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What is the Difference...

How much thought have you ever really given to credit card payment schemes and what do they really mean to a merchant?



Clearly there are benefits to merchants who accept the multitude of different cards types in the course of their day to day business. With the conveniences afforded by that small piece of ready to use plastic, can there possibly be any downside? Lets explore the the real nature of credit card schemes...


The upsides:  

	Many people carry credit cards and enjoy the convenience of having them to hand. This is clearly a winner for merchants.
	Immediate authorization codes means that the merchant is guaranteed to get their money.
	Any business worth its salt has a merchant account accepting all credit cards.
	Payment appears to be quite rapid with merchants getting their funds within a very short period.
	The card holder does not have to clear their credit card debt until the end of the month, unless they have a minimum repayment model which allows them greater time to repay.
	There is an abundance of different providers to choose from, and so you can be assured of competitive rates.
	There are facilities which allow for all manner of payment environments, both card present and card not present - clearly this product is versatile.
	Card holders can gain points or rewards on their cards which encourages them to spend spend spend.
	You believe that credit cards are the largest non-cash payment method currently utilized today.

However, did you know as a merchant you are the one who gets penalized almost exclusively, and here is how they do it:

• A merchant is only guaranteed their funds IF the client does not charge back the transaction. Clients chargeback for many different reasons, from being unhappy with the service, to simply not recognizing the transaction on their statement. They can do for typically up to 6 months, but as many as two years!
  
  
• Banks make it all too easy now for clients to dispute a transaction and then you the merchant has to fight to prove the transaction was legitimate and that the money is rightfully yours. All the time, the funds sit in the client's account and not yours!
  
  
• Although the payment appears rapid, you will see that in reality, cleared funds are not available for several days.
  
  
• You feel that you may get a fair 'discount' rate - maybe 1.9%, for example. Did you know that this rate only applies to those transactions which 'qualify' for this rate? In fact only about 5% of all cards will attract the rate at the top of your agreement - all the others will be 'mid' or 'non' qualified and therefore you can expect to pay as much as 4% in some cases. This is a fact. There are 86 pages of different card types in the USA today. Corporate cards, business cards, rewards cards . . be wary of them because these are the ones that cost you.
  
  
• As a business taking credit cards, you cannot forecast your budget, because you simply have no idea what your fees are going to be each month. It's simply impossible.