Demystifying Plastic Payments

Plastic Cards: credit cards, debit cards, ATM cards, EBT (aka food stamp) cards, gift cards, loyalty cards and others.


Is your business already accepting plastic cards? If not, have you been tempted to accept cards but was told it's too confusing and expensive?

Mastering cards (no pun intended) is easy when you know the basics. The program needs to be tailored to your specific needs. Believe me, if landlords in NYC are accepting cards for rent payments and fast food stores are accepting cards for a $3 sandwich, there's a program out there that you can fit into! The card payments industry is amazingly resourceful when it comes to accommodating a business's need to accept plastic. Not a surprise.

The major card brands advertise like crazy to entice a consumer to use one card brand vs. another. Merchants accept them all, typically, so differentiation isn't the issue to the merchant. It's price. No surprise.

Today it is not uncommon for me to see a merchant have a MasterCard transaction priced differently than Visa. Close to each other but nonetheless differently. American Express has its own pricing model, and Discover prices based on the previous month's average ticket. Confused? Again, no surprise.

Basically, the pricing model is something along these lines: for a single credit card transaction, the merchant is charged

1. a certain percentage of the face amount of the transaction
2. plus a few cents per transaction.
3. There are other fees such as statements, monthly minimums, batch fees, address verification, additional fees for certain types of cards, etc. and it's not the time to get into these right now. We will.

The merchant receives the cash proceeds from the card sale in about 2 or 3 business days from the date the authorized transactions are batched together and transmitted electronically to the processor. The fees are either deducted upfront and the proceeds paid net of fees to the merchant, or accumulated and charged at the end of the month. Confusing? It can be.

The good news is that like many new things, eventually we all get used to the rhythm and timing of how credit cards work even if you have never accepted cards in your business before.

Next time, swiped vs nonswiped. "Swiped" is not a police term for larceny. Some might disagree..I'll tell you why in another blog posting soon.

Pertinent Negatives

You don't feel well and some of the symptoms could at the worst case be serious. You decide this is worth going to the doctor.

After a series of questions and other examinations, she or he tells you what you do NOT have first, to ease your mind. Whew!

What the doctor tells you next is what you have is not serious and can be treated.

The expert tells you what you do NOT have: the "pertinent negatives." You just need adjustment of some sort.

Using this analogy, is your business cash cycle running slow and you do not know what to do?

Chances are your situation is not lethal and with a little treatment, the cash flow can be treated. Velocity of cash is essential: a factor of size and speed.

Ask an expert who has at least a few options to help you, not just "one size fits all," because a real professional knows that no two cases are alike and each needs the right type and amount of TLC to nurse the cash flow back to health.

Ask for help-there's nothing wrong with getting the help of a pro. Many times, the diagnosis is not serious and can result in improved cash flow.