Let’s face it, many business owners see merchant processing as a commodity. And who can blame them? The industry pumps out salespeople who sell on rates alone and have limited knowledge of the industry, its regulations, and the systems that authorize their transactions.

Merchants tend to shy away from any discussion that involves credit card processing. Chances are, they have experienced an unfortunate event that left them telling themselves they will never switch again.

Objections to merchant processing has evolved over the years. Some are valid, and some are merely used as a polite way of expressing they are not interested. With that said, I think this a good time to share my “Top 10 Objection and Rebuttal” list with BOLD Partners. Hopefully this document will help you when you come across merchants who politely tells you they are “not interested.”

NICHOLE’S TOP 10 OBJECTIONS AND REBUTTALS

1. I’m Happy With My Current Provider
This is a common objection which usually means “I am not interested in talking right now,” even if they aren’t happy with their current provider. It helps to remind the business owner that is it important to review their statements every few months to expose any hidden fees that drive their cost up. You are not asking them to change. You merely want an opportunity to analyze their statements to confirm what they are paying is what they were originally quoted.

2. I Have A Contract That I Can’t Cancel
Trust me. They are not the first merchant that we have come across that is tied to a contract. What we have found is that many times there are more savings in breaking their current agreement for a lower merchant processing rate than waiting out the term. The right approach would be to request a thorough cost-benefit analysis and compare the monthly savings vs. the cost of breaking the agreement.

3. Last Time I Tried To Change I Had A Bad Experience – Never Again
The first step you will want to take is to find out if it was a financial issue or a setup issue.

If they ran into a financial issue, reassure them that we have rates explicitly designed for their industry and transaction needs. It would help to have a few sample statements ready to show so they can see the clarity of the reporting.

If it was a setup issue, they must be aware that many people in the industry can sell processing but are unfamiliar with the technology involved. BOLD specializes in point of sale and terminal setups. We work closely with each software company to make sure the system is set up and tested right the first time.

4. My Processor Gives Me The Terminal For Free – Do You?
A merchant’s agreement may state “free terminal,” but we all know nothing is free. Whether it’s a “annual/monthly statement fee” (which BOLD does not charge) or “technology fees” (which BOLD does not charge), many processors have mastered the art of hiding the cost of terminals in their billing.

5. I Already Have The Best Rate
This is probably the biggest objection we hear. However, it would surprise you to know how many merchants switched to BOLD when a thorough statement analysis is complete. At no fault to the merchant, “I already have the best rate” usually means “I already have the best quote.” We need to help them understand that what was originally quoted is more than likely not what they are paying. The majority of statement analysis we perform reveal hidden fees that were never discussed during the quoting process. As a result, they incur a much higher effective rate than what they expect.

6. What Are Your Rates
While this response may sound “salesy,” there is no possible way to answer this question without understanding the merchant’s business and transaction types. You want to give the business owner the information they are looking for, but more importantly, you want to give them the correct information. Providing misinformed information benefits no one.  Having a better understanding of the merchant’s monthly volume, transaction type (swiped, manually keyed, moto, etc.) and transaction amount/count is vital information to give an accurate quote. .

7. I Won’t Show My Statement
Many merchants are hesitant to share financials with strangers. It makes sense. Assure the merchant that the information on the statement is only being used to analyze their fees and will be strictly confidential. If it makes it easier, offer to review the financials with them present and that way you are not leaving with a physical copy. A few minutes can reveal a lot about their rates and can be very informative for the business owner.

8. No Thanks … I Just Changed Processors
If the merchant changed processors recently, now would be a better time than ever to complete a statement analysis! This will ensure they are receiving the Effective Rate they were quoted. Let it be known you are not asking them to switch. You would simply like to walk through their statement to explain the charges to make sure they fall in line with what was sold to them.

9. Every Processor Charges The Same, And There Is No Such Thing As True Savings
This is a common misconception in the merchant processing industry. The merchant needs to know that there are processors that run sales shops that are limited on the savings they can offer. However, there are Independent Sales Organizations (ISO) like BOLD who have greater control on the pricing they offer. Every rate and fee will be detailed in their agreement, and their statements are designed to outline their savings in a CLEAR and CONCISE layout.

10. This Is My Busiest Time Of The Year / Not A Good Time To Change
There is never a good time in business for a change but consider this. If there is a substantial monthly saving by switching and the changeover is seamless, isn’t the busy season a great time for a change to maximize their savings? The best approach that I have found for this situation is to assure the merchant you are not asking them to change right now. You are merely trying to analyze their savings. If they feel a switch-over is worth it, great! If not, then they have the information they need to perform the switch-over at a more convenient time.

I hope these suggestions help steer BOLD partners to educate business owners about merchant services. We all know people buy from people they trust. For me, a large part of my success in merchant services is built around me consulting merchants so they can make an informed decision.

Your BOLD Partner,
Nichole Kazenske
V.P. of Partner Relationships
nkazenske@boldpay.io

BONUS CONTENT

You didn’t think I have only ran across ten objections in my life time, did you? Below are additional questions/objections that did not make the top ten but are still worth mentioning.

Competitor

My Bank Does My Processing – My Accounts / Loan /Credit Cards Are With Them
Many banks are known for offering “perks” if business owners sign up for their processing. The truth is, the bank’s number one focus is having the business’s money rest in their banks. Changing processors has less impact than banks let on when it comes to interest rates and credit limits. Many times the merchants are paying MORE for the inflated processing than they would with a slightly higher interest rate.

My Processor And I Have Been Friends For Years – I’m Loyal To My Friends
Let’s all agree that loyalty is excellent, and it is prevalent for merchants to do business with friends at some point. However, while their friend may offer a “great” deal in processing, the agreement is based on the margin they can give. It is not uncommon for processors like BOLD. with lower buy rates than the competition to be able to save the merchant money.

I Use Quick Books To Do My Processing
Quickbooks is a handy tool when it comes to merchants running their business, and many who rely on the software also rely on integrated merchant processing. BOLD has solutions in place that enable the merchant to integrate with QuickBooks while saving money on processing.

I Use Paypal And Process On The Internet
The PayPal suite has gained traction in many brick and mortar stores. However, many merchants believe they are paying the best rates possible when they implement their solution, this is not the case. BOLD has won the business of many merchants who once used PayPal when a cost-benefit analysis was performed on their statements. Also the ROI of a POS system that is built for their industry.

Service

I Prefer To Deal With Someone Local
Who doesn’t like dealing with someone local? But what happens if that “someone local” decides to sell cars next month? Where does their support go? BOLD and their partners are available at all hours of the day ready to help. We are not a fly-by-night processor just passing through town. There is always someone available to help.

Hardware/POS

Do I Have To Buy / Lease A New Terminal If I Use Your Company
There are many value-added services offered by BOLD (i.e., MX Invoicing and MX Merchant) that allows the merchant to run credit cards with no additional cost or hardware.

Can I Use My Own Machine If I Sign Up With You
Machines can be reprogrammed. However, regulations change and many terminals can be deemed obsolete if they are not up to standard (i.e., EMV regulations). There are specific security issues mandated by the federal government that must be implemented when you get hooked up to our network. Many of the older model terminals do not have sufficient memory or features that allow this. Also, there are many new types of terminals being introduced today that provide you with features that make your life a lot easier, and it may be worth taking a look at what we can offer.

I Get All My Terminal Supplies For Free … Do You Offer Free Supplies
It is important to remember that no supplies are free (See Number 4 Above). Usually, this means that the merchant is being charged in some other way so that they are still getting paid for the supplies. It would be best to look at their statements to review the miscellaneous/hidden fees to determine where expenses can be cut. 

My Processor Tells Me They Are The Only Ones Who Can Program My Machine
While this is true in some cases, it is essential to learn who their processor is. Like many of the options above, many times the savings in merchant service fees quickly make up for the cost of a $150 terminal.

I Have A POS System Installed To Do My Processing
Step one is to find out if they are happy with the POS system and the service. If they say “Yes,” inform the merchant that BOLD is built to be compatible with over 95% of POS systems and our team is designed to specialize in the POS industry. The second step is to offer compatibility consultation to review the software and the gateway/hardware used. If the merchant informs you, they are not happy with their POS system; this is a great time to determine the issues they are having and offer them a chance to review POS options that better fit their business.

Rate/Fee

Are There Any Monthly Fees I Would Have To Pay
Short answer…yes. But choosing an ISO that works with BOLD who can write direct deals with Visa/Mastercard, which means less “middle-men” and fewer fees.

All I Pay Now Is A Rate Of _____ % And A ____ Cent Swipe Fee … No Other Charges
This sounds like an amazing deal, and there is a chance this is true. More than likely, this also means they are quoting a cost-plus rate, which means a percentage/transaction fee on top of interchange rates. At this point, it becomes a game of who can offer the lowest cost-plus rate with service to back it up.

 I Belong To A Processing Association – They Offer The Best Rates
While this could be true, the merchant needs to understand a reasonable rate does not mean they are receiving the best true effective rate. A true effective rate is a more accurate representation of fees when calculating rates. It involves dividing the total fees by total volume to determine the true rate charged against all tiers. Many times merchants are surprised to learn how much more they are paying when compared to what they were quoted.

General

I’m Too Busy To Deal With This Right Now
At this point, it might be best to practice patience with persistence. Offer to schedule a call or meeting at a better date and time. If it is an opportunity worth pursuing, find ways to keep them on your radar. Today might not be a good day for them. Chances are there will be a day they look for a change, and your name will be on the top of their list.

Would I Have To Sign A Contract /I’m not too fond of Contracts
Not many people like contracts. In this case, the merchant should be aware that the merchant processing agreement is designed to protect both parties. Plus, you are not asking them to sign a document to analyze their statement. You are merely researching their fees to inform them of any possible savings. Many times the savings is substantial enough that the agreement is a non-issue.

Ready to Learn More?

There are a number of reasons a merchant can experience a credit card hold/reserve. There are also a number of things merchants can do to prevent this headache.

Knowing the basics of credit card reserves and holds can save merchants quite a bit of frustration and hopefully help them avoid experiencing a delay when receiving their funds.

WHAT IS THE DIFFERENCE BETWEEN AN ACCOUNT RESERVE AND FUNDS WITHHELD (HOLD)?

Account Reserve is money set aside as a security deposit. It is usually due to the nature of the business (i.e.- a business at a high risk for chargebacks). When a processor determines a reserve is needed, it is common for the processor to hold a percentage of the merchant’s batches until a predetermined amount is reached.

Funds Withheld (Holds) take place when red flags are triggered by an unusual transaction type and the merchant processor holds the funds until further research is done or the chargeback deadline has passed.

WHY DO ACCOUNT RESERVES AND HOLDS EXIST?

Acquiring Banks (the merchant processor) are basically a line of credit until the chargeback time limit expires (at which point the card holder can not refute the transaction. Learn More About Chargebacks Here). If the cardholder disputes the charge, the merchant processor can use the reserve/hold to repay the consumer rather than try to recoup the amount from the merchant directly.

WHO DECIDES WHAT FOR A MERCHANT ACCOUNT RESERVE

Ultimately, it is the merchant processor that takes on the risk for merchant processing by funding merchants for transactions that can be disputed at a later date. It is up to the merchant processor to decide the parameters for the account reserve and sometimes looks at it as a case-by-case scenario (i.e.- length of time the merchant has been processing, the goods sold, chargeback history, etc).

Reserves

It is typical for high-risk merchants to need a reserve, and the processor can require a reserve as soon as the merchant begins processing.

Holds

The merchant processor can put a hold on an account based on an individual transaction that may look out of the ordinary (uncommonly high tip, larger than usual transaction, etc). When a merchant first signs up for merchant processing the merchant processor requests the expected average monthly volume, average ticket size, and highest projected ticket amount. The processor can use these queues to setup red flags in their system to identify unusual credit card activity. For example, if a restaurant claims their highest ticket is $1,000 but runs a $2,500 transaction for a catering order, the merchant processor will review that transaction and determine if a hold is needed until the chargeback deadline is cleared.

HOW MERCHANTS CAN PREVENT RESERVES AND HOLDS

Set the right expectations up front

When deciding the average ticket/monthly volume and the high ticket amount, it is important to be as accurate as possible to reduce any unnecessary red flags while processing. Merchants will also want to confirm their SIC Code (a four-digit codes that categorize companies by the type of business activities they engage in) is correct at the time of their application boarding. The wrong SIC code may categorize them as a high risk merchant resulting in unnecessary reserves.

Be upfront with the processor about the nature of the business

It helps to provide as much information as possible during the boarding process. Previous statements, chargeback history, business history, etc all can benefit the merchant by building credibility with the processor. Don’t lose hope if the processor requests a reserve on the account. Depending on the processor, the merchant can sometimes provide additional information at the time of approval to either avoid the reserve or lessen the amount requested.

Notify the processor about unusual transactions before they are batched

The best way to avoid holds on individual transactions is to notify the processor before the transaction is authorized and batched. It is typical for the processor to request either a signed invoice or a back story of the transaction. The risk department will take note of the transaction and usually fund the merchant for the full amount with the correct documentation.

While not ideal, reserves and holds are a necessary “evil” when it comes to keeping the merchant and processor safe from losing money. It is important for merchants to talk to their processor to find out what they require and to confirm the parameters they have on file are accurate based on the volume that is ran.

As POS and credit card technology changes, so do the requirements from Visa, MasterCard, Discover, and American Express. Merchants rely on their merchant processor more than ever for information on how to remain compliant with bankcard regulations. Doing so can help the merchant avoid chargebacks and fees passed down from the four major card brands.

MINIMUM PURCHASE AMOUNTS

Merchants are allowed to require a minimum amount in order to run a credit card, however there are a couple rules they should know:

1. The required minimum amount for any credit card transaction cannot be more then $10

2. Merchants cannot require a min amount on debit transactions.

3. Requiring a min on debit can result into being reported to card brands.

   1. First offense – formal request that the practice is stopped

   2. Second offense- Results in a fine

   3. A third offense could result in the merchant being blacklisted from running future transactions.

REQUESTING CUSTOMER IDS

 Merchants can require a customer to see ID with a few guidelines they must follow:

1. If the customer’s ID does not match the name on the card, the merchant can refuse to accept the card.

2. If the customer does not have or is unwilling to present an ID, the merchant should honor the card if there is proof of card presence, a valid authorization, and a valid pin and signature.

MERCHANT MCC CODES

In order to avoid confusion and issues running credit card transactions, merchants should make sure they are classified under the correct MCC Code when signing up with their merchant processor.

1. An MCC Code is a four digit code that categorizes the merchant’s business and dictates their interchange rate and the card types they are allowed to run.

2. These codes are also used for activity tracking, reporting, and risk management

3. Merchant should verify that they are classified correctly. If they fall under two different MCC Codes, they should use the MCC Code that has the highest volume or activate two merchant accounts.

PARTIAL AUTHORIZATIONS

Partial Authorization Defined (TSYS): A partial authorization occurs when a payment card authorization is attempted for a transaction and there are not enough funds available in the account to cover the full amount. The issuer returns an authorization for the amount available in the account, leaving the merchant to obtain an additional form of payment from the customer for the balance.

The simple answer for all pre-authorizations is that all credit card machines and point-of-sale systems are required to take partial authorizations in order to be compliant. Card brand rules include:

1. Discover requires that you take partial authorizations for all merchant category types

2. Visa and MasterCard requires pre-authorizations for only certain  MCC Codes 5812 (eating places and restaurants) and 5814 (fast food restaurants)

3. Card brands do not allow there to be machines that can disable partial authorizations.

4. If the sale is greater than the partial authorization (for example: if the partial auth is $5 and the merchant adds a tip resulting in a transaction amount greater than the available funds), the transaction can be disputed by the cardholder for incorrect charge since the partial authorization is only $5.

Additional References:
Visa Rules and Regulations
MasterCard Rules and Regulations

The topic of EMV is not new among the POS and merchant processing industry. But while the discussion has lost a bit of steam, the opportunity for merchant processing and point-of-sale vendors hasn’t.

It is no secret that the adoption rate for EMV has been slower than expected. What is more surprising is the number of merchants who still do not understand what EMV is or the risks that are involved with not accepting chip cards. The industry as a whole has seen an influx of fraudulent chargebacks due to consumers who are now savvy enough to identify merchants who do not accept EMV. Cardholders looking to take advantage of merchants who still swipe has become more common costing merchants millions of dollars a year in indisputable chargebacks.

EMV BY THE NUMBERS

Since the EMV liability shift in October 2015, the EMV conversion rate among merchants has been slower than expected. According to EMVCo, the percentage of card present EMV transactions for the year of 2018 stood at 53.5%, an increase from 41.2% in 2017.  This is much different than the transaction rates in Canada and Mexico they are more than 93%.

WHY HAVEN’T MERCHANTS SWITCHED?

For many merchants, the thought of installing machines and changing their business practice can seem daunting and expensive. It is common for some merchants to have looked into implementing EMV only to find out that their POS will require a costly upgrade. The best approach for these types of merchants is education. It is important for them to know there are options available that will fit their budget and eliminate a bulk of their chargebacks.

HOW TO EDUCATE MERCHANTS ABOUT EMV

The first thing a merchant must understand is that implementing EMV does not have to be as costly as their POS company might have quoted them. It helps if the merchant familiarizes themselves with EMV and understands the risks and costs associated not accepting chip and pin transactions.

First, What is EMV and Why is it Important?

EMV is a global standard for credit cards that uses computer chips to authenticate rather than the magnetic strip on the back of the credit card. Unlike the magnetic strip, the information on the EMV chip is encrypted and virtually impossible to replicate. This reduces the risk of fraudulent cards being created.

After the liability shift in 2015, issuing banks who categorize transactions as fraudulent immediately look to see how the card was accepted. If the card was swiped at the POS/credit card terminal, the bank will immediately rule in the cardholder’s favor leaving the merchant unable to fight the chargeback. If the card was “dipped” (an EMV transaction”), the cardholder can not rule the charge as fraudulent as the merchant tool the necessary steps to eliminate the risk, and a chargeback will not be issued.

Understanding the Return on Investment

Before you look into the best way to implement EMV, it would be best to understand the merchant’s return on investment. What is their average ticket size? Monthly volume? Number of chargebacks they see a month? For some low volume merchants, you may find the cost of implementing EMV does not justify the savings of avoiding chargebacks. But for the majority of merchants, the savings can be exponential over time.

For example, say a merchant who does $20K a month in volume with an average ticket of $30 sees four fraudulent chargebacks a month. The inability to fight these chargebacks could result in $120 a month in lost revenue and another $80 in chargeback fees. Not to mention, there is a trend where consumers are taking advantage of merchants and running up large tabs then simply calling in a fraudulent transaction leaving the merchant left covering the bill. For these types of merchants, the cost of EMV terminals would pay for themselves over the course of 2-3 months.

Ease of Implementation

The merchant must know is that there are options for implementation that more than likely fit their budget.

Point of Sale- Semi-Integrated

The majority POS systems offer semi-integrated solutions (a separate pin pad next to the POS machine for running credit cards). There are many benefits to this as the merchant is still able to run transactions through their system and the POS is taken “out-of-scope” when it comes to PCI requirements. You can learn more about semi-integrated solutions in the Pax Integration FAQs on BOLD’s University page.

Point of Sale- Non-Integrated

If the merchant is running a POS that does not offer EMV in a semi-integrated environment, there are also options to run the credit cards on a separate machine outside of the point-of-sale. While this is not ideal and can alter their business process/reporting, it does offer a cost-effective approach to avoiding chargebacks.

Stand Alone Terminals

If the merchant does not use a POS system, it is important for them to know that the cost for EMV enabled terminals is minimal. Many merchant processors and POS companies offer the credit card hardware for free as an added benefit of going with their merchant services.

Merchants have begun to feel the effect of and are looking for choices. It is a good time to open up a discussion with businesses looking for a change by offering information and solutions that fit their needs and budget.

If you have more questions about EMV or are interested in the hardware/software packages that we provide our partners, feel free to fill out the form below and a BOLD. representative will contact you shortly.