According to the Housing and Economic Recovery Act of 2008, beginning on January 1, 2012, Acquirers in the electronic payments industry were required to report credit card payments to the IRS.

In addition, Acquirers are also responsible for performing backup withholding on any merchants whose information (name and tax ID) does not match IRS records.

All merchants are encouraged to confirm that their merchant services provider has the most current, up to date and accurate TIN information on file. Merchants should consider submitting a copy of their W-9 form or a copy of the SS-4 form as part of the application process or upon any changes to their businesses legal structure that shows exactly how the merchant’s name is filed with the IRS therefore substantially reducing the possibility of a mismatch.

In January 2013, Vantage will facilitate the mailing of 1099-K documents to all its merchant clients. In late 2013, if the IRS reports non-matching records, those merchants will receive a backup withholding notice (a B-Notice). If a merchant does not respond to the B-Notice and request for W-9, their merchant account must be placed on backup withholding.

Like his previous article discussing the merchant services industry, Michael Conticelli has done it again with a must read insightful report in the Ft. Myers Small Business Examiner titled “New trend in merchant statements hides rates and fees”.

Michael specifically calls out SunTrust for purposely redesigning their merchant statements to eliminate all rate and fee detail, leaving merchants no clue as to how charges are calculated. SunTrust made the decision to keep merchants in the dark about their “surcharge fees, bill backs, annual fees, PCI fees, etc.” because when merchants “don’t actually see the rates and fees month after month” they can’t ask questions.

Michael warns “Merchants need to be vigilant in monitoring their merchant fees.”

We couldn’t agree more! In fact, Vantage Card Services takes the exact opposite approach with our clients. Not only do we provide a very detailed merchant statement, we also provide our PayView analytics tool to help merchants explore stats and trends, chart their sales, manage their Interchange qualifications and track their effective "real rate" calculations month after month.

PayView is a user-friendly dashboard and analytics reporting tool that merchants can use to gain greater insight and more transparency into the cost of accepting card payments. This added layer of business intelligence empowers our clients with a greater understanding of where fees come from, best practices to keep costs down and a historic tracking of processing expenses.

Read more and take a tour at http://vantagecardservices.com/payview.

Effective immediately, registration is no longer required for merchants that accept MasterCard who choose to accept Debit MasterCard Cards only, Other Cards only, or both Debit MasterCard Cards and Other Cards. At this time, Visa still requires registration of merchants who wish to limit acceptance to debit or credit only.

As we head into the start of a new year, now is a good time to review your card processing procedures. Many of the highest Interchange rates result from transactions that downgrade for preventable reasons. Please take a moment to review your card acceptance procedures and follow best practices as they are important in qualifying your transactions at the very lowest Interchange rates available.

Here are the most common issues:

• If you are accepting key entered transactions, the most common cause of downgrades is due to missing AVS (address verification service) which looks to match the cardholder’s zip code at the time of authorization. Best practice: always enter the zip code. Check with your staff and your system to make sure you are entering and passing the zip code with each non-swiped card transaction.
• Other reasons for transactions to downgrade to higher Interchange rates include a mismatch of Authorization and Settlement dollar amounts (except in certain industries where tips are allowed) and forced/offline transactions in which a previously obtained authorization code is key-entered to settle a transaction. Transactions also fail to qualify for the best Interchange rates when transactions are not settled in a timely manner (typically 1-3 days depending on your industry). Best practice: settle your batch every day and avoid obtaining pre-authorizations.
• Non travel and entertainment merchants accepting commercial cards (Business, Corporate, Purchasing cards) should upgrade to a Level 3 payment gateway or virtual terminal. Level 3 refers to passing line item detail of the invoice with the standard payment data. Best practice: don’t use a retail terminal to process commercial cards. Vantage specializes in B2B transaction processing. Please contact us with any questions and visit http://vantageb2b.com for more information.

For personal assistance, give us a call at 800-397-2380 for a free consultation.

Trusted since 1996, Vantage Card Services celebrates its 15^th year providing payment processing and payment systems to merchants, businesses and community banks.

Today Vantage is honored to service clients in all 50 states. Our philosophy of building a business one merchant at a time, with a focus on service and education - not contracts and gimmicks – is a growth strategy that has served us well over the years.

Vantage is home to world-class payment solutions and features the best value package of price, terms, service, solutions and incentives available in the payments industry. Our passion is providing you with high quality payment processing solutions that exceed your expectations and we are continuously working on improving our programs, technology and service offerings.

In addition to the depth of information about the merchant services industry on http://VantageCard.com, our merchant advocacy extends to include these additional payment resources:

Blog.VantageCard.com - Payment industry news and viewpoint

MerchantRates.com - Merchant Interchange rate quotes, guides & FAQs

VantageB2B.com - Commercial card Level 3 and B2B payment best practices

VantagePointsRewards.com - Earn rewards when accepting card payments

myRealRate.com - Learn to calculate your real rate to accept card payments

BankcardTerminals.com - Payment technology recommendations

Twitter.com/VantageCard - Tweets on the payment industry, Interchange & technology

We would like this opportunity to THANK YOU, our valued client, for allowing us to continue to be of service!

Wow! This post on TheBreakFreeProject.org titled 5 Deceitful Tactics Credit Card Processors Use To Get More Of Your Money really captures the very points Vantage has been making now for 15 years! Everyday we work with merchants being aggressively pursued by both fly-by-night organizations and big-name-mega banks who use all 5 Deceitful Tactics.

Tactic #1: The “Rate Game”

Tactic #2: The Binding Contract

Tactic #3: Early Termination Fees

Tactic #4: New PCI Fees

Tactic #5: The Bewildering Statement

This post does an excellent job of explaining the pitfalls of these tactics and recommending solutions. Of course you MUST pay attention, ask questions and read the fine print for yourself to identify these tactics. You can NOT rely on “knowing the rep” or the “brand name” bank to be your guide.

So where can you find the solutions outlined in this article? Look no further than the home page at http://vantagecard.com. Here you find the best value package in the payments industry: Interchange rates, personal service, month-to-month terms, payment-solutions by industry and Vantage Points Rewards incentives.

And one last important footnote
Another key lesson in this article is that when either a merchant or a sales agent selects a merchant services provider, they are investing in that organization’s way of doing business. Don’t reward those with deceitful business models. And don’t try to fix them by negotiating and “waiving” terms and fees. Help weed out the companies that go-to-market like this by spotting these tactics and walking away. There are other companies like Vantage that struggle everyday to get our message out into the marketplace. Support them with your business or talent and together we can change things for the better!

Have you ever used the Wayback Machine?

The Wayback Machine allows users to browse through over 150 billion web pages archived from 1996 to just a few months ago. I used it to craft this brief history of Vantage.

We launched our first web presence as far back as the end of 1997 but the first archive I find is a view from October 1999. That’s a decade ago and just months before the dot-com bubble crash. If I recall, we used Microsoft FrontPage to develop these early versions (we still do all our web development in house today):
http://web.archive.org/web/19991004142744/http://www.vantagecard.com/.

And while our site has grown, our messaging hasn’t really changed. In the first paragraph on the October 2000 home page we begin to push the concept of “Interchange qualification management” (seriously who else was talking with merchants about managing Interchange back in 2000?!):
http://web.archive.org/web/20001023133448/http://www.vantagecard.com/.

We started to board our first Level 3 merchant accounts in 2000 and by October we had Level 3 commercial card processing featured on our web site:
http://web.archive.org/web/20010302100308/www.vantagecard.com/Level3.html

The same things we were warning merchants about in October 2000 are unfortunately still things merchant must watch for in our industry today:
http://web.archive.org/web/20001012233531/www.vantagecard.com/faq.htm.

The mood of the nation was very patriotic right after September 11, 2001 as you can see from this Wayback view: http://web.archive.org/web/20010923125210/http:/vantagecard.com/. On this 2001 home page we warn merchants about long-term contracts and cancellation fees.

By May 2003, the Vantage Points merchant loyalty rewards program had its own landing page:
http://web.archive.org/web/20030601211729/vantagecard.com/html/right_vantagepoints.htm.

In December 2003, over 2 years after September 11, we were still flying the American flag.  And we were still working to provide “Merchant Negotiating Tips” and “Important Alerts” of what pitfalls to avoid:
http://web.archive.org/web/20031226085735/http:/www.vantagecard.com/.

Talk about consistency, by February 2004 the format of site began to take shape as what you will recognize today over 5 years later: http://web.archive.org/web/20040208154611/http:/www.vantagecard.com/.  Are we getting boring yet, with the same old message about watching contract terms that we are still harping on to this day: http://web.archive.org/web/20040204191618/www.vantagecard.com/terms/default.asp?tl=3&sl=0

In April 2004, on the home page under News Alerts, we feature “April Interchange & Trends” were we encourage readers to learn more about credit card processing Interchange rates:
http://web.archive.org/web/20040525100450/http://www.vantagecard.com/.
We’ve been tracking Interchange changes from this link ever since.

Fast forward 5 years to 2009 and you find a world were a Google search on “merchant services” turns up 21,200,000 results in just 0.19 seconds (that’s over 21 million results!).

Looking at the marketing of many of these companies, you may get a glimpse of the positive influence Vantage has had on the payments industry. As the saying goes we’ve been preaching “Interchange and Month-to-Month contracts” when “Interchange and Month-to-Month contracts” wasn’t cool. And we are still waiting for another provider to copy our Vantage Points merchant rewards program, now in its 7th year.

If you are looking for a solid leader as a payment processing partner, look no further than Vantage. Or take a look back. We’ve been advocating for you the entire time.

We receive calls daily from agents inquiring about the Vantage program. Many of these calls have the same common theme. They go something like this recent paraphrased email exchange…

Prospective Agent

I have recently been recruited by a merchant services provider to become a sales person for them. 

I'm writing to you because this provider does everything you tell your customers on your web site not to do...we lease our equipment to merchants; we have qualified and non-qualified rates and we charge fees to get everything set up. 

I want to be sure that I'm with the "right" company.  I would appreciate your guidance.

Vantage Card Services

Thanks for writing. We applaud your research. 

The leasing commitment, monthly payments and buy-out clause means merchants are upside down immediately out of the box and the problem is compounded when merchants are sold leases on proprietary equipment that cannot be reprogrammed by other providers.   If you could purchase an open source terminal for a couple hundred dollars and make 3 monthly payments, what would you choose?

A non-qualified bucket pricing scheme means merchants cannot manage Interchange qualifications.   If you are going serve your clients long-term, I highly recommend you learn Interchange.

At the end of the day, if you knew that a month-to-month agreement (without early termination fee), and Interchange pricing without a terminal lease was available, which merchant services program would you choose?

Prospective Agent

With our program, they're not upside down if they are paying a $50/month lease and we are cutting their rates to the point that they are saving money every month including the lease fees. We also guarantee compliance with the payment card industry rules as part of the lease.

I don't think our equipment is proprietary; that is, I do believe it can be reprogrammed.  But, of course the customer is in a lease that is with a finance company so they would still be responsible for the lease even if they wanted another company to take over their processing.

I currently can offer three rate programs. One is a low qualified rate and a higher non-qualified rate, another is a low non-qualified rate and a higher qualified rate and the third is an Interchange rate, but I’ve not learned how to explain it very well to merchants. I would like to be better educated on Interchange, and will do some research on my own. 

I guess the answer to your final question is that I would pick whatever plan allows me to process payment cards at the lowest cost to me, while making sure that I'm in compliance with the processing rules of Visa or MasterCard.

Vantage Card Services

The merchant is upside down on the lease.  Paying $2,400 + for a terminal that is worth $240 once they open the box is upside down. Merchants could save more by not leasing regardless of the rates you quote. And you could still offer the better rates without the lease, right?  When you tie your rate quote to a long term lease, what happens when those rates go up?  What if the service provided is poor, what if the merchant does not get funding on time, etc.? As you pointed out, merchants are still stuck in the lease. Last, service providers are not allowed to sell, lease or reprogram any card processing terminal that is not PA DSS (meets the Payment Application Data Security Standard) so this is NOT a sales feature of a lease.

Find out the make and model of the equipment you are leasing. Proprietary lock-in from selling terminals that are only certified on a single processing network means the merchant is unable to use another vendor without substantial switching costs. Research what networks have certified the specific make/model you are selling and any restrictions you should make merchants aware of during the sales process. Full disclosure is needed if you are going to become a trusted advisor.

If you are serious about understanding what you are selling, read the fine print of the merchant agreement for terms / terminology. Read the merchant services agreement cover to cover and look for a few key points: 

• Can rates go up for any reason at any time?
• What is the contract term? 
• What is the termination penalty?  Who has the authority to waive terms? 
• Does the application reference the terms?  Do you provide the fine print with the application?

Last, let me ask you this…How much of your income is from the ongoing processing of payments (residual income) and how much from selling leases?

There is a way to "service" clients and earn a professional income consulting in the payments business.  It's not a get rich quick program and without the "lease factor" payout or other upfront fees it may not pay the bills month one.  This is something you will have to decide.  But what we find is that eventually your industry experience will make you wise to the various programs in the market place.  There are agents that enjoy longevity serving loyal clients in this industry and those with short term get rich quick schemes that come and go.

Prospective Agent

I do understand what you are saying, and you are technically correct, but one thing I have learned in sales is that people pay for what they perceive is valuable.  Still, everything you are writing and what I've read on your website is really challenging my sense of fairness.

I also met with a guy I know from the church I go to who works for a different merchant services company. It seems like every company has different ways of approaching the market, with a twist on some of the common themes we’ve discussed.

I’m really not comfortable with the approach of selling leases and non-cancelable contracts.  I really am intrigued by the industry, but I know what I would agree to if I was a business owner, and I would not agree to the terms I’m selling now.

I like your company’s approach much better, and I guess the information on your website has helped open my eyes to what’s good and what’s not so good in the industry. 

Vantage Card Services

Most merchants don't do the in-depth research that you are doing.  But if they knew the whole story they would perceive things differently.

Experience the Vantage Program

Rates: Today’s merchant clients require more than a generic “qualified rate as low as” quote. You need to deliver a detailed proposal with a custom rate structure based on specific industry Interchange using the latest payment technology and best practices acceptance methods. Partnering with a company that can help you manage Interchange qualification is very important.

Service: Service, good or bad, impacts your bottom line and ability to do your job. Vantage is a full service payment provider focused on high quality personal service. By far, most of the people and companies you talk to are going to be strictly sales oriented. At Vantage, we are merchant SERVICE providers. We process applications in house including credit underwriting, data entry, terminal deployment, implementations and one-on-one personal service with our clients after the sale is made, all under one roof. It makes a difference in the quality of service.

Terms: Pay close attention to the fine print of the terms and conditions of the merchant agreement you represent. Don't lock your clients into long-term contracts with steep early termination fee penalties and add-on hidden fees. Vantage has a true month-to-month contract with no hidden fees.

Solutions: Selecting the payment processing solution that best meets your clients’ needs is critical. From terminals and software to wireless, contactless and ecommerce payment gateways, we support the technology today’s businesses require to accept payment. Vantage provides comprehensive business-to-business (B2B) and business-to-government (B2G) payment solutions including Level 3 payment solutions and a trade credit payment platform. We represent emerging market payment systems and work with businesses to implement trade credit A/R outsourcing solutions.

Incentives: Retention is the key if you are to build a large profitable residual income. “Vantage Points” is a merchant loyalty rewards program. Help your clients earn great rewards from distinguished Vantage Points program partners like: American Airlines, Marriott, Hyatt, Staples, The Home Depot®, Starbucks Coffee and hundreds more. Vantage adds value beyond what's available with your standard merchant account provider. With Vantage, reward your best clients with a unique incentive program you won't find anywhere else.

In Conclusion

Throughout this story, you could replace terminal “leasing” with “free equipment” offers. Similar points apply. And if you are selling introductory rates so you can lock merchants into long-term contracts with early termination fees in an attempt to qualify for an upfront signing bonus -- well it’s not likely you will build a career under this type of program either. The reason is that gimmicks don’t work long term. To earn referrals and become a respected payment industry professional, you will need to graduate to a different approach; one that puts the best interest of your merchant client first.

If you are an agent in the payments industry, looking for a better program to represent, send us your resume. If you are a fit for our organization, we would welcome the opportunity to partner with you.

As a merchant in these difficult economic times, you are looking for every way possible to cut costs and survive.  And there seems to be no shortage of merchant account providers soliciting your business, offering to lower your rates for accepting credit cards and promising the big savings you are looking for.  However, now more than ever, merchants must use caution when selecting financial firms to process their payments.

Primarily a commission only sales force, many of the representatives walking through your door selling merchant accounts today will likely not be in the industry in a few months.  A good number of the organizations they represent may not be either.  With these challenging market conditions: lower payment card transaction volume, fewer new merchants opening businesses, higher default rates of businesses going out of business, increased competition, lower margins, and greater fraud risk; the merchant account provider you are about to commit to may be hurting worse than you are. 

As a smart consumer of merchant services, you not only must consider the rate and rate structure, find the hidden fees, and read the contract's fine print; you also need to independently research the financial status, years in business, the BBB and D&B reports of the proposed provider before making a decision.

You should also consider the motivation and business model of the merchant services vendor you are considering.  Introductory rates are designed to make long-term contracts appealing, but if you value your time, consider not just the short-term but also the long-term consequences.  Acquisition pricing (below market, unsustainable pricing models used to simply acquire new customers) does not last. 

Like you, we are feeling the downturn.  But, with 13 years under our belt, we are fortunate to have built a large loyal client base.  Vantage’s overhead is low; our pricing is highly competitive and value driven.  We know this because every provider is operating from the exact same published Interchange rates.   We know all of our competitors’ rates.  We also know that no company can compete with the overall value package of price, service, terms, solutions and incentives we deliver. 

What’s a rock solid vendor relationship worth?   With payment cards comprising a large slice of your total revenue, don’t take your processing choice for granted.  All merchant service providers are NOT created equal.  Vantage has an A+ rating with the BBB and a solid reputation for delivering value, quality and stability.  Vantage’s processing bank relationship is with HSBC Bank USA.  As of 2008, HSBC is the world's largest banking group according to Forbes magazine.  Global Payments and Vital are two of the top processing networks in the industry.   Now is not the time to risk your processing to inexperience.

To save time, weed out the “rate as low as” solicitations.  Don’t take the risk of changing providers simply for the “promise” of big savings.   Given the chance, we will fight hard for your business with the knowledge that you are not overpaying.  We hate losing good customers to gimmicks, tricks, hidden fees and hidden terms.  Let us provide the professional services you’ve come to know to thoroughly evaluate the terms and fine print of any offer your receive and give you a second opinion.  It will save you time and money in the long run.  

Please let us know how we can improve and serve you better.  We strive to be your “vendor of the year” every year.  We thank you for choosing us as your payment processing partner and wish you much success in 2009!

Sincerely,
Ted Hardison

Just about every company today call themselves the “leading” provider of something (read almost any press release).  Many of the brochures and sales people you talk to promote their company’s size.  Formal rankings tend to use metrics like sales, profits, assets and market share.  But does this equal leadership? 

Missing from this “leading” definition are things like marketplace ethics, management practices, commitment to fair and honest conduct and business integrity.  Take for example the big brand name bank on the corner who is selling credit card terminals on four year lease plans that overcharge merchants by thousands of dollars.  Or the rep who tells you there is no contract while hiding the terms and conditions fine print.  Or a “savings” calculation based on false information, omitted data and mathematical errors.   In this say anything, do anything, hyper competitive environment, we are continuously shocked by what we see by both the leading household brands and the leading fly-by-nights alike.  

While “leading” provider has been used to describe Vantage over the years, we certainly can’t claim title to the most sales, profits or market share.  However, in the business of providing merchant services, Vantage is truly leading:  

• We don’t lock merchants into long-term contracts and early termination fees; our agreement is a month-to-month term.
• We teach all merchants how to avoid Non-Qualified surcharges with a direct Interchange pass through rate structure.   
• We refund to merchants the Interchange fees when issuing credits for cardholder returns.
• We launched the innovated, award winning and highly successful MerchantRates.com Calculator in 2000.
• We launched Vantage Points Rewards in 2002, a one of a kind merchant processing rewards program.
• We began The Vantage Viewpoint Blog which offers entries on industry trends and more in 2008.
• In 2009, we will launch a revolutionary new service for the merchant community at http://myrealrate.com.

So the next time a representative from the biggest company shows up wanting you to follow their leadership, be very careful where they might be leading you.