Leap Payments

Visa’s new FANF fee, it’s new but not an improvement

admin — Thu, 03 May 2012 16:37:49 +0000

In April, Visa has introduced a new fee called Fixed Acquirer Network Fee (FANF) which is quite complicated to calculate and results in significant new fee that all credit card processors must pay to Visa for the privilege of accepting their cards. The fee is charged based upon your businesses volume of card present/swiped and card not present/keyed transactions.

Here’s an example:
If you’re a retailer who has a single location and you swipe credit cards you’ll pay Visa a new fee of $2.00 for FANF starting in April. If you also manually enter card numbers you’ll pay an additional fee based on the volume of those keyed transactions. So if you process $10,000 in keyed transactions you’ll also pay $15.00 to Visa directly for FANF. So now you’re paying an additional $17.00 per month to Visa. To help you determine how much your business will pay see our Visa FANF Flow Chart flow chart. If you need any assistance calculating your FANF fee call us and we’ll help you do the math, as this is one of the most complicated fees ever introduced.

So, why are merchants paying these new fees?
Let’s be honest, the Durbin Amendment to the Financial Services Reform Law that was enacted in October 2011 forced Visa and MasterCard to reduce the cost for Debit card transactions, but unfortunately it was short-sighted and not well reasoned for a couple reasons:

#1 Senator Durbin simply didn’t understand that the rates set by Visa/MasterCard for debit cards is not always the rate that your business will pay unless you have interchange plus pricing as offered by Leap Payments. Most providers never offer interchange plus or cost based pricing to their clients, as they prefer to set specific higher rates for each card transaction. So while Leap Payments clients immediately enjoyed these debit card savings, most merchants never saw a penny of savings. We find that most providers are simply too greedy to pass along Durbin savings to their clients so the legislation only resulted in Visa/MasterCard’s earnings reduction that they had to make up somewhere else.

#2 Senator Durbin also didn’t consider that if you mandate a rate cap for debit cards then the card associations will simply increase the fees for other card types or go as far as Visa has now gone and introduce entirely new fee types such as FANF to impose on merchants. Let’s remember that Visa and MasterCard are for-profit publicly traded companies, so they’re motivated to provide the highest shareholder value possible. When you use legislation to limit the price on a single product offered by a for-profit company their reaction will be to increase other fees or introduce new fees to offset their lost revenue. Bank of America tried to introduce monthly debit card fees to consumers to offset Durbin reductions but due to the massive consumer backlash they had to reverse their decision. Now Visa is doing the same thing to business owners with FANF, and frankly we shouldn’t stand for it.

We say enough is enough. If you’re as mad as we are about these new fees write to Senator Durbin and tell him that his legislation didn’t work and you the business owner are now paying for it. Here’s a link to his webpage to send your comments: http://durbin.senate.gov/public/index.cfm/contact…

Point of Sale systems – good for business or a financial trap?

admin — Sat, 03 Mar 2012 00:45:51 +0000

Using a point of sale system or integrated system that manages your sales, tracks inventory and helps you track your expenses and revenues can be a very good thing for your business, with one big gotcha – integrated payment processing. The gotcha is that some systems only offer a single credit card processing solution provided by a “preferred” partner. What that really means is that the software provider is getting a kick-back from the credit card processor in exchange for being an exclusive provider of credit card processing services.

So your POS provider has no incentive to provide the best prices to you. In fact, these software providers are financially incentivized to charge you the most possible for your credit card processing because with higher rates their incentive increases. There are even providers out there who will give you a free POS system because they know that as soon as you spend the time to enter all of your information into the system, you can never leave and they can charge you whatever they want to accept credit cards.

To avoid this hijacking of your credit card and debit card processing you need to make sure that your POS system partner offers you the flexibility to choose your own credit card processor. This way if you’re not happy, you’re in control and can do what’s right for your business.

At Leap Payments we’ll work thousands of POS systems and have direct reseller agreements to provide you with the lowest cost solutions from Performance POS, PC America, Authorize.Net, Virtual Merchant and Internet Secure. With over 1,000 integrated software partners that work with our online transaction gateways, we can find a solution that works for you. Another secret is that sometimes gateways add additional fees for themselves each time you authorize a transaction, we actively work with each client to identify the right processing solution so you see the largest possible deposits into your bank account, because that’s what counts.…

No free lunch or free terminals?

admin — Tue, 14 Feb 2012 00:14:11 +0000

We’ve all heard the saying that there’s no such thing as a free lunch, but everyone loves FREE offers. We’d like to share some of the tactics used by other companies that say they offer free terminals, but in reality the business owner gets stuck with a bad deal. Here’s how these “free” programs work:

Merchant signs a contract for the “free” credit card machine… Wait a minute you need to sign a contract for something that’s free? Here’s why it’s not free at all and what you’ll find in the small print:

Annual equipment fee
Maintenance and reprogram fees
Long term contracts with hefty termination fees and penalties
Locked terminals, so they’re worthless to anyone except your current provider

As always be skeptical whenever you hear FREE and don’t fall for a gimmick with hidden fees and additional contracts with lots of fine print. At Leap Payments we want you to own your equipment so you’re in control, not your processor. No fine print, no terminal contracts. When you can purchase a new state of the art machine for only $199, is it really worth signing a contract with hidden fees, terms and conditions for so called “free” equipment?…

Mueller Implement and Rental

admin — Fri, 27 Jan 2012 18:28:09 +0000

During a conversation discussing credit card processing fees with my brother-in-law, who has a small Sporting Goods store, he raved about Leap Payments. He was impressed with Leap Payments because they took the time to make sure that he understood his statements answered any questions he had.

At the same time, our former processor charged us an annual fee (which was not in the original quote) and a fee for failure to complete PCI compliance even though I did everything that they asked. Needless to say I was not happy and the other processor’s customer service was unwillingly to work with us. So I picked up the phone and dialed Leap. What a difference to talk to someone who seemed to be generally concerned and had our best interests in mind.

As a final insult our former provider had password protected on our terminals and were unwillingly to unlock them so we could switch providers. Leap Payments stepped in and swapped out our terminals so we could get up and going.

We are very happy to have next day funding (which was promised by our former provider but never happened). And now if I ever have a question or concern, Leap Payments is there to help.

Would I recommend Leap Payments? The answer is YES!
Thank you for providing the personal touch.

- Cathy Palan Mueller Implement, Inc.…

Thanks to the 99%, and Boomerang clients

admin — Mon, 02 Jan 2012 22:16:49 +0000

We’d like to say THANK YOU to our clients for helping us achieve our goals in 2011 and for our unprecedented 99% retention rate. With an industry average 20-30% annual attrition rate, Leap Payments continues to prove that providing ultimate transparency to your bankcard processing along with truly personal service results in happier clients who remain clients year over year. The Occupy movements across the country highlighted that the 1% gained a very bad reputation last year. Our 1% here at Leap Payments who had to close their accounts due to hard times shows that sometimes there’s nothing we can do when a business closes. So retaining 99% of our client’s year over year and growing our base more than 250% shows that our commitment to providing honest credit card processing and serving our clients is unmatched, and word is getting out. And of course, we’ll be here when our 1% re-surfaces with their next great venture.

We also saw a few “boomerang” clients in 2011. These are clients that fall prey to a slick sales pitch from a competitor and switch processors hastily, only to realize that the competitor’s sales rep was not providing them accurate information. Some sales reps will say absolutely anything to close a deal, then when their promises don’t materialize and getting help from the other processor becomes impossible, the client boomerangs back to Leap. We typically ask these clients for a testimonial, but the response is typically that they simply fell for a sales pitch that they really wanted to believe, but realized quickly that they had instead made an embarrassing mistake.

We get it and we’re here to help, so if you ever have a question, call your Leap Payments rep, we’re always available to help. If you’re a Leap client, thanks for being part of our 99%. If you’re considering becoming a client please talk to any of our existing clients and they’ll tell you why it’s time to make the Leap!…

Direct Credit Card Processor, Fact or Shameful Pitch?

admin — Tue, 01 Nov 2011 15:00:28 +0000

Many credit card processors claim that they are direct credit card processors or offer wholesale credit card processing rates. This sounds attractive to “cut out” the middleman, but is this real or simply a sales pitch? The truth is that in practice unless the business name of the company you’re dealing with is Visa or MasterCard, then they are not truly direct. In fact Visa and MasterCard will not open a credit card processing account for an individual business as they only service banks. So you need to work with a credit card processor who will service your account, provide you with statements and take care of your business since it’s impossible to be truly direct. There’s a list of these offices that are directly registered with Visa and MasterCard and as we’ve discussed in previous blogs Visa publishes this list on their website. You’ll find Leap Payments on the list, as we’re as direct as possible so we enjoy the lowest costs without the middlemen.

So who can offer “wholesale” rates for your small business credit card processing? While anyone can make this claim, it doesn’t hold any meaning with today’s financial systems. If you hear this pitch just ask the sales rep what a direct credit card processor really means, probe for their parent company’s name and verify that they are directly registered with Visa. Then check their Better Business Bureau rating and you’ll quickly learn that you don’t want to the next victim of an outrageous sales pitch. …

It’s Official Debit Card Processing Costs Slashed 95%

admin — Tue, 04 Oct 2011 16:24:05 +0000

Thanks to the Durbin Amendment to the Financial Services Reform Law the cost to process debit cards has been slashed from 0.95% to 0.05%. Most businesses will never see these cost savings because their processor charges them fixed or flat rates for their transactions. We estimate that over 98% of businesses currently have a fixed, flat or tiered rate pricing structure with their processor, so their processors will be having a big party this month at your expense. That’s because as of October 1 the new debit card rate cap went into effect, so if you’re business has a rate of 1.59% for debit cards, your processor’s revenue just jumped from 0.64% (which is 1.59% – 0.95%) to a whopping 1.54% (1.59% – 0.05%). That’s almost a 2.5x increase in your processor’s revenue.

What do you the small business owner get out of this deal? Nothing. That’s unless you’re with a processor like Leap Payments who offers cost plus pricing.

With Leap Payments the cost caps established by the Durbin Amendment and enforced by the Federal Reserve are automatically passed along to our clients, so our clients enjoy the full benefit of these reductions. While the objective of the amendment was to reduce businesses’ costs to accept credit cards, this has actually backfired as only the largest businesses (and Leap Payments clients) enjoy cost plus or interchange plus pricing. This is a significant flaw in the regulation because Congress simply doesn’t understand how typical businesses pay for their credit card processing, so the processors are reaping all the benefits at the expense of the banks and now the consumers (see below). In fact, only 2% of business owners will see this benefit, but if you stand up and make a switch you can be part of this group.

Background – Why Bank of America Just Introduced Debit Card Fees
A majority of the revenue from debit card transactions actually gets paid to the bank that issued the card. So by regulating and slashing the debit card processing rates directly impacts the bank’s revenue. That’s why Bank of America has announced that they will now be charging $5 per month to consumers to use their debit cards. When the Durbin Amendment was originally proposed the banks informed Congress that they would have to raise debit card fees to offset their losses from a federally imposed rate cap, so now Bank of America is simply fulfilling their promise. Senator Durbin is predictably unhappy with this backlash and has made public statements that consumers should choose another bank, but we expect other banks to introduce similar debit card costs to consumers.

One insider compared this to Congress telling McDonalds that they could only charge $0.10 for a soda, so of course McDonalds will have to raise the costs for a burger to offset their losses.

The Bottom Line
While Leap Payments competitors are preparing for a big party this month, we’re hard at work reducing your costs so your business can succeed. Our philosophy is simple, we share our industry knowledge to empower your business success. Leap Payments has grown over 250% since last year, so business owners are clearly fed up with the tactics of our competitors and the word is getting out that there’s a simply better way to process credit cards for your business. Honestly better credit card processing, only from Leap Payments.…

Will you benefit from debit card cost reductions?

admin — Mon, 12 Sep 2011 16:02:38 +0000

The short answer is … Yes, if you’re a Leap Payment’s client your costs are about to decline dramatically for debit card transactions starting October 1. If you’re not a Leap Payments client your costs will likely stay the same, but your processor’s revenue will be increasing dramatically. We believe that our clients deserve to receive 100% of all cost reductions without even asking.

First, some quick background for first time readers: The Federal reserve board now regulates the costs that Visa and MasterCard as well as the debit networks can charge for debit card (check card) transactions. On October 1, the Fed has set maximum costs to 0.05% and $0.21 per debit transaction. To see more details here’s a quick link to the Fed’s website
But the story does not end there. Your credit card processor has the ability to either pass along these cost reductions to their clients, or continue to charge their clients the same fees and keep the savings for themselves.

We have credible information from the major processors that they are not reducing their client’s debit card rates, so even though their costs are reducing they are trying to hide this fact from their clients, so they can keep the money for themselves. We also hear that for new accounts some processors are offering a lower bundled cost for qualified credit and debit cards, but not passing along the full benefit of the new lower debit card costs onto you the business owner.

Why is Leap Payments different? We offer true interchange plus pricing, which means when the interchange costs drop, our client’s cost drop as well. 100% of cost savings are automatically and immediately passed along to our clients. Other processors do not share our philosophy or ethics and might pass along some of the savings, or worse keep all the cost reductions to themselves.

Starting October 1 debit card cost savings are significant! The cost will reduce from 0.95% to 0.05%, so for a business processing $10,000 per month in debit cards, you’ll immediately save $90 per month or $1,080 per year if you’re a Leap Payments client. Only if you have a true interchange pass through account will you experience the full savings automatically.

We appreciate your business and will continue to deliver the lowest cost accounts available with our knock your socks off service. …

Spanish Valley Vineyards

admin — Mon, 22 Aug 2011 17:22:17 +0000

“As the owner of Spanish Valley Vineyards, a small family owned and operated farm winery, I’m used to being treated as unimportant by the big businesses that I deal with, but my Leap Payments Rep has proven that being a small customer doesn’t mean I’m insignificant. He’s a man of his word and is willing to go the distance to make things right, always there when I need him. Thanks Leap Payments!”

- Stacy Dezelsky, owner Spanish Valley Vineyards…

Ecological Society of America

admin — Wed, 10 Aug 2011 17:50:28 +0000

“Switching to Leap payments was extremely easy. The customer service is fantastic – better than any I have ever experienced by far. And the cost savings are real.”

- Elizabeth Biggs Ecological Society of America …