Tuesday, June 20 2023
If you are a first-time or small business owner, then you may have heard of flat-rate credit card processing. Every business needs a provider for credit card processing, as it is one of the most important aspects of any business--the ability to accept payments. However, choosing a provider and a fee structure can be a challenge that takes time, energy, and research. If you’re going to succeed, then you need to be familiar with every type of processing service and why they might be suitable for you. One of the most popular services purchased by small businesses when it comes to credit card pressing is flat-rate credit card processing. Flat-rate credit card processing has many benefits, but it's not the right situation for every business. This brief analysis of flat-rate credit card processing will give you some insight that helps you decide whether flat rate credit card processing is the right option for you, or if it's a bad choice for your specific business. Credit card processing isn’t always the easiest concept or industry to understandAs a business owner, you are already aware of some of the struggles that you can experience when trying to determine a credit card processing provider. It is one of the most difficult things to do as a business owner, especially if you are trying to estimate the cost of accepting credit cards using a merchant services provider. Determining these costs can be difficult, which is why some business owners are drawn to a flat-rate processing model where the pricing is easier to understand. However, these decisions depend on so many factors that it becomes a time-consuming task to determine which pricing model is best for you. To make it easier, this article will serve as a knowledge base and guide to helping you understand the factors that go into this decision and what concepts you need to understand. Definition of flat-rate credit card processingThe first important concept of payment processing to know is what exactly flat-rate payment processing is. If you’re going to determine if it is the right choice for you, then knowing what it entails is the first and most important step. With an understanding of what flat-rate credit card processing is, you’ll be well on your way to understanding it at a deep enough level to decide whether it is the right choice for you. Credit card processing isn’t free. It costs the merchant a fee to implement and accept payment processing solutions. The variable here is what the cost is. Just like in any purchase, there are varying costs from different providers. Though consumers don’t consider it, it is the reality of being a business owner. In addition to trying to find the lowest fee, merchants also face the possibility that credit card processing fees will vary within the credit processing provider that they choose. One of the most significant and common reasons for credit card processing fees to fluctuate is the various fees charged by Visa, Mastercard, and other suppliers for using the card. In addition, there are fees charged by the issuing bank for the transaction and there are a couple more mouths to feed along the way. There are hundreds of services that are involved in this process and each one takes a different sized bite. For this reason, credit card processing fees can often fluctuate and have business owners confused about what they are actually paying to process credit card transactions. To simplify things and make it easier for the merchant to understand, some of the best credit card processing companies have begun to offer flat-rate credit card processing fees. With flat-rate credit card processing fees, merchants are more able to predict exactly what the cost of accepting credit cards will be and forecast that into their profits and margin calculations. It comes with many benefits, but it’s not right for every business. Benefits of flat-price processingAs you can imagine, there are many benefits to flat-rate processing and that is why it is so commonly used by businesses that are seeking simplicity in their processing arrangements. When you have flat-price processing, there are a few aspects to love about your credit card processing agreement. PredictabilityThe first benefit of using flat-rate credit card processing is being able to have a predictable credit card processing fee each month. With predictability in the rates that you are charged to process credit card transactions, you can not only plan your expenses better, but you can also price goods and services better to provide you with a more consistent margin. When you know what your processing rate is going to be, the need to fluctuate your item pricing will disappear. You can plan ahead and be sure of what you are going to be charged to process credit card transactions. FlexibilityWhen you have a flat-rate processing plan, another benefit that you will be entitled to is the flexibility that comes with these processing plans. With flat-rate credit card processing plans, you often don’t have to get locked into long-term commitments that hinder your flexibility and make it difficult to plan ahead. For small businesses looking for short-term credit card processing or to lessen the long-term overhead for their business, this is the ideal situation. Flexibility is also a benefit to any business that might be considered high-risk or in general need of agility due to possible changes in the business model, revenue, and other aspects affecting their business. SimplicityWhen you work with a flat-rate credit card processing contract, one of the most important benefits is the simplicity of the contract. As we touched on earlier, traditional credit card processing agreements will often feature clauses, charges, and fees that you don't even have access to seeing the details on. For this reason, in those arrangements, you can never tell exactly what your credit card processing fee will end up being. However, with a flat-rate processing plan, you can always understand what the fees are and exactly how they impact your business. You can plan to include enough margin for your processing fees and make it easier to understand the implications of your credit card processing agreement. Who is a good candidate for flat-rate processing?If you are considering flat-rate processing for your business, you probably want to know a bit more information about who is a good candidate for flat-rate processing and which businesses should pursue flat-rate processing for their processing needs. It is very easy to identify merchants that are good fits for flat-rate processing because of the straightforward nature of flat-rate processing. StartupsStartups are the ideal businesses for flat-rate processing because they usually need to have less overhead and a shorter contract. Startups are often young and unstable, so having a processor that is flexible in the terms is ideal. Startups also typically have a lower volume of transactions. Many credit card processing companies have solutions that are specifically geared towards the needs of startups and young companies. Small BusinessesSmall and local businesses are another frequent customer of flat-rate processing solutions. This is because small and local businesses typically have a much lower volume of transactions than larger companies and they are unable to attain better rates. In addition, small businesses are slightly more unstable and higher risk than other companies and don’t have the leverage to get favorable contracts with other processing solutions. High-Risk BusinessesBusinesses that are higher risk industries also tend to use flat-rate processing because they are subject to riskier transactions that could lead to increased fees by processing companies. If they are able to get an account with a flat-rate processor, then high-risk businesses typically take that opportunity because it is a favorable situation for them. Doing better than flat-rate processingFor some, flat-rate processing simply isn’t a great option. This leaves many wondering if it’s possible to get a better deal than flat-rate processing. It’s true, there are some downsides to flat-rate processing and that is the reason that some choose to pursue other options. It is possible to get a better deal than flat-rate processing has to offer, but there are certain conditions that you have to meet. The first condition that you have to meet if you want to get a better deal on your processing than what flat-rate processing has to offer is that you have to be able to do a high volume of transactions. The higher the volume, the better deal you are going to get on your processing. Another condition that you will have to meet if you are going to get a better rate than what most flat-rate processing solutions have to offer is you will most likely have to sign a longer-term contract for your processing needs. This means less flexibility, but it is possible that you will get a better rate, though it will be dynamic and subject to change. If you are a business that cannot get flat-rate processing or you do a high volume of transactions for an established and long-lasting business, then you can possibly get a better deal by going with a solution other than flat-rate processing. Friday, June 16 2023
If you are looking to find out whether you actually own the residual portfolio that you are building, one of the best ways to do so is to ask the processor that you are working with to purchase some of the future residual. This is known as a buyout and it’s a very common step for agents to take when they are in need of quick cash from the sale of an asset like a residual portfolio. If you want to be able to take advantage of these buyouts, you need to be very familiar with what a buyout is and how it can be completed from your side. This guide to the process of selling merchant account residual portfolios can give you the knowledge that you need to conduct a transaction like this and get access to the funds you need Background residual knowledgeIf you are going to sell your merchant portfolio, one of the most important things that you will need to know is the background of residuals and how they work in order to determine the price that you might get bought out at. Most agents already know how residuals work--you sell merchant accounts and in return, you get a share of the income. For many merchant processing contracts, the merchant’s share of the income is about 50%, leaving the merchant with the other 50%. However, it isn't always the ideal situation for the agent to wait for their income on a monthly basis and some prefer to cash out their earnings up front. A buyout between the agent and the merchant processing company gives them the opportunity to do this and pursue whichever avenue they might want with their lump sum of cash. How much can you get for your residuals?If you are considering selling your share of a residual contract, then you also probably want to know what your earnings potential is from selling your share in these often steady and lucrative agreements. Generally speaking, a processor will pay 15 months worth of residual payments on your part in exchange for your 50% of the residual share in the merchant processing account. This means that the lump sum that you would be getting is 15 times the size of the monthly residual that you would otherwise be gathering from holding the contract. There are benefits and drawbacks to this. Benefits of selling your residual shareThere are a few possible benefits to selling a share that you have in a residual contract that continues to feed you money. The first is that you need quick access to cash. If you do, then this is one of the best ways to do it. A buyout comes with no obligation to pay back or pay interest--it is your money that you earned and you get to keep it. Another benefit of selling your residual share is that you might get something in exchange for nothing, so long as you are planning on leaving the merchant processing industry. If so, then it’s a win for everybody. You will get to be paid 15 months for a merchant processing residual that you would otherwise not be getting due to you leaving the business. In exchange, you will hand over the asset that you do have to the merchant processing account where they will continue to collect residuals on the account. The final benefit is that the payout of a merchant services residual contract buyout is actually pretty competitive, compared to what you might otherwise get with a fast lending service or another service that doesn’t have your best interests in mind. The payout of a buyout is guaranteed and you get a good rate. So, if you are in need of an injection of capital for a venture, debt, or any other purpose, selling your share of a residual contract might be the right choice for you. Drawbacks of selling your residual shareJust as there are benefits to selling your share in a residual contract, there are also downsides. One thing that you should be aware of if you are considering selling your share of a residual agreement is that you will not ever be able to get this contract back and earn the residuals for yourself. Once you have been bought out, the movement is permanent. The merchant processing company will not give you a chance to get back into it once your financial situation becomes less muddy and you want to get back in the game. That’s not to say that you can’t close new clients, but you won’t be able to work with the clients that you sold to the merchant processing company. In addition, selling your merchant account portfolio van be a bad financial decision. Though it’s tough to assess this because everyone is in a unique situation, the theory is that residual income is basically a guaranteed passive income stream, after the setup is complete. So, how much does a few hundred extra dollars a month mean to you? Without the share of the residual income, you are left with a lump sum, which isn’t so bad. However, it does leave a gap in future wealth generations and could make it harder for you to survive financially in the long-term. When to use a buyoutAs a young agent, there are probably multiple situations in which you feel a buyout of an asset might be the right decision for you. However, buyouts from residuals should only be used in some situations. One such situation is if the agent needs a sudden influx of cash to replenish savings or consolidate a debt. Another reason is if a merchant services agent or ISO has a large upcoming business expense that they want to make sure they have the freedom to invest if they so choose. With this flexibility, merchant services agents and ISOs are well-positioned to emerge stronger than ever from any situation that they find themselves in. Contact Shaw Merchant Group Partner Program to get a full evaluation or your merchant account residual buyout. Get up to 40 times your monthly residual to buy sell your credit card processing accounts. Friday, May 12 2023
Are you planning to become a merchant service provider? When it comes to selling merchant services, there are thousands of ISO agent programs for you to choose from. It is very exciting to become a merchant services provider. However, without the necessary information and details, it is very easy for you to fail. The merchant services business is both complex and lucrative. There are several ISO agent programs available. Choosing the one to suit your specific needs can be very tricky, but luckily we are going to give you expert advice and tips on choosing the best one. Some factors to consider in order to become a merchant service provider include the tools offered by the company you chose, technology use, and customer supports. This article paints a clear picture of what a great ISO agent program should look like. 9 Characteristics of a Good Merchant Service ISO Program The following are some of the key characteristics that define a reliable ISO agent program. A company with the following traits increases your chances of being successful in your credit card processing business. Exceptional Customer Service This is one of the most critical characteristics of a good ISO agent program. However, it is one of the most overlooked things when an agent wants to become an ISO and when seeking out an ISO partner. In the merchant services business, the worst-case scenario would be to receive complaints from your clients, and you are unable to get in touch with your merchant services partner. This can really ruin your business. It is a great practice to look for an ISO agent program that provides 24/7 customer support. In addition, the customer care representatives should be able to attend to any questions, both general and technical, within the shortest time possible. Same-Day Funds Deposits This is another important feature to look out for when choosing a ISO agent program. Clients do not have to wait for long to get their funds deposited into their bank account when a transaction is made. The same day funding is a great incentive that will leave your clients happy and also help you when promoting your business. Ability to Handle High-Risk Merchant Accounts Though you might not be dealing with clients who have high-risk transactions such as travel agencies, CBD companies, bail bonds, credit collections, medical marijuana, etc. it is important for the ISO agent program you choose to handle high-risk merchant account. You might get clients who operate high-risk operations, and therefore the benefit of this is to ensure that the business of your clients is running smoothly without any payment glitches. Great Discount Opportunities The fees associated with credit card processing are quite high. These high fees have been causing businesses to scramble. The cash discount or dual pricing program enable merchants to implement a service fee to customers who pay via credit card and issue discounts to those who pay via cash. The merchant does not have to pay a fee for each transaction they run, and therefore this saves them money. You should, therefore, ensure you find a ISO agent program that offers these opportunities. Assistance on Marketing When it comes to credit card processing business, marketing can be the hard part. However, with a great team behind you to offer marketing assistance, it becomes easy. For you to turn cold leads to warm leads, you will need an effective plan or hire a marketing team. They will assist in providing marketing information as well as design on marketing brochers ect. Flexible Compensation PlanGetting paid is one of the most important steps as a merchant services provider. It is critical to get compensated for the work and effort you put into your merchant services business. Look out for a ISO agent program that will help you realize your goals and meet your needs. Note: Pay attention to the agreement document to make sure you understand all the details. Residual Income TrackingA good ISO agent program will help you get residual analytics; this is very important for your business. The use of technology and the latest software to track residual income is a must for a good ISO agent program that you are going to choose. You should be able to see, at a glance, these details: number of clients, average profit, average ticket, top 10 merchants, and more. Infrastructure For the success of your credit card processing business, it is critical to look for an ISO partnership who readily avails the necessary infrastructure to you. The payment technology is very dynamic, and each year, there are new changes and improvements. There are several other payment methods that have come up. A good ISO agent program should give you access to these assortments of payment processing products. All these will give your clients payment processing options to choose from, which helps them to run their business smoothly. A good ISO agent program should be in the capacity to support most of the following infrastructures:
Multi Relationship with Various Banking Options A great ISO agent program should facilitate a solid relationship with several banks. This creates options to resort to incase one bank declines an account. With this feature, you will have peace of mind and be able to easily close deals and get paid. |
Becoming a merchant service provider can be a lucrative and rewarding career choice. As a merchant service provider, you will be responsible for helping businesses accept debit and credit card payments, as well as providing other financial services. To become a successful merchant service provider, there are several key steps you need to follow. In this comprehensive guide, we will outline the process of becoming a merchant service provider, including the necessary qualifications, skills, and steps to take to launch your business. |