PayNet Merchant Services - Visa and Mastercard Credit Card Merchant Services, If You're Shopping

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Risks
Pricing

Most businesses involve the straightforward exchange of goods or services between two parties at a set price. Ours does not. Our services may continue for years and years. We have a variety of rates and fees. Many companies work together to form the "network" that processes your transactions. The whole industry is extremely complex.

For these and other reasons, our industry is prone to abuse. Unregistered agents abound. Quite common are independent sales people many times removed from the primary provider. Equipment- and software-lease rip-offs are rampant, as are the many methods of hiding rates and fees.

If the organization with which you are dealing does not prominently identify the bank or banks with which it is affiliated, beware. Mastercard/Visa regulations require it, and common sense should tell you that a company that fails to identify its bank affiliations may not have any, and is probably hiding that fact and much more.

Merchants who are attracted to the lowest "rates" without regard to all cost and other factors may ultimately pay much more - in money and aggravation -- than those who carefully examine all factors. Rates are just a part of the cost equation. Smart merchants insist on full disclosure of all account terms. They shun abusive equipment leases and root out all hidden fees.

Beyond costs are questions of customer service. Is the organization with which you are dealing responsive to your needs? Smart merchants deal with knowledgeable, responsive organizations that disclose all fees and are the primary providers of bankcard processing services.

Here is a list of possible account terms, many of which are not routinely or openly disclosed by banks and merchant services providers.

Application/Setup fees. Typically one-time charges. They range from zero to several hundred dollars. Anything over $75 to $150 is probably going to the sales representative as commission. Determine when the fee is payable, and if it is refundable if the application is declined.
Equipment/software leases. More often than not, these are outrageously abusive contracts. At their worst, they grossly inflate the cost of otherwise reasonably priced equipment and software. Common are $39- to $79-per-month, 48-month, non-cancelable contracts costing $2,400 to $4,000 over the life of the contract for equipment whose fair-market value is usually between $250 and $750. Reasonable lease terms do exist, but they are rare.
Transaction, authorization or other per-item fees. So long as these fees are disclosed, they are fair. Smart merchants will take into account, however, that a $0.20 transaction fee raises the cost of a $20 transaction by a full percentage point. An important question to ask: What constitutes a "transaction?" Many processors define a transaction as any instance in which the merchant connects, electronically, to the processors' host computer. So refunds, batch transmissions or inquiries, and authorizations all qualify as well as routine sales transactions.
Communications charges. Contrary to common belief, most terminals and software are not programmed to dial toll-free numbers. Much more common are local and so-called "950-" access numbers, which require local phone calls - and local phone charges. In PayNet's home state of Michigan, for example, Ameritech charges business customers $.085 per local phone call. That adds another four-tenths of one percent to the fee on a $20 charge, whether or not the processor is charging a per-item fee.
Batch, ACH or other per-deposit fees. Rarely itemized on schedules of fees and charges (you may find them mentioned in the fine print), these fees are merely a nuisance - nickels and dimes - to you. But in a business like ours, which is built on pennies, they add up to big bucks for processors.
"Network access" and "administrative" fees. Go figure. Put these in the "unexplained" category with whatever other fees you can't get a handle on. But don't forget to add them to the bottom line; the processors who charge them certainly don't.
Interchange surcharges. In almost all cases, a quoted discount rate assumes that transactions will meet certain qualifications. For example, so-called "qualified" retail transactions must be a) consumer cards; b) electronically authorized; c) swiped at the point of sale, with the full contents of the magnetic stripe captured and transmitted to the processing bank; d) authorized and captured on the same day, and e) transmitted soon enough so that the processing bank can submit them for settlement within two days of the transaction date. If a transaction fails to meet any of these qualifications, then the transaction clears at a higher Interchange rate. The additional fees are passed through to the merchant in the form of surcharges. The question is: Are they passed through with, or without, markup? Merchants will always pay more on transactions that don't qualify. The issue is: How much more? Some processors trim their quoted rate to the bone, then make a hefty profit on non-qualified transactions. Merchants typically prone to high levels of non-qualified transactions include retail or service businesses that manually key a significant percentage of sales, or that accept many corporate cards, or who tend to authorize charges in advance, and then capture them several days later.
Chargeback fees. This fee is assessed when a transaction must be reversed by the processing bank, typically because of a cardholder dispute. Unlike normal transactions, chargebacks (like bounced checks) take significant time and effort to handle. Chargeback fees of $25 are common and justifiable.
Monthly statement/maintenance/membership fees. When fairly assessed, these fees cover everything from the service provider's cost to issue a monthly statement and provide help desk support, to the cost of supplies or free terminal replacement.
Voice/ARU authorization fees. Occasionally, when attempting to authorize a transaction, your system may prompt you to call an authorization center to complete the transaction. When you call, a computer Audio Response Unit (ARU) system may prompt you for your merchant number and other details of the transaction. Or, you may talk to an operator. Most service providers charge anywhere from $0.50 to $2 for such authorizations.
Non-bankcard/T&E processing fees. If, like most merchants, you choose to authorize and settle Travel and Entertainment cards such as American Express, Novus, Diners Club, Carte Blanche or JCB through your bankcard service provider, you may expect the provider to charge you for doing so. Expect to pay anywhere from $0.10 to $0.50 for authorization and/or settlement of these transactions. If your system allows you to authorize T&E cards directly with their issuers, you should do so, and avoid the cost of authorizing through your bankcard processor.
Address Verification Service (AVS) fees. Card-issuing banks will verify the billing address on a credit card at the time of authorization if a merchant is capable of making the request and does so. An authorization with AVS costs no more than an authorization without it, but some service providers charge $0.05 to $0.10 extra nonetheless.