Are you using the wrong type of Processor?

Whether you are an insurance agency or any other type of business, having your own Merchant account is the best.

Hey Agency Owner...yeah you!

Is your company using a Payment Service Provider or a traditional Merchant account? As an owner there are certain things that you want to take control of and payment processing is one of them!   

In case you are not sure how to answer the question above "Payment processor or traditional merchant account", let me give you an overview of both and the pros and cons.

Payment Service Providers

First off, a PSP is a company that aggregates many businesses together under one merchant Identification number (MID). It is like sharing a platform with many other companies to help reduce overhead and save you money....or does it? I will let you be the judge of that after reading what I have to say. 🙂 Some of the common PSP's that you may have heard of are companies like Stripe, Square, Paypal, etc....

Payment Service Providers

Pros

  • Takes Minutes to setup
  • No monthly admin fees (normally)

Cons

  • Takes 24 hours to setup... not minutes
  • Possible monthly admin fee
  • Funding can take days
  • Prohibitive Business list is lengthy
  • One transaction can freeze your account for days, possibly indefinately

Traditional Merchant Accounts

A traditional merchant account provides you with your on MID.  You may ask "Why the heck is that important to me?" Well, having your own MID allows the processor to trace credit card activity easily and also bank associations, which in turn helps them reduce the risks of fraud. MORE importantly, it improves the stability of your account (that means fewer surprises of money being held or your account getting shut down unexpectedly).  Keep in mind, this does not eliminate the chances of some HUGE transaction (which we all want more of) being put on hold, but by one transaction being put on hold, it does not shut down the rest of the account. Can you imagine your account getting shut down, causing you heart palpitations while trying to figure out what to do because you cannot accept any credit card payments and now your business is likely to fail and the dog may get sick.....sorry that is a little overdramatic but you get my point. Normally with a little verification that the transaction is legit, the hold is released right away, you get your funds and again you can start to daydream about where you are going to spend all of that ca$hola,  and no more worries about the dog getting sick.

Oh yeah, I forgot to talk about some other features (some folks like to call them ancillary, I call them "must-haves"), Echecks,  ACH, customizable online payments, customer vaults, and invoicing. Those are a whole nother topic for a whole nother day...but I will keep you posted when I post about them.

“Having your own MID allows the processor to trace credit card transactions easily and also bank associations, which in turn helps them reduce the risks of fraud”

Here are some considerations:

Pricing:

Who are we kidding,  you know damn well that the commoditization of your products and competition continue to make it harder and harder to bring home more bacon by increasing revenue. So what do you need to do as an owner???? Yep, you got it...CUT EXPENSES.

Now that being said, you may look at the pricing of a PSP and it goes a little something like this.."No monthly fee, only 3.25% +33.3 cents per transaction" You say to yourself, "self, that is a good deal, I only have to pay for when I use it...no monthly fees" But wait, are you missing the forest for the trees?   

First off, look at the fees! If you are a one-man shop and only do one credit card transaction a month, that is a good deal, but I thought you were an owner, you know, someone who intends on growing your business! Side rant: I always get frustrated with owners that do not have an abundance mindset, you'll never make it in the big leagues. You need to build your business how you "want" it to look in the future and the time to do the right thing is now! I digress, I know there are some of you reading this that do not even take credit cards and haven't for years and never intend to....my only question is why the hell are you still reading this then? 🙂

Now for the traditional Merchant account fees:

You guessed it, there will likely be a nominal monthly fee that could range from 49.99 per month down to as little as 0.00 per month, just depends on the level of service and bells and whistles you want. In my next post, I will give you an insider tip on how to get everything you want for 9.99 per month, but you will have to read my next post! You may be paying a monthly fee, but guess what, you will not see 3.25% + 33.3 cents per transaction and more importantly you will have your own MID and along with that comes a relationship with your processor. Yes, you heard me... a relationship with your processor, you know, we use to have business relationships in the past. You can actually get a phone number, email address, heck maybe even the office address to visit while in town.

Try doing that with a PSP like Square, Stripe, or Paypal.

OK OK, I think you get my point, I am not going to continue to beat a dead horse.

Traditional Merchant Account

Pros

  • Retail Business Solutions
  • Short Prohibitive Business List
  • Next day Funding
  • One bad transaction won't shut down account
  • Less expensive 

Cons

  • Takes 24 hours to setup... not minutes
  • Possible monthly admin fee
  • More expensive

Conclusion:

As you can see, in the forefront, a PSP may seem to be the right choice, but ultimately the better choice is to have a traditional merchant account.

Contracts

Did you say "Contracts"?  I get a kick out of companies that still have people sign contracts for payment services. What I hear when they say "contract" is that no matter how much they screw up, how many times they hold funds or freeze your account, you are obligated to stay with them or pay a hefty fine to break the contract.  PSSSHHH!

I am originally from the Midwest, I have the Midwest values. I believe that a contract should look like this...If I provide you with the best service that I have with competitive pricing and you still do not like what I provide you, you are free to go somewhere else. I can say that because I know that I will outperform anybody whether it be in business or my personal life. That is why I do not believe in contracts!

Wow, a lot to take in, huh, Mr/Mrs.  owner? Well, I will continue this discussion on my next post. In the next post I will be discussing Hardware, E commerce Support, as well as Customer support.....so hang tight. Oh yeah, I will also be sharing my insider tip on how to do this all for $9.99 per month, I know the suspense is killing you but how will I ever get you to read my next post without dangling the proverbial carrot??


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