2008 Credit Card Survey: Advice and Lessons-learned For Those Thinking of Setting Up a Credit Card Account
One of the questions in our survey asked respondents if they had any advice for someone thinking of setting up an interface to accept credit cards, but was not sure of how to go about it. We also asked for lessons-learned. Based on the responses to this question, it is quite clear that the devil is in the detail. While the basic concept behind accepting credit cards in payment of commercial transactions is relatively straightforward, any number of peripheral issues can crop up. We've organized the great responses into the following categories:
- Evaluating Your Options
- Implementation
- Process Issues
- Unintended Consequences, and
- Success Stories
Evaluating Your Options
Fees, levels of service, ease of use, PCI compliance (credit card information must be kept securely throughout) will all affect your decisions. Here are some things to consider when you go shopping for a credit card merchant: "The processor will quote their charges, however the issuing banks have fees on top of these processing fees. For example, your initial quote may be 1.8 percent but the total fee may actually be 2.3 percent. This is important to know when analyzing whether to offer that service. I would also say that whether you are reconciling statements or trying to solve a POS problem, a responsive representative is imperative."
- Sonia Kuhlmann, AVP, Atlas Companies. "Look for a way to cover your transaction cost. It cost us 2.3 percent."
- Ted Cwynar, Director Corporate Credit, United States Pipe and Foundry Co. "Do investigate more than one credit card payment system, as some are more user friendly and intuitive than others. We found a web based credit card system, Orbital, which seemed much easier to use than our previous system."
- Paul Brunner, Corporate Credit Manager, Mitsubishi Electric Automation. "Confirm that your Service Provider is compliant with the PCI Data Security Standards."
- Catharine Walker, Finance Manager, AR, Zimmer, Inc. We accept credit cards for only two small business units, but do not intend on implementing credit cards for the majority of our products due to the costs. I would encourage anyone looking into this to make sure that the provider has a web-based system for processing, which is also PCI compliant. This takes away the headache of physically have to maintain the security of the card information."
- Gordon Miller, General Credit Manager, ISP Technologies. "This [credit card system] was established before I joined the company. However the "standard" was the exploration of applicable service options and their associated fees, ultimately the decision is/was made based on a combination of both considerations. I have updated the program this past summer and found, through such research, our current program is still acceptable. Reviewing our costs and needs with our service supplier quarterly has recently yielded reduced fees. It never hurts to re-evaluate the program on a periodic basis to assure you continue its' benefits."
- Paul Setteducati, Corporate Credit Manager, Dual Electronics Corp Implementation
It is highly recommended that you don't try to implement a credit card system on your own. To get it right requires testing, training and periodic performance reviews: "Be sure to pull together a Team (Cash application, IT, Treasury and Credit Manager) to work on the setup. With each new credit card system, there are always some initial hiccups that need to be worked out. Our systems are working well. We are currently looking at adding Amex and Discover to our existing MC/Visa options."
- Mary Peacox, Credit Supervisor, Sentry Group "This was done in conjunction with setting up a new lock box facility with our bank. We set up a demo by the provider and then had two training sessions for the employees that would have hands on responsibility."
- James Albetta, Credit Manager, Ansell Healthcare Make sure that everyone involved understands how it works before you implement it. We had so many issues with not everyone knowing what would happen when we did this or that. The reconciling was a test due to the days between the charge and the post to the bank account. It's always a challenge when implementing any new system."
- Denise Certain, Credit/Collection Manager, Hutton Communications Inc. Process Issues
Documentation, fraud protection, dispute resolution, cost recovery and compliance mechanisms must all be built into your credit card payment process. Here are some suggestions in these regards: "Have a credit card authorization form that has to be filled out and signed by the customer before you honor their request to use their card."
- Maurine Sticker, Credit Manager, Elmer Candy Corporation. "Always get a copy of the credit card front and back, written authorization and breakdown on how to apply the payment."
- John Pivowar, Director of Credit, Titan America "We use advanced fraud protection on our credit card processing. This helps eliminate fraudulent transactions or carding which can be costly to companies in processing fees. The advanced fraud protection has several good tools that have saved us thousands in fraudulent transactions. In this economy, we expect to see more fraudulent attempts in ordering product from us and feel the advanced fraud protection is absolutely essential for us."
- William Edgar, CCE, Credit Manager, Zippo Manufacturing Company. "I did not implement the system it was here. Just make sure you work with the compliance guidelines to protect against identity theft."
- Diane Patterson, Credit & Collection Manager, Thermo Fisher Scientific (Asheville) LLC. "Keep good supporting docs in case of disputes. Consider convenience fee for cards that charge larger discount rates (i.e. American Express)."
- Ken Smith, Credit Manager, Schwartz & Benjamin Unintended Consequences
No matter how hard you try think of everything, there will always be unintended consequences. Hopefully, the experiences reflected in these responses will help you eliminate the number and severity of the unintended consequences you might run up against in setting or a credit card payment process. "Our credit card merchant charges us different rates depending on the type of credit card (i.e. corporate procurement cards have a lower rate than a personal credit card). However, I've no way of knowing whether the card we're accepting is a corporate card, large ticket card, personal card etc, so no way of knowing what we'll get charged - very frustrating."
- Tracey Skipp, Credit Manager, Krug, Inc. "The major lesson we learned is that by accepting credit cards, we were lowering our mark up since we could not charge any fees back to them. This is not a first option for us. We only accept credit cards for those prospective clients that did not get an approval in the credit process."
- Michelle, Payroll/Credit Manager, The Hamilton-Ryker Group, LLC "Watch their billings closely. Learn the fee structure. Audit their invoicing periodically. They will err and mischarge you."
- John Bradtke, Credit Manager, Dayton Superior "Make sure your rate doesn't change by the info you input. For example, if we put in an address that is different than the billing address for the credit card, we are charged a higher percentage. Also know that a confirmation number on the machine doesn't mean the transaction is valid. It may later be rejected."
Catherine, Credit Professional, Ohio Medical Corp "There were too many hidden fees we were not aware of such as millage accounts, points and bonus type cards, transaction fees, volume fees, no address fess. And remittance reports were not detailed by transaction (lumped per day)...J.P. Morgan offered better rates than Fifth Third (there were no set up charges for changing to J.P. Morgan (Chase)."
- Patricia Hunter, Credit Manager, Line 6, Inc. "We no longer accept MasterCard as they wanted us to pay large fees due the fact that we sell cigarettes."
- Barbara Shull, Controller, H&H Foodservice. Success Stories
Despite the costs, process issues, and compliance requirements associated with any credit card payment system, the fact of the matter is that most people seem quite pleased with the benefits. These range from increased customer satisfaction to increased sales to improved processing. "We are a card-not-present environment and we have to manually settle all charges. We have found that using an online portal (such as www.skipjack.com), we are able to handle those charge card requests. We process approximately 2,500 transactions a year totaling $810K. Skipjack's reporting capabilities have also come in handy for CFO reports. All credit card customers are asked to sign an authorization form and account numbers are not kept on our mainframe. We contract out our PCI compliance thru SecurityMetrics. They scan our system quarterly, provide the yearly compliance documents and confirm our compliance with all major credit cards."
- Lisa Cook, Credit Manager, Pro Co Sound, Inc "It was very easy. We have made some of the customers very happy. The system works well for us."
- Marcia Burgasser, Comptroller, American Douglas Metals, "We had a few hiccups at the beginning with security issues. Cards were being rejected because the address did not match. We found that individuals often forgot to change their addresses with card companies as they get their statements online. It is costly to process however we have been able to take on higher risk accounts that we would not otherwise be dealing with. These accounts we charge their credit card as the order is going out. It has worked out well for us."
- Cindy Boily, Credit Manager, Chariot Carriers, Inc. "Paypal is great. It is one rate for all credit cards and just $0.30 per transaction. There are no surprises and no reconciliation issues."
- John Henderson, Director of Credit, D&M Holdings "We have been using PayPal for all of our Cash-in-Advance customers for several years. We suggest to all who want to pay with a credit card to do so via the PayPal program. A Credit card program would cost us 3.5 to 4.2 percent for each transaction. Our cost with the PayPal program is 2.2 percent plus 35 cents per transaction."
- Dale Gerschutz, Manager, Haldex Credit Services Corporation.
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