6 things businesses wish they knew about credit cards

Businesses may have been accepting credit and debit cards for years, but that doesn’t mean they understand all the terms, fees and options available to them. Just like the owner of a start-up, they have questions! That’s why we’ve invited our new Vice President and Merchant Services Specialist, Curtis Beames, to answer common questions about credit and debit cards. He has more than 20 years of experience in merchant services.

In this first-of-two-blog series on the topic of merchant services, Curtis will cover six “what-I-wish-I-knew-when-I-started-my-business’ topics.

1 — Should I rent, lease or buy a credit card terminal?

We always recommend buying. Card terminals usually cost under $300. Leases and rentals end up costing you hundreds if not thousands more. Leases are the most expensive, have the longest terms, and often renew automatically. With leases and rentals, you never own the equipment even if you have paid for the entire term. Many processors have a short-term interest-free plan to buy the machine. Ask for it when you need your first terminal or are upgrading your current one. We even have starter packages at under $200 when a customer opens a new account with us.

2 — What are the various fees?

Interchange — This is the main fee charged when using MasterCard, Visa and Discover. The fee varies by the type of card, the merchant’s type of business, and whether the card is present at the time of purchase or keyed in. The interchange fees are paid to “associations” of banks and ultimately are paid to the bank that issued the card. This particular fee is the same no matter which credit card processor is involved.

Assessments — This fee is charged by the card brands such as MasterCard, Visa and Discover. Assessment fees vary slightly, but average about 0.13% plus 2 cents.

Fees — Fees are charged by the credit card processor. They can vary from a few cents on high volume accounts to as high as 2 percent or 3 percent. They are usually determined by volume and type of business. The credit card processor collects all three of the fees above and sends Interchange fees to the associated bank, the assessment fees to the card company, and keeps the processor’s fee.

3 — Can I send the deposits to my bank and can I change the bank later?

Yes, no matter who processes your credit cards, you can send your funds to any U.S. bank or credit union. You can even have your card funds go to one account and have your fees taken out of another. Of course, it makes sense to use First Utah Bank, your community bank, for your accounts AND your card processing. Did you know you have access to your merchant services reporting online?

4 — What are my options to pay the credit card fees?

All processors deduct the fees automatically. There are typically two options — daily or monthly. Most processors will put you on daily deductions to begin with, because it lessens their risk of not getting paid. Many merchants prefer this method so they don’t have a large withdrawal at the beginning of the following month. It is a little harder to reconcile with accounting, though, as the settlement report and the amount deposited are not the same.

Typically, you need to request the monthly option if that is your preference. This is easier to reconcile as the deposit will match your batch settlement report and the bank deposit. Merchants do have to be ready, though, for the fees to post the following month as it can disrupt cash flow.

5 — How quickly do I get my money?

The standard is two business days. This is how long it takes for the ACH transaction to be posted through the Federal Reserve Bank, since most batches are closed after 8 p.m., which pushes funding to the next business day. Some processors can offer faster funding if batches are closed before 8 p.m. ET.

6 — How will the deposits show when they get my bank?

Usually the deposit will have one or more of the following three items in the description:

Merchant number

Name of your processor

Generic reference on merchant or merchant deposit

Occasionally it will be none of those, but you should be able to get the exact description from your processor.

We invite you to consider First Utah Bank for all your business needs — checking and savings accounts, treasury management and merchant processing. Would you like to talk to Curtis Beames? You can call him at 801-308-2357 or complete the form on the First Utah Bank website.