Missed the Webinar on Credit Card Acceptance? We Have Your Playback Recording Here

Credit card acceptance and surcharging continue to be two of the hottest topics among credit professionals. With more and more companies opting to pay by credit card, the surcharges can definitely eat into your company’s bottom line. At our recent webinar, Michael Williams from UTA and Ronald Clifford, Esq., addressed some of the most frequently asked questions they hear regarding credit card acceptance and surcharging from a practical and legal standpoint. Additionally, the question-and-answer session at the end of the webinar from fellow credit practitioners is worth your time to listen to.

The playback recording of the webinar is available free to CMA members, while non-members can get the recording for $79. Click here to request a recording of the webinar.

The Advantages (and Disadvantages) of Accepting Credit Card Payments, by Scott Blakeley, Esq.

Customers in the B2B space are increasingly using credit cards to pay supplier invoices. The upside for the cardholder and paying customer is the 30 extra days to pay the cardholder statement that includes the supplier’s invoice. Cards also reduce paperwork and allow the customer to eliminate the time and cost of processing A/P checks. The upside for suppliers is that payment by credit card means near immediate remittance, reduced credit approval and collection activities, reduced credit and bankruptcy risk, and new sales channels (attracting customers who otherwise may not qualify for terms). Further, by accepting cards only when the order is placed, the supplier also enjoys increased cash flow, improved DSO and reduced A/R.

Still, there are complications involved with accepting credit cards in the B2B space. One area where suppliers may have particular legal questions surrounding their policy concerning credit cards is in collections, particularly in suppliers using credit cards as a collection strategy on past-due accounts.

As a speaker at the upcoming CreditScape Fall Summit in Las Vegas, I will address the use of credit cards as a supplier collection strategy in scenarios where the customer has failed to pay. I will cover the rules of the supplier accepting credit card payments on past due invoices from a customer who cannot pay. The discussion will also include the possibility of a surcharge rollout, and the legal issues associated with surcharging the credit card using customer, including how handle the 2-4% interchange fee that credit card companies charge their customers.

Join me as we cover this topic in much more detail at the upcoming CreditScape Fall Summit, September 17-18 at the Tropicana in Las Vegas. For more information about the conference, visit www.creditscapeconference.com. I hope to see you there.
Scott Blakeley, Esq., is founder of Blakeley LLP, where he advises companies around the United States and Canada regarding creditors’ rights, commercial law, e-commerce and bankruptcy law. He will be speaking at the upcoming CreditScape Fall Summit, and can be reached at seb@blakeleyllp.com.

The Illusion of a Good Deal

There’s no question that a lot people have a hard time wading through the confusing and overwhelming maze of data present on statements that they receive from their credit card processors. There’s a popular mental image that processors are merely robbing their customers, hitting them with a never-ending string of charges like convenience fees, access fees, risk fees, assessment fees, downgrades and the heavy-handed interchange.

“They do take advantage,” said Robert Day, assistant vice president, Commercial Interchange, Third Fifth Processing Solutions at the recent CMA webinar, “The Illusion of a Good Deal.” “Interchange is where your focus needs to be. The issuing side of the house is where the money is made…they’re the ones that are driving the interchange.”

Day warned that interchange, the fee collected by the acquirer from the merchant for every Visa and MasterCard transaction, can represent as much as 92% of a transaction’s costs. On commercial cards, the rate of interchange can be affected by the amount of detail a business can collect on the purchaser, such as zip code, location and tax ID as well as line item detail of the purchase, to lower the risk of the transaction being disputed. With lower risk comes a lower interchange rate, which can save anywhere from tens to hundreds of dollars on large ticket sales.

“Really, the key is getting the correct information and putting the information in correctly,” said Day.

But even if a merchant does this, it could be moot.

Beyond the tangled mesh of fees upon fees, the problem for most businesses is that the account with their processor or gateway does not match their business’ needs or practices. Having an account that is set up incorrectly, which typically happens because of lack of experience or knowledge from the merchant or an Independent Sales Organization (ISO), like a local bank that re-sells the credit card processing, translates into wasted money and time. ISOs outnumber processors over 100-to-1 and are very common partners for business accounts, but their limited knowledge could mean that it would be nearly impossible for businesses to achieve lower interchange rates.

Day also warned that processors will simply try to take advantage of businesses. A common practice is that a processor will offer an attractive base rate, which will appear boldly on page one of a merchant’s statement, if the merchant will agree that the processor doesn’t have to disclose the rate they charge for downgrades. In this type of agreement, the processor will deliberately leave out the column for transaction volume on the statement so that the percentage charged on downgrades can’t be figured out. Day explained that if credit professionals see that this one column is absent, it might be time to take another look at the relationship with that processor.

“It doesn’t matter what discount rate is shown on page one,” said Day. “Page one is there to humor you. Throw it away unless it aligns itself with page two. Otherwise, it just doesn’t matter.”