New Breakthrough Reduces Cost Accepting Credit Cards Payments

When a Business decision-maker is being pitched on anything new, all they want to know is the following: 1) What is it? 2) Why should I care? 3) What is it going to do for me?

As some decision-makers do not have the patience of a gnat, here is what you need to know: 1) Rates to accept Credit Cards on every single transaction can vary as much as 30-40%, due to additional data that Visa and MasterCard require when a Commercial Card is being presented. 2) Unless their Credit Card Terminal or Point-Of-Sale system has the computer memory to capture all the additional data, they are currently paying 30-40% more on all of these transactions.  Even some Payment Gateways may not be programmed to overcome this problem. 3) What the new technology that has now been developed can do to overcome these problems is to correct them seamlessly in the background.

In order to better understand this opportunity, let us start with some basic information. Every time a Business or an Organization such as a Trade Association, or a governmental entity, such as a City, State, or Federal Agency such as the U.S. Patent Office, who collectively are called Merchants, accepts credit card payment from any Consumer (e.g. Individuals) or Commercial (e.g. Business, Organization, Government) account, the Merchant incurs a cost that they have to pay.  That is because the Bank that issued the Credit Card, called the Issuing Bank, is ostensibly underwriting a short-term loan to the Cardholder.

Credit Card processing cost is comprised of three components: 1) Interchange: The rate schedule established by Visa and MasterCard that makes up over 80% of the credit card processing fees. These Interchange costs all go to the Issuing Bank. 2) Assessments: Visa and MasterCard recoup their operating expenses and make a profit, which is a profit center that augments Dues that they bill any entity that wishes to resell their services.  3) Processor Mark-Up: The Bank, Credit Union, or Independent Sales Organization (ISO) that signs up anybody to accept Credit Cards, along with the Credit Card Processing firms such as First Data, TSYS (formerly Visanet), and Chase Paymentech which serve as intermediaries to do the actual back-end processing of the monies tendered all have to meet their operating costs and make a profit.

Because the Bank that has issued the credit card is going to make 75-90% of the monies that are being used to purchase goods and services, they have absolutely no incentive to proactively alert the Merchant who is the party that is selling the products or services to the buyer, that they are highly likely to be incurring extra costs, because they issued the credit card to the buyer; not the seller!  Why is this occurring?

Visa and MasterCard establish the rules and regulations on the pricing for every type of credit card that is issued in the United States.

And, they classify pricing based on the risk that they assign to each type of Category based on the type of Credit Card being presented by the purchaser of the products or services. These Categories include Corporate Cards that itemize business and travel expenses and Purchasing Cards (sometimes called P-Cards) which are used to procure products or services versus sending a Purchase Order in a Business-To-Business transaction.  The latter two (2) types of Credit Cards are eligible for Visa and MasterCard special Category pricing that Credit Card processing resellers have largely ignored.

Even in the case where a Business, Organization or Government entity has a Credit Card Terminal, Point-Of-Sale Terminal, or Payment Gateway that has the capability to obtain the best pricing for accepting a credit card from another Business, Organization, or Government entity, the transactions that are eligible to save up to 1.5% on that transaction are oftentimes not settled by the Credit Card processing provider because their Credit Card Terminal, Point-Of-Sale Terminal, or Payment Gateway is not capturing the data elements that need to be provided to qualify for these special rates. And, similarly, if an employee of the Merchant inadvertently omits any of the requisite data requirements, they would not qualify to save up to 1.5% on that transaction.

The new proprietary Credit Card processing technology works on any Credit Card Terminal, Point-Of-Sale System, or Credit Card Terminal that has been certified by major Credit Card processing platforms. The new proprietary technology overcomes the problem of employees not entering the data properly when they are entering in the Client information to process any Credit Card Transaction. Implementing this technology is the only way Merchants can be assured of optimizing their cost savings in accepting these special Category pricing Credit Cards that they are not benefitting from currently. Procrastination, in this case, can be expensive.


Ron Feldman
Ron Feldman
RON has been recognized by Who’s Who In California and Who’s Who In Lodging. He has taught Business Services Marketing at the Undergraduate and MBA University levels. Feldman holds an undergraduate degree in Mass Communications, as well as a Masters Degree in Educational Psychology. Feldman previously had been retained as a consultant twice by a major publicly traded NYSE payments industry company to re-engineer their order processing, and restructure their telecom costs, as he had done for the Clients of the second largest Utility Auditing Company in the World. He has saved businesses and organizations millions of dollars in performing Utility Audits, since 1994. He was also retained by another NYSE Retailer to advise them in regards to their payment solutions for their customers. Feldman received a U.S. business method patent for a transaction processing technology focused on the hotel industry that he invented while working with Citicorp in developing their global multi-party settlement system in the late 1980’s. During that era, Feldman worked with SITA/Sahara, a global Internet-based organizations of airlines and hotels, and was formerly Vice-Chair of the Association of Travel Marketing Executives. Feldman has represented the United States in the World Championships of Tournament Bridge in 1982, 1986, and 1994. He founded the first accredited organization of Professional Bridge Players. Feldman also served on the National Conduct and Ethics Committee of the American Contract Bridge League (ACBL), as well as its National Marketing Committee. He resides in Petaluma, California in the Sonoma Wine Country.

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