Cynthia

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I know AVS is a huge headache for a lot of people. However, AVS is not mandatory for everyone. AVS is a system that is designed to help save people from high chargebacks. We all know there are many credit card thieves out there and we all know in one day your card could be maxed out if stolen.

What a lot of customers do not understand when it says input your address is that it mean the address where the credit cards invoice goes. So to help save you some time place that on your shopping cart in big bold letters. It will keep your customer happy because they will not input it three times till they get fed up and say never mind and save you some money. Also, you do not have to put Apartment 4 on there. It is not going to check for all of it. If you just put the address and forget the unit number you should be fine.

Here is a fun interesting fact that people do not know. Gateway providers give you an option to pass AVS or not right? That is a given. However, there is also an option in the coding to have the transaction still pass through if the AVS does not pass. That is a gateway setting not a Merchant Bank thing. Now, how is this special? A merchant bank will give you a qualified rate for passing the AVS information regardless if it is correct or not. I AM NOT SAYING TO DO THIS because this does help raise your chances of loosing money and product if you ship but I am just spilling the beans. If you want to know more send me a message.

AVS international. AVS does work for international cards. However, know that not all international banks are up to date with the AVS the US is. So if you process a foreign card you may see an error on the AVS response and that will just mean AVS is not recorded. What sucks about that is you will be hit with a higher interchange rate.

Gateways and Merchant Bank providers.

What I have come to realize is that customers need to stand up against the Merchant Banks and not look to point a finger at a gateway provider. The gateway provider is merely a passageway of your credit card data. They also help you with reporting, subscription payments, and some like TrustCommerce can provide more security then AVS. Now, most payment gateways charge the same fee’s across the board. You have:

1. Setup Fee:

2. Monthly Fee:

3. Per Transaction Fee: Now, most providers will charge you any time you touch a transaction. Such as, credit, void, authorization and capture, or just a standard sale. So, if you ship you authorize the transaction when you receive the order and capture the funds when it’s shipped. If you are with a company lets say Authorize.Net you are charged $0.10 cents per transaction. Well for one transaction with a authorization and a capture your looking at that transaction really being $0.20 cents. Now lets say the customer calls and is unhappy with that. So you issue a credit. Well thats an additional $0.10 cents. So that one transaction ended up costing you $0.30 cents. Now, this seems like chump change but if you are an account who does many transactions this can become very costly. Now, I know from experience that TrustCommerce does not charge a per transaction fee. They charge a per Authorization fee. Which means you will save money. With this fee you would only be charged for a sale or an authorization but not a credit, void, and etc. Though, on average TrustCommerce sells their fee at $0.15 per Authroization which sounds $0.05 cents higher then Authorize.net it could still cost you less. However, that is depending on what type of business you are. If you do strictly sale which is a one time transaction and you have a very low credit rate then you would probably save money with Authorize.net.

4. Storage of credit card fee: This is a fee that you are paying for security. If you are using a company for storing credit card information which is used for mainly subscription payments then you are being charged a monthly fee typically around $0.10 cents per Credit Card. Now, it does sound like a lot but, if you want to have additional security and pay more for your PCI audits then be my guest. I would say the fees for the gateway to hold this data can be cheaper.

Merchant Bank providers are crooks. They have so many fee’s and nothing on the invoice is ever clear. Anyone have Wells Fargo for your merchant service provider? I bet you look at the invoice and almost want to rip your hair out because it almost means nothing to you. Hence the knowing their lingo. So instead of learning you just pay. However, not really knowing your loosing money when you do not need to be. Below is a list of fees merchant banks typically charge.

1. Application fee:

2. Setup fee: (now wouldn’t you think the application and setup fee should go hand in hand?)

3. Monthly fee:

4. Monthly Mimimum fee: If you do not process up to a certain limit they will charge you for it. Because they say they loose money. Yet you already have a monthly fee…

5. Per Transaction fee: (now this is where it is strange. You are already being charged a transaction fee from the gateway so now why are you being charged another one from the merchant bank provider? Please know this transaction fee includes credits. Even though the credit is already for a transaction you have processed a credit is sending a new authorization and yes you get charged for it.

6. AVS fee: Most banks will charge you everytime you pass AVS for verification… I am sorry but I think this is the one of the biggest ripoffs. They are already getting you for a transaction fee so why do they need to charge you another fee? To make you think more about this is the gateway provider does not charge you for this fee. Yet, the gateway provider is the one collecting this data and sending it. If the merchant bank is being charged for it by Visa and the gang then why isn’t the Gateway being hit with the same charge?

7. Discount rates: These are the percentages that they charge you for Visa, Mastercard, Discover, American Express, JCB and etc. Now, know this that the merchant bank adds more on the percent because they keep a piece of that. More of a way to dig into your pocket. Some companies if you have non qualified transaction meaning you are not passing the necessary information to send a potected transaction they will charge you another $0.10 to $0.15 cents. This is on top of your non qualified rate which is a higher percent plus your already AVS charge and transaction fee… Also, these rates are never going to stay what they were when you singed a contract. Every year you will receive a letter stating some interchange has changed and the rates are going to go up. More then likely your contract you signed says this is normal and you acknowledged this but it was never stated.

8. Batch Fee: Some banks will actually have the nerve to charge you each time you send a batch to them. These fees can be anywhere from $10.00 to $25.00. Now if you send a batch everyday which by Card Industry you must batch at the end of business day if you have processed transactions. So if you process everyday and its a 30 day month at $10.00 thats an extra $300.00 they made off of you for a month. Thats an extra $3,600.00 in a year of your money they take.

9. ETF (early Termination Fee): Almost all banks in the industry have a contract term. Typically its for three years and they will charge you close to $300.00 for breaking that term. ALWAYS read the fine print and all sections on the agreement.

One other thing I would want to warn people about. Sales Reps at Merchant Bank Providers can be very tricky in how they send a proposal. They can make the rates look different in an effort to show savings to get you to sign a three year contract term. However, you will later find out that you were hagged and the rates actually are higher. So be very weary on what banks you go to. In addition to this there are a lot of banks out there that will have a bundled package. This means the gateway and the merchant bank have partnered with one another to get business. So, if you use Wells Fargo you will be sold Authorize.Net along with it for merchant processing. Now, what you are not aware of it this is an easy way of hiding fee’s. They can bundle prices to make them look less when in fact its more or the same as it typically would be. Also, the catch 22 in this is if you do decide to break away from this bank you will probably be forced to find a new gateway too. Which, if you are a company that stores credit card info with your gateway provider be ready to pay for that data. It may be your data and the gateway cannot keep it from you but they can charge you to get it and they can charge whatever they want for it and you really have no option but to pay. Unless of course you want to call each merchant and ask them to give you their card information again. So, if you are going to settle for a bundled package make sure you are truly happy with that provider.

The fees that are being charge are ridiculous. However, what most people do not understand is its a competitive market. There are hundreds of Merchant Banks out there and you can call and get quotes. If you see some BS charges you can say well this bank is only charging me this and unless you can match or do better I will be looking else where. More then likely the bank will do what it can to get you. If you already singed up with a provider and are under contract and are being charge to much sometimes its best to pay the ETF and get out. The savings you will get in the long run can easily make up for that fee. However, if you are close to the end of your contract term its very easy to make them give you more competitive rates. The more knowledge you as the merchant gain the better off you will be at fighting these companies and saving yourself a lot of money.

The problem is there are very few “scientists’ out there studying the subject. If you ever have any questions about this stuff feel free to ask me; If I don’t know the answer already I’ll find one for you.

Nobody is transparent about their pricing, they have obtuse lingo, none of the companies are used to marketing on the web and the point of contact is usually a salesperson that has very limited understanding of online business.

Last spring a business partner and I started a company that is similar to LendingTree, but for credit card processing. You enter a bit of information about your business and get back binding bids from credible credit card processing companies, from which you can select (or not) without any pressure or sales BS. The product is still in beta, but we think it’s pretty cool and our initial customers are happy. We are also a RoR shop.

Check it out, we would appreciate any feedback on the service.

Best is to integrate google checkout and paypal using their apis and concentrate on your core competency.

your customers will thank you for it.

Thanks.

I recently switched to using Paypal Website Payments Pro. The documentation is still almost worthless, but I feel much more confident using Paypal than the others. They’re just much more professional.

Also, another thing that took me a while to figure out at first was that you’re usually dealing with resellers, and that means you should be able to negotiate on the rates (I talked Linkpoint way down, but Authorize not so much). When we’re talking about something as important as processing payments for my company I’d rather feel like I’m paying a set price for a well-thought-out service, and that’s another thing I like about Paypal.