#16: Choosing a Credit Card Processor

Discussion in 'ODwire.org TV & Radio' started by AdminWolf, Jan 10, 2013.

  1. AdminWolf

    AdminWolf Site Administrator & Tech Lead
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    Episode 16: Choosing a Credit Card Processor

    Every practice needs to pick a processor in order to run credit cards.

    But how do you go about choosing the right one?

    Should you just go with the ones promising low rates?
    Is service important too?
    And what about ancillary services, such as check verification, cash advance, or gift cards?
    Should you just go with your local bank?


    In this ODwire.org Radio show, Adam and Paul sit down with Matthew Focht, President of Tru Processing.

    Tru is a consulting firm that helps small businesses choose the processor that's the best match for their needs.

    Matthew reviews the most important issues when choosing processors and helps you figure out some of the
    "tricks" that processors like to use to boost their profits.

    If you run credit cards in your office, this is a show you won't want to miss.


    Loading the player ...




    Thanks to ODwire.org Supporting Members for making this radio show possible.
     
  2. AdminWolf

    AdminWolf Site Administrator & Tech Lead
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    Follow-up comments here!

    Thanks to Matthew for a fun hour! And I want to thank Pioneer Pest for clearing the studio of all remaining rodents. :)

    Please post any follow-up questions for Matthew here.

    cheers
    adam
     
  3. Stephen G. Lanier

    Stephen G. Lanier ODwire.org Supporting Member

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    Nice Job Guys

    Very informative. I have been considering a switch to a new credit card processor and this interview was very timely and insightful. Many Thanks.
     
  4. Scott Heerssen

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    credit card processing / PCI / equipment

    Hey Guys, here is what's going on lately.
    I keep getting messaged and questioned about this and it seems to be a common trend so I wanted to share.


    A lot of ODwire members and business owners have come to me asking for verification on certain claims made by credit card processors regarding PCI compliance and equipment. A bunch of companies out there are choosing to no longer work with certain terminals, software, etc., and that these are no longer compliant. Ironically these same processing tools have actually been provided by the processor making these choices. Is it a revenue generating coincidence? :)


    They will typically then provide a few solutions to you:


    1) buy something new from them
    2) lease something new from them


    So here is my two cents:


    Whether or not you are running into this just know you can have a very simple PCI program no money out of pocket, that can even save you money. You don't have to spend money on equipment. I would look for equipment that is iP enabled. It speeds up transaction times. Don't forget there are a multitude of cost-effective, painless solutions available.
     
  5. Scott Heerssen

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    Saving Money

    I just received another private message about IP enabled terminals and software and wanted to elaborate.


    IP enabled terminals and payment processing software are definitely worth considering as they allow you the opportunity to eliminate a phone line and save some dough. They are also faster as stated previously than the traditional phone line connection setup. You should not pay more than $500 on payment processing equipment as most cost around $350 and include a PIN pad, if you are purchasing.


    As purchasing typically yields a limited 1 year manufacturers warranty, and leasing typically yields a long term non-cancellable contract, we have found that offering a loaner equipment program delivers the best of both worlds (full warranty through life of the account / no contract).

    If you have any questions at all or are looking to purchase, lease, or obtain loaner equipment or software, or if you simply want to save some money shoot me over a private message.
     
  6. Scott Heerssen

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    Check Processing

    Check processing can actually be done through IP as well. We are independent and have been able to work with various different check companies. Some push for phone line connection, some push for IP.


    We set our clients up with whatever works best for them. As you can imagine, eliminating a phone line and using your PC and internet to process the checks is a popular choice not to mention faster and cost effective.

    We have agreements in place with different check companies. Because of our size and referring potential they practically bend over backwards trying to give us the best deals to offer you guys. Some even provide our clients loaner equipment with no purchase, charge, or lease required. Check equipment can perform various duties such as check conversion, guarantee, and can connect IP or Dial up.

    There are also ways to use checks as a financing option. For example, what if your patient wants a new set of glasses or contacts and doesn't have enough cash in the bank or room on the credit card? You can use checks to solve this too.
     
  7. #7 Jan 17, 2013
    Last edited by a moderator: Jan 17, 2013
    Stewart Gooderman

    Stewart Gooderman ODwire.org Supporting Member

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    I use square.com

    I've been through two credit card processors and then moved to square.com.

    It was the best thing I ever did.

    The teaser rates are a farce. That rate is only for the most basic of Visa/MasterCard cards. Most people are using reward cards which carry a much higher discount rate and/or corporate cards which carry even a higher discount rate. And you don't know what your rate actually will be until you get your statement.

    Then you get an entire array for ancillary charges: monthly fees, access fees, unsecured card fees, key in fees, taxes, etc. etc., etc. which literally double the monthly cost.

    square.com has only two rates, one for a swiped card, one for a key-in, no matter what the card is. You know immediately what you will get for that charge, and that amount is deposited into your checking account, usually the next day. There is no monthly bill. It is my understanding that if you typically do high dollar amounts of charges per month, you can apply for a rate drop on the amounts over a certain threshold.

    I did a side by side on a couple of months and either came out even or realized savings using square.com.

    The only special equipment you need is an iPhone or an iPad.

    And patients LOVE it. You can send the charge to their email address so they don't have to worry about losing the charge slip.

    Editor's note: My life experience is that when a deal is too good there has to be a reason. I know less than nothing about this subject but look forward to some expert opinion from the folks at Tru with their analysis. Maybe you really hit on a good deal. Let's see.
     
  8. Matthew Focht

    Matthew Focht Member

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    Dr. Gooderman makes a fantastic point. He speaks of the main issue in the credit card business today of how many doctors are given a teaser rate, are often times quoted huge savings, then end up with lots of little charges.

    This is exactly why I take a lot of time to cover the ONLY rate you need to worry about in my radio interview with Paul and Adam Farkas: Episode 16: Choosing a Credit Card Processor. When you divide your fees by your volume you end up with your overall effective rate, which is ultimately everything that you are paying. This is essentially the only rate that's really important.

    Square is an excellent choice if you are small or just don't know where to look. If savings and security are an issue, and you process over $1,000 a month we can help to put you in a much better position. Square still pays all those different rates for different types of cards, and there are over 400 of them! They just bundle them together, add a good %, and charge you 2 rates. When looking at your overall rates, Square could actually save a lot of OD's decent money because most OD's are not in a great position. These are the same OD's that could save HUGE money by allowing us to place them with a processor who doesn't mark up as much as Square.

    If any OD is truly interested in a flat rate, we can do that too. We can even charge 1 rate, instead of 2 like Square, and provide you a fancy swiper that is actually encrypted for your security.

    If you like simplicity you can have that. If you prefer lowest overall cost you can have that too. If you want a terminal, a swiper for your computer, or want to run transactions with your iPhone or iPad, we can do that as well. Basically, we want to provide you with what is best for your practice and we have just about every tool to be able to do that with.

    Whether you're using Square, your bank, a small company or large, I want to ask you to give TRU a shot. We guarantee you savings but I think you'll be more impressed with our service. Hopefully we will hear from you soon.

    Matthew
     
  9. Matthew Focht

    Matthew Focht Member

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    a response to Dr. Dayyani

    As the owner of TRU and a big believer in what we are trying to do, I am greatly concerned any time I hear of someone who is unhappy with us in any way. I have personally reached out to Dr. Dayyani in an attempt to resolve this. He has made many inaccurate claims and I want to avoid a situation that is harmful to us and potentially very embarrassing and even shameful for this doctor.

    We make mistakes and we greatly appreciate every OD that has given us an opportunity to correct our mistakes. In this case I don't believe a mistake was made on our part but there is clearly a misunderstanding and I am prepared to do my best to make Dr. Dayyani happy. I'll surely update this post with the resolution that we reach.
     
  10. AdminWolf

    AdminWolf Site Administrator & Tech Lead
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    This is my major issue with Square -- the mathematics don't make sense to me. People claim they get a lower rate from them, but I fail to see how that is possible particularly for larger merchants.

    Square has to pay the same fees as any other processor to the credit card companies (ie, every processor pays similar fees regardless of who they are.)

    Square then states they will provide any merchant with CC processing abilities at a flat rate -- meaning that they aren't stratifying customers by risk or volume and offering differential pricing. Everyone gets the same thing, whether you are a six-figure professional practice or a guy selling fireworks and knock-off rolexes out of the back of a van.

    The 'fireworks-and-watch' chargeback risk is higher than the ODs office, yet they both are paying the same rate. Which means that the risk premium has to be spread over all of Square's clients, large and small, shady and legit. Great deal for the guy selling M80s, I'm not so sure for someone selling Crizal in a professional office....

    Maybe Square's operating costs are so low that they can get away with this 'flat rate for everyone' model & still offer better rates, I have no idea. Though I do know their 'service' -- even for emergency requests -- is via e-mail only, similar to PayPal. So it is great when things are working, but when they go south....
     
  11. Scott Heerssen

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    iPad Mini

    Hey guys!

    I just was asked if the iPad Mini offer that we are doing is real.

    The answer is YES!

    We are doing a limited time offer. The first 100 members to sign up with TRU will receive an iPad Mini.

    Private message me to get the ball rolling!
     
  12. Stewart Gooderman

    Stewart Gooderman ODwire.org Supporting Member

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    squares model

    Square was developed by one of the developers of Twitter. He wanted to find a way to allow any merchant to be able to process credit cards. This included artists, merchants who travel to county fairs, etc.

    The application for the iPhone and iPad are slightly different and are geared for different merchant needs. The iPhone app lets you charge cards in the wild, while the iPad app is geared for box stores with fixed prices for items being sold.

    As you have noted, Square is not a bank. They contract with a bank in order to process card transactions. The bank takes a cut of this and Square pockets the rest. The amount that Square gets per transaction is small but they make up for it in volume, and so far, they are doing very well, so much so, that the major banks are noticing and are developing similar programs to recover the business they are losing. And there's no reason to think that Square has not established special rates with the bank(s) it uses to process cards. Look, you can call American Express and haggle with the rates and they often will accommodate you.

    And as I said, if you do very large dollar amounts of credit card processing, Square will cost you more than traditional credit card processors. However, it is my understanding that they have a program that significantly lowers the rate once you hit a certain level. I never hit that level so I never did more research on it.

    Since they are a web-based company, you communicate with them via the web. I have on a few occasions and they responded very fast, and had the answer right away. I've never had one single problem with the system since I began using it just over a year ago. Not one single problem. All you are using is your iPhone/iPad and a tiny card reader (which they supply for free) which attaches to the headphone jack. And you can go to their website and see the breakdown of charges, reprint receipts, etc.

    Patients like getting their receipts by email or text message, and if you use an iPad, you can buy a printer that works through your network that prints receipts. And these receipts can show the breakdown in charges, as well as the total amount of charge.

    Now regarding the sponsor of this rant, I cannot say anything good or bad because I have not used their service. However, I did change my processor prior to square based on Vision West's recommendation: MISTAKE, MISTAKE, MISTAKE. I couldn't even download a digital copy of my monthly bill without paying a fee to access their web site, and they nickel and dime'd me on every single request. They didn't even have an 800-number and they kept me on hold for at least 10 minutes each time, instituting charges for programs that they automatically instituted and you had to call them each time to opt out.

    Give me Square any day, any time. I love it!

    DrG


     
  13. Jeff Guthrie

    Jeff Guthrie Well-Known Member

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    I've been using square also for about a month, beats my old processor hands down.
     
  14. Scott Heerssen

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    Square

    I agree with Dr. Gooderman!


    There are a lot of nickel and dimer's out there for sure!! And square is great for some business owners.


    As a consultant for this industry I definitely recommend square from time to time if the situation calls for it. I think anything you can use with an iPhone or iPad is cool, and I love the simplicity behind square. The advertising is very aesthetically pleasing as well.


    Often, I am asked at what point would I recommend a real merchant account vs. square?


    I agree with Adam about the mathematics and he makes a fantastic point. The M80 salesman will be doing just fine with square. My concern is for the Optometrist doing any volume above approx. $1,000.


    Anything above that will make a noticeable impact on your pocketbook at 2.75% for swiped cards and 3.5% + $.15 a transaction for keyed, and at that point forward I can't say that I would recommend it as a cost effective solution.


    As a business owner I think the real questions are: "Am I doing decent volume? Is saving money important? Do I want the best method to process cards for my practice?" If you answered yes to these questions then I TRU-ly feel that we are the best solution for OD's. I'm happy to have a conversation with you. It's free and I won't bite. :)

     
  15. Matthew Focht

    Matthew Focht Member

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    Square is sexy!

    Yes I said it and I'm proud to say it: Square is sexy and I love them! A year ago no OD wanted to talk about credit card processing but now its awesome to see OD's getting engaged in what is traditionally a boring, misleading business. And my friends and family finally have some idea of what I do. Before, when discussing credit card processing, their eyes would glaze over. Now, thanks to the founder of Twitter, credit card processing can be cool, sexy, straight forward, and easy.

    Here's some facts every OD should know about Square:
    1. Square is probably cheaper than who you are with and YES there is a good chance you should look at changing processors. However, in most cases, Square is NOT your best bet. You should be able to save .5%, or $50 for every $10,000, or even a full 1% or more, and get an encrypted card reader that you can attach to an iPad, iPhone, or your computer.
    2. Square's average client processes $400 a month. Their target market is NOT OD's so be careful not to be swooped up by all the recommendations from your gardener and babysitter.
    3. Square is NOT able to drive down their costs because of volume discounts. Dr. Gooderman brings up an excellent point about American Express. AmEx can lower their rate at will because they receive the lion's share of the transaction. When it comes to Visa and Mastercard, their cards are mostly distributed by banks. If you pick up your Visa card now there will most likely be a bank's name on it. This bank is who receives most of the revenue you are charged and every bank issuing cards will most likely never agree to lower the rates for one business. Wal-Mart and Home Depot, our great nation's biggest retailers, even have to pay these rates and don't get a discount from these card issuing banks or from Visa and Mastercard.
    4. Square's overhead is NOT low. Most companies have steered clear of tiny merchants because they tend to cost more on average to acquire, and the attrition rate is atrocious. Square has DEEP pockets and HUGE financial backing.
    5. Square's margins are HUGE. 2.75% is just the base rate. If you key in a card your rate is bumped to 3.5% + $.15. If those little free swipers don't read that worn card then you just paid a HUGE penalty for it.
    6. Security is an issue. Square has gotten immense scrutiny for most of their readers not being encrypted. And, as Adam Farkas mentions, OD's are penalized with high rates because they are being lumped in the guys selling firecrackers and yes, even more questionable businesses. Square absorbs huge losses and simply levels them out across their merchant base. They could probably drop their rates by at least 0.5% for OD's because of the small amount of fraud coming from this particular industry. But why would they do that? Its working just how they have it set up.

    Despite all of this Square is still sexy! Just not for most OD's. You can still get a sleek user interface, a safe encrypted swiper on your mobile device, AND enjoy the guaranteed lowest overall costs. Where can you find all of this? Great question! With TRU of course.

    Heck we will even loan you an IP-based touchscreen terminal for no money out of pocket if you prefer to process cards that way. But we will charge you $895 if you switch and try to take our terminal with you. ;-)

    If you want a FREE analysis of your processing we will be happy to do that for you. Square may be perfect for you and we will be happy to point you in that direction if that's the case.

    Please don't hesitate to let us know if we can do anything for you and we want to wish you continued success for 2013!
     
  16. James D. Williams O.D.

    James D. Williams O.D. Well-Known Member

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    Square charges 2.75% per swipe and 3.5% per manually entered transaction. It seems you could easily beat these rates with just about any processor...
     
  17. #17 Jan 19, 2013
    Last edited: Jan 19, 2013
    Randall Bernstein

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    Credit Card Rediculousness

    I have battled with the credit card people for years. The two main things they consider is your volume and average ticket size.

    Aprrox 60% of my patients pay with credit cards. I just got a notice from a benefits provider that they will be paying my claims via credit card too! Jeez - I am not only getting less money through my contract, but now i get less because of the discount rate from my credit card processor!!!!! Maybe I should ask for some airline miles!

    Anyway, I own my own terminal (great deals through ebay btw). I usually find myself switching about every 3-4 years either because I can find a better deal or less hassles. After sifting through the ten page statements from PNC, I got an offer from a single discount payer - Singular Payments. I was able to get a flate rate below 2% guaranteed for 1 year without a contract. Amex is a bit higher. I got the first two statements so far and it is 1 page long!! It show my total sales with ONE discount fee applied to the total.

    If you are doing any kind of volume, it is in your best interests (besides your pocketbook's) to check these things out as any prudent business owner would.
     
  18. Paul Farkas

    Paul Farkas Administrator

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    Resolving a problem before going public...

    Criticizing a company publicly on ODwire.org is a powerful consumer weapon. Our policy once this occurs is to get both sides of the story. I have to share a Private Message I sent to Dr Dayyani that might have given him second thoughts. I wrote...

    "You have made some serious public charges against TRU Processing. Becertain of your facts. If Tru has many different names you should makethem public. Charges on ODwire.org have to be backed up with evidence.

    Your statements can hurt Tru's reputation and cost them business. Youhave to prove them or it can lead to a very costly law suit fordamages. I do not wish ODwire.org to be pulled into this disagreementbetween you and Tru. You should have tried to settle this without goingpublic.

    The damage is done. Now it's up to you to back up your statements withproof or publicly state you misspoke and apologize. To protect yourselfyou might wish to consult an attorney.

    This is serious business."

    Keep supporting our advertisers who support ODwire.org and you. When there is problem, try to resolve before going public. If you are going to go public be certain you are 100% accurate.

    Now back to the important topic of how to get the best deal on your Merchant Account.
     
  19. AdminWolf

    AdminWolf Site Administrator & Tech Lead
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    Paul speaks the truth. One thing that we discovered (much to my surprise) is how much power this site gives you, its users, vs. the vendors that service you.

    We've had several instances now where members who were 'squeaky wheels' -- with legit problems with a vendor -- got their issues solved with our intervention.

    In fact, on numerous occasions i've gotten PM's from members letting me know that even though they can't talk about details publicly (because vendors frequently make you sign NDAs), they were able to bring the situation to a happy resolution because of intervention on the site.

    So we take our role as intermediary seriously -- we feel that both the vendor and the site member should be able to get a fair hearing. I would just recommend if you are having a legit problem that you can't seem to solve, post as much detail as you can so we can help you get it resolved -- even if you need to send some details to us in a private message. We're always around & willing to do what we can.

    Adam
     
  20. Stewart Gooderman

    Stewart Gooderman ODwire.org Supporting Member

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    So what's going to happen after the first year?

    One of the things my ex-partner taught me was that time is the most precious thing you have. If after one year you get ambushed and have to spend a few hours looking for a new service, how much income lost does that come to if you could have been doing the thing that generates income: seeing patients, fitting contacts and selling eyewear? I mean, isn't that's why we get upset when we have a no-show?
    I think odwire.org should be applauded for providing info on merchants who sincerely might help us out. Is there any member of odwire who has used TRU's services? Can we hear from them?

    DrG