what I gather, most issues with Square are for high risk, high single transaction, or card not present type of stuff. Is this accurate? I assume you spend a lot time telling people why Square sucks.

Sorry, been busy and not around.

I would steer away from Square for anything but side businesses or low volume & low ticket transactions. Their POS equipment is POS- never came across anyone that liked it.

There are better options than Harbortouch. You might want to look into some tablet based systems. Talech is a good one and it is pretty seamless. Clover has some fans and it's strength is a ton of add on apps you can do with it but it is not as seamless.

Elavon does Talech (not all providers do) and offers a Clear and Simple plan that make the cost very easy to understand and would be very competitive to Square. Depending on the average ticket from what you told me, you may save a few bucks on one of their plans.

The hugest problem with Square is no customer service and when there is a problem I have never come across an owner who was happy with them taking care of the problem. Never. I got a lot of business from unhappy Square customers who often had the attitude of "I don't care what the cost is, save me."

I'm back on the banking side. But more than willing to help along the way.

 

[pollardsvision]

Sorry, been busy and not around.

I would steer away from Square for anything but side businesses or low volume & low ticket transactions. Their POS equipment is POS- never came across anyone that liked it.

There are better options than Harbortouch. You might want to look into some tablet based systems. Talech is a good one and it is pretty seamless. Clover has some fans and it's strength is a ton of add on apps you can do with it but it is not as seamless.

Elavon does Talech (not all providers do) and offers a Clear and Simple plan that make the cost very easy to understand and would be very competitive to Square. Depending on the average ticket from what you told me, you may save a few bucks on one of their plans.

The hugest problem with Square is no customer service and when there is a problem I have never come across an owner who was happy with them taking care of the problem. Never. I got a lot of business from unhappy Square customers who often had the attitude of "I don't care what the cost is, save me."

I'm back on the banking side. But more than willing to help along the way.

Thanks for the input. If you don't mind, what sort of businesses had problems with Square?

Harbortouch got my EQ working fine in the ordeal (only took 9 months). But the process led me to (and this is quite embarrassing) look at my Harbortouch statement for the first time. I go through every other expense with a fine tooth comb, but just haven't had time to worry about CCP expenses much. I figured "hell, it's a few hundred bucks I'm going to pay every month no matter who it's with".

Anyway, it was only then that I realized I paid 4.4% with Harbortouch last month. Business is doing very well, but roughly $125 in savings is something I have to consider. Though, I can't seem to get Harbortouch to give me the full details about exactly what my ETF would be, though I can try a little harder when I get some time. But at $125 a month in savings, the ETF probably doesn't matter.

It will come down to how much I can trust Square if we made the switch. I really do suspect that a lot of the issues others have may not apply to us. We wouldn't use a Square POS. We use the chip reader on an old Android phone. I personally own 5 different devices that can run the chip reader (and have a back-up chip reader).  3 of the devices are in the restaurant at all times. I have a miniscule number of chargebacks (best I can tell, the statement I checked had none in $8K worth of transactions). It's a bunch of $5-20 transactions.

We're a low tech, low risk business is what I'm saying. I know a lot of people have issues with Square, but my gut tells me we'd be okay. Though, I do understand the value of having people you can call when issues come up, and certainly, that's worth an extra sawbuck a month in many cases.

 

[Johnny Rock]

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.

This is such a scam. If we don’t have EMV but we have a signature from the actual customer, and they dispute it, we’re still losing our chargebacks even with perfect transaction documentation and signature. 

 

[NotSmart]

Just an observation, for the places I shop most (Costco, Kroger), the time for a chip transaction has improved a lot compared to when they first came into common use.

Costco is very fast, under 5 seconds I'd say - and Kroger isn't far behind.

Kroger was slow just 2-3 years ago, it seemed like 15 or 20 seconds back then.

Now my greatest "fear" with the chip readers is when it's done with my card and beeping for me to remove it and I don't notice it fast enough.

 

[djmich]

Just an observation, for the places I shop most (Costco, Kroger), the time for a chip transaction has improved a lot compared to when they first came into common use.

Costco is very fast, under 5 seconds I'd say - and Kroger isn't far behind.

Kroger was slow just 2-3 years ago, it seemed like 15 or 20 seconds back then.

Now my greatest "fear" with the chip readers is when it's done with my card and beeping for me to remove it and I don't notice it fast enough.

You're seeing the impact of this change at the POS, making EMV transactions quicker (transaction still takes as long, but the amount of time you need to have the card in the reader is shortened).

https://www.pymnts.com/news/emv/2016/visa-puts-the-quick-into-emv/

 

[Chadstroma]

Thanks for the input. If you don't mind, what sort of businesses had problems with Square?

Harbortouch got my EQ working fine in the ordeal (only took 9 months). But the process led me to (and this is quite embarrassing) look at my Harbortouch statement for the first time. I go through every other expense with a fine tooth comb, but just haven't had time to worry about CCP expenses much. I figured "hell, it's a few hundred bucks I'm going to pay every month no matter who it's with".

Anyway, it was only then that I realized I paid 4.4% with Harbortouch last month. Business is doing very well, but roughly $125 in savings is something I have to consider. Though, I can't seem to get Harbortouch to give me the full details about exactly what my ETF would be, though I can try a little harder when I get some time. But at $125 a month in savings, the ETF probably doesn't matter.

It will come down to how much I can trust Square if we made the switch. I really do suspect that a lot of the issues others have may not apply to us. We wouldn't use a Square POS. We use the chip reader on an old Android phone. I personally own 5 different devices that can run the chip reader (and have a back-up chip reader).  3 of the devices are in the restaurant at all times. I have a miniscule number of chargebacks (best I can tell, the statement I checked had none in $8K worth of transactions). It's a bunch of $5-20 transactions.

We're a low tech, low risk business is what I'm saying. I know a lot of people have issues with Square, but my gut tells me we'd be okay. Though, I do understand the value of having people you can call when issues come up, and certainly, that's worth an extra sawbuck a month in many cases.

I had feedback across the board from different industries. The best way I could sum up Square is that it basically works great until it doesn't and then it is pure hell. What I say Square does great in is with side businesses and possibly ultra low average ticket businesses (like $2 average) because they end up taking a loss and that cost savings is passed to the business owner but you are at risk of issues to your business.

An effective rate of 4.4% is high. I would get excited if I saw that in consultation because there is ton of room for savings to pass to you. You could do a flat rate charge and still have nice savings. Elavon has those and I believe First Data has options as well.

For what you want out of Square, I am seeing that you have other options that will get you where you want to be and still not risk some of the horror stories I have heard from Square.

I would never recommend Square outside of the two kind of businesses I mentioned previously. I just have seen too much go awry.

 

[Chadstroma]

This is such a scam. If we don’t have EMV but we have a signature from the actual customer, and they dispute it, we’re still losing our chargebacks even with perfect transaction documentation and signature. 

It is risk. And the simple fact is that Visa, MC, etc know business owners and know that they won't make changes until they have to. The US is already ridiculously behind on moving to chip compared with the rest of the world.

It doesn't matter what you do now- unless you have and use chip you are taking all the risk on yourself as a business owner. The cost of investing in new equipment is worth it to not carry that risk on your shoulders.

 

[Chadstroma]

Just an observation, for the places I shop most (Costco, Kroger), the time for a chip transaction has improved a lot compared to when they first came into common use.

Costco is very fast, under 5 seconds I'd say - and Kroger isn't far behind.

Kroger was slow just 2-3 years ago, it seemed like 15 or 20 seconds back then.

Now my greatest "fear" with the chip readers is when it's done with my card and beeping for me to remove it and I don't notice it fast enough.

Yes, lots of effort have been made to improve the speed.

 

[Chadstroma]

@pollardsvisionI met with a First Data rep today and confirmed they do have flat fee pricing. So, again, if the big draw is the flat fee that Square charges- you have options that I would be more comfortable with versus the potential hell of Square if anything ever goes sideways.

 

[Johnny Rock]

What are your thoughts on integrated TrustWave PCI Compliance, Self-Assessment Questionnaire and $100,000 Breach Protection for $25 a month per location?

That’s very expensive to me, especially since we have a Breach Insurance Policy, but the self-assessment questionnaire is a MAJOR pain and coordinating the quarterly vulnerability scans is impractical with many locations. 

Other options for retailers? Bite the bullet and use the integrated PCI plan for $25/month?

 

[Johnny Rock]

What are your thoughts on integrated TrustWave PCI Compliance, Self-Assessment Questionnaire and $100,000 Breach Protection for $25 a month per location?

That’s very expensive to me, especially since we have a Breach Insurance Policy, but the self-assessment questionnaire is a MAJOR pain and coordinating the quarterly vulnerability scans is impractical with many locations. 

Other options for retailers? Bite the bullet and use the integrated PCI plan for $25/month?

@Chadstroma

Also, thoughts on this merchant pricing for a retail chain where we are doing a new agreement based on the move to EMV?

Interchange Plus assessments, access fees and 0% plus $.05 per transaction. 

Never been excited by all the confusing and hidden fees. But who is? Tokenization fee? Thanks. 

 

[Chadstroma]

What are your thoughts on integrated TrustWave PCI Compliance, Self-Assessment Questionnaire and $100,000 Breach Protection for $25 a month per location?

That’s very expensive to me, especially since we have a Breach Insurance Policy, but the self-assessment questionnaire is a MAJOR pain and coordinating the quarterly vulnerability scans is impractical with many locations. 

Other options for retailers? Bite the bullet and use the integrated PCI plan for $25/month?

You have to do the PCI compliance annually or you will eventually be charged a monthly fee that usually starts around $30 and I have seen as high as $80. There are programs out there that because of the higher degree of security (usually through tokenization) it reduces your compliance burden that you have to do and gives you the protection. I am not familiar with the Integrated Trustwave compliance (though we used them to process our PCI compliance) but it sounds like that is it. 

If you have multiple locations, the real big question is are you on seperate TIN's for each location or are you running them through one. If separate then that is $25 each per month and if you already have insurance to cover you- then maybe it is not worth it. However, if you are on one then there should be no reason you could not do the plan and it is $25 a month covering your whole business, extra insurance and most importantly- saving you time and if you are like most businesses, the money of not being in compliance.  

 

[Chadstroma]

@Chadstroma

Also, thoughts on this merchant pricing for a retail chain where we are doing a new agreement based on the move to EMV?

Interchange Plus assessments, access fees and 0% plus $.05 per transaction. 

Never been excited by all the confusing and hidden fees. But who is? Tokenization fee? Thanks. 

If you get TRUE IC+ at 0bps and .05 per and you are not running a ton of small ticket items then you are doing pretty good. 

Here is the things I would say to think about...

1) I have seen it multiple times in the past where merchants were told it was IC Plus and then as you mentioned they play games to make it look like interchange costs but really bump it up. Not uncommon. How do you see that or not? It is damn hard. I am not doing merchant services anymore but I did it for about a year and a half and even towards the end when I was pretty good at ready competitor statements there were times I had to ask other veterans where the cost was because I knew it was there but couldnt figure it out. Generally, if you go direct through a provider like First Data or Elavon then that does not happen... but the ISO's are the wild, wild, wild west. I would avoid them. 

2) What is your average ticket? If you are running low ticket amounts you might be better off not going with the per transaction but asking for 5bps and no per. It all depends on volume and average ticket. But generally, true IC+ at 5 cents per is a damn good deal. 

3) For most businesses, it is in your interest to make sure you have the debit PIN option and encourage your customers to use it. Merchant reps dont generally push it or bring it up unless it something the merchant has or asks about because it is a huge money saver for the merchant and costs the merchant serv reps money. A monthly fee of $5 to enable is common. If you have the IC + at 5 cents then getting the debit at same would save 85% of the businesses money because of the big difference in IC cost. 

4) ISO love all the extra little fees here and there. Love them. There are things you can't avoid but then there are things that are optional. Some have real value to them. Some have none other than costing the merchant money. ISO's are notorious for that. 

 

[Wu-banger]

Been in the business tech business for a few years now .... which includes merchant services and POS systems.

The lack of knowledge by the business owners, the lack of trustworthiness of some of the ISO's , and strong arming of the Big Banks is ridiculous .

ETA - and the industry is designed to make it difficult for merchants to gain clarity.

 

[skycriesmary]

Been in the business tech business for a few years now .... which includes merchant services and POS systems.

The lack of knowledge by the business owners, the lack of trustworthiness of some of the ISO's , and strong arming of the Big Banks is ridiculous .

ETA - and the industry is designed to make it difficult for merchants to gain clarity.

All very true, I've been both a business owner, and seller of POS systems, and the lack of transparency is appalling. Rate wise, it's a race to the bottom. Providers selling you the 'relationship aspect' of it are full of it because they have no idea of how to compete when their rates are higher. It's all about that rate. 

 

[Chadstroma]

All very true, I've been both a business owner, and seller of POS systems, and the lack of transparency is appalling. Rate wise, it's a race to the bottom. Providers selling you the 'relationship aspect' of it are full of it because they have no idea of how to compete when their rates are higher. It's all about that rate. 

For a long time it was a race to the bottom... and in some cases it still is. The providers still doing that are either going to fail or rely on the old slimy tactics of confusion, lies and deception.

On the other hand there is so much technology available now to the small business owner that only a few years ago was not or was just too costly. 

Clover, Talech and even NCR (and more) which are taking advantage of the scalability of tablets. 

Poynt and Clover are pushing hardware away from what we have had for a couple of decades and delivering the same kind change as Apple did from flip to smart phones.

The best thing about Square has been to push for more clarity and simplicity within the industry. For most businesses other than side business, business that rarely takes credit card payments but wants to have it in case and very small average ticket they are for poo but overall even with them not turning a profit they have been a disruptive force for the good of the merchant.

The industry has a well earned reputation for being scummy. I have moved on to an industry full of angels and has a golden rep.... mortgage broker.

 

[sublimeone]

All of my transactions are online - credit card/ACH is taken over the phone or via web forms. My clients are small business owners so I’m guessing a high amount of rewards cards. 

We do a fairly high amount of transactions. Our clients pay us automatic monthly recurring payments averaging around $50/transaction. We also have some higher transactions ranging from $300-900/month. The smaller transaction comprise about 65% of our revenue with the larger transactions making up the balance. Credit cards account for 98% and ACH the balance.

We pay en effective rate of 2.49% with everything related to credit card/ach included. In your experience, does this seem like a good rate?

We are currently with Paysimple via USAEpay.

@Chadstroma

 

[Chadstroma]

All of my transactions are online - credit card/ACH is taken over the phone or via web forms. My clients are small business owners so I’m guessing a high amount of rewards cards. 

We do a fairly high amount of transactions. Our clients pay us automatic monthly recurring payments averaging around $50/transaction. We also have some higher transactions ranging from $300-900/month. The smaller transaction comprise about 65% of our revenue with the larger transactions making up the balance. Credit cards account for 98% and ACH the balance.

We pay en effective rate of 2.49% with everything related to credit card/ach included. In your experience, does this seem like a good rate?

We are currently with Paysimple via USAEpay.

@Chadstroma

For the activity you describe, that is not a bad effective rate at all. 

Think of it this way.... commercial cards keyed in (which is even more expensive than rewards) can be up around 2.7% + .10. Rewards would be not too far less. 

I would try to push towards the ACH which should be like 10 to 20 cents per. Maybe offer a 1% discount on recurring when they sign up fir ACH. 

But yea, you have a pretty good deal for what you are doing.

 

[skycriesmary]

For a long time it was a race to the bottom... and in some cases it still is. The providers still doing that are either going to fail or rely on the old slimy tactics of confusion, lies and deception.

On the other hand there is so much technology available now to the small business owner that only a few years ago was not or was just too costly. 

Clover, Talech and even NCR (and more) which are taking advantage of the scalability of tablets. 

Poynt and Clover are pushing hardware away from what we have had for a couple of decades and delivering the same kind change as Apple did from flip to smart phones.

The best thing about Square has been to push for more clarity and simplicity within the industry. For most businesses other than side business, business that rarely takes credit card payments but wants to have it in case and very small average ticket they are for poo but overall even with them not turning a profit they have been a disruptive force for the good of the merchant.

The industry has a well earned reputation for being scummy. I have moved on to an industry full of angels and has a golden rep.... mortgage broker.

Yeah, I agree with most of what you've sold. I was an outside territory manager for Talech for a short period of time, before they brought everything in-house again. Very solid group of people who really tried to do what they said, and make a great product. Chip readers were just coming of age though a few years ago, and we had some bumps along the way...

 

[pollardsvision]

@pollardsvisionI met with a First Data rep today and confirmed they do have flat fee pricing. So, again, if the big draw is the flat fee that Square charges- you have options that I would be more comfortable with versus the potential hell of Square if anything ever goes sideways.

My current 3-year contract is officially up in 30 days. Got very lucky that my terminal croaked yesterday. I knew the 3-years was coming soon, but hadn't had time to check on the exact day. Call to support forced me to do, and glad I did. It's one of those wonderful sorts of contracts that if you fail to cancel before it's up, they automatically renew for 2-years with a new ETF. Without the machine faltering yesterday, I'd sure have gotten sidetracked and forgotten before it was too late. 

Going to cancel (I've got to make another call so that it's in the 30-day window), and I'm sure they'll make it as annoying and painful as possible. Then go with Square while we consider other options. 

 

[Chadstroma]

My current 3-year contract is officially up in 30 days. Got very lucky that my terminal croaked yesterday. I knew the 3-years was coming soon, but hadn't had time to check on the exact day. Call to support forced me to do, and glad I did. It's one of those wonderful sorts of contracts that if you fail to cancel before it's up, they automatically renew for 2-years with a new ETF. Without the machine faltering yesterday, I'd sure have gotten sidetracked and forgotten before it was too late. 

Going to cancel (I've got to make another call so that it's in the 30-day window), and I'm sure they'll make it as annoying and painful as possible. Then go with Square while we consider other options. 

Yea, I would keep Square around as a backup if your main one goes down so it isn't bad to bridge the gap.