Expense saving advice from SmallBizAssist: www.smallbizassist.ca
We were recently contacted by a business being run by a couple of very nice but older and perhaps a little less savvy owners. These people like many of even the most savvy business owners really didn't understand payment processing, the contracts or pricing. In fact, since they signed up in 2012 they had never seen a statement and didn't know how to get on much less read it after they got it.
Their immediate problem was that their seasonal business was about to open and they were unable to process payments. They had contacted their processor and been told the 2 terminals they had purchased only 3 years earlier were now useless and had to be replaced suggesting they lease or buy new ones.
We did some investigating and found out that the terminals they had, Hypercom 4100s were in fact now obsolete, however we strongly recommended that they not lease or buy again to avoid the same situation is a few years. We also made arrangements to retrieve statements and made some startling discoveries. First, they had 3 accounts for the same business, the original credit card processing account, the original debit processing account and a newer seasonal account for credit cards.
Apparently when they requested to have their account frozen off season a new account was opened (at higher rates), used only in the summer and then suspended for the winter. The result was a number of duplicate fees and minimum fees year around for the original account that was no longer in use. It should be noted that it is unusual and more expensive to have separate debit and credit card accounts.
We recommended that the client set up a new single account with an alternate processor at much better rates. Oh I forgot to mention their rates, 1.95% MDR (market rate 1.49% to 1.59% and 2.63% NQ fee (market rate . 30%). We got them going with the new processor so they could start doing business and then turned our attention to the old processor. We decided that the best course of action was to lodge a code of conduct complaint and cancel the existing accounts (note the complaint has to go in before the cancellation). The result was an agreement to waive cancellation fees which could have been $900 and a refund for the duplicate fees of almost $400.
Businesses should always check their statements and balance deposits. You also need to note any changes in processing costs, accounts or
notices on or with the statements. This customer is now paying the equivalent of an MDR or 1.49% Visa & 1.54% MasterCard (compared to 1.95%) and NQ fees equivalent to .20% (compared to 2.63%). As you can imagine this business will realize considerable savings and their costs off season are $11 a month total.
For more information contact Rick Smith SmallBizAssist,
www.smallbizassist.ca (905) 714 1487 , 1 800 946 2367 or (905) 317 5560
Submitted by: Rick Smith President SmallBizAssist. SmallBizAssist is a small business consultant specializing in payment processing
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