Posted by Sharon Robb on Mon, Jun 14, 2010 @ 03:31 PM
K - we promised more on this and Dorsey and Square are moving along in Beta, press, pricing and more - let's talk!
First - take a look at our first blog re Dorsey's Square - the card reader, the premise and the promise of a very unique credit card processing product - with your iPhone or Droid. Awesome. What's new since our first writing...
Pricing - it's out. Currently Square is charging 2.75% of the sale and 15 cents/transaction for card present and 3.75% for keyed transactions (card not present - always more costly). As far as standard industry pricing goes - the swiped fee is high, the keyed is high, the transaction cost is pretty average. Square does not take into account standard industry discount pricing (qual, mid qual and non qual). No costs for payment gateways though, or PCI, statements or monthly minimums - attractive...if you are a merchant with low processing volume.
A recent Fast Company article by Noah Robischon touts the device as an evolution and "champion" in the big bad credit card processing industry (we suffer this indignity a lot but I like this rag...must they???). We AGREE with Fast Company - we like the product - it's cool and of a new era but take umbrage with a few liberties in the article and well, portions of the Square site and claims.
The article -
- The "disruption that could be caused by Square in the convoluted credit card system". Ah convoluted - agreed - we'd like things (i.e. all those interchange rates) to be simpler (like taxes maybe?) but credit card system? card issuing and acceptance are far from one and the same - vague terms like these are confusing and muddy the waters.
- "the card company"...same thing. This is? Visa? MasterCard? the issuing bank? the ISO (independent sales organization?) - all different interests and roles.
- Merchant Fees and chargebacks are deducted at the month end making it difficult for businesses to gauge cash flow? (Square settles daily) Um, anytime a merchant likes he can opt for daily assessments, in fact, if you have lousy credit the processor will insist - it's not a plus and inhibits cash flow. Why pay daily when you can divy up at the months end?) - and todays processors give merchants 24/7 real time access to the daily details of their transactions, chargebacks, sales volume, and costs - todays merchant is more savvy than Robischon gives credit and so is the big bad processor.
- As a "result of the financial crisis, more and more of a microscope is being placed on this industry". The scrutiny of interchange has rightly been in place for a long time - long before the financial crisis caused in large part by the subprime housing debacle.
- Square has a more transparent pricing alternative. Since Visa and Mastercard went public - wholesale pricing has been available to every size merchant - it doesn't get any more transparent than cost plus.
- A Free "reader" - don't know a merchant account provider today that isn't giving away equipment - old hat.
Don't get me wrong - we like the concept of Square! but with 1000 "Beta" users already, I doubt Visa or MasterCard is sweating bullets that this is what will evolutionize electronic payments. We still maintain that the concept and product serves a unique market - P2P payments and the small volume merchant. Neat product - disappointing article.
The Square site and cost comparisons to a "typical merchant account" - oh come on - have you googled merchant account lately??
- No contracts - pulllleeeaze - 17 pages of terms and conditions covering underwriting, card network rules, reserves, PSA (payment services agreement) that must be signed prior to processing, no guarantee or warranty that service will work or be available and well, so on.
- Free Reader - already addressed this - you want a free one - ask any merchant provider - no problem. You want a free, wireless credit card processing terminal? - they'll probably give you that too....
- Free setup - Google please - we've been providing free applications and set up for YEARS and so is just about everyone else.
- Card present discount rate??? 1.79 quoted by Fast Company as industry average - close - pretty ballsy of Dorsey to claim 2.9%.!
Lastly, when you don't get funded or your money is held in reserve - who ya gonna call? Not Square - I guess you can email though. I can think of at least a million merchants who definitely might not like that.
Come on guys - we like your product... it is techie, gadgety cool - but let's make sure we put it ALL out there. Squares terms and conditions (contracts in laymen terms) also notes transaction limits on the site - but we can't find'em - crucial to processing merchants....don't want to get that big order only to have the funds held because of going over the established "limits".
We don't like the complexity of the industry any more than our merchants do (try training new staff!) - but the issue is not as black and white as some such as Robischon would make it out to be.
Posted by Sharon Robb on Tue, Feb 23, 2010 @ 12:06 PM
All of the December 2009 and January 2010 credit card processing industry rags are touting mobile payments as "the thing" in 2010. Growth, applications, and opportunities are arriving rapid fire - and so we're going to try help our merchants sort it all out (I'm dancing as fast as I can).
So....let's launch with the newest gadgetry that's creating a great deal of buzz...Square.
Jack Dorsey, founder of twitter (very cool we agree) -announced a new venture - development of mobile payment technology compatible with Apple's iPhone called Square. The hardware and service is in "beta" mode (just testing so chill folks) but it sure has raised a ruckus of attention in the online community.
The ruckus is two fold -
One is WOW that's mobility in a small convenient package. The Square, is little, plugs directly into the IPhone, and allows the iPhone user to accept a credit card payment from anyone, anywhere - swiped (lower risk).
Two - it comes with the merchant account with a simple, flat rate transaction fee (no rates on the website so we only have rumors and tweets for info). Excuse me? No application, no underwriting? Fascinating.
Jeff Green, Editor-in-Chief of Payments Source - talks about the device and service in his Editors Letter in the January/February 2010 issue. It's exciting and Dorsey's getting a lot of publicity, but things are all quite vague when it comes to the payments processing and Green notes in his letter that perhaps Square will act as an payments aggregator, such as PayPal, running all of the transactions through their own merchant account. All still up in the air - but a quick gander at the site turns up a few vital points for our small business friends always looking to reduce costs we know -
- Square touts No contracts - I printed 17 pages worth of Square "Service Agreements and Payment Services Agreements" right off the site. Most of us don't need to check with an attorney to know what that means - legal agreement = contract. There might not be a length of service contract but anybody taking money from and delivering to, bank accounts electronically is working on a contract - has to be. In this case apparently there may even be two - one with square and if they deem it so, one directly with the payment processor.
The Square Service Agreement -
- No warranty - this one's pretty clear - at this poing in time Square does not guarantee it's service - for availability, dependability or risk. No mention of PCI DSS.
- Communications - electronic only currently - no matter what your question or issue - no calling'em.
The Payment Services Agreement-
- Reserves - "Reasonably determined" - new accounts have to have one (I'm guessing that's everybody) equal to 14 days of sales activity plus pending disputes. The reserve could be raised or removed based on activity, credit reviews etc. If you don't keep sufficient funds in the reserve it may get funded from your Square Account, i.e. credit card processing sales.
- Transaction limits - Square accounts have transaction limits - no idea what these are yet - stay tuned.
- You need to provide a written receipt to your customers for any transaction over $15 - you can give the customer the option to decline it of course and you can offer an email receipt, but not in lieu of.
- Availability of Funds - doesn't say when you get your money - 2 days? 3? 5? just that Square can limit your access to your Square account funds if they feel they are at financial risk or other agreement parameters are in dispute.
- Fees - doesn't say.
Ok - so remember Square is in Beta - I'm sure they'll work out these kinks but at quick glance we can't help but think these current questions raise some real issues for businesses. The application does seem fun for P2P (person to person) payments - think garage sales, girl scout cookies, PTA fundraisers, etc. or maybe the handyman, lawn guy, tupperware and avon lady, that doesn't do enough processing to warrant their own merchant account but wants to offer the convenience of credit card sales. That's cool.
The term small business is pretty broad though. Most merchants we service need electronic payments professionals to navigate POS equipment, funding and value added services above and beyond the "merchant account".
Today there are a number of overwhelming factors that impact a merchant's ability to process credit cards securely AND profitably. Merchant account agreements are indeed complex and typically include 8-12 types of fees depending on the type of card used in the sale as well as the method and equipment used in the processing. Cash flow, prompt funding, fees and rates, PCI DSS are essentials for processing success and a casual approach isn't recommended.
We'll be hearing more about Square for sure - I'll keep you posted - in the mean time - think payments professional to answer your processing questions about rates, equipment and "going mobile with your business".
Posted by Sharon Robb on Wed, Feb 10, 2010 @ 03:09 PM
I waited to write this post, in hopes that the new year would wreak some sense out of the chaos regarding the "credit crunch" that has besieged US businesses. The information "out there" is ...conflicting at best. But you don't have to be a news junkie to get the gist - US businesses are failing at alarming rates - and cash flow seems to be a predominant issue.
Accordin
g to the American Bankruptcy Institute - an organization that tracks insolvency in this country, business bankruptcies increased by 44% from 2006 to 2007, and 54% from 2007 to 2008. Ouch.
Ironically, a recent article in the December 2009 issue of CFO poses the argument that access to credit is not at issue - and the "contraction in small-business credit is actually due to a lack of demand". Is this possible? The author Alix Stuart goes on to cite a survey by the National Federation of Independent Business (NFIB) in September in which only 10% of 827 small business owners surveyed said they couldn't access financing.
What's with all the bankruptcies then?
The fact remains that SBA lending between September of 2008 and 2009 was down by 35% (remember even with SBA backing - it's your bank's money being loaned). Even private investment in US small business remains markedly low when compared to recent years.
General consensus despite the naysayers remains - access to capital for todays new and veteran business owner remains negligible.
Merchant cash advance for processing merchants remains an option for access to capital. This advance is based on a merchants future credit card processing sales. Unlike a traditional loan there is no set payment amount because payments are based on a percentage of the monthly credit card sales volume and as such fluctuates with the merchants income - a big plus.
Remember some of the other benefits we've touted in our blog post - no personal guaranty, quick approval times, fast cash in the bank, etc. The drawback is typical of fast money - cash advances can be costly....but if the alternative is bankruptcy, is it worth it?
Unlike in years past, even merchant cash advance providers are taking a closer look at the merchants they work with. Merchants must show a processing history of 4 months to even a year as well as a certain monthly volume in sales, may be asked to produce an active property lease, and/or may even have their credit checked (say it ain't so! is there no end to the scrutiny?).
As a merchant account cash advance provider we don't claim to know or provide advice as to whether this option is a good one for each and every one of our very unique merchants...but we can't help but think it's a viable one - if bankruptcy is looming.
Typical merchant use for cash advance use to be things like paying taxes and remodeling, but our industry is touting new uses by their merchants with the money advanced on future sales. Not just in survival mode, merchants are using the money to refine their product lines or tweaking their brands in reaction to the marketplace.
We like this.
Posted by Sharon Robb on Mon, Nov 23, 2009 @ 06:22 AM
Fascinating news in this mornings Observer - Charlotte's Salvation Army is testing credit card acceptance - Visa, MasterCard and American Express - at a number of red kettles this Christmas season throughout the city.
Jim Price - the agency's director, points out that folks appear to be carrying less cash than in years past (pretty observant) and other payment options seem to be called for.
Apparently - the idea has been tested in a Salvation Army chapter in Dallas/Fort Worth and guess what? Credit card donors gave an average of $14 at the Kettle, compared to the average $2 given by cash donors.
What's interesting about this picture?
- It is textbook credit card processing benefits - i.e. using credit cards can increase the amount of your average ticket or sale or in this case donation.
- Using credit cards makes tracking sales easier.
- The salvation army is a smart merchant, combining what we know about trends in credit card use and cash on hand.
- Mobile or wireless credit card processing is easy!
The Salvation Army is not rated by Charities Navigator because of the agency's religious mission and thus a lack of reporting requirements -but sure has been around doing good works for a long time.
Charlotte's Salvation Army Chapter is working to serve more families than ever before, like all of our charitable organizations this year. Check out the agencies mission and give'em a call if you have the faith in their missions and outreach.
We can certainly say this about the organization - their implementation of a program to accept cashless transactions or credit card payments-donations is smart, cost effective and likely to increase cash flow.
I like that in my charities.
Posted by Sharon Robb on Fri, Aug 28, 2009 @ 08:33 AM
Working Capital for Processing Merchants - Not a Moment Too Soon
Is the economy looking up? How are your receivables? Did the bank close the line of credit? Slash your credit card limit?
These issues have been a mainstay in the media for the last year, including their impact on small business. Access to cash in the recession has become unusually difficult - and it was never easy.
Despite the stimulus, small to mid size businesses continues to feel the credit crunch. Creative financing is a fact of entrepreneurship. Family funding (pursue with caution), credit cards, SBA and bank loans, personal lines of credit. Some of the options come with impossible paperwork including years of tax returns, financial projections, business plans and a promise to hand over our first born. Financing was tough - now it appears non-existent.
Merchant cash advance products and services based on a merchants future Visa and Mastercard sales have been around for a while. Clearly these are not loans. There is no specific payback date and often monthly payments are based on overall card processing volume - hence the payment can fall or rise based on whether the merchant has a good or bad month.
Like all legal contracts and financial products, merchant cash advance requires research and education. Cash advance is not inexpensive but it comes with a great many benefits in times like these -
- access to cash can be quick, with no indepth paperwork required from the merchant (usually requires 4-6 months of card processing statements).
- there is no personal guaranty or collateral required - remember the money is advanced against the merchants future sales
- approval rates are high with minimal qualifications
- statistics show that despite its cost - many merchants renew their cash advances
Some of the top uses for merchant cash advance amongst merchants appear to be remodeling, inventory, tax payments, and working capital. The monies can be used for any business purpose and the purpose is not a part of the application process.
A cash advance based on a merchants future processing sales is clearly an option that calls for consideration when it comes to a need for immediate cash flow, something the SBA and our financial institutions are simply not renowned for.
Posted by Sharon Robb on Wed, Jun 17, 2009 @ 09:48 AM
The Key to Getting Paid.
A recent Get Paid survey by Intuit turned up some astonishing results regarding small business owners across the country - do any of these describe you?
Nearly 20% of small business owners admit to forgetting to invoice or follow up on an overdue invoice. Fifty percent of these respondents admit that this is due to a lack or organization and/or lack of an automated system.
66% of small businesses still handwrite invoices (no!), use word processing programs and spreadsheets or simply don't have a standardized method.
Nearly 40% of small businesses have aging invoices over 30 days.
42% of small business owners claim that trying to get paid quickly by customers is one of the top issues that "keeps them up at night".
Small businesses average $1500/mo in overdue customer payments.
And so it goes. Why do small business owners reject technology and flexible payment options proven to address exactly these issues? XBS has so many cost effective solutions geared to ease the administrative burden of the small business owner while increasing cash flow and often even revenue that we are having a real hard time with this issue.
Electronic Invoice presentment and payment (EIPP) puts accounts receivable control at your finger tips - doesn't matter if your an accountant, plumber, auto body shop or childcare service. Imagine having an overdue invoice report available at a glance - or automated sending of preformatted customized overdue notices to all of your past due customers. XBS PaySimple.
Suppose your customer could click the invoice and pay with his business credit card and receive a copy of his paid invoice simultaneously to print or file electronically - XBS PaySimple plus an XBS merchant account with competitive industry pricing and unparalleled merchant resources.
How about a secure gateway coupled with a virtual online terminal for credit card processing - that allows your business to bill your customer monthly, in 3 easy installments or any other scheduled payment plan per your customer agreement - how about that? (think health clubs, subscriptions, church's and non-profits, maintenance plans etc.) This does not even require your customer to click and pay, should this prove too labor intensive - you just set and forget. XBS makes automated recurring billing a snap - your customers credit card is processed, and an email receipt is sent. Billing this way is easy, time saving and doable. Very doable.
The writing is on the wall. Small businesses must do more than be good at what they do (service) or have a quality product to sell - they must compete in an inequitable marketplace. Customers want to feel good about what they buy and now, just as importantly, who they're buying from - or, studies show, they move on. This means a complete package from the order to the bill (I can't tell you what goes through my mind about the product or service when I don't get a bill OR I get one that I have to make my own copy for my records, write out the envelope, stuff, seal and stamp - no wonder I forgot the check!)
Small and mid-size businesses need a plan to ensure cash flow and customer payment and collection, as painful as it seems, should be a top priority. Small business expert and author Denise O'Berry hits the nail on the head at Small Business Trends when 5 of her 7 strategies to pump up cash flow revolve around invoicing, merchant accounts, recurring billing and other stuff that XBS has been touting from the roof tops.
If you need and want to improve your cash flow - call us - XBS can bring your business up to speed.
Posted by Sharon Robb on Thu, May 21, 2009 @ 08:42 AM
Maybe if We Don't Tell'em They'll Pay with Cash
Why don't all merchants advertise credit card acceptance and customer payment options? I'm not talking about the local department store or Best Buy, they KNOW it's important, smart and necessary. I'm talking about the plumber, antique dealer, handyman, painter and fruit stand guy?
Almost every merchant account provider advertises what is common knowledge in this industry - credit card acceptance increases sales and cash flow - nice benefits to tout in these days and times. Lately I've noticed though, that some merchants keep card acceptance to themselves - informing the prospective customer only when asked.
Some merchants I know are just hoping and praying that the customer will pay cash - "gimme that green" - because they just don't want to pay processing costs (i.e. - this is what we call...the cost of doing business). Some I guess just don't grasp the need or significance - you know, let the customer do all the work.
Is it significant?
Well let's take me for example - my husband says I buy a lot so I could be considered a "good prospective customer".
Cash. Average amount in purse? $3.00 - and some of that is loose change. I just don't carry it since the advent of debit cards. Disappears too quick - tough to track - it makes me sad to part with it.
When shopping in unusual places? I gravitate towards the antique dealer with the MasterCard/Visa sign on his table (now that's a vendor!) Pulllleaase don't make me have to ask - in that case I may just walk on by - too much work!
I use Angie's list for service vendors and simply skip those that don't list card acceptance. Move right on to the next A rated vendor because there are plenty I assure you (speaking of which what happened to the company service profile on the list - I didn't see any vendors with customer payment methods listed this am - did Angie change company profiles? - say it ain't so! - stay tuned).
I can't begin to tell you how many times we here at XBS here this from our prospective clients - why should I advertise or, take cards? Nobody ever asks me if they can use one.
Of course not! That's because I didn't even stop in.
Posted by Sharon Robb on Mon, May 11, 2009 @ 08:39 AM
Is the United States Postal Service out of time AND money?
It's time to convert to electronic invoicing. Effective today, the US post office increased the cost of first class stamps as well as several other products and services, for the third year in a row. The agency is in the hole and in danger of running out of money this budget year.
In addition to increased costs - the USPS has asked congress for permission to drop a delivery day - another step towards reining in expenses while in survival mode.
How long will it take to get your invoices and statements to your customer - and how long before payment comes back? What will it cost - for the initial invoice, the statement, the reminders, etc.? Is your company doing everything it can and should - to implement at the very least, some sort of operational efforts at going green?
Businesses looking to cut costs and increase cash flow (ah, that should be everybody) should consider jumping ship now - the combination of electronic invoicing with electronic payments is a tool that will eventually become a foregone conclusion.
Efficiency, customer satisfaction, cost cutting, increased cash flow, quick and easy secure payments is a vital requirement for the success of every business. The combination of e-invoicing with a fair and profitable merchant account program is the next wave - don't wait until USPS changes force the issue - get ahead of the curve.
Combine an electronic invoicing program like XBS PaySimple with interchange cost plus pricing for merchant accounts and businesses can go green, save in substantial overhead/labor costs, increase cash flow immediately and lower processing costs.
Win-Win.
Posted by Sharon Robb on Fri, Feb 27, 2009 @ 08:23 AM
A Direct Relationship
I found an interesting quote today in the business section of the Charlotte Observer about "cash being king" and that the current economic climate is rendering cash flow fashionable again. Really?
Truth is a lack of cash flow is one of the predominant reasons behind business failure (i.e. just look at our auto industry). As experts in the payment industry, we're here to tell you that cash flow management is - well - more than just fashionable or trendy - in fact - it's high on the list of processes that demand best business practices . Joseph Anthony and the microsoft small business resource list 7 ways to improve cash flow - it's no irony that the top 3 revolve around customer payment.
Cost Effective Solutions
XBS PaySimple which combines electronic invoicing with ACH or direct debit and credit card payments is one tool that provides an easy to use vendor/customer interface that provides a strategic method for invoice tracking and payment collection at little cost. Think about it - send a custom invoice (recurring even - same time every month!) via email and your customer just clicks and pays OR draft the customers checking account and send the copy of the email invoice same day.
A well managed invoice process improves financial operations and streamlines the order to pay cycle. That's a big enough benefit, but consider the rest -
· Reduced labor and processing costs - no more staff to print, stuff, and mail invoices...and statements.
· Ease and flexibility to offer installment sales and discount terms for quick payment.
· No more postage (up to 44 cents in May - almost $1 a customer/mo. for an invoice and statement).
· Lower printing costs - envelopes, invoices, return envelopes ...
· Fewer payment delays - streamlined billing speeds collections...are you pushing 60? 90 days?
· No more lost invoices or worse, lost checks.
· Easy reporting and tracking capabilities.
Small Investment - Big Returns
We're surprised every day by the casual approach businesses take to their customer payment practices and solutions. Contractors, child care providers, pest control businesses, utility companies...the list is endless - biggest objection - price. Scary. With PaySimple as an example - a leading SAAS solution can be implemented for less than $350/yr - my window washer charges that for a single job and he really needs a billing system.
Investing in a service that can markedly help you track and increase your overall cash flow is imperative to the health and success of your business. Check out the XBS PaySimple Demo and if you care about your business (and your customers), by all means do your research, and then DO something about it.