Unfortunately there’s no way to talk credit card processing without heading inducing language, but here’s my best shot :-)
What you need to know about Credit Card Processing and RealDropzone
Matt Christenson Updated 2/23/2011
RealDropzone has the ability to seamlessly accept Credit Cards on both your website and at your office. On your website, Credit Cards are entered directly into your website (Card Not Present). In the office they can either be typed in (Card Not Present), or swiped using a Credit Card Reader attached to your computer (Card Present).
Unlike other solutions that take hidden fees by forcing you to use their credit card processor, RealSkydiving does not make any of our income through these fees. In fact, the software product is specifically designed to minimize the financial impact of accepting credit cards at your business by encouraging Card-Present or Cash transactions whenever possible.
Because RealDropzone does not have ties with any one specific Credit Card Processor, you are able to freely chose and find competitive pricing. In fact, we encourage you to re-evaluate your credit card processor on an annual basis to continue to assure you are getting the lowest rates possible.
Don’t be overwhelmed with the amount of information I am about to go over. Learning about this information WILL SAVE YOU MONEY. A lot of money. It is better to maintain your own accounts than to go through a service that simply takes “one easy flat rate of 5%”. Establishing your own accounts will get your total credit card processing fees down between 1% and 3% depending on cards used, volume, and other factors. Our industry has an advantage in that our average transactions are quite higher than many other industries.
There is a good chance you already have one or more of the accounts mentioned below. If that is the case there is a very high chance that we can interface directly with your existing accounts; however even if this is true it’s still a good idea to take some time to do some shopping to make sure you have the best deal.
In order to understand what “Credit Card Processing” services you will need, you must first understand the difference between the two primary transaction types:
- CP (Card Present) Transactions: These are transactions where the card is physically swiped and you are able to obtain a signature. This form of transaction offers the lowest rates because of a lower rate of theft.
- CNP (Card Not Present) Transactions: These are transactions where a card cannot by physically swiped. In this case the card number is typed in over the internet or read by a customer over the phone and typed directly into a website, terminal, or software product by your staff members. Because of a higher risk of theft, these transactions often carry with them a higher transaction fee (Based on percentages).
In order to accept Credit Cards, you will need a “Merchant Account” with a bank. In my experience, you will actually need two separate “Merchant Accounts” (or rather, it is in your best interest to have two separate merchant accounts). One Merchant Account will have CP rates, and the other will have CNP rates. RealDropzone™ is setup to accept payments of both types to help reduce your overhead as much as possible.
There will be fees involved in these merchant accounts. You will see setup fees, monthly fixed fees, and a percentage based fee for each transaction. The percentage is not always the same for each card. For example if your customer has a “Rewards” card that card will often carry a higher percentage fee with it, while a no frills “checking debit” card ran as credit may have a lower fee attached to it.
Your specific fee will be based a lot on your volume, and is something you will need to negotiate with your bank. It is a good idea to keep all of your CC processing paperwork and show your numbers to competing companies annually to get the best rates. Be careful to look at ALL the details as some processors try to add hidden costs, and after you switch you end up paying more than you were previously.
After you establish your Merchant account, you are half way there. Next you will need what’s call a “Payment Gateway”. A payment gateway is what allows you to accept payments using the internet as the communication mechanism. You will actually need one payment gateway for each of your two Merchant accounts. Payment Gateways also have fees associated with them however these are not percentage based; instead they are per-transaction based. The Payment Gateway that RealDropzone accepts at this point is Authorize.NET, however we can add support for other payment gateways if you find another with better terms.
I have attached an application for an Authorize.NET payment gateway account. You will want to fill this out AFTER you already have your merchant account. Also, if you do not already have a merchant account this form allows you the ability to sign up for one however I suggest you do your shopping first, you can get better rates from shopping.
At the time you sign up for your merchant account it is becoming more and more common that they can set you up with a payment gateway them. Nearly all American banks and many foreign banks will support Authorize.NET.
When signing up for a payment gateway, Do not opt for any extra “Fraud Detection”, in our industry this just doesn’t make sense as a customer must be physically present to accept your services; this is really just a way for the payment gateway to try to increase their take.
When signing up for a payment gateway, do not opt for the ARB (Automated Recurring Billing) feature. This is for companies offering subscription based services where you can re-charge a credit card without it being present at a later date. It is not applicable to our industry.
If you have any questions at all please don’t hesitate to ask. We are happy to help you work with banks and payment gateways.