Give Yourself a Raise!

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When I ask merchants what their total cost is per credit card transaction, in most cases I get either a blank look or the standard I don't know but it's very low as an answer. But, if they knew the correct answer, they might be able to give themselves a raise by finding a cheaper solution.

But it is hard to get that raise. The simple truth is that small business owners are as busy as the proverbial bee, being constantly pulled from one problem to another, having to exercise the wisdom of Solomon in order to keep the ship running on course and all hands happy!

The vast majority of small business owners rarely get the opportunity to open their monthly merchant statement, it ends up in the bookkeeper "pile".

For those of you who have looked at, tried to read or even for that matter tried to understand your merchant statement, exactly what your total cost is for a Visa or MasterCard transaction may not be the easiest thing to grasp.

You will easily see your discount rate, however, you will also see things called Visa & MC ASMTS, Non Qualified Fees, Interchange Differential Fee, Brand Fee, Assessment fee, Settlement Fee, Authorization fee, Item Rate, but what are you paying, bottom line?

Do you wonder if someone is trying to keep something from you?

That as well as many other concerns regarding the Payment Card Industry (PCI) and lack of disclosure and transparency led to a voluntary Code of Conduct.

(Many associations and organizations such as the Retail Council of Canada, Canadian Chamber of Commerce, Canadian Federation of Independent Business to name a few of the heavy hitters were instrumental in getting the government to act on the many complaints regarding PCI.

The black and white of the matter is that after gathering information and having the PCI and the way it operates explained to him by leaders of the industry such as Jeff van Duynhoven, TD Merchant Services Senior Vice-President, Minister Flaherty created and released the Code of Conduct for the Credit and Debit Card Industry in Canada.)

This new code is designed to promote fair business practices and ensure that merchants and consumers understand the total costs associated with credit and debit cards.

Under the Code, merchants will be:

· Provided with clear information regarding fees and rates.

· Given advance notice of any new fees and fee increases.

· Able to cancel contracts without penalty should fees rise or new fees be introduced.

· Given new tools to promote competition, and in particular, will have the freedom to accept credit payments from a particular network without the obligation to accept debit payments and vice versa.

(For more information, please see: http://www.fin.gc.ca/n10/10-029-eng.asp)

The third bullet is golden if you're a business owner who is locked into an agreement and you think or are aware that you're rates are too high.

  • Under the new code, your acquirer is required to inform you of a rate change.
  • If you receive notice from your acquirer regarding an upcoming rate change, you can call your processor and cancel with no penalties.
  • This opt out clause lasts 90 days.

Although, this new code though voluntary, it does have teeth.

This was evident earlier this year when Moneris sent out rate change letters to thousands of merchants about upcoming changes to the fees it charges for processing credit cards.

But, the letter was very misleading at beast, talked about a rate decrease and then discussed the Interchange Differential which is for the most part incomprehensible for your average small business owner.

These changes occurred on April 1, 2011.

The CFIB argued that for many businesses, the changes could actually amount to a substantial increase in processing fees and filled a formal complaint with the Financial Consumer Agency of Canada, the voluntary code's enforcer, FCAC.

The FCAC turned the heat up on Moneris and in order to avoid the FCAC's wrath, Moneris agreed to extend the 90 day opt out period by another 90 days or until June 30, 2011.

Moneris's tactic was used again, this time by Global Payments, the CRFA's merchant program provider.

Global circulated a rate change letter towards the end of August, 2011, however, the language used is less jargon filled than Moneris' letter, Global, out of the kindness of their hearts is decreasing rates, however, they do mention something about an Interchange Downgrade Fee Merchant Table.

For anyone who is aware of the Interchange or non qualified fees for the current CRFA program and who decides to compare existing fees to this table, he will discover that the rates for the vast majority of credit card transactions will see the Interchange increase or in other words, the non qualified fees for these transactions are going up.

In typical fashion, they give it to you in one hand and take it away from the other hand!

All this to let you know that you do have options, get in touch with a reputable salesman who represents a reputable organisation and have him explain to you if he can save you any money, who knows, maybe in doing so you'll be able to increase your profit margin and give yourself a raise!

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This has been a guest post by Scott Irwin. Scott Irwin is a regional sales executive with TD Merchant Services, the only Bank-owned and operated Acquirer in Canada. Scott.irwin@td.com

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