Tag Archives: Host Merchant Services

Industry Terms: Large Ticket Programs

This is the latest installment in The Official Merchant Services Blog’s Knowledge Base effort. We want to make the payment processing industry’s terms and buzzwords clear. We want to remove any and all confusion merchants might have about how the industry works. Host Merchant Services promises: we deliver personal service and clarity. So we’re going to take some time to explain how everything works. This ongoing series is where we define industry related terms and slowly build up a knowledge base and as we get more and more of these completed, we’ll collect them in our resource archive for quick and easy access.

Today’s term, Large Ticket Program, is a specially designed program for merchants who accept high dollar transactions on credit or debit cards. Visa, MasterCard and Discover all have their own Large Ticket Programs with different Interchange rates and requirements for merchants.

Visa’s Large Ticket rate is 1.45% and $35 for transactions above $5,000. This lower interchange rate accompanied with a higher per-item fee amounts to a lower overall effective rate for the merchant.

MasterCard qualifies Large Tickets as anything above $7,255, and the accompanying Interchange rate is 1.25% and $40 per transaction.

Discover, the most recent company to implement a Large Ticket Program has the lowest rate for this category, at 0.90% and $20 per transaction. Discover also sets the amount for ‘Large Tickets’ at transactions above $5,000.

Host Merchant Services offers this program to our larger merchants that may find it useful. While some processing companies hide added percentage points in the difference that exists between small ticket and large ticket processing, Host Merchant Services gives the savings directly to you. The Large Ticket Program gives you a rate that saves you more money in processing fees for all purchases $5,000 or more. If you qualify for the Large Ticket Program, contact us immediately for your large ticket savings.

HMS Small Ticket Program

Today’s edition of the Official Merchant Services Blog will discuss the best way for merchants to save money on fees when accepting credit or debit cards for smaller transactions. Host Merchant Services is committed to bringing its clients the lowest fees in the industry. Our Small Ticket Program is a feature that helps us do just that for those merchants who process transactions at $15 or less.

Many merchants have seen debit savings thanks to the Durbin Amendment, which caps the Interchange Fees that Visa and MasterCard charge for debit cards at $0.24 and 5 basis points. Smaller merchants do not see the savings when running transactions under $15, since the 24-cent per item fee and the 5 basis points amount to 2.1% of the total ticket, before any additional fees are incorporated.

The Small Ticket Program however, allows qualifying merchants to pay a per item fee of only 5 cents, while paying an interchange rate of 1.6% for Visa. MasterCard has set its small ticket rate at 4 cents and 1.55%. This program saves merchants money on lower transaction amounts, since the per item fee is less of a burden on them in terms of overall effective rate.

The Interchange category for small tickets is available for merchants who are on Interchange Plus pricing, and who qualify under the Visa business types listed below. Merchants enrolled in flat rate pricing or any type of three-tiered pricing will not be able to utilize these savings, which is just another way Interchange Plus pricing is truly the best out there.

While some processing companies hide added percentage points in the difference that exists between small ticket and large ticket processing, Host Merchant Services gives the savings directly to you. Our Small Ticket Program offers a better Interchange category and a lower per item fee, saving you more money in processing fees for all purchases $15 or less.

Visa opened up the types of businesses that qualify for Small Ticket Processing in November, 2010. Now each of these industries qualify:

Local Commuter Transport
Limos & Taxis
Bus Lines
Bridge & Road Fees/Tolls
Grocery Stores/Supermarkets
Convenience Stores
Service Stations
Fast Food Restaurant
Drug Stores
Book Stores
News Dealers, Newsstands
Dry Cleaners
Quick Copy, Reproduction & Blueprint
Parking Lots & Garages
Car Washes
Motion Picture Theater
Video Tape Rental Stores
Post Stamps/Government Only

If you qualify under any one of these categories, contact Host Merchant Services for your small ticket savings right away. Host Merchant Services promises: we deliver personal service and clarity and as always, we want to keep merchants informed of any potential savings.

Host Merchant Services and Certified Hosting Announce Partnership

Certified Hosting, a leading web hosting services company, announced today a new partnership with Host Merchant Services that will enable webmasters to use merchant services with their web hosting plans. All Certified Hosting customers, including those on shared web hosting, virtual private servers (VPS hosting), and dedicated server hosting plans, are now able to apply for Payment Card Industry (PCI) compliant payment processing that is delivered to Certified Hosting’s high standards of customer service.

“Certified Hosting offers a range of ecommerce hosting services,” says Kacy Carlsen, co-founder and CEO of Certified Hosting. “We have made it easy for our customers to get up and running with an online store using the latest scripts and rock-solid hosting services. Quality merchant services are an essential part of a good ecommerce strategy for any business, and we are proud to announce Host Merchant Services as our chosen payment services partner. We are confident that Host Merchant Services will deliver the quality of service our customers have come to expect, at an affordable price.”

As a leading web hosting provider, Certified Hosting balances cost against quality of service. The company’s reliable web hosting services come with a 99.999% uptime, at a price that is affordable to new and growing businesses. Similarly, Host Merchant Services offers professional payment processing with fees that are clear, fair, and incredibly low. Typically, each type of credit or debit card transaction incurs a different fee, depending on the risk associated with it. Some merchant service providers charge merchants predetermined fees, meaning that merchants always pay the highest rate, regardless of which card has been used. Host Merchant Services charges merchants using a system known as Interchange Plus. Interchange Plus ensures that merchants only pay the fees that have actually been incurred, plus a small surcharge for administration. As a result, merchants using Host Merchant Services can reduce their payment processing expenses and more accurately project the cost of future transactions.

“There are no other industries where customers pay unnecessarily high charges,” says Carlsen. “Yet merchants routinely pay fixed fees for payment processing that do not reflect the actual transaction cost. At Certified Hosting, we provide fairly priced services thanks to Host Merchant Services. And now we can offer credit card processing to match. Even better, Host Merchant Services is – like Certified Hosting – an honest, upfront company that does not surprise merchants with hidden fees and charges.”

Another factor in Certified Hosting’s success is the company’s unlimited web hosting services, with no charges for customers who use a lot of disk space or bandwidth. The payment processing industry is full of complex terms and conditions, including additional charges buried deep in endless documentation. Host Merchant Services removes several common surcharges in the industry, with free applications, free setup, a free virtual terminal and an affordable payment gateway. Merchants are simply charged for the transactions they carry out, making accepting credit cards online more affordable and, crucially, more predictable.

“The most important thing about Host Merchant Services is that payment processing is made simple,” says Carlsen. “Host Merchant Services has no hidden charges, no expensive setup fees, and no unpredictable fees. With Host Merchant Services, our ecommerce hosting customers can quickly apply online, be approved in minutes, and begin taking payments in as little as 24 hours. We hope customers will take advantage of this new partnership so they can spend less on payment processing and maximize their profits.”

Certified Hosting has a proven record of excellent customer service, going the extra mile to help customers grow their online businesses. With this new partnership, Certified Hosting allows customers to get started right away with an affordable and efficient solution for payment processing.

Customers interested in merchant services from Certified Hosting and Host Merchant Services are encouraged to visit certifiedhosting.hostmerchantservices.com.

Industry Terms: Monthly Minimum Fee

Today’s term is the Monthly Minimum Fee. This fee is one of the more confusing credit card processing fees because it’s not really a fee at all. A monthly minimum is more accurately described as a benchmark, or limit that may result in a fee, rather than as a fee itself. It indicates the minimum amount in fees that a processor will collect in any given month. If actual fees resulting from processing activity don’t meet or exceed the minimum amount, the processor will charge the difference in order to meet that minimum. For example, if a merchant has $50 in fees in a given month, and the account has a $75 monthly minimum on it, they will be charged an additional $25 in order to meet the monthly minimum.

Perhaps the most dangerous caveat with monthly minimums is that processors determine which fees count toward the minimum and which don’t. One processor, for example, may count all discount and credit card transaction fees toward the minimum while another may only count its discount rate.

Host Merchant Services differs from the competition in that it does not charge any type of monthly minimum fee for our merchant accounts. We do not discriminate against small business merchants that may still be growing, by charging them for not doing enough business. This is just another way that HMS differs from the competition, and excels in understanding customer needs.

Industry Terms: Downgrade Fee [2023 Update]

What is Downgrade Fee?

Today we will define the term Downgrade Fee. This fee is a surcharge added to the Discount Rate of the total processing fees for a transaction. There is no standard on what a Downgrade Fee must be called so the terminology can vary by processor. A Downgrade Fee may be assessed for a variety of reasons including a customer’s card type, issuing bank, how the transaction is entered and other merchant actions.

Under a Tiered Pricing model more than 50% of a merchant’s credit card transactions experience Downgrade Fees, on average. Downgrade Fees generally cost merchants an additional 1%-3% per transaction on top of the Qualified processing rate. Host Merchant Services saves merchants money on these fees by using the Interchange Plus pricing system. For an in depth analyses of Tiered Vs. Interchange Plus Pricing, see here and here.

The main cause of these Downgrade fees, are card-not-present transactions. These transactions occur frequently with MO/TO or E-Commerce processing, however the downgrade itself can be avoided. As a security measure, processors who charge Tiered pricing tend to raise rates on transactions where risk may be involved. In these cases since the merchant has not physically handled the card, there is a downgrade fee applied. This can be avoided however, by requiring additional information from the customer. When a merchant requests a cardholder’s CVV code, the 3-digit code on the back of a Visa or MasterCard, another layer of security is applied thus avoiding the potential downgrade, and saving the merchant money on fees. Additional information helpful in avoiding Downgrade Fees, are cardholders’ billing ZIP code and numerical street address, this is known as an Address Verification System, or AVS.

Downgrade Fees are often the fees that merchants report as “hidden fees” because they are rarely disclosed before the merchant account activation. Host Merchant Services advises merchants to request as much information as possible when keying in sales, as to avoid downgrades, as well as charge backs. This added knowledge, and our Interchange Plus system of pricing creates a culture of savings for all of our merchants.

Industry Terms: Payment Aggregation

Typically, Merchant Aggregators or Payment Aggregators are service providers through which e-commerce or mobile payments merchants can process their payment transactions. Aggregators allow merchants to accept credit card and bank transfers without having to setup a merchant account with a bank or card association. The Aggregator provides the means for facilitating payment from the consumer via credit cards, stored value accounts or bank transfer to the merchant. The merchant is then paid by the Aggregator. This practice gets controversial among the more traditional sectors of the payment processing industry because it makes it harder for networks to monitor just who generates transactions and, most importantly, the attendant risk.

With a traditional merchant account, like the ones Host Merchant Services offers, there is a noteworthy difference in practice for the merchant. The account is in the merchant’s name, giving the merchant more rights as well as more responsibilities. The traditional merchant account also holds Host Merchant Services to the merchant with added oversight on the transaction process. The security and service gives merchants more peace of mind and more value for their effort. Payment Aggregators also have discretion over when a merchant receives their funds, another drawback of the aggregation model.

DE Auto Show: 10/5-10/7

Today the Official Merchant Services Blog is focused on the Delaware Auto Show. The exhibit is back again this year, kicking off today at the Chase Center on the Riverfront (815 Justison St., Wilmington). Delaware’s show is the first in the region to preview 2013 models, and runs from 10 a.m. to 6 p.m. today, Saturday from 10 a.m. to 8 p.m., and Sunday from 10 a.m. to 6 p.m.

Car enthusiasts will have plenty to look at, with 200 cars from 70 local dealers and show cars including a 1912 Stanley Touring Model 87 Steam Car, a Fisker Karma, a few Porsches, and others. Also attending the event is Bear chef Dana Herbert, “The Next Great Baker” winner, who will be on hand to showcase his life-sized Fiat car cake. Other forms of entertainment include celebrity autograph signings by two former Philadelphia Eagles and Phillies outfielder John Mayberry, Jr as well as photo-ops with favorite local area mascots including the Eagles’ Swoop, the Oriole and Rocky Bluewinkle.

HMS Customers Attending:

Some Host Merchant Services’ customers will be attending the event as well. Barry’s Events will be on hand, facilitating the ticket system through which attendees will purchase food. If you want food from a vendor there, simply see someone at the Barry’s Events tent, purchase a ticket, and bring your ticket to the corresponding food vendor. One such vendor, is another HMS merchant, Hot Sausage King. Be sure to stop by and try some of the great food there!

If you’re a real gear head, be sure to stop by the Nemesis Autosport tent, another of Host Merchant Services’ customers. The company is located in Wilmington and provides exceptional service and aftermarket/OEM tuning parts for European and exotic vehicles. Nemesis will be in attendance for all three days of the event, and one of the cars they will be showing off is their custom 2008 Audi S5 6MT (pictured below).

Admission is $10 for adults, and free for children 10 and under. Today only, admission is half-price for seniors, students and military personnel. You can buy tickets at the door or at www.delawareuatoshow.com for the event.

Industry Terms: QR Codes

Today I will define the term Quick Response Code, or QR Code. These codes are two dimensional barcodes, sometimes called print based hypertext links, that are designed to be decoded at a high speed. QR codes are increasingly used to identify the URL of a company’s web site so that mobile phone users can photograph the code and retrieve information about the organization. Some companies have even created billboard-sized QR codes for this purpose.

The versatility of the codes doesn’t stop there, a QR Code can also contain a phone number, an SMS message, a link to a photo, contact information or just plain alphanumeric text, and the scanning device will respond by opening up the correct application to handle the encoded data appropriately. With the technology of mobile phones constantly expanding, especially within mobile internet, QR Codes seem like the perfect solution to quickly and efficiently bring mobile phone users onto the mobile web.

QR Codes can also be used to facilitate mobile payments. Recently, Barclays Bank launched a mobile commerce QR code campaign right here in Delaware, called BarclayCard Mobile Wallet. The program works in conjunction with a merchant’s credit card terminal, a customer’s smartphone and the corresponding BarclayCard app. When paying for something, the merchant prints out a special kind of QR code and hands it to the customer, who uses the BarclayCard mobile wallet application to scan the code and authorize the payment. We went over this program in detail here a few weeks ago, when our own Steve Myers was the first to use the app at National 5&10. Advancements in technology will lead to expansion and advancement in the uses of these codes, including new games or more advanced methods of mobile payment.

Stripe, Transparency, and User Rights

Online payment processor Stripe announced on Friday, that the company is committing to transparency and user rights for its customers, following the lead of Google, Twitter, and Host Merchant Services. For today’s edition of the Official Merchant Services Blog, we will introduce Stripe, as well as discuss what these recent steps mean for the company, and the industry.

Stripe’s recent move is part of an effort to increase awareness of the effects of the legal process on their users. The company is an online payment processor geared toward developers. They offer to handle everything, including storing cards, subscriptions, and direct payouts to your bank account. Although some merchants may find that helpful, it may make refunds, voids, retrievals and chargebacks more difficult, since you do not have direct access to your customers’ payment information. The company also charges unusually high fees for acceptance, in an effort to simplify the process with rates starting at 2.9% and 30 cents for any card type.

Stripe charges such a high rate, in an effort to simplify things for merchants. I would like to point out, however that a standard Debit card, using Durbin Debit rates would qualify for a rate of 0.05% and 22 cents under Interchange Plus pricing, the type of pricing offered here at Host Merchant Services. Since this rate of 5 basis points is so much lower, Stripe’s customers are overpaying by as much as 2.85%. For a transaction of $500, Stripe would charge a merchant $14.5 (2.9%) and an additional 30 cents on a transaction that actually costs them 25 cents (0.05%) and an additional 22 cents, or $0.47 total. In this case, the flat rate of 2.9% charged, is much greater than the Durbin Debit rate that could be applied, if the merchant was using Interchange Plus.

Stripe is moving towards more transparency, because they sometimes receive legal requests from third parties to stop doing business with certain users. Stripe is enlisting help from Chilling Effects, a joint project run by the Electronic Frontier Foundation, Harvard, Stanford, Berkeley, and other law schools that publish copyright takedown notices sent to web companies, and its most prominent contributors are Google, Twitter and GitHub.

It’s not clear how often the payment processor is asked to stop working with a site or on what grounds, however the best example of the lack of transparency by the net’s dominant payment intermediaries was demonstrated in the fall of 2010. Visa, MasterCard and PayPal all cut off WikiLeaks on the grounds it was engaged in illegal activities, after publishing a trove of U.S. diplomatic cables.

Stripe intends to provide transparency reports regularly about how many requests it gets, a practice that was pioneered by Google. Stripe, in regards to a subpoena notification policy also says it’s instituting the same policy as Twitter, committing to informing a user, when not barred from doing so, that someone is subpoenaing their record. This allows the targeted user to try to quash the subpoena in court. Twitter has spent significant resources fighting to allow its users to resist government subpoenas — including winning the right for WikiLeaks associates to try to quash a grand jury subpoena for their Twitter records.

In conclusion, it is a step in the right direction for large Internet companies to be on the side of transparency as well as advocate for the rights of their users. I hope more web companies step forward in the name of full disclosure in the future. Host Merchant Services has been committed to transparency from the start, and we maintain the promise of personal service and clarity for all customers.

Groupon Going For Mobile Payments

Today we enter the realm of mobile payments again for this edition of the Official Merchant Services Blog, as we look at the newest company to enter the already crowded playing field. Daily-deal giant Groupon, Inc. announced the creation of Groupon Payments in late September, a service that will allow merchants to accept credit and debit cards using Apple Inc.’s iPhone or iPod touch.

Groupon is attempting to leverage its existing loyalty services for merchants, and claims to have low card-acceptance prices. The service provides a free card swiper made by Roam Data that plugs into the Apple devices’ audio jacks, or a $100 wrap-around case from Infinite Peripherals for merchants that expect heavier usage.

Merchants who want use Groupon Payments will be charged fees of 2.2% for Visa, MasterCard and Discover transactions plus 15 cents, and 3% and 15 cents for American Express. If a merchant has ever offered a Groupon deal before or has committed to doing one in the future they are eligible for a discount rate for swiped transactions of 1.8% plus 15 cents for Visa-MasterCard-Discover transactions, and 3.0% plus 15 cents for AmEx sales. Groupon also will charge more for keyed, or card-not-present transactions, with rates starting at 2.3% and 15 cents for Visa-MasterCard-Discover and 3.5% and 15 cents for AmEx.

Groupon is one of the leaders among the national daily-deal offering websites. Senior analyst Rick Oglesby of Boston-based Aite Group LLC said of the program, “Overall, I think it all makes sense. Groupon brings on a tremendous amount of value to merchants due to the volume of eyeballs they attract.”

The numbers appear to back that claim up, the company offers a host of other services that reinforce customer loyalty to merchants, including featured daily deals, deals from national merchants, and Groupon Now! a system for instant offerings available online and through mobile devices. With 250,000 merchant relationships worldwide, the company refused to disclose it’s U.S. merchant count. In terms of customer base, a Groupon investment filing shows they had 36.9 million active consumer customers in the first quarter alone.

Groupon’s program is not without downfalls however; one seems to be the risk of slowing the growth of merchants willing to offer heavily discounted deals. The service is currently available only for Apple devices, and the company hasn’t specified if it will cater to Android phones in the future. Also, it is worth noting that the company does not mention a length of contract or if other fees are involved, including possible termination fees for the service, usually a troublesome sign.

The part of this that I find the most interesting, is that Groupon decided to shun the existing mobile payments companies and create another. Many retailers have made strategic decisions to partner up with mobile payments processors as they see the emerging mobile payments sector as lucrative. Groupon Payments may develop into serious competition for Square Inc., Intuit Inc.’s GoPayment Service, and PayPal.