5 tips to reduce your credit card fees now

Fees usually vary because of the risk the provider takes on by letting your company accept credit cards. You may pay more or less credit card fees depending on your industry because of the type of goods or services you sell.

Here are 5 tips you can use to save money on your credit card processing

• Check that your provider is using the correct merchant category code (MCC) for your business
• Swipe the credit cards wherever possible
• Get direct interchange pass through pricing
• Review your bill make sure you understand what's on it and how it got there
• Reduce chargebacks by using fraud tools such a AVS etc

There are many other ways to save money on payment processing, but these you should be able to determine quite easily. Remember it doesn't always come down to the lowest rate quoted. Hidden fees can make the actual costs you pay much more than the quoted rate.

ACH Credit Transactions

ACH credit transactions are used everyday for any number of reasons. Whether its dividend payments from your broker or your monthly social security check ACH credit transactions are an important part of the ACH network.

ACH Credits Usage
ACH eCheck transactions happen when the Originator (usually a company) starts a transfer to move funds to a Receiver's (consumer) account. There are a number of reasons to perform an ACH Credit transaction.

• dividend payments
• b2b payments
• interest payments
• annuities disbursements
• telephone bill initiated payments
• pension
• tax payments
• refunds
• Social Security payments
• payroll
• government vendor payments

Here is an example. You have a brokerage account at Bank of America and you own 1000 shares of Microsoft. As of this writing Microsoft pays a dividend. If your set up to be payed the dividend, you the Receiver would receive the dividend as an ACH credit to your account from Bank of America, the Originator.

ACH eCheck Payment Applications

The ACH Network supports a variety of payment applications from different vendors. An Originator initiating entries into the system will code the entries in a manner to indicate the type of payment, such as a debit or credit, and whether an entry is a corporate or consumer. The ACH application is recognized by a three digit code or an Standard Entry Class Code (SEC) code. This SEC code appears on the record format. It identifies the specific record format that will be used to carry the payment and the related payment information. Here is a list of entry class codes.

ARC - Accounts Receivable Entry
CIE - Customer Initiated Entry
MTE - Machine Transfer Entry
PBR - Consumer Cross-Border
POP - Point of Purchase
PPD - Prearranged Payment and Deposit
POS - Point of Sale
RCK - Represented Check
TEL - Telephone Initiated Entry
WEB - Internet Initiated Entry
CBR - Corporate Cross Border Payment
CCD - Cash Concentration or Disbursement
CTX - Corporate Trade Exchange
ACK - Acknowledgement Entries
ADV - Automated Accounting Advice
COR - Automated Notification of Change
DNE - Death Notification of Change
ENR - Automated Enrollment Entry
TRC - Truncated Entries
XCK - Destroyed Check Entry

ACH eCheck Acceptance

Many merchants that have been concerned about taking checks in the past have now seen the light. eCheck or ACH transactions compared to credit cards can save you big money. Check acceptance is less risky and easier than it used to be thanks to electronic check conversion. ACH transactions are now a cost-effective method of payment and a fast way for your customers to pay safe and securely.

eCheck Conversion
A check conversion application turns a paper check into an electronic one. The resulting check is sometimes called and echeck or e-check. This is also known as an ACH transaction. The merchant will use a check reader to scan the check at the point of sale. The scanner is can be hooked into a software program that sends the check to the payment processor or the payment gateway. The gateway will return a response that is echoed back to the user via the application. The eCheck will clear depending on the type of agreement with the processor debits are usually faster than a credit transactions standard four day hold time.

Merchant Benefits of ACH
When converting checks or ACH processing is used in conjunction with check verification the merchant benefits are huge. Along with the lower processing costs of eChecks the entire process has been streamlined allowing for the integration of a accounting programs such as QuickBooks, and MYOB. Mistakes from data entry are reduced, the closing and settlement process is also simplified by using ACH eCheck conversion.

What is ACH?

This should have been our first post, but better late than never. Every once in a while we get the question "What is ACH?".

Automated Clearing House
ACH stands for the Automated Clearing House Network. The ACH network is a nationwide electronic funds transfer system. The network is overseen by the NACHA operational rules. They provide the interbank clearing for electronic payments for participants. The electronic payments network and the Federal Reserve are in the position of ACH Operators or the central clearing houses which financial institutions to receive or transmit Automated Clearing House transactions.

ACH Volumes
According to Nacha the number of ACH payments originated by financial institutions increased to 8.05 billion in 2002, up 13.6 percent from 2001. These payments were valued at $21.7 trillion. Including payments originated by the Federal government, there were a total of 8.94 billion ACH payments in 2002 worth more than $24.4 trillion.

ACH Types of Payments

• eCommerce, web sites etc
• eChecks payments
• B2B (Business to business) payments
• Mortgages
• Tax payments made to local, state or federal government
• Direct deposits, government benefits, Social Security, tax refunds, payroll
• Insurance premiums
• Mortgages, loans
• Utility bills
• Insurance
• Other consumer bills
  

Basic ACH Terms
Originator
An entity, individual, corporation that initiates entries into the ACH network.

Originating Depository Financial Institution (ODFI)
A participating financial institution that originates ACH entries at the request of and by (ODFI) agreement with it's customers.

Receiving Depository Financial Institution
Any financial institution qualified to receive ACH entries that agrees to abide by the NACHA Operating Rules and Guidelines

Receiver
An individual, corporation or other entity who has authorized an Originator to initiate a credit or debit entry to a transaction account held at an RDFI.

Hope that helps, clear up some confusion. If you would like to know more about the ACH network or NACHA please visit their site or leave a comment.

Check Verification vs Check Guarantee

If you accept ACH, echecks or just plain old paper checks you probably use either a check verification service or a check guarantee service. These services are designed to reduce your company's exposure to bad checks.

Check Guarantee
If one of the checks you accept results in an NSF (Non Sufficient Funds) the check guarantee company will reimburse you depending on if the check was accepting according to the guidelines they provide. These guidelines cover whether the writers drivers license is on the back of the check etc. By not following these guidelines the check guarantee company may refuse to pay. Even if they do pay they have the option to debit your account later if they cannot collect from the bad check writer. The fees check guarantee companies charge are pretty steep for the average merchant.

Check Verification
This method of check protection gives you the option to decline or accept a check during the payment process depending on the information and data provided. Verification can be done at checkout. A real-time query is made to check the status of the account. A number of items can be checked.

• Is the account in good standing
• Has the account been stolen or a victim of fruad
• Is the account a non DDA account
• Are there sufficient funds to cover the check
• Is the account in NSF
• Is the routing number and account number valid
• Is there a stop payment on the account

Another optional item would be to have the check ran through a database of known bad check writers.

Compared to check guarantee, check verification is far less expensive.

Some service providers may not be able to offer the entire list above for check verification and may just offer the negative database. In that situation you may want to look at another service provider to get the full benefit of check verification.

Nacha ACH Return Codes

If your company does any kind of eCheck ACH processing you'll want to get familiar with at least a couple of these return codes from NACHA.

Return Code	Description
R01	Insufficient Funds
R02	Account Closed
R03	No Account/Unable to Locate Account
R04	Invalid Account Number
R05	Unauthorized Debit to Consumer Account
R06	Returned per ODFIs Request
R07	Authorization Revoked by Customer
R08	Payment Stopped or Stop Payment on Item
R09	Uncollected Funds
R10	Customer Advises Not Authorized
R11	Check Truncation Entry Return
R12	Branch sold to another DFI
R13	RDFI not qualified to participate
R14	Representment payee deceased or unable to continuein that capacity
R15	Beneficiary of account holder deceased
R16	Account Frozen
R17	File record edit criteria
R18	Improper effective entry date
R19	Amount field error
R20	Non-Transaction Account
R21	Invalid company identification
R22	Invalid individual ID number
R23	Credit entry refused by receiver
R24	Duplicate entry
R25	Addenda error
R26	Mandatory field error
R27	Trace number error
R28	Routing number check digit error
R29	Corporate customer advises not authorized
R30	RDFI not participant in check truncation program
R31	Permissible return entry
R32	RDFI non-settlement
R33	Return of XCK entry
R34	Limited participation DFI
R35	Return of improper debit entry
R36	Return of improper credit entry
R38	Stop Payment on Source Document
R40	Return of ENR entry by Federal Government Agency (ENR Only)
R41	Invalid transaction code (ENR Only)
R42	Routing number/check digit error (ENR only)
R43	Invalid DFI account number (ENR only)
R44	Invalid individual ID number (ENR only)
R45	Invalid individual name/company name (ENR only)
R46	Invalid representative payee indicator (ENR only)
R47	Duplicate enrollment
R50	State Law Affecting RCK Acceptance
R51	Item is Ineligible, Notice Not Provided, Signature not genuine
R52	Stop Payment on Item
R61	Misrouted return
R62	Incorrect trace number
R63	Incorrect dollar amount
R64	Incorrect individual identification
R65	Incorrect transaction code
R66	Incorrect company identification
R67	Duplicate return
R68	Untimely Return
R69	Multiple Errors
R70	Permissible return entry not accepted
R71	Misrouted dishonored return
R72	Untimely dishonored return
R73	Timely original return
R74	Corrected return
R80	Cross-Border Payment Coding Error
R81	Non-Participant in Cross-Border Program
R82	Invalid Foreign Receiving DFI Identification
R83	Foreign Receiving DFI Unable to Settle
Change Code	Description
C01	Incorrect DFI Account Number
C02	Incorrect Transit/Routing Number
C03	Incorrect Transit/Routing Number and Incorrect DFI Account Number
C04	Incorrect Individual Name
C05	Incorrect Transaction Code
C06	Incorrect DFI Account Number and Incorrect Transaction Code
C07	Incorrect Transit/Routing Number, Incorrect DFI Account Number, and Incorrect Transaction Code
C08	Reserved
C09	Incorrect Individual Identification Number
C10	Incorrect Company Name
C11	Incorrect Company Identification
C12	Incorrect Company Name and Company Identification
C13	Addenda Format Error
C61	Misrouted Notification of Change
C62	Incorrect Trace Number
C63	Incorrect Company Identification Number
C64	Incorrect Individual Identification Number
C65	Incorrectly Formatted Corrected Data
C66	Incorrect Discretionary Data
C67	Routing Number Not From Original Entry Detail Record
C68	DFI Account Number Not From Original Entry Detail Record
C69	Incorrect Transaction Code