Merchant Account Services in Canada

When you are new to the Payment solutions available in Canada, it is easy to not know the difference between a “Debit Machine” and a “Cash Register”.  As a merchant in today’s market, it is essential to have easy, fast services when it comes to accepting money from customers.  Weather it be a POS terminal to accept transactions or a cash register or a combination of both, the main importance is to offer a variety of payment options to those potential customers.

Debit Machines

Debit Machines allow the customer to draw funds directly from their accounts to pay for goods and services.  The physical apparatus requires a customer enter their pin, and initiate the transfer of funds from either their bank account or any source of credit.  In addition to this basic service, there are many providers out there who pride their reputations on being able to deliver a variable plethora of bells and whistles to further entice merchants to utilize their services.  These added features and functions offer a merchant the capability to increase revenue and add convince for their customers which in turn helps one to keep customers!  These incentives can be in the form of being able to profit from surcharges for cash back functions, selling phone cards without having to waste money on inventory, gift card and loyalty programs that are inexpensive and easy to manage.  All of these are in combination with a service the merchant will need to pay for anyway (transaction processing).  The option of these functions allow the debit machine to be worth allot more to the merchant as it has the potential to help the business in many different ways.  On another level, the debit machine can provide the merchant with functions like easy and extensive reporting, inventory and invoicing.

Cash Registers

Cash Register, often used in combination with a pin pad or other hardware, is probably the earliest method of transaction processing.  The same basic function of debiting the customer’s account for payment is applied when utilizing the electronic cash registers outfitted for debit and credit card usage, which for the benefit of this example, we shall assume.  A cash register will allow ease with cash payments in terms of providing a record for the transactions, and safely store cash and receipts from debit or credit card transactions.  The system is generally easier to use, however lacks the ability of in depth reports and profitable functions like cash back and surcharging.  At the same time the ease of the register and natural placement of one in any retail frontage is essential for good business.  The modern register is often in combination with other devices, depending on one’s business, there are touch screens and integrated software available to use along with the register itself.

The very definition and physical image of a cash register has changed so rapidly over a few short years that the debit system and register are almost one in the same and we can easily see how the two may be completely interchangeable in the future.  I would imagine since the advent and explosion of the debit machine, cash registers have had to change to adapt to the technology as well, as merchants absolutely must offer interact and credit card options.

Being one who works and thrives in the merchant services industry, I have always been in favour of the debit machine or point of sale terminal as the most effective and advantageous method of transaction processing, however, when I shop at most major retailers and merchants, the pin pad is integrated with the register, or the pos terminal itself, as the option is available in combination with register use.

Which is better is entirely dependant on the business the solution is being utilized for and the preferences of the merchant them self.

                

                

                        

                            
Have a Question?
                            Is there something you want to ask about our article...?  What is your most important question about merchant account services...?  Ask us and one of our expert merchant account brokers will get back to quickly with an answer.
                        
                        

                            
                            
Name*
FirstLast
Phone
Email*
What is your most important question about merchant services?*

                            
                        
                        

                        
                
                

When POS Terminals became available in the market, they required a method to “call out” or utilize a signal in order to notify the host of the transaction. As every business has a phone line, it was logical that the POS Terminal be able to use that existing connection to complete the transaction process.  Using the dial up connection as the way to communicate the transaction is the way POS Terminals were able to work.   The only down fall to the service, is that when a merchant is using the terminal to complete a transaction, the phone line is UN usable.

For most business, this is a forgivable amount of time, as high retail environments do not depend on phone driven business.  However, the professional offices and hair salon’s and appointment based business who make up about 40-50% of a processor’s customer base by the way, were subject to missed calls, which equates to them as lost revenue….

As a result, there has always been a market and interest among processors to be able to provide an alternative method of “calling out” that would not disrupt the merchant’s phone line. Creating a huge selling benefit, which was very important at this particular point in time where the market was deregulated, so there were tons of new companies competing for the same dollars, and the advent of the internet was on the cusp of being absorbed into every business in the exact same way the phone lines were.

• There is no strong argument available any more to make a statement that Dial Up
• Terminals are more valuable to a merchant that ones that run on an internet connection.

Top Three Reasons why Internet Processing (IP) POS Terminal is More Beneficial to a Merchant Than Using a Dial Up POS Terminal:

1. No dropped calls.  It is important that customer’s are able to communicate and reach a merchant, weather the business is driven by over the phone transactions or not, the ability for a merchant to address customer’s on the phone line and not break that communication to do a transaction is invaluable.  Obviously, for appointment driven business, or business that rely on telephone communications, there is no compromise needed.

2. Speed of Transactions.  Since the terminal is utilizing the much more efficient and faster DSL connection, the transaction is completed faster than waiting for the dial up.  Creating an invaluable asset to high traffic retail business!

3. Cost benefit/Savings.  Allot of Iso’s are now offering the Internet option with very little to no additional fee to the merchant, it is almost industry standard now to be using Internet and the processor’s know this.  Allot of business not only gains from the lack of cost increase, but also allot of business can now cut off their costly telephone bills and use the one internet connection to run phones, PS Terminals and other items essential to their communication.

There are allotting of reasons, all valid, why a credit card company or rather Merchant Services Provider will not accept an application.  There are just as many components that allow merchants to offer credit cards as a method of payment to their customers.  But when looking at declined applications, it is consistent why and when applications are declined.  One can be declined for any of the following reasons, not to say they can’t be absolved, but here are the most common

• Restricted or Prohibited business type
• High risk associated with business profile
• Open Bankruptcy
• No credit or poor credit without financial or “co signer” support
• New business, from home, high ticket prices
• Not enough or inaccurate support documentation
• History of fraud or excessive chargeback’s

I have found, in my personal history whilst working with Merchant services providers, hosts and member branches, that sometimes, an application that has been declined, maybe approved elsewhere….this was always strange to me as I do my best at all times to get people up and running!  So I decided to take a deeper look into why these applications that we’ve declined, with what seemed to me to be good reason, are getting approved some where else…..not just any where else, but one North American company specifically…

We use two or three different credit card providers, from the list of the top 5 biggest in Canada, so when I get dually declined and a merchant finds services with another company, it is usually with a stipulation.  When it is not, it is always the same provider who is the absolute largest in North America.

So these providers who are essentially lending money to merchants are so careful with who they provide services too, that the only one company who will approve them is also the largest.

Just like any business “it’s all numbers” and when you are the biggest provider with the most customers and largest amount of transaction volume coming in, you can pretty much handle the “loss” that these more risky accounts may present.

In addition to sheer power of volume, merchant providers may approve an “iffy” account with a stipulation.

Some examples of stipulator approvals are as follows:

1. Funding delay: the provider will “hold” your deposits for 5 – 10 business days in order for them to fully clear without costing them.
2. Reserve fund: sometimes the provider will request a dollar amount (some times up front, sometimes an accumulative system based on per transaction) be put aside so if there are issues in the future, the provider is protected with a bank account for the merchant, of their own.
3. Limited volume: another option is for the provider to put a limit or cap on what the merchant can accept in a day, this way they cannot accumulate any dangerous amounts of transactions that may harm the provider later.

Why You Don’t Want to End Up on The Merchant Account “Match List”

Everyone has heard of the term “blacklisted” or “black balled” although no one has ever viewed said black list.  But seriously, the term generally suggests rejection.  The world of Merchant Services is no different and there is a very real, very much existing point of reference for Merchant Services Providers known as the MATCH list.

Originally the people of Master Card initiated a database that could be cross referenced with new applicants.  The information on the data base is basically merchants, who have in one way or another gone delinquent with their Merchant Services provider (s).  These merchants have been shut down by their provider, usually after an investigation and this MATCH list contains all of these merchants and also provides information as to why the merchant was shut down.  Essentially, no merchant wants to be on this list!

When we fill out contracts and answer questions about our business, the processors trust this information is accurate and truthful. Often basing their approval structure on the information we provide to the, should they later find out it is not accurate, it is within the terms and services of any and all providers that they maintain the right to shut down your processing.  There are a few major “no-no’s” that will ensure a merchant ends up on the list.  Here are the top three reasons’s a merchant maybe put on the MATCH list:

1. Chargeback’s:  Chargeback’s are a result of a customer grievance regarding a fee on their credit card.  Should the merchant be subject to excessive chargeback’s, their provider may shut down their services and put them on the list.
2. Restricted and prohibited (misrepresentation):  there are businesses whose very nature of conduct does not conducive to getting approved for credit card processing.  Immoral or questionable businesses like strip clubs or physics for example.  If there is misrepresentation on one’s application and they are approved and later exposed as a restricted or prohibited business type, then they can be put on the list for misrepresentation.
3. Fraud:  the worst word that we are exposed to in dealing with Merchant Services.  simply put, the merchant is not who they say they are, they have plagiarized information or simply stole information and are pretending to be someone else so they can obtain services and scam potential clients.  The same definition of fraud also applies to the merchant services industry and the MATCH list is a sure fire way to put these guys out!

Is there a way out?  Of course.  Although being on the MATCH list will essentially get you declined, it also opens the door for good and honest merchant’s to clear their name.  The only way to get off this list is to contact the provider who put you on it and settle the issues.  It may not always be possible, but in some cases after an investigation and viewing some documents the merchant would be requested to provide, it is very possible to be removed from the list and retain services.

Most of the time, when we shop and buy, it is immediate satisfaction…you choose your product and purchase it, walk away and it’s yours!  Sometimes, a consumer may indulge in similar practice with a service; let’s say a haircut or salon service.  In these instances, there is no time between when you receive a product or service and when you pay for it.  This is the most comfortable ideal business situation for our Merchant Services Providers, it entails very little risk and the likelihood of the consumer returning the service or product is very small.

At the same time there are a million of different businesses who operate in a variety of ways.  Sometimes, you may partake in the purchase of a product or service which you will not receive right away.  The time between when you pay for something and when you receive it is referred to as “fulfillment” time.  It is during this time where the red flag’s wave and the possibility of the evil dreaded Chargeback becomes a reality….

A Chargeback will only happen to a merchant as a result of a grievance from a customer directly to their credit card processor.  The consumer disputes the fee which leads to an investigation by the credit card company in an attempt for someone to cover the lost fees.  Let’s use an example:

Furniture Business… I go out and purchase a chair on sale.  It will take 2 weeks for me to receive that chair but I pay for it in full up front.  After two weeks, I receive the chair and it is two shades lighter than the one I picked out in the showroom.  I don’t want the chair and I don’t want to pay for it anymore.  Now… keep in mind here that a merchant will receive my payment for that chair within 48 hours of the transaction which in this example was two weeks ago!  The merchant is covered for their inventory, but now that I got my Visa bill and I was not satisfied with the product I later received, I refuse to issue that payment.  I will call Visa and explain this to them.  Visa in turn, will contact the merchant to get the merchant to cover the loss.  This is called a “chargeback”.

Another example, I want my art to be framed.  I go to the framers, they charge me a deposit, and the rest is due upon pick up.  I didn’t sign anything nor was I subjected to any terms with regards to that deposit.  I go back to pick up my framed art work 7 days later and it looks awful.  I demand my money back, the merchant claims they do not refund their deposits.  I was never told this…so again, unsatisfied consumer calls to dispute fee’s with credit card processor directly, again it is now up to the merchant and credit card company to determine where the fault lies and who will cover the loss.

Basically, word of caution to avoid chargeback’s would be to obtain a signed receipt with every credit card purchase.  In the instance where this is not possible (online business ect) then the merchant should format some type of documentation that can free them of ever having this happen.

It is important for a business to have their terms and services understood by their consumers, post signs, issue additional paperwork essentially anything that would help defend that purchase, should the credit card co’s come a knocking with a customer grievance.

Chargebacks are a source of grief to the processors and often times before even approving a merchant to accept credit cards, things like fulfillment time and refund policies are strongly reviewed ahead of time, to help assess the potential risk the business may present.  Chargebacks are not a good thing, too many of them will give your provider good and valid reason to terminate your processing.

MDR’s ARE NEVER WRITTEN IN STONE

So, you have come to a point where you feel you are not getting the best possible deal from your provider.  This feeling has come about as a reaction to some sort of stimulus…..with regards to merchant services, maybe you had received a call or seen a flyer or spoken to another merchant about it.  However it was incepted there is no denying that you are going to call to re negotiate your terms! There are a few tips and things you can do to better your odds of getting what you want.

1. EDUCATION AND INFORMATION –
To get what you want you need to speak with CONFIDENCE.  This can only be obtained through Knowledge which requires Education that comes from Information~  So the more you know about what you want, in specifics, and the better educated you are about your provider’s capabilities in terms of service, the better chance you have of clearly and realistically stating your desired terms going forward. Know your own personal history with the company and draw on that for justification of your request do your research on what you want and know specifically what you are looking to change.  Note to the person you are re negotiating with that you are not trying to take advantage, but rather update your profile to reflect what pricing trends may benefit you.

2. COMPETETIVE OFFER
The good old fashioned competitive offer trick! This requires truth and diligence to be a beneficial point of reference in order for your current provider to take your request seriously.  Seek out quotes from competitors, flyers and basic marketing materials like online ad’s are NOT always what they seem to be, and often insubmissable as a truly competitive quote because we are not seeing the FULL CONTRACT. Be sure to get to the contractual stage of a proposal before using it for competitive edge. Look out for hidden or embedded fee’s and only draw on a competitive offer that is valid and will help you, as it will be scrutinized by your provider for authenticity  if it is truly a better deal and legitimate, your current provider will match or beat it when contested to.  It’s only fair as your request for revision will not cost them more then what they would loose if you are no longer a customer!

3.  CHOSE YOUR BATTLE
Be realistic in your request. Realize that interchange does exist and when it comes to saving money on your processing, it is a give and take relationship with your provider.  Keep your request beneficial to you, but fair to the company as well.  Always have a plan B or alternate request, so that you can be flexible and they will in turn be flexible with you.  These providers can often do very little with regards to visa/mc pricing so try to push and pull on other fee’s and meet your merchant provider half way.  Nothing is free, but it can be fair~

Authenticity in your request and confidence whilst delivering it will help you to come to a more mutual agreement.  It is always best to sign, or receive authentication of said changes from your provider, it is not considered rude at this point to request written documentation of your new terms and svc going forward.