Tag Archives: credit card transaction

Should Merchants Surcharge?

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Should Merchants Surcharge?

In many states merchants have had a decision to make. Recent developments allow merchants that accept credit cards to pass card processing charges on to their customers. So should merchants surcharge their customers?

First of all, in at least ten states there are laws that prevent merchants from assessing their customers a surcharge. In any case a debate rages among consumer protection groups; how will merchants react to this new legal ability to pass on credit card charges to their customers?

Merchants have now had almost a month to start surcharging but not many have done so. It would seem that under the current economic climate and with a do nothing Congress, that merchants both large and small realize it would be a mistake to upset their customers.

Merchants should do more than quietly not pass on these charges. They should inform their customers that they are not, and will not, pass on such charges. Consumers are much more aware than before. On the first day that merchants could pass on credit card processing charges I asked at the market if my grocer was passing on these fees. The clerk told me no and informed me that at least seventy-five percent of customers on that day had asked the same question.

Merchants are being watched very carefully as our society is very distrustful of those that have, and how they treat those that have less. Should merchants start passing on surcharges it could be expected that customers would react in a way that would not be favorable for the merchant.

Thanks to technology and widely available access to the Internet consumers now have more of a voice in business. With social media website growth where people share thoughts and ideas, the word will spread quickly about any merchant passing on such charges. Worse yet will be the response to any merchant that tries, albeit little by little, raising prices quietly to cover these charges. That is the reason merchants should declare their policy on this matter and assure customers why they are not passing on credit card surcharges. Honesty and truthfulness is always the best policy, especially for merchants that depend on customer loyalty to remain in business.

When a social issue goes viral things can get out of hand. One negative aspect of the Internet and online social interaction is that rumors often spread faster than facts. Once social networks get down on a person, subject or organization it takes time, attention and money to set the facts straight. This has happened most recently to restaurant chains. Their response to online social pressure was naive and just made the situation worse. This is another reason that any merchants that accept credit cards should publicly and obviously answer the question; should merchants surcharge?

Industry Terms: Payment Aggregation

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This is the latest installment in The Official Merchant Services Blog’s Knowledge Base effort. We want to make the payment processing industry’s terms and buzzwords clear. We want to remove any and all confusion merchants might have about how the industry works. Host Merchant Services promises: we deliver personal service and clarity. So we’re going to take some time to explain how everything works. This ongoing series is where we define industry related terms and slowly build up a knowledge base and as we get more and more of these completed, we’ll collect them in our resource archive for quick and easy access. Today’s term is Payment Aggregation.

Typically, Merchant Aggregators or Payment Aggregators are service providers through which e-commerce or mobile payments merchants can process their payment transactions. Aggregators allow merchants to accept credit card and bank transfers without having to setup a merchant account with a bank or card association. The Aggregator provides the means for facilitating payment from the consumer via credit cards, stored value accounts or bank transfer to the merchant. The merchant is then paid by the Aggregator. This practice gets controversial among the more traditional sectors of the payment processing industry because it makes it harder for networks to monitor just who generates transactions and, most importantly, the attendant risk.

With a traditional merchant account, like the ones Host Merchant Services offers, there is a noteworthy difference in practice for the merchant. The account is in the merchant’s name, giving the merchant more rights as well as more responsibilities. The traditional merchant account also holds Host Merchant Services to the merchant with added oversight on the transaction process. The security and service gives merchants more peace of mind and more value for their effort. Payment Aggregators also have discretion over when a merchant receives their funds, another drawback of the aggregation model.

Payment Gateways: How They Help Your Business

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The Official Merchant Services Blog delves into Payment Gateways today. We’re going to examine the pros that exist for businesses in using Payment Gateways to establish an online business presence and accept online payments. We also detail some of the basic questions you want to ask yourself about e-commerce, why you want an e-commerce presence for your business, and how much the two Host Merchant Services Payment Gateway options cost.

Why Do I Want To Start Collecting Online Payments In the First Place?

The easiest answer is that it opens up a new market for you and improves your cash-flow.

Online payments give you the ability to accept credit cards through a Payment Gateway itself, or through a third-party add-on, without a lot of trouble or delay. Your clients can pay you quickly with a credit card transaction and the money is in your bank fast.

This increases your cash-flow. You no longer need to wait for a physical check to show up in the mail, then spend time depositing that check in the bank, and then waiting days for the check to clear before you can access the money.

Accepting online payments also opens your business up to a wider potential customer base. Beyond just the local draw your brick and mortar business can attract, the ability to set up an effective e-commerce business lets you reach out to customers far away. Online shopping, especially as we close in on the holiday shopping season, is booming. And virtual shopping options for your website (e-commerce solutions) all hinge on having a way to process payments through your website. In short, to cash in on the online shopping potential your business has, you need a payment gateway in place to process those transactions.

Also, accepting online payments allows you the ability to charge your client’s credit card on a recurring basis (for monthly, quarterly or annual services). This process can be automated, making recurring revenue streams a reliable and predictable source of income.

What are the Costs of Using Payment Gateways?

Most Payment Gateways charge a base monthly fee as well as a “discount rate” for each sale (usually 2-4% of the sale). Monthly fees are generally charged for premium options that can include added support, personal branding for your business and other miscellaneous functions.

Host Merchant Services offers two basic Payment Gateway options: Authorize.net, and HMSExpress. Authorize.net, which is one of the three largest Payment Gateways offered, costs HMS Merchants a base fee of $10.00 a month and 5 cents per transaction. HMSExpress, the new virtual terminal solution that HMS offers, costs its merchants $10 a month and has no added fees for individual transactions.

When analyzing your options, you want to balance the costs of the services against the additional value these services bring to you and your business. One basic way to evaluate the cost of even having a payment gateway is: What is it worth to you to get paid faster for online transactions than you do for check transactions? What is it worth to your business to be able to process more transactions during the holiday season because you can attract business from all over the country?

Questions like that are what you have to consider when you decide if you want your business to transition to an online one. In our next part of the series, we’re going to get into the details of how Payment Gateways work and see what other questions you have to consider when trying to decide which Payment Gateway to use.