Taking Card Payments: Think Beyond “Rates”

Names like NetPay and First Data may, or may not be familiar to many merchants. But this graphic gives you an idea of the number of companies that are likely to be involved when you take a card payment.

From acquirers, to card issuers, to the card networks (Visa, JCB, MasterCard etc), and from gateway providers to service providers… there are many, many parties involved when you make or take a card payment.

It is not my intention to explain what their function is here, merely to help merchants to understand that when you choose a company to provide you with a card payment facility, there are some KEY THINGS that should be considered in addition to headline “rates”. Price is obviously important, but there are also several other very important factors that should have a significant impact on who you choose to provide the facility, and then who you choose to process your payments.

In terms of who provides the service to you, there are many ways that value can be added. For example, most service providers offer a 24-hour help-desk when things go wrong. Possibly an on-site engineer if hardware has a major meltdown. Or billing that enables you to keep a close eye on what card payments are being processed where and when, and may even allow you to reconcile those daily batch payments, also on a daily basis rather than using a monthly paper statement.

Typically in the UK, service provision has been done by the high street banks. Nowadays though, there are many other providers out there, who will be bending over backwards to give you the facility to take a card payment, however you wish to do it. Just make sure that they offer the backup that you need and expect, and that their billing and reporting is going to be up-to-scratch in an age when you should probably expect more than a monthly paper statement.

Also consider that in many circumstances, it will often be ANOTHER third party that deals with the processing of your transactions. This company is called the “card acquirer”. They are the ones who bill you a proportion of the transaction value (in most instances) on a monthly basis for the privilege of processing said transactions. It is also them who hold onto the money for 2-4 days (or longer, in some circumstances) before it is paid into your bank account. This is done largely to mitigate their risk, as after all it is the acquirer who is largely left carrying the can if a transaction is found to be fraudulent, or if the consumer invokes the Consumer Credit Act. They will however do their utmost to push that financial loss back to the merchant, should such circumstances arise, in the form of a “chargeback”. Familiar names that many merchants will know in this space are Streamline (who re-branded to become WorldPay a couple of years ago), Global Payments, First Data and Elavon.

Many merchants also engage directly with the acquirer to provide additional service, such as a physical card payment terminal or an online e-commerce gateway. While this undoubtedly offers merchants the reassurance of dealing with a big company, it is unlikely that the big acquirers will be overly responsive if things go wrong or if 3 months into your contract, you find that other things really don’t match the requirements of your business.

So what else should you consider when choosing a service provider and an acquiring bank? Processing rates are obviously significant, but most service providers and/or acquirers will always offer extremely attractive headline rates. Bear in mind also that many service providers may ONLY be able to offer you the option of their one, preferred acquirer partner.

Other things that NEED to be considered are…

  1. How long will the acquirer hold onto your money? Depending on a merchant’s circumstances, I have heard anything from 2 to 45 days;
  2. What happens if you don’t process a transaction in any given month? Most acquirers will charge a minimum monthly fee for the privilege of having a merchant account with them, even if you only use it rarely;
  3. What if you mostly process certain cards like corporate credit cards? Rates vary significantly across card types, and if you are being offered a really hot consumer debit card rate, the service provider in conjunction with the acquirer will probably be making this back elsewhere;
  4. What if all you do is process transactions where the card holder is not present? Like online or telephone transactions, for example. In this case, it will be harder for the acquirer to prove the card-holders identity and therefore the validity of the card (chip and pin is always deemed to be most “secure” in this context), so you may be charged additional “non-secure” fees. Ask your provider about 3D Secure and AVS checks, in this context;
  5. What about interchange fees? This is the standard fee that acquirers charge to card issuers for processing a payment, and although most acquirers nowadays include this is in their headline rates, we still sometimes see interchange charged in addition to the “headline” rate;
  6. How will the service provider, or acquirer, help you to achieve PCI DSS compliance? If you are a merchant that processes card payments, you MUST demonstrate that you are at least aware of and have an understanding of PCI DSS compliance. If you do not do this, you WILL be charged penalty fees;
  7. Who do you call if things go wrong? As a minimum you should expect 24/7/365 telephone support, especially if you work in retail or hospitality. On-site support in the event of hardware failure could also potentially save your business thousands in lost revenue.

If you require any more information about PCI DSS compliance, online security checks or anything else that is contained in this article, please click here and fill out the form at the bottom of the page.