Normal Credit Card Processing vs. Next Day Funding Merchant Services

Many merchant services providers are adopting next day funding to grow their next day funding merchant services, and in a post last February, Carry Notheis explained many of the basics and benefits of this hot new service. However, despite the popularity of next day funding merchant services, many merchants don’t completely understand how it works. So to clarify this tricky topic, we thought it would help to compare next day funding to how credit card payments are typically processed by merchant services providers.

Normal credit card transaction processing
Typically, it takes two days from the time of sale for funds to appear in a merchant’s bank account. Say a boutique sells a blouse for $100 dollars on Tuesday afternoon, and after closing at 6:00 pm, the manager batches out and settles the terminal. That $100 (minus any fees) will be deposited in the boutique’s bank account on Thursday.

So what occurred between Tuesday and Thursday to make that deposit happen? Early Wednesday morning, the merchant service provider processed the debit and credit card transactions from Tuesday, submitted them to the card associations and initiated a transfer of funds to deposit the money into the boutique’s bank account. The money was then transferred via the ACH network. Because the ACH network transfers money between bank accounts overnight, the transfer occurred late Wednesday or early Thursday, and so the boutique received the funds sometime on Thursday during the day.

Next day funding
Now, using the same boutique example, let’s examine the next day funding cycle. If the boutique had next day funding, their merchant services provider would have processed the blouse transaction late Tuesday night and initiated the funds transfer to the ACH network Tuesday night before its last cut-off time. The ACH network would have transferred the funds overnight, and so the deposit would have appeared in the boutique’s bank account on the next day---Wednesday.

It sounds simple, but it can be tricky because each payment processor has its own processing and funding methods. Processors have to meet the cut-off time of the ACH network, and so they have to set a cut-off time for their merchants. This cut-off time varies from processor to processor because, depending on their systems and capabilities, some processors need more time to get everything in order to meet the ACH network cut-off time.

Furthermore, other processors may circumvent the ACH stipulations altogether. Collaborating with banks, they may “memo post” the transactions to the merchants’ accounts before the funds have really been transferred. This process relies on the policies of each bank and often requires funds to be held at a certain bank.

Jeff Zimmerman is Vice President of Product Management and Marketing at Clearent and has held management roles at Network Solutions and Intuit. Jeff brings 15 years of product management, finance and marketing experience to Clearent. Clearent is an experienced merchant services provider offering solutions such as mobile payment processing, wireless terminals, and next day funding merchant services. Learn more about how we can aid your credit card payments service and let us know any questions you might have.

 

4-Step Routine to Create the Best Merchant Services Program

We all have a daily routine, and whatever it may be, we consistently follow it. It helps us keep our lives in order. It makes us feel good. It just works.

And just as we should all follow our personal routines, Independent Sales Organizations (ISOs) and agents should follow routines of their own to get the most productivity out of their merchant service program. So to help you develop the best merchant services program possible, we’ve created this simple, 4-step routine.

1. Stay up-to-date

Like many other industries affected by the rise of the digital age, things constantly change in the world of merchant services. New technology is being produced, critical regulatory changes are taking place and your customers may be talking about you in a digital social sphere.

2. Make time to make sales calls

You know your portfolio isn’t going to just build itself. However, many ISOs fall into a trap of complacency when it comes to sales. They think that because their portfolio is adding to their bottom line, then there is no point changing anything. Building your portfolio with one or two successful merchants can do wonders for your profits. Yet to realize true organic growth, every day you should set aside a time to call prospective merchants and see if you can help them.

3. Follow-up with your customers

If your merchant has just been set up, call them to see how they’re doing and see if they need anything else. From a customer service perspective, staying in touch with your merchants is the best way to gain their trust and make them feel valuable. Managers of the best merchant services programs will consistently check on their customers.

4. Know where your merchants stand

It is important to know which of your merchants you’re at risk of losing. The best merchant services provider will be able to provide you with data that will help you figure out which merchants may be seeking a more profitable merchant services program. Additionally, checking on your merchants’ sales volume each day is a quick and painless process, and if you find a merchant that is dissatisfied, see if you can meet them halfway to salvage what profits you can.

Jeff Fortney is Vice President of ISO Channel Management at Clearent™. His career includes over 35 years in financial services, with the last 17 focused on the debit and credit card processing industry. As one of the best merchant services programs, Clearent is a valuable partner to many ISOs and agents. If you’re looking for a new partner for your merchant services program, Clearent will be sure to give you and your merchants high-quality service, competitive pricing and sought-after products and services.

How to Be Better Merchant Services Providers

No matter their size or industry, merchants should demand excellent customer service from merchant services providers. The best credit card processing companies know this, and do everything they can to ensure that their merchants are taken care of.

Although many companies do offer the kind of topnotch customer service that they claim, some fail at satisfying the consumer. They may think that their customer service is topnotch simply because there is no phone wait time and a building full of representatives in headsets answering calls immediately. Maybe they call their customer service “unmatched” because they have an “advanced troubleshooting program” and the representatives just have to read from a script.

Unfortunately, people don’t like feeling like they are being read to when they should be getting talked to, and people don’t really mind a short wait for a merchant service providers to answer the phone as long as the customer service experience is good. Not to mention that questions that aren’t contained in the computer script may arise during a call.

When something has gone wrong during a customer service call, customers don’t want to be formally addressed by their last name and profusely apologized to. They just want to know that the representative is doing everything he can to solve the problem. They want the customer service representative to show genuine concern for their problem.

The best credit card processing companies know that customer service representatives need to actually care about the problems of the customers. If a representative cares about the concerns of the customers, it will come through in his or her voice, and ultimately reassure the customer. Customer service representatives who care are also much more effective at solving problems because they want to see them resolved. It’s easy for customers to tell if a customer service representative is truly sympathetic to their situation or not.

They don’t want a customer service representative who speaks in a monotone voice or one that constantly uses industry jargon and big words to make them feel inferior. Customers want representatives to talk to them like normal people. Representatives of a merchant service provider can easily fall into industry-speak and forget that customers aren’t experts in their business.

The best credit card processing companies treat customers cordially, respectfully and honestly. Customers who have exceptional customer service experiences are likely to refer others to your credit card processing company just because of that one call.

All merchant service providers could benefit by reevaluating their customer service quality and revamp it where needed.

About the Author

Jeff Fortney is Vice President of ISO Channel Management at Clearent™. His financial services career includes over 35 years, with the last 17 focused on the debit and credit card processing industry. Clearent is one of the best credit card processing companies, providing passionate service that does not go unnoticed. Learn more about what merchant service providers can do for their clients.

5 Tips to Boost End-of-Year Profitability

Now that the year is half over, it is a good time to evaluate the goals you set for your merchant services program back in January. If you’re falling just a little short, here are some tips to get you back on track.

1. Cut Costs

The most basic way to increase profits is to reduce expenses. All you really have to do is assess where you are spending money and see if you are getting sufficient returns. Cutting costs is a surefire way to increase profits, especially when it comes to your credit card transaction processing service and how much money you make with your program.

Small business credit card processing offered by your bank should have competitive pricing. This will help you sign bigger merchants and help you make a greater impact on your overall profits.

2. Track the Money

Depending on the merchant services software provided to you by your credit card transaction processing service, it may be easier than you think to figure out how much your program generates. You might not need to spend hours with a calculator, adding up percentages to know how you are generating profits. Some merchant services software creates graphical reports so you can easily determine the value of your small business credit card processing services.

3. Promote Your Program

When you have a few large merchants and things are busy, it’s easy to forget how much more you could be benefitting by continuing to add merchants. There are a number of ways to increase merchant acquisition; you can create incentives for your personnel and implement in-branch advertising techniques targeting merchants. Create a presentation and set aside an hour to train your front-line employees on how to talk to merchants and give them bonuses for signing more. Small incentives can go a long way towards growing your portfolio.

4. Demand Quality Service

Never forget that excellent service is what keeps your customers happy. Not everyone who claims they provide good service actually does. Evaluate the promises your credit card transaction processing company made when you first started regarding the quality of service you and your merchants would receive, then talk to your merchants. What do they have to say? At the end of the day it is your responsibility to make sure your merchants are happy.

5. Don’t be Afraid to Switch

If you are unsatisfied with your credit card transaction processing company, you need not be afraid to switch to another provider. Many banks are hesitant to do this because they think the process will.

In reality, many providers have a solid plan and a skilled conversion team to get you switched and updated with better service in less than 30 days.

Converting to a new small business credit card processing company shouldn’t be viewed as a hassle, but instead a chance to clean up your portfolio and bring in more merchants to give them better service.

Kick-starting your merchant services program can boost your bottom number while requiring much less work than you ever thought.

 

About the Author

As a Relationship Manager, Nick Karcher supports both current bank partners as well as those institutions that want to know what makes Clearent a different kind of payment processor. Nick began his career in debit and credit card processing with Electronic Merchant Systems (EMS) as an Account Executive and later started his own Independent Sales Office. As one of the best credit card transaction processing companies, Clearent provides the kind of passionate service that others can't. With an abundance of small business credit card processing solutions, Clearent can provide clients with the necessary tools to really make a difference.

Even The Best Credit Card Processing Companies Face Pricing Challenges

As a merchant services provider, you know that at times, it can be difficult to price new merchant accounts, especially with the addition of new association fees. After discussing referral programs with many bankers, a lack of flexibility seemed to be creating the majority of the frustration when it came to pricing these new accounts.

In such a competitive market, flexibility is key when it comes to pricing. It’s necessary to offer many different options. Some of the best credit card processing companies will work diligently toward being able to offer unique pricing based on each individual merchant and their needs. In doing so, they focus on certain characteristics, such as the average ticket size, the size of the merchant and their expected card mix (credit, debit, rewards cards, etc.).

Here are a few areas payment processing agents should be cautious of when pricing new accounts.

Small Ticket Size

Merchants with a ticket size less than $15 are hard to price due in part to the large impact of the transaction fee and the minimal impact of the discount rate – whereas normal ticket sizes have the opposite effect. Also, the range of ticket sizes can affect the percentage of transactions that actually qualify for small ticket interchange rates.

Because of this, it’s much harder to use discount pricing for merchants with small tickets, but unfortunately some providers don’t make pass through pricing an option for their banks. 

Pricing Methods

Due to limitations of some provider’s fee structures, some merchant services programs still only offer one of the two major pricing options. Typically, pricing methods in our industry include discount (tiered) pricing, and interchange plus (pass through) pricing. When deciding which pricing method to choose, many small business owners are looking for payment processing agents that will work with them as a partner and help them find or create the best pricing structure to enhance the success of their business.

The best credit card processing companies will work to find the best option possible for your program – which could include either the discount or interchange pricing method. When only offered one option that might not meet all of their needs, there’s a good chance banks have turn business away. Plus the profitability on certain accounts will take a serious hit.

Looking to the future, I bet we will see more hybrids of discount and interchange plus pricing, like a discount pricing with pass through fees.

Support

Because merchant statements can become confusing, it has become increasingly difficult to offer the right price to merchants. It’s best if a bank can be given the opportunity to call their processing company for advice, although some aren’t given such option. With a good support system, banks will be able to take advantage of more opportunities.

About The Author

 

As a Relationship Manager, Nick Karcher supports both current bank partners as well as those institutions that want to know what makes Clearent a different kind of payment processor. Nick began his career in debit and credit card processing with Electronic Merchant Systems (EMS) as an Account Executive and later started his own Independent Sales Office. Clearent is always working toward being one of the best credit card processing companies thanks to its dedicated staff and many services. Talk to one of Clearent’s payment processing agents about how you can improve your sales.

 

Four Problems Even the Best Merchant Service Providers Face

As a merchant services provider, do you offer merchant tools to help you cater to the many different types of businesses in your market? Upon talking to many bankers about referral programs, there seemed to be an overwhelming number of people with frustration over the lack of flexibility when pricing new accounts. 

When trying to succeed in a fairly competitive market, it’s necessary to be flexible when it comes to pricing and offer many different options. The best merchant service providers will work hard to offer pricing based on each merchant individually and take into consideration size of the merchant, average ticket size and the amount and mix of different reward cards, debit cards, credit cards, etc. 

Here are four problems to avoid if you want to offer the best merchant service possible. 

Flexibility 

Small business owners are looking for merchant service providers that will work with them to help find or create the best option for their success. However, some financial institutions’ merchant services programs still only offer one pricing option. The problem can be due to system limitations or the bank’s fee structure.

As a service provider, it’s your job to try to offer your merchants what they need – that could be either a discount (tiered) or interchange plus (pass through) pricing method. Unfortunately, when banks are only offered one option that doesn’t meet all of their needs, they are forced to turn business away. Providers should be able to offer more than one method, and as we move into the future we’ll probably see more hybrids of the two – discount pricing with pass through fees. 

Small Ticket Merchants 

It can be difficult to use discount pricing for merchants with small ticket sizes. For one, the discount rate for merchants with a ticket size less than $15 has minimal impact and the transaction fee has a significant impact. Normal ticket sizes have the opposite effect.

The smaller the ticket, the harder it is to use discount pricing – but some banks still are unable to use pass through pricing because it is not available from their provider.

Limited Rates

The discount rates offered by many financial institutions’ merchant service programs tend to be rounded to a specified amount, rather than delivered in smaller increments. However, real world situations often call for precise rates, otherwise banks will likely frustrate their customers or offer lower-than-necessary rates, thus lowering profitability. 

Nonexistant Support 

Both industry veterans and “newbies” occasionally come across merchant statements that are difficult to understand. Because of this, it makes it harder to price the merchant correctly. Some banks have the luxury of calling their credit card processing company for guidance; others do not and are left to fend for themselves. With more support, banks will be able to better evaluate sales opportunities. 

 

About The Author

As a Relationship Manager, Nick Karcher supports both current bank partners as well as those institutions that want to know what makes Clearent a different kind of payment processor. Nick began his career in debit and credit card processing with Electronic Merchant Systems (EMS) as an Account Executive and later started his own Independent Sales Office. Clearent is always working toward being the best merchant service provider possible through dedicated staff and many services. Learn more about Clearent’s financial institutions merchant services programs that include next day funding merchant accounts can help you improve your sales.

 

 

Enhance Your Credit Card Processing Service With Social Media

Social media is constantly growing, changing and becoming a larger part of how people and companies interact with one another. It's a way for businesses to really get to know and understand their consumers and how they can help give them the best experience possible. When it comes to merchant service providers, it's important to build that relationship with business owners and show them you can provide reliable small business credit card processing. A recent report from the Nielsen Company found a few promising statistics about the use of social media.

 

• About 4 out of every 5 active Internet users frequently visit blogs and social media websites.
• 23% of the total time Americans spend online is spent visiting these sites. 
• Approximately 40% of social media users gain access via their mobile phones.
• Accessing social media via the mobile phone is rapidly growing for those ages 55 and up.

 

Because it is becoming a larger part of American culture, it's important that companies offering credit card processing services have an online presence, where their merchants are located. The majority of customers want to know that they are being heard and can rely on companies to respond to their concerns and offer more information about their services and small business credit card processing in general. 

Although it's important to provide small businesses with information about your credit card processing service, it's also necessary to not overwhelm consumers with only facts and product information. Here are two great tips to using social media to enhance your small business credit card processing company. 

1. Keep it Conversational

Don't always be trying to hard sell your products and services to everyone you reach online. Instead, try listening to consumers about what they especially like and dislike about your services. Think of it as a way to build relationships and loyalty, rather than just push product information. 

2. Share Good Content

Social media has completely transformed the way that people are sharing information, however it hasn't quite changed what people are sharing. People are still sharing things that are "awesome", or in this case, information that is useful and relevant to your specific audience. If you publish content that is meaningful to your consumers, it is more likely that they will share with their friends, start to trust your company and look at other services you offer. 

When used correctly, social media can be an important tool in enhancing small business credit card processing companies by helping to foster relationships with merchants. The fact is, people are using social media every day and it's important to be available to answer questions from your customers and provide useful information in a more conversational online atmosphere. It's time to spread the word about your credit card processing service.

 

Vice President of Business Development, Kate Root is focused on helping Clearent expand its strategic ISO partnerships, as well as growing financial institutions' merchant services programs. Kate's 25 years in merchant services spans senior management roles in both issuing and acquiring, supporting financial institutions and ISOs. It is our mission to build trust-based working relationships with our merchants through our credit card processing service. Learn how our interactive online reporting tools can benefit small business credit card processing .