3 Ways for Small Businesses to Process Credit Transactions More Efficiently

Small Business Owners are a stalwart, hardy folk. They have to be brave and determined, as well as savvy, to survive in our current economy. Overhead costs keep increasing and profit margins keep decreasing. And, as these conditions continue to persist, the market has become over saturated with another disturbance to our already stressed entrepreneurs… never ending streams of salespeople pushing all sorts of products claiming to “increase profits” or “reduce costs’.

The merchant account industry, is probably the worst offender of the lot. My clients, as well as my business owner friends, frequently complain about the continuous telemarketing (or door-to-door) merchant service calls that they receive.

Because Merchant Accounts are a hot topic right now regarding non-qualified charges and because this is an essential service for most small businesses, I am going to share some relevant info that can help small businesses save unnecessary processing costs (but really)… thereby reducing a bit of their overhead.

1. Discount Rates: The discount rate is always a percentage amount of the purchase, the cost incurred for the processing service. The base qualified rate is the amount that the merchant pays to have a basic swiped credit card transaction processed, turned into cash and deposited into his bank account. Then, there is a level of non-qualified surcharges that are applied in addition to the base rate such as keyed- in transaction rates and/or incentive/rewards/ corporate card surcharges. It is common to see merchants set up in the wrong rate code for their industry. It is very important to have your business set up properly within this framework. This can save merchants hundreds of dollars… depending on their volume. Get someone who is NOT a salesperson for one of the processors, maybe your bank rep or an independent consultant to review it for you.

2. Batch Out: Before batching out it is important to review your daily transactions. If you accidentally made a mistake..(ie charged $100.00 instead of $10.00) or pushed a wrong button… VOID the sale! Don’t credit the mistaken amount. You’ll end up paying the processing fee for the sale and, also, for the credit. This is burning money. Many merchants don’t realize that depending on their processor, they pay the same percentage on a refunded transaction as on a purchase transaction.

3. Read and understand your contract clearly. A merchant account is a contract governed by industry bank rules and Visa/MasterCard regulations. There is usually an application from the sales office and a contract from the Provider Bank. If a desperate sales representative says something that sounds too good, make sure you have them point out EXACTLY where it is confirmed on the contract.

Canadians Struggle to Afford Their Homes

The current Canadian mortgage rate of 5.25% is being raised to 5.85%, up six-tenths of a percent. This move is being followed through by five of Canada’s largest banks and will affect all five-year mortgages. The report from the Conference Board of Canada comes just as CIBC and National Bank announce they too, were raising their mortgage lending rates by more than half of a percent, ahead of the Bank of Canada’s anticipated rate hike that is expected this summer. This likely spike in bank rates will end the historically low mortgage rates that have brought us into 2010.

The Conference Board of Canada claims the high debt loads that are being taken on by consumers are an attempt to get in before the mortgage hikes take effect. These same homebuyers are considered responsible for the housing market rebound that Canada has seen up until now. However, there is a fear that anxious consumers will continue to overextend themselves in an attempt to get into the housing market meanwhile, the level of Canadian incomes has remained relatively consistent, not providing enough of an increase to match the housing prices.

Much of the problem lies with the buyers who didn’t put a lot down, which means their mortgage payments are quite high. Combine this with an increased mortgage rate and the outcome will be homeowners with a serious affordability problem. If the current prime rate of 2.25% rises by 2.5 percentage points, which is an average cycle increase, a variable mortgage rate could cost a homeowner about 30% more per month.

A large segment of the housing population’s demands have not been met due to the heightened fees of construction, resulting in developers being focused on building homes aimed at people in the higher tax bracket. There is also a gap in rental availabilities as developers are building condos instead of apartments, leaving rental properties sporadic and expensive.

There is an element of concern that there could be more defaults on loans or more home foreclosures due to interest rate increases, but it is felt that most people will find ways to cut expenses to pay off their mortgages, which may pose a risk to Canada’s recovering economy. If you feel that you are in a position of needing to tend to a bad credit rating or financially prepare for the upcoming rate hikes, a private bad credit loan may be an affordable answer.