Charge It!

As we continue to navigate through this digital revolution, more and more people are forsaking paying for items, even some bills, with cash or checks. The convenience of using debit/credit cards has made life for the consumer much smoother. However, what happens when a business does not accept debit/credit cards? Are you in jeopardy of losing customers because your business has failed to keep up with the technological revolution? Unfortunately, you are.

Your business may receive multiple calls per day from telemarketers asking if you accept credit cards, do you want to accept cards, can they set you up to accept credit cards? Although you may want to jump in to merchant processing (that's the technical name for taking consumer money through credit cards), there are a few factors that you should consider.

Accepting debit/credit cards is a process that involves you taking your customer's bank information and submitting it through a terminal which sends the information to a merchant service using digital transmission. The computer system determines if your customer has enough money to process the transaction and then sends you an approval or denial message. The company takes the money from the client's account, charges you a fee or series of fees for processing the transaction and then sends you the balance. When choosing a company to process your credit/debit payments, consider the following factors to find the best company to work with.

How will you be accepting payments? Some companies will charge a different fee based upon whether you are operating a web store (accepting payments on line), accepting payments over the phone or swiping the card in person. Accepting payments in person will generally have a lower fee because there is a reduced possibility of fraud – someone using someone else's card – since you are able to verify the existence of the card and the person using it.

How much is the set up charge? Often companies will charge a nominal fee to set up your account however if you are a shrewd business person you may be able to have this fee waived.

How much will the terminal cost? You may have the option of renting a credit terminal or paying up front for the machine. It may seem cheaper to rent but you should take the monthly cost and multiply it by the number of months in your lease agreement and compare that with the cost to pay upfront. You may be surprised at the difference in price. If a machine costs $59.95 to rent over a 48 month period or $595 to purchase, is it cheaper to pay the $595 or $2,877.60 over 4 years? However, you must also consider your budget. Can you afford to pay the entire amount upfront? If not, ask if they sell refurbished machines. These are machines that were returned to company because of a malfunction, got fixed and are now being sold at a discounted rate.

Ask about the fees. Tell them that you want to know about every fee associated with this service regardless of the likelihood of you incurring the fee. These include application fees, cancellation fees, statement fees, gateway fees, monthly service fees and monthly minimum fees. You must factor these fees into your monthly budget. For example, if you are paying $115 in fees each month and processing an average of $150 in transactions, you are actually only netting about $35. In this case, it may not be worth it for you to process credit transactions or you should find a less expensive company to work with.

There are also fees associated with processing each transaction. First there is the discounted rate which every Visa, Master card, American Express, etc charges for processing a transaction using their card. Usually this fee is a percentage which can range between 1% and 3% depending upon whether you are swiping or keying in the card data. The other is a transaction fee which is charged per authorization and can range from $0.20 to $0.50. For example, if your merchant service charges 2.44% per transaction and $0.24 per authorization and you have a charge of $33.00; you will pay $1.05 for the transaction.

The next consideration is funding. Funding is how and when your merchant service gets you your money. Some banks offer merchant services and will transfer the funds directly to your account, however, you may pay higher fees for this convenience. If you choose a third party merchant, it may take up to five business days to receive your money. Always ask when your fees will be deducted from your account and how you will funded for the payments received.

Keeping up with modern technology is essential to every business' growth, however you must be smart and mind your business. It's not always about how much you make, but how much you keep.

Do You Deserve Credit?

One of the main complaints that we all have with credit card companies sending cards to teenagers is that they don't deserve it. The theory is that they haven't earned the right to have access to thousands of dollars that they may not be able to repay. However, how many of us deserve credit?

It wasn't until the prosperity years of the '90s that credit became widely available. Before then, you had to have excellent payment history or lots of cash in the bank to access credit. Creditors were leery of allowing the common man access to its stash. This all changed when they realized that we are consumer society. Studies have consistently shown that Americans spend more than they earn. It doesn't take a rocket scientist to figure out that credit keeps us in that flux. We take no issue with buying a home that we can't afford, driving a car we can barely maintain or wearing clothes that we never should have bought. Credit has allowed us to create a lifestyle that may be enviable on the outside but no one realizes the strain that paying these bills puts on our lives which essentially makes us a slave to our jobs. We can not enjoy the freedom of doing what we want to do rather we are forced to stay at jobs in which we are unhappy or defer our dream job which may not pay as much as we would like because we have so many bills.

Credit alone is not the culprit instead it is the fact that creditors realized that the people wanting credit didn't deserve it so they figured out a way to punish them for their selfish desires – interest. Interest is a complicated beast that can take over a balance and have it whooping your butt before you even realize what's happened. If you are only paying the minimum payments each month, then you are essentially feeding the beast (interest) and starving the monster (principal). It may seem that the monster is being held off but the beast is growing and taking over your life.

I have nothing against credit, when used responsibly. It's almost like a gun, in the wrong hands it can be deadly. Credit is actually necessary in our society. If you want to make a significant purchase, like a home or a car, then your lender will want to know how you have handled your credit in the past. They will be looking for your monster and your beast to be tamed in a nice little cage called low/zero balance.

Every person should have at least one credit card, preferably a universal card like Visa, Master card or American Express, for emergencies. However, opening your wallet and displaying a credit card collection like newborn baby pictures is not impressive. The more accounts you have open the more leery a creditor may be about lending to you regardless of the their balances. Imagine you have six cards with $30,000 in available credit and an annual salary of $40,000. You may only have a total outstanding balance of $4,000 but imagine some traumatic event happening in your life, a creditor's worst nightmare is you going on a $36,000 shopping spree and never be able to repay your debts.

Not many of us deserve credit because we are selfish and materialistic. Rather than using credit cards for emergencies, buying the best house with an affordable mortgage and choosing an economic car; we choose to be slaves. Free yourself, pay down your debt and so that you can enjoy life. Having a low or no debt lifestyle allows you take advantage of jobs that you enjoy, allows you to save extra money for vacations and keeps you from dreading to open your mail.

Your money matters – its not about how much you make, but how much you keep.