Sorting Through A Merchant Service Statement: Find Those Hidden Costs

When you first signed-up for a merchant credit card processing service , you were inundated with sales pitches from everywhere. Your service representative promises were fantastic. How could you have been so smart, or so lucky? At least that is what some merchants think before they get their first statement. Those merchants find themselves saying things like, “The rep said they offered the lowest prices, and yeah, he did mention that there would be a statement fee, and a monthly minimum, but those are to be expected, what are all the other costs, for signing up for a lower rate why am I not keeping more of my money, what is up? “They promised next day deposits, but these rates I am being charged are absolutely NOT worth it, I am finding a new processor now.”

Paying bills is not fun. Paying for something that you did not agree to buy is maddening. Not understanding what exactly you are paying for is just wrong. Merchant statements are frequently filled with cryptic codes and indecipherable jargon. Too often that is precisely what some banks or independent processors intended. If you can’t read it, you may not notice that while you got a great rate quote, the fees they charged you are equal to or more than you saved on those deceptively lower rates. Many banks and processors lure the merchant in with low rates, and immediate deposits. Once you have been hooked the rate offered is now only an introductory rate or the cost of services outweigh the benefits of immediate deposits. Merchant statements can be so complicated that it nearly impossible to assess you REAL costs. Every processor calls commonly expected fees by different names. It is important to understand what the expected and necessary fees are, and what fees can be avoided by finding a top quality processor. The most common fees are: Monthly Statement Fees, Monthly Minimum Fees, Chargeback Fees, 12 B Letter Fees, Transaction Fees, Authorization & Capture Fees, Return Transaction Fees, Batch Fees, Wireless Fees Customer Service Fees, AVS, ARU, Electronic AVS, and Voice Authorization Fees Annual Fees Reprogramming Fees Set-up Fees

A top quality credit card processing service will not charge quite a few of these listed fees. Annual fees, reprogramming fees, set-up fees, can almost always be avoided. The rest of the fees will be charged outright to you, or the bank and processor will pass them on to you in other areas. Negotiate the fees with your processor. While many of these fees are set by the associations, the mark-up can be negotiated. Often processors will offer “interchange plus” fees. Depending on your type of volume and industry, credit card processing costs can be greatly reduced. However, as always be aware that banks and processors can pad other charges to you to make up the difference.

Monthly statements should contain your total daily card sales and the fees charged to process them. If you were informed correctly by your processor’s sales representative, they quoted you a “qualified rate”, a “mid-qualified rate”, and a “non-qualified rate.” The interchange you are charged for a transaction plus the processing costs will be reflected in your costs. Far too often processors and banks do not inform merchants of the different rates a merchant may be charged. The merchant has been advised of the lowest rate, and not of the increase in rate they might pay when a transaction is “downgraded”. Downgrade is the term used when a transaction is assessed a higher than “qualified rate.” Reward credit cards and on-line transaction are charged a higher rate. Billbacks are used to hide higher interchange rates from the merchant. Some processors use something called ERR (earn reduce and recover), which is just another term for billback.

Don’t’ fall for this scheme. A credit card processing service will charge a low discount rate on all of a merchant’s transactions in a given month, bill back the higher rates on transactions the following month. Billbacks are coded with a BB, or ERR. The processor is passing on the additional cost of handling those transactions without showing clearly the actual rate a merchant is charged. To estimate your actual rate, determine your average sales ticket (transaction) and multiply it by the number of transactions for a given billback or ERR, and divide the charge by the previous amount (ticket amount X number of transactions). The merchant can save tremendous money by negotiating lower rates for “mid-qualified” and “non-qualified rates.” Don’t let the sales representative get you to focus on the low “qualified rate” while ignoring the rates that cost you more and more, especially in light of the growing popularity of world and reward cards.

build free traffic

credit card transactions

A dispute on credit card transactions made, offers consumers three protections: protection against unauthorized use, billing error procedures, and the right to withhold payment. Lenders follow a set of procedures when you file a credit card dispute for a discrepancy in your bills. Keep in mind that at the end of the investigation, these protections may still result in a finding that you are liable to pay for the disputed transaction. The law(s) applicable to your particular set of circumstances will dictate the actual amount – if any – that you are liable for.

Protection against Unauthorized Use

In an era where merchants accept payments by credit cards on the Internet and by phone, the problems relating to the unauthorized use of credit cards have increased. Unauthorized use includes situations where your credit card or credit card number is stolen, borrowed, or used without your consent. If it is proven that your credit card was indeed used without your authority, then the law limits your liability to $50. In most cases the issuers of credit cards waive this payment.

Once an unauthorized charge has been reported to the issuer, the latter makes a decision whether to take the credit card transactions charge off your account or to investigate the validity of your claim. This reasonable investigation can consist of many things such as a verification of the signature on the credit card transaction slip, comparing the locations of your residence and the outlet where the transaction was made, and obtaining the related police report.

Procedures to Follow When Disputing a Billing Error

You can invoke this protection on your credit cards, when a merchant charges you for products you ordered but that never reached you, or when your credit card bill is overcharged. A federal statute, Fair Credit Billing Act (FCBA), protects you when you use your credit cards. FCBA provides that you may dispute any charges that are made to your credit cards and, that while the credit card issuer is still conducting investigations, you have the right to withhold payment without being subjected to interest for the corresponding unpaid amount. Because of this law, credit card companies are forced to pay attention to your credit card dispute. The merchant involved may, as a result of the dispute, incur credit card chargebacks.

There are things you need to do if you want to avail yourself of these consumer protections afforded to you on your credit cards by the law:

File a written statement to the credit card issuer at the address indicated for “billing inquiries” – not the address to which you send mailed payments. This statement must contain your name, address, credit card account number (not the card number), and all particulars and descriptions regarding the erroneous billing credit card transactions including the corresponding amount and the date of the erroneous transaction.

Send this letter to the credit card company so that they receive it within 60 days from the date of the first statement that contained the erroneous transaction entry. Suppose you did not get the billing statement? For instance, an identity thief may have changed your account address. In such cases, the credit card dispute letter should still reach the card issuer within the required 60 days. You should have an idea (or ask) of when the credit card companies usually mail out the billing statements. Make sure you receive your statements every month. If you don’t, follow up without delay.

The following circumstances are grounds for invoking a credit card dispute:

? The item posted on the bill is in error;

? The item on the bill is a transaction not made by you or a person you expressly authorized;

? The item refers to products or services that have not been accepted for reasonable causes by you or a person you authorized. For instance, the item may not have satisfied the conditions of sale. You can ask your card issuer if you are not sure whether to reject the item outright, or to accept conditionally and then challenge the supplier.

? The item refers to products or services not actually delivered to you, or to your designated person, as the terms of sale have indicated. For instance, you may have paid additional shipping to ensure quicker shipping but the purchased item was delivered late, or not what you ordered, or not in the quantities you specified.

After you have submitted your complaints, credit card companies are required by law to conduct an investigation. They should be able to inform you of their findings within ninety days or two billing cycles, whichever date comes first. In most cases, merchants will back off rather than risk losing the privilege of accepting credit cards. The credit card company will then cancel the charges as well as all corresponding interest.

If the credit card dispute is not settled, you are entitled withhold the payment of the disputed portion of your bill. You should however see to it that you pay the undisputed amount. Otherwise the credit card company may resort to action for collection, or report the delinquency to a credit bureau.

Should the results of a credit card dispute not be in your favor, your credit card company is required to send you a written explanation of the findings and how the decision was informed. A grace period for the disputed amount is normally granted.

Right to Stop Payment

Another crucial protection you have in a credit card dispute is the right to stop payment. The stop payment order is a very powerful tool that can be used when you are not satisfied with a purchase you made with any one of your credit cards. You can invoke this right if you have a legitimate complaint regarding the quality of anything you purchased with your credit card and provided that you have made a good-faith attempt to settle the problem directly with the merchant.

Because it is so powerful, this right has some important limitations:

? The value of the disputed goods or services should be over $50, and

? The items must have been bought in your home state or within a distance of 100 miles from your mailing address.

There are exceptions to these limitations: they do not apply if the credit card you used was issued by the seller (such as a department store or house card) or if an advertisement for the items you bought was mailed to you by the seller. Even so, you should show proof of a good-faith effort to settle the issue with the seller.

Once you have sent notification to the credit card company about your intention to withhold payment, they are not allowed to report the amount under dispute as a delinquency to any credit bureau. Any actions have to be withheld until the dispute is resolved or a competent court has issued a judgment against you. By the same token, your lender cannot take action for collection or treat the transaction as “settled” unless they have conducted a reasonable investigation into the dispute.

If you feel that you should withhold payment, complete Form 76 and mail it to the credit card company address indicated for “disputed charges” (not for the billing address) and explain the reason for your decision not to pay. You should do this promptly: taking too much time about it will make your claim suspect. You should withhold only the amount corresponding to the defective or undelivered item plus the associated finance charges.

To bolster your position as best possible, ensure that your credit card issuer receives your dispute claim within sixty days of the credit card billing statement that first showed the item under dispute. You must explain and describe your attempts to resolve the issue with the seller. You should also attach documentation of all your attempts at resolution, including letters you sent to the seller regarding the disputed purchase and the copy of the credit card bill showing the item under dispute.

Perhaps this is why purchases made by means of credit cards are better than cash from a consumer perspective. The protection and mediation offered on purchases made through you credit cards essentially translate into built-in consumer assistance: help that would have cost you a great deal extra had you opted to pay for the disputed items by cash instead.

g guage trains