Animated Demonstration

Check out this video that ideally demonstrates how much credit card processing fees affective small businesses and consumers.

http://fightswipefees.com/cardfeesgame/main.swf

This is an interesting demonstration of the gas station/convenience store dilemna. Gas stations are in a tough position with constantly changing gas prices and stiff competition. I have consulted many gas stations that confide in me that they actually lose money on American Express transactions because the merchant fees eat away at their profit and then some. Convenience stores have very low average sales and the transaction fees (ranging from 10 to 25 cents per item) can eat away at the profit entirely. Remember, in most states merchants aren't able to require a minimum charge for customers to pay with a credit card.

Do I have much faith in the video? I think it is a great visual tool for consumers and merchants alike to realize that there is a problem in the processing world. The video seems to want to turn to the government for help regulating the interchange fees. What customers and merchants don't realize is that if this were to happen they would run into the following issues:

1. Government interference in private business matters is slow, painful, and often ends up with little or no benefit for the intended recipient. If legislation were to pass regulating interchange, there would likely be a very watered down version of the initial bill with tons of pork and earmarks to give incentive for the bill to be passed. Any changes may take up to 10 years for merchants to see effective changes. Will that really help today's merchants?

2. Government regulation implementation takes a lot of time and resources. How are we going to fund those things as a nation? We may end up seeing interchange fees go UP because the governemnt wants to tax them like they do for cigarrettes and gasoline.

3. Just because interchange is reduced, there is no guarantee that there will be a savings passed onto a customer. Just because the cost of doing business becomes reduced, merchants would likely feel entitled to that savings rather than passing it onto their customers.

What is the solution? Hire a private company to work with you rather than waiting around for the Government to solve your problems. Ideal Cost is an industry leader and helps merchants save up to 40% off of their monthly processing costs WITHOUT switching their credit card processor. Visit www.idealcost.com today to learn more.

Vermont's merchant fee legisilation

Merchants across the country have been waiting for their local and national government to step in and take change of rising credit card processing fees. Vermont has recently enacted legislation with the following provisions:

● Prohibits credit card companies from fining merchants for their pricing displays or for offering a discount to customers who use a credit card with fewer fines on the merchant;
● Allows merchants to set minimum and/or maximum transaction amounts without being fined or penalized by the credit card companies;
● Prohibits credit card companies from forcing a store owner to use their credit card at all of their store branches if they choose to use it at one;
● Prohibits credit card companies from mandating the acceptance of all of their cards if the merchant chooses to accept one of them;
● Prohibits central price setting by the major credit card companies.

This amendment will be included in S.138, An Act Relating to Credit Card Fees, currently being considered by the Senate Judiciary Committee.

Does this really help merchants? It certainly does if your average sale is $5. How many of us have an average per customer sale of $5? We sure don't! This bill is mainly targeted towards retailers with a low average sale, mainly convenience stores. The biggest concern for merchants is the consistent rising cost of merchant swipe fees, but this doesn't seem to be addressed in this legislation at all. Merchants should stop waiting for the government to bail them out and contact Ideal Cost to fix their fees. Contact Ideal Cost today at www.idealcost.com.

Debit or Debit? The Mystery of the Pinpad.

Many clients ask us how to encourage their customers to enter in their pin number when making a purchase with their debit cards. Consumers may wonder what the deal with the pinpad is and rarely ask merchants why they want the pin number. The difference between pin-based or "online" debit and "offline" debit where the debit card is run like a credit card can be huge. Usually a pinpad is recommended for merchants that have an average sale upwards of $40 because the fixed pin-debit cost becomes less expensive than the variable offline debit cost. For a merchant with sales that far exceed an average of $40, like a jeweler or transmission service shop pin-debit can be extremely valuable. Merchants can pay a fixed cost of $1.35 where they might otherwise pay $20.00 on a $750.00 sale without the pin number. The merchant also generally avoids the potential for a chargeback, or credit card dispute, from the customer because the transaction is instantaneous rather than delayed for a day or two.

The media is consistently driving customers to avoid using the pinpad because of rising debit fraud. There may be no recourse for consumers whose pin number has been stolen.

So how do both sides of a transaction, the merchant and the customer, reach a happy medium?

1. Merchants should be upfront with their customers and let them know that if it is all the same to the customer that they should enter their pin number to keep the price of the products and services down helping the merchant avoid excess fees. Merchants should also train their staff to do the same as we constantly see educated merchants and uneducated employees who cost merchants a lot of money.

2. We recommend that consumers who are uncertain of a merchant or are in an unfamiliar city should be cautious and do without entering their pin number and consumers. We recommend repeat buyers at a local small business give the merchant the benefit of the doubt and use the pinpad.


To save money on your credit card processing contact Ideal Cost at www.idealcost.com.