Posts filed under 'Credit Card Equipment'
Free Credit Card Terminal Merchant Accounts
The big craze in the merchant account industry is the new free credit card machine offers that many providers are offering.
About 20 years ago up until about 6 years ago, free credit card terminals were a fairly common practice in the payment processing industry. It was standard for banks and merchant service providers to offer a Tranz 330 or Zon Jr. to their customers, especially for the larger ones. Until last year, the free credit card terminal offers had all but disappeared. Brought back again in full force by a company called United BankCard, the free terminal offers have become very popular over the past year. Many merchant service providers have followed suite and are now offering free terminals to their new customers.
Free credit card terminal offer have their advantages, and they have their disadvantages. As true with almost everything, if something seems too good to be true, it most likely is…
There are now a plethora of providers that are again offering free credit card terminals. Free terminal merchant accounts are no exception to the too good to be true offers. On the outside these offers seem like a very good idea. They almost completely eliminate the processing startup cost for many businesses. The cost of equipment nowadays, is normally the only significant cost that a businesses with incur when getting setup to accept credit cards. This cost can range from nearly free for simple phone processing or virtual terminal merchant account, to extremely expensive for mobile and wireless processing equipment. The terminals that are offered for free are normally terminals in the $300 – $400 range.
Obviously someone has to pay for the equipment. After all, the companies providing these ‘free’ terminals are getting them from somewhere. And, that somewhere that they are getting them from is charging them. So, who is going to pay for the free terminals in the end?
What you really get with a free credit card terminal merchant account.
While not every company offering a free credit card terminal merchant accounts are the same, there are some things you can be sure of with every company offering these.
- An early termination fee
- An application and / or setup fee
- Additional Yearly and / or Monthly Fees
• An early termination fee is charged to any merchant who goes out of business, or leaves the processor before their contract is up. Contract lengths vary, but are normally 3 to 5 years in length. Termination fees vary, but are commonly over $300, and almost always over $200.
So what happens if you don’t pay?
Unlike a credit card where the penalty for not paying is comparatively low, if you don’t pay your processing bill, you get placed on a list called the TMF (terminated merchant file) or match file. If your name appears on this list for any reason, you and your company will never be able to process credit cards with an American bank, until you get it removed. The only company that can remove it is the one that put it on there.
• An application and / or setup fee is normally charged with free terminal merchant accounts and can vary from $30 to several hundred dollars. Sometimes both an application and a setup fee is charged.
• Additional Yearly and / or Monthly Fees which can be as high as $300 to $400 / year , and are in addition to your companies processing fees.
The bottom line:
The bottom line is that you should read your contract very carefully, no matter who is going to provide your company with a merchant account.
After $300 / year in fees, a $200 setup fee, and being locked into a 3 year contract, that $250 terminal the other company offered without the termination or random yearly charges, is looking pretty good right now.
January 23rd, 2006
Often overlooked, gift cards are one of the most effective customer retention and marketing methods available to businesses.
There are 2 types of commonly used gift cards. The first is the Visa or MasterCard branded gift cards that work just like a credit or debit card. While convenient, these gift cards don’t offer much benefit to most businesses. The second type of gift card is a proprietary self branded gift card, that is essentially an electronic gift certificate. These gift cards also work just like a standard credit or debit card, but are limited to being spent at your own company. For many businesses, these are one of the most effective customer retention and marketing mediums available.
More than just a good idea:
Gift cards offer a great benefit to retail stores and can be beneficial to some online businesses. Gift cards are one of the best customer retention methods available for any business, as customers will return to your business to make an additional purchase. Additionally, when gift cards are given as gifts you gain new customers for each new person that gets a gift card.
Statistically, about 25% of the money put toward gift cards is never spent, which is money that is kept right on a businesses bottom line.
Who should use a gift card system?
Businesses that will benefit the most from a gift card system, are retail stores that offer unique but widely desired products. Many service orientated businesses can also benefit from gift cards. Generally if your industry is something that many people need or want then gift cards may be right for you. Alternately, if you only offer high end products, custom products, or your products are only of interest to a small percentage of people, then gift cards are probably not a cost effective solution for your business.
How to get setup accepting gift cards:
Gift cards are normally setup by the same company that you process your credit cards through. A gift card program can be added to most common credit card machines or software programs. There will be an initial setup fee that covers the creation of your gift cards. This fee varies depending on the complexity of your card design and the number of cards that you need. After the setup fee is paid, you will only need to pay for more cards when you run low.
Gift cards are processed just like a credit card through your credit card machine. You can also add to the balance of a gift card if a customer wishes to recharge it.
December 28th, 2005
We just published an area devoted to information about credit card machines on the Merchant Store website. I will be putting up answers to general question about credit card machines there, and there are already some great pages geared toward people who are new to the processing industry.
Information about credit card processing equipment.
November 18th, 2005
These are some of the most popular credit card machines that are currently being sold and used in the US.
The main brands being used in the US are Verifone, Hypercom, and Lipman. All three companies have terminals that are well suited for just about any business. Lipman is by far the leader in wireless processing with three wireless terminals in circulation. While Verifone has been the most popular brand in the past, Lipman and Hypercom are quickly gaining market ground in the US.
Entry Level Terminals:
Lipman Nurit 2085
Verifone Omni 3200SE
Hypercom T7Plus
High End Terminals:
Lipman Nurit 3020
Verifone Omni 3740 & 3750
Wireless Terminals:
Lipman Nurit 3010
Lipman Nurit 8000 & 8000G
From customer feedback with different terminals, I have to recommend the Lipman brand terminals for all businesses unless a merchant needs to process over an IP connection. For IP enabled processing the Omni 3740 and Omni 3750 both of which are great terminals, are the only option.
All of these terminals have withstood the test of reliability, price and functionality. I would recommend any of them.
Some terminals that are quickly gaining popularity are the Lipman Nurit 8320, the Verifone Omni 3730 and 3730LE. The 3730 series terminals are very low cost and have the same features as terminals that cost much more.
August 29th, 2005
I wrote a lengthly truncation article about two years ago on my business website, and I think it is important enough to post an article about it here. Visa and MasterCard have slightly different policies regarding truncation so I will cover the most restrictive here.
Please refer to Credit Card Truncation if you would like information about a specific state’s policies.
What is Credit Card Truncation?
Credit Card Truncation is the removing of all but the last 4 digits of the credit card number and the expiration date from the customer’s transaction receipt. The merchant’s copy of the receipt is not required to be truncated. Many businesses complain that customers cross out their numbers on the merchant’s copy of the receipt, but the merchant is allowed to keep these.
I don’t recommend storing them unless you can provide security for them, due to the ease of an employee or a thief to commit credit card fraud with them.
Why is truncating important?
People being very careless with their credit card receipts has led to a rise in credit card fraud from receipts getting found by the wrong people. Truncating the customers copy of the receipt protects the customer and other merchants from fraud when the consumer looses or disposes of their receipt.
What are the penalties?
As of now Visa and MasterCard policies are still not completely in effect for all business in all states. New terminals must all be truncation compliant, and existing terminals have until July, 1 2006 to be truncation compliant. But, many states have stepped forward and created their own regulations. Regulations in states are anything from a small monetary penalty to a class D felony in Kentucky.
Visa and MasterCard penalties are as follows:
1st Violation – $5,000
2nd Violation – $10,000
3rd Violation – $25,000
4th Violation – $50,000
Willful or Egregious Violation – $500,000/month
Visa and MasterCard can also shut down a businesses credit card processing and prevent them from accepting credit cards ever again.
Besides these reasons, it is just a bad business practice to not truncate. Why should a business have the right to jeopardize the security of a consumers credit card.
August 26th, 2005
Gone are the days of businesses needing to lease credit card processing equipment. It was once a common practice for a business that was looking to start accepting credit cards, to lease their first credit card terminal. The leases usually ran anywhere from $30 – $75 / month for three or four years, for the use of the processing equipment. In the past, leasing was a major cash flow source for merchant service providers. Eventually businesses began to shop and found that they were paying way too much for their processing equipment, often more than ten times what the equipment was worth.
Thankfully, the internet has provided businesses with instant access to near wholesale prices on processing equipment. Now, any business can get low prices on credit card equipment and literally save their business thousands of dollars. This leads to the question, why would any business lease processing equipment.
In reality there are bad businesses out there. These businesses aren’t out there to provide a good service or product, or even to help their customers in any way. Their main and only purpose is to take your money, and they have no regrets about doing it. What is also unfortunate is that many of these companies are ones that many people trust with their money. Large banks seem to be a very common culprit, but are not the only perpetrator.
Example: A customer contacted me about getting setup processing credit cards. They were processing through a large, highly trusted, national bank chain, which I will refrain from naming, although I would really like to. They were processing on a Nurit 2085, which we sell for $265. They were locked into a forty-eight month lease. This lease cost them $300 to setup and $49 / month. If you calculate the cost that they would pay for this simple, relatively cheap terminal, it was going to cost them over $2,600. That’s $2,300 more than the terminal is worth. That is the equivalent of buying a $16,000 car for over $150,000. That’s absolutely insane. What’s even worse, is that even after forty-eight months, they still did not own the terminal. This was not a lease to own.
This may be an extreme case of a customer being ripped of by leasing equipment, but this type of lease is not uncommon. Thankfully the industry standard lease is well below this absurd amount.
Nurit 2085 Example Lease:
Purchase Outright: $265.00
Lease: $24.95 / month for 48 months.
$24.95 x 48 = $1197.60
Wireless Nurit 8000 Example Lease:
Purchase Outright: $779.00
Lease: $39.95 / month for 48 months.
$39.95 x 48 = $1917.60
The point is that you will pay significantly more if you lease equipment when compared to purchasing it outright. Look at the picture, what may sound like a good idea, seems ridiculous when applied to a larger scale. You also may not be in a contract to actually own the equipment that you are paying so much for. If you have to lease, make absolutely sure that is it your last option. Find a company that will give you the lowest possible lease, and ensure that it is a lease-to-own. Most importantly, shop around.
Also keep in mind, that if you find a ‘too good to be true’ company, it most likely is.
Check Out the processing equipment lease cost calculator.
August 10th, 2005
I often am asked what is the credit card processing terminal that I most recommend for businesses. Nearly every time, I have to recommend the Nurit 2085.
The Nurit 2085 is not a new terminal. It isn’t particularly small. The display isn’t fancy. The technology inside it isn’t anything close to new. What the Nurit 2085 is, is a very reliable, time-tested machine that is very easy to use, and extremely reliable. It comes with a fast thermal printer that accepts common sized paper that is readily available. As many as nine merchant accounts can be run through a single Nurit 2085. The Nurit 2085 is also cheap. Because it has been around for so long, the price is very reasonable, a new terminal costing under $200.
The Nurit 2085 was ahead of its time when it was first produced years ago, and Lipman continues to produce it today despite several more advanced Lipman terminal in production.
The Nurit 2085 can be used for almost any type of retail or MOTO business. It has sufficient memory to handle gift cards or electronic check acceptance programs. It is compatible with debit and smart cards. It has large buttons with an easy to use and read interface. It prints legible receipts. It is an easy terminal for a merchant service provider to program and it has great cross-processing platform compatibility. Its multiple merchant account capabilities are great for businesses with multiple account types or multiple person service businesses such as hair salons. I have very rarely seen a Nurit 2085 ever have any problems, even after years of use.
Omni and Hypercom terminals are also very popular, but after years of seeing customer’s experiences with all types of terminals, the Nurit 2085 has proven to me to be the best terminal available.
Where the Nurit 2085 falls short, is the ability to process over an IP or broadband connection. While, businesses in some areas may not even have access to broadband connections, many upscale and urban businesses need the extra speed and convenience that a broadband connection will provide.
Overall, there is no other terminal that can offer the reliability, usability, and price of the Nurit 2085.
August 9th, 2005
Wireless credit card processing is not a new technology. It has been around for several years, and has been slowly growing in popularity and in the technology that it uses.
Several months ago, the GPRS wireless network, which is a network that many cellular phones currently use, opened up to wireless credit card processing. Before, wireless processing was limited to the Mobitex and Motient wireless networks. Both of these networks are severely limited in their area coverage with several states having no coverage at all. To further make matters worse, the expansion of the Motient and Mobitex networks, which are considered business networks, is completely stagnant. There is very little coverage expansion on these networks. With GPRS, all fifty states have at least some wireless coverage, and cellular carriers are continuously increasing the coverage range for the GPRS network.
GPRS Processing Coverage
Mobitex Processing Coverage
Currently there is only one wireless credit card machine, the Lipman Nurit 8000G, that has the necessary certifications to process on the GPRS network. The Nurit 8000G is the GPRS version of the popular Nurit 8000. It has a thermal printer, a signature accepting screen, and is a very fast and reliable wireless terminal. This terminal is quickly becoming the standard for wireless credit card processing.
The Nurit 8000G is available through many merchant service providers but currently must process through First Data. If you are planning on purchasing a Nurit 8000G, make sure that it is coming from a reputable dealer. There is no way to differentiate a Nurit 8000 from an 8000G until programming is attempted. The Nurit 8000G will cost around $800 from a good online retailer. You may also have to purchase a SIM card which will run an extra $20 – $30. Wireless processing also has an extra monthly fee for use of the cellular service which is usually $20 – $30 / month.
GPRS processing is a huge step in the wireless processing industry, and although it may be still to expensive for some businesses, it is a perfect solution for others. Either way, GPRS processing offers a vast improvement over any previously available wireless processing at no additional cost. If you are looking to start wireless processing for your business, there is no other way that I would recommend.
August 4th, 2005
Welcome to the merchant account blog. This is where you can find news and information about the credit card processing industry. We search the web daily and find information that is important so you don’t have to.
July 26th, 2005
