Managing the Costs of Payment Acceptance: A Guide for Retailers (Part 1)From Scott Cruickshank, Chief Marketing Officer Paymentech Keeping Debit and Credit Transaction Costs DownWhether your business is a single location selling to consumers or a large, multi-channel business-to-business operation, chances are your company accepts credit and debit cards for payment. Allowing customers to pay with plastic is no longer an option, it’s a requirement in the modern world. No messy change or dollar bills to fumble with, and printed receipts are infinitely more conducive to expense accounts and budgeting. Just whip out the card, make a swipe, and the transaction is over almost as quickly as it began. It’s like magic. But for businesses that accept credit and debit cards, the other requirement is the cost associated with each transaction: the fees owed to both the card associations (i.e. MasterCard and Visa) and the payment processor carrying the transaction. Depending on the type of business you own, your annual sales volume and a number of other factors, those fees can vary. But there are some ways to control the costs of payment acceptance. First and foremost, there are some basic best practices recommendations that we advise each of our merchant customers to follow. The basicsEvery transaction processed for your business is categorized. To qualify for the lowest rate, the transaction itself must meet certain guidelines that have been set by the card associations. Without going into the details of each one, here are some good rules of thumb to make sure you get the lowest possible rate: Always swipe the card, if possible (and be aware if your employees are keying in transactions manually due to lack of training or equipment failures) When keying a transaction, employ the use of address verification Settle your batch every day to get lowest rates Reconcile every day, to make sure all your transactions were transmitted to the host, and that you are in balance Reconcile again when you get your statement, to compare what you think you sold to what you were actually funded If you offer prepaid cards and/or gift cards, it’s important to reconcile these reports as well. Being out of balance can be an indication of theft or fraud Stay on top of your businessIf you are out of balance, often the problem can be traced to simple, easily rectifiable issues: your employees need a training session on using the hardware, batching out, etc., or your software needs to be tweaked slightly to accommodate your transaction needs. Nevertheless, we can’t overemphasize the importance of keeping abreast of your unique business patterns, from how transactions are entered to the amount of your average ticket, to being aware of the times of day when sales tend to spike. The simple truth is that if you stay conscious of these things, you will know when the alarm bells begin ringing when something is amiss – if an employee is improperly trained and processing incorrectly, if you have an excessive amount of transactions, or ticket volumes, at unusual times, etc. Employ reporting toolsNumerous Internet-based reporting tools are at your disposal today. They are not only powerful and comprehensive, but they can also help you avoid many costly – and unnecessary – transaction fees. For instance, Paymentech offers merchants a tool called In$tant Alerts that allows merchants to track transactions based on customizable information. Want to be notified every time an extra large transaction amount crosses the system? How about multiple consecutive card number uses (sometimes a sign of fraud)? Or a chargeback that is about to expire? Losses due to these incidents can be avoided if you are tracking them and proactively working to resolve them. Make your reporting tools work for you. Avoid outsourcing to numerous vendorsConsider all the methods of payment acceptance that your business requires. Your processor likely supports all forms of credit and debit payments, but what about gift cards? Or corporate purchasing cards? What about wireless terminals? Are you planning to add an e-commerce site? A catalog? Whatever payment acceptance needs your business plan calls for, remember to partner with the processor that can offer the most. The simple truth is that multiple vendors often translate into multiple pieces of hardware, software programs and bills. Outsourcing to numerous vendors is always more costly, and confusing, so avoid it whenever possible. About the Author Scott Cruickshank is based in the Dallas, Texas headquarters of Paymentech, the nation’s largest processor by transaction volume. Scott oversees the direct sales force, customer care and account management departments as well as the training, service quality, marketing and public relations functions. Copyright 2004 Scott Cruickshank. All rights reserved. Used with permission. Source: retailindustry.about.com.