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This morning as I read through the industry news, I started thinking about how tragic it is that most consumers have no idea how much their favorite businesses pay to credit card companies and credit card processors every time they choose to pay by debit or credit card. Even more tragic is the fact that few merchants really know what they are paying.

But what if there was a way merchants and consumers were able to see this data, right on the bottom of their receipt? I’m at Brueggers this morning. I’ve watched 30 people go through the busy line, paying mostly with debit cards. The last patron paid with a business credit card, he bought bagels and coffee for the office staff (I overheard him talking to the manager). His total was $63.08. I don’t like math, so I’m going to round that to the whole number $63. He used a corporate card, which comes with the highest interchange rate. A conservative estimate would be that Brueggers paid a total of 4% of that purchase to Visa and their merchant processor just to accept the card. This sets up an easy equation: 63 x .04= 2.52. Brueggers essentially “ate” $2.52 of that patron’s purchase. But neither the patron, nor the Brueggers manager, has any way of seeing that cost in real time.

I made some phone calls, and because I’m rather persistent, I can now offer this service to the businesses who process with Swipe-Rite. But I want to challenge the other processors who read my blog to do the same thing. So here it goes: If you are a processor and you want to offer this service, let me know. I’ll tell you what I did to get this service added to our capabilities, just because I’m so passionate about interchange education. Keep in mind, I am essentially giving away a service that our sales staff will use to negotiate new business. All in the name of good business.

If you are a business who wants this service but doesn’t want to switch merchant processing companies yet, I’ll help you too. I’m starting a revolution. Join me?

I am FULL of big ideas. I struggle with finding the time to develop each one to fruition. I want to hear your big ideas. Tell me about them here: @AmySwipeRite And if you like bagels, follow Brueggers on Twitter. Tell ‘em Amy sent you.

Last week, I was out shopping with my Mom at a store to whose customer loyalty program I belong. They have a simple “stamp card” where I earn a little red check mark for every $10 I spend in their store. When I collect 10 check marks, I get $10 off my next purchase. Simple enough.

My Mom is not a member of the loyalty program as she doesn’t even live in this state so, being the savvy shopper I am, I asked the owner “Can I get credit on my loyalty card for her purchase?” He’s a nice guy, he knows me, so he said “Sure!” My Mom used her bank-issued Visa Debit Card to pay for her purchase and he asked her “Do you want me to run this as Debit or Credit?” My Mom, thinking that the only difference between the two options is whether she enters her PIN code or signs the receipt said “Oh, it doesn’t matter.” Here’s where I interject that indeed, my Mom does know what I do in the Merchant Processing Industry but alas, doesn’t find it all that interesting. I saw this as my opportunity to finally repay my Mom for all the great lessons she taught me over the years. I spoke up “Actually, Mom, if you enter your PIN code, it saves him (as in Mr.Owner), money on what it costs to process your credit card transaction.” He smiled, and my Mom entered her PIN code. He then turned to me and said “Thank you, for being an educated consumer. I’m giving you an extra stamp on your loyalty card.” As luck would have it, that extra stamp filled my card and on my next visit to his store, I’ll save $10.

Show your loyalty to the businesses you frequent by helping them save a little money, too.

For more tips like these, or to talk about how the Yankees are going to win the World Series, follow me on Twitter.

*Don’t forget to join me for #ratechat on Twitter, this Wednesday at 4PM CT. I’ll be analyzing a Merchant Credit Card Processing Statement live, taking your questions and showing you how to be sure you aren’t the victim of hidden charges.

I am very excited to announce the launch of #ratechat, a Twitter chat designed to teach people who use merchant services to accept credit and debit cards as forms of payment, what they need to know about merchant processing. Beginning next Wednesday, October 21, at 4 pm CT, I will host #ratechat. My plan is to teach users of merchant services how to analyze their own merchant processing statements to be sure they are getting the best rate. I will also cover how to setup a merchant account to accept credit and debit cards, why we are charged to accept credit and debit cards, the transaction cycle, making sure security software is up to date to protect a business’s sensitive information, and how to negotiate with your processor to lower your merchant processing costs. I am excited to see how other participants help shape the content of this chat as we go forward.

I was hesitant to start this chat right away, but always had it in the back of my mind. Now that I know the Twitter community and have familiarized myself with etiquette, I just can’t wait to really use Twitter to provide valuable content to everybody who uses merchant services. I want to make it perfectly clear that I will absolutely not be advertising our business or spewing sales pitches. I am just providing help.  If only one business is helped every week, it will be well worth the hour. Stop in and join the conversation, I guarantee you’ll learn something. I might even save you some money.

#ratechat

Wednesdays beginning October 21, 2009

4pm CT

Hosted by @AmySwipeRite

PayPal, one of the internet's most popular method of accepting credit cards, doesn't give the best deals

This morning, I had the privilege of talking to a leading business magazine about merchant credit card processing and interchange rates. In preparation for this interview, I did some in-depth research on PayPal, one of the internet’s most widely used method of accepting credit card payments.

In the event that you’ve lived under a rock for the past decade, PayPal is a website that allows consumers to send and receive money via credit card or electronic check (e-Check). Largely due to their partnership with eBay, PayPal’s brand recognition makes it a “go to” site for processing these types of payments.

As an eBay Power Seller in the late 1990s, I used PayPal to accept credit cards from my customers. In fact, until I actually became affiliated with a merchant processing company, I recommended PayPal to people who asked me about accepting payment cards. Today, I am officially rescinding my endorsement of PayPal. Here’s why:

Exorbitant processing fees: Let me lay it on the line for you. If you are using PayPal to accept payments through your website using their “Web Payments Standard” option, you will be paying 2.9% of the transaction value plus 30 cents. Of this amount, 1.6325% plus 10 cents of the transaction value goes to Visa/Mastercard (called ” interchange”). The other 1.2675% plus 20 cents goes directly to PayPal as a service fee for them to help you move the money from bank to bank.* Ok, maybe that doesn’t seem like a lot to pay for convenience, right? But the truth is that PayPal’s fees are double what you should be paying. No matter which of their merchant services solutions you use, no matter what your monthly transaction volume totals, no matter whether you use PayPal on your website or send email invoices, if you are using PayPal you are paying too much for merchant services.

Rolling Reserves: This subject came up in my media interview today. I was surprised to learn that “rolling reserves” are now a chief complaint of users of PayPal Merchant Services, mostly because we have never imposed one on a client. A rolling reserve is a contractual stipulation imposed on some merchant accounts, more often than not these accounts are determined “high risk.” In this case, PayPal is withholding funds–sometimes 5% of a merchant’s gross sales–in a non-interest bearing account for 18 months. So if you use PayPal, and you are bound by a rolling reserve,  you will be missing out on 7.9%+ revenue (interchange+PayPal fees+rolling reserve) from credit and debit cards for a year and a half. Now, maybe I’m a dummy, but this just seems ludicrous. Which leads me to my next argument

Wait times: With a run-of-the-mill merchant processor, you can basically assume that funds from your credit card sales will be deposited into your bank account within 48 hours (and very often it is closer to 24 hours). PayPal, on the other hand, holds the funds you receive from these payments until you to transfer them to your bank account, a process that takes 3-5 days. So if you get paid $40 on Monday, it will appear in your PayPal account and be ready for transfer by Tuesday, but it will likely be the following Monday before you have access to these funds. There is an exception, it is their “PayPal Debit Card,” which allows you to have “instant” access to your PayPal funds (once they are approved), and you can use it for purchases or to remove cash at an ATM (after setting up a pin). Please note that if you use an ATM, you *may* be charged…you guessed it…more fees.

Customer Service: Sure, PayPal has a 1-800 number and at some point you may actually get to talk to a human. But, and this is just my simple way of thinking, the most important trust relationships in a merchant’s business life should be with their banker, and their merchant processor. Your merchant processor should know you, your family, your business model, and your business goals and should be dedicated to helping you reach them at any cost.

So why does PayPal have such worldwide acceptance when they have such shady processing practices? Brand recognition is part of the answer. The other part is that merchants simply aren’t educated enough about their options. PayPal underwrites an extraordinarily high number of high-risk merchant accounts (which partly explains why their fees are so much higher). As such, merchants who think that they may have a problem being approved for a merchant account through another processor (whether it is because they are a new business or have less-than-exceptional credit), go directly to PayPal without exploring other options. Don’t fall into this trap. There is a better processor, with better rates and better customer service. PayPal does not offer any service that is unique, they are just really well marketed.

As you should know by now, I don’t make it a habit to “call out” the competition by name, but today I’ve made an exception in the name of good ethics in the merchant processing industry, and the hope of helping businesses save money and get the treatment they deserve.

Do you still use PayPal? Tell me why (I don’t bite). Anybody else ready for a cup of tea? You can always find me on Twitter @AmySwipeRite

On Monday, I received my latest edition of Chris Brogan’s Newsletter. I enjoy his newsletters every week, but this week’s newsletter was so good, I shared it with at least two dozen people. It was so good, in fact, that I am sharing my copy of the newsletter with you by hyper-linking the word “newsletter” until you go and read it for yourself (another link for good measure). So go ahead, open it in a new window, then come back so you can finish reading this post.

Read it? Okay great. Let’s continue…

As a busy working Mom, I thrive on patterns. Patterns/routines and all things synonymous keep my house from being completely chaotic. I wake up, get the kids ready for school, put on the coffee, and prepare my breakfast. For pretty close to a year, my breakfast has been the same thing every day: Blueberry yogurt with fiber rich granola. It’s not a bad breakfast, I have actually grown quite fond of my quick morning meal. I do switch it up a little from time to time. Sometimes, I eat it out of a green bowl, sometimes, out of a coffee cup, and sometimes, I stir the granola into the yogurt cup and take it “to go.”

After reading Chris’s challenge to “find three patterns and break them,” I was inspired to make this week into “The Week of Green Chile Smothered Eggs for Breakfast.” You see, I’m from Arizona. My Dad is a native New Mexican (as in, from New Mexico-home of Hatch Green Chile). My dearly departed maternal Grandfather was Spanish-American raised in the Mexican-American cultures of Southern Arizona. Needless to say, I know my chile (notice, I even spell it right). And when you know chile, you know that eggs are naked without being smothered in it. Add some spicy home fried potatoes and a flour tortilla, and you have Heaven on Earth.

So this week, instead of grabbing my yogurt, I grabbed my egg carton. Every. Single. Morning. I tried not to think about the calories or the carbs or the cholesterol. I just savored each bite. And by Thursday, I noticed a funny thing had happened. My jeans were just a hair looser than they were on Monday morning. I headed for the bathroom scale and wouldn’t you know it? I had lost 2 pounds.

I started to think about the patterns in my life that I perceive as being “healthy,” (like my yogurt and granola breakfast) and I came to a stunning revelation: Sometimes even “healthy” patterns weigh us down. We become so accustomed to doing things one way that we fail to innovate, experiment, or excite ourselves. Just because a habit isn’t necessarily “bad” doesn’t mean it’s always good.

I realized that the old adage “if it ain’t broke, don’t fix it,” eventually leads to perpetual boredom. I considered how boredom is currently impacting my life as it applies to my work in the merchant processing industry. There is only so much to say about accepting credit card payments (and getting a good rate). Now, however, I’m inspired to find a new way to approach the topic, help people, and restore trust to the industry. The ideas are popping up so quickly that I can hardly sit still.

Maybe it’s just the capsaicin in the chile, but I’d like to think that breaking my breakfast pattern jump-started more than just my metabolism–it threw my zest for evolution into high gear.

Did you take the Chris Brogan Challenge? Do you want my green chile recipe? I’m easy to talk to, find me on Twitter!

PhotoCredit iStockphoto

I remember my parents telling me that I should be careful which friends I chose because I didn’t want to be presumed “guilty by association.” While I’m sure this was just their effort to keep me away from flunkies and junkies in high school, it’s an idea that has stuck with me into my adult life and interaction with businesses–large and small.

It’s easy for “socially-aware” types to steer clear of brands or businesses that are operating sweat-shops in third world countries. Don’t like the fact that a snack food company is dumping waste into the surrounding water supply? That’s easy, just stop buying their product. But what if a business’s injustices are on a much smaller (in terms of the attention given to them) scale? What if, say, Bob’s Pizza Parlor* had under-age kids making crust at night? Or Dan’s Used Cars* wasn’t paying proper commissions on sales, or refused to offer health benefits to their employees? How would you know? And would you change the way you do business with them if you did?

This question has been on my mind a lot lately as I think about our product suppliers, and about the accounts our company seeks. As our brand grows and evolves, I am increasingly concerned about the business ethics of our business partners.

When I was a college student at the University of Arizona, our school faced an onslaught of bad press over our partnership with Nike. Nike was under fire for using Asian sweatshops to manufacture their products. Arizona received especially bad press because that same year (1997), our basketball team became National Champions. More than 12 years later, a “Google” search of “Nike and The University of Arizona” begets an article about schools who are “Hooked on Sweatshops.” The reputations of Nike, and the universities who partnered with them, are forever tainted as the result of this controversy.

Luckily for them, all the parties involved were large entities with great PR representatives and teams of attorneys. They were not undone by their “bad business” mistakes. But when you are at the helm of a start-up, perceived guilt by association can result in demise.

So how do you know if you’re doing business with people who do good business? I want to know your tactics. Share them below, or find me on Twitter.

A little variation this week, in honor of Iowa’s signature crop.