Credit Card Processing:

Transcription

1 Credit Card Processing: What Your Nonprofit Needs to Know Presenter: Erik Verryden, Founder/CEO National Processing Solutions (NPS) Copyright DBA: National Processing Solutions; Verrywest Enterprises LLC

2 The Different Parties Involved, Every Time. Card Brands / Associations Card Issuers Acquirer / Processor (Merchant Service Provider) + + Visa MasterCard Discover Amex CITI Capital One Chase Copyright National Processing Solutions Verrywest Enterprises LLC

3 The responsibilities of each party.

4 Association Responsibilities Provides usage of worldwide logo Allows consumer to use the card with merchants Considered an Interchange Fee

5 Issuer s Responsibilities Issues line of credit to the consumer Assumes great risk that they may never be paid back by the consumer Uses marketing to sign new consumers and convince them to spend on the card Provides customer service * Also considered an Interchange Fee

6 Processor Responsibilities Fund the business in 1 to 2 days Responsible for marketing to new clients Offers support & service to the business Assumes Risk: Potential Fraudulent Charges Disputed Charges from the Consumer

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8 Did you know? A not for profit organization is one of the lowest risk entities as a donation is rarely disputed and not many thieves that steal a card make a donation with it

9 Now that we ve gone over each parties responsibilities Let s go over how much those fees are for them to provide their services.

10 But First: Two Definitions What is a Basis Point? A basis point is a unit of measure for interest rates and percentages. One basis point is equivalent to 0.01% (1/100 of a percent) or.0001 in decimal form =.50% (fifty basis points).010 = 1.00% (one hundred basis points) Swiped VS. Keyed Swiped means the card is present and it is physically swiped or inserted into the terminal Keyed means the card is literally typed into either a terminal or the customer types it in online

11 Association Fees $ Typically 0.13% % basis points, multiplied by their own card processing volumes. (IE:.0015 x $10,000 in Visa volume = $15.00).

12 Association Fees + + = Consumer Shops or Donates Card Swiped If Data not Captured Fully Higher Rates For You

13 Issuer Fees Credit vs Debit

14 Issuer Fees - Credit Fees Credit Standard Swiped Visa Standard Keyed In Visa / Rewards Card Business Cards & Transactions Per Transaction 1.50% % 1.65% % 2.10%- 3.25% $0.10

15 Issuer Fees Debit Fees Debit *A debit card is considered Regulated if it comes from a bank with $10Billion in assets or higher. Regulated Swiped/ Keyed Card Non-Regulated Swiped Card Non-Regulated Keyed Card Per Regulated Transaction Per Non-Regulated Transaction 0.05% 0.80% 1.65% % $0.21 $0.10

16 Issuer Fees Credit vs Debit Woo!

17 Charitable Rates 1.35% plus $0.05 cents for a Visa credit transaction taken online through your donate button

18 Now onto the Processor

19 Processor Fees $ We know the Processor needs to bill on top of Interchange to make revenue but HOW MUCH is the question. Unregulated Industry Quoted vs. Actual Billings Average markup to cover associated costs 0.10% %

20 Now what you need to be aware of is what type of pricing model your PROCESSOR is billing you on. Tiered Pricing or Interchange plus Pricing

21 The Two Basic Pricing Structures Your Processor has to Choose From Tiered Pricing Simplistic but possibly more expensive Interchange Plus Pricing Transparent & typically lower cost

22 Tiered Pricing *Business does not pay interchange fees directly Business Pays the Processor Tiered Rates Processor Pays Interchange on Behalf of the Business

23 This allows the processor to classify interchange fees under its own rate structure by assigning individual interchange categories. Qualified Mid-Qualified Non-Qualified

24 Typical Tiered Structure Interchange Category Interchange Fee Processor s Tiered Rates Processing Markup Debit Regulated 0.05% + $0.21 Qualified: 1.64% + $0.04 Debit Unregulated 0.80% + $ % + $ % + $0.05 Credit Standard Swiped 1.65% + $ % + $0.15 Credit Charity Online 1.35% + $0.05 Mid Qualified: 2.25% + $0.25 Credit Business Keyed w/o address 2.10% + $0.10 Non Qualified: 3.00% + $ % + $ % + $0.15

25 Square & PayPal s Structure Category Interchange Fee Processor s Tiered Rates Processing Markup PayPal Debit 0.05% + $ % + $ % + $0.04 PayPal Credit 2.00% + $ % + $ % + $0.15 PayPal Charity 1.35% + $ % + $ % + $0.25 Square Debit 0.05% + $ % 2.70% Square Credit 1.65% + $ % 1.10% Square Charity 1.35% + $ % 1.40%

26 Interchange Plus Pricing *Term used to describe a merchant account pricing model where a fixed markup is applied directly to interchange fees published by Visa and MasterCard. Markup isn't dependent on interchange qualification. Keeps the processors markup the same regardless of: the type of card you accept, or how you process it. There are no qualified, mid-qualified or non-qualified rates with interchange plus. The processor earns a fixed percentage regardless of the underlying interchange.

27 Interchange Plus Pricing How WE Structure Category Interchange Fee Your Total Rate Markup Debit Swiped 0.05% + $ % + $ % + $0.10 Credit Swiped 1.65% + $ % + $ % + $0.10 Charity Swiped 1.35% + $ % + $ % + $0.10 Debit Keyed 0.05% + $ % + $ % + $0.10 Credit Keyed 2.00% + $ % + $ % + $0.10 Charity Keyed 1.35% + $ % + $ % + $0.10

28 The Two Basic Pricing Structures Your Processor has to Choose From Woo! Tiered Pricing Simplistic but possibly more expensive Interchange Plus Pricing Transparent & typically lower cost

29 ? Read your statement. But what should you look for?

30 If You re on a Tiered Structure, You ll see these key words... Qualified Mid Qualified Non Qualified One flat rate One rate for Swiped One rate for Keyed

31 If You re Interchange Plus Pricing, You ll see the following. Each Card Type s Actual Name Corporate Cards Rewards Cards Regulated Debit cards Additional line items with each rate associated

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33 Full Control Bill & Report Whatever they Want Undisclosed Extra Fees Usually Hidden as Interchange

34 Interchange Fees Increase Twice a Year

35 Interchange increases are usually small and help handle new risks. The Processors get the first chance to decide what THEY want to do with the new rates. Do they. Pass the costs directly on to the client with no additional markup Absorb these costs directly and not pass them through to the client Markup these costs and tell the client they are just passing along their costs directly to the client

36 How much are the Interchange Increases? Just a few pennies per specific card brand (ie. Visa) Or minimal amount of basis points between.01%-.02% on specific card brands and types *Processor legally has to give you a 30 day written notice

37 Hidden in the fine print some processors will pad the rate increases with their own markups. Typical Markups: 0.05% % on ALL cards $0.05 cents on ALL sales

38 What s the best thing to do? Read your statement.

39 Other Fees to Look Out For Annual fees higher than $100 Semi Annual fees higher than $50 Quarterly fees higher than $25 PCI fees higher than $5/per month Anything reading miscellaneous monthly fee Any type of compliance or non compliance fee

40 What s Non-Compliance? Non compliance charges can mean a couple of things: You as the business are really non compliant in how you are storing card information and may be susceptible to more fines You are compliant but have not taken the annual questionnaire or completed the quarterly scan on your systems You have completed one of either in number 2 but your Processor just continues to bill you and make profit

41 How to Stay Compliant Never store card info on paper or a computer Secure your online shopping cart with privacy policies Include a Captcha on your site to stop robots Never card information or ask a client to send this info via

42 Annual Compliance Survey If you have completed this you should NOT be billed a Non compliance fee from your Processor. Non compliance fees typically are $19.95-$24.95 / mo

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44 We Give. You Grow. NPS Gives turns a necessary expense to even accept a donation, into a new flow of monthly revenue for your nonprofit. NPS will Give 20% of the revenue earned from your processing right back to your organization. It s consistent, flexible, and most of all SIMPLE funding back to your nonprofit! Copyright DBA: National Processing Solutions; Verrywest Enterprises LLC

45 Erik Verryden, Founder/CEO National Processing Solutions (NPS) Copyright DBA: National Processing Solutions; Verrywest Enterprises LLC