USPay | Merchant Services
- Common Challenges
- The Sourcing Alliance Program
- Why Merchant Services?
- Procurement Process
- Tools & Tips
- Getting Started
We received a phone call a few years ago from one of our members asking if we had a merchant services program. When asked what prompted the question, the member sent us their most recent merchant services/credit card processing statement to review. We found their service provider was charging fees of more than seven percent (7%), well over the two percent (2%) rate they were promised. Our member felt intentionally misled and was understandably upset. Upon further investigation, we learned that this member’s experience was more the rule than the exception.
The complexity and hidden costs of merchant services and payment processing are often frustrating. Think about it…there are more than 3,000 service providers to sift through. You (the merchant) are now liable for the costs of credit card fraud if you don’t have the right card processing and chip technology. Merchant services statements are intentionally confusing, and you often pay a much greater percentage in fees than you were promised. Worst of all, it is extremely difficult to cancel your contract when you figure out that you are being over-charged. It is no wonder our members asked us to develop a better solution.
Navigating the Complexities of the Merchant Services Industry
Sourcing Alliance worked closely with our members and industry experts to understand the ever-increasing complexities of the merchant services industry. During our investigation, we learned about:
- Numerous Service Providers – there are so many merchant services providers and their proposals are structured so differently it is nearly impossible to create a true apples-to-apples comparison.
- Complicated Statements & Hidden Fees – the typical merchant services statement includes a wide array of creatively named fees, including Credit Card Processing Charges, Card Minimum Bill Fees, Card Association Fees, Authorization Fees, PCI Fees, Statement Mailing Fees, and our favorite, Other Fees. With so many fee categories in which to bury additional charges, it’s no surprise that a quoted two percent (2%) rate can quickly grow to a seven percent (7%) effective rate.
- EMV Chip Technology – the credit card companies lobbied for a major change in the payment industry – merchants must install terminals with chip readers or pay out-of-pocket for fraudulent credit card purchases.
- Customer Service Levels & Guarantees – the industry is notorious for providing poor customer service, and when your credit card processing systems are down, you need an immediate resolution.
- Timing of Deposits – some providers deposit your funds in your account the same day, but every other day or even weekly deposits are not uncommon. It’s your money and you should receive those funds immediately.
- Volume Requirements – most contracts require the merchant to pay a minimum monthly fee, regardless of the number of transactions. These fees are particularly damaging to seasonal operations, such as school districts, in low activity months.
- Locked-in Contracts – most merchant services providers require annual or even multi-year agreements, preventing you from cancelling the contract once you figure out just how much those egregious hidden fees cost you.
Sourcing Alliance Developed a Better Alternative for our Members
We developed stringent requirements for our Merchant
Services Program and searched for a service provider who
would offer our members:
- A complete analysis of your current payment processing
- The development and implementation of a custom
strategic plan to manage your credit card and check
payment processes in the most cost-effective way.
- State-of-the-art credit card readers at no cost.
- PCI compliance.
- An online gateway that delivers:
- Fast transaction processing across multiple
locations with multiple user-permission levels;
- Online billing and bill pay;
- The ability to set up payment plans for outstanding
- The capability to email receipts to customers.
- Fast transaction processing across multiple
We designed the program to deliver i) flexibility, with
customized payment solutions that meet your current and
anticipated needs, ii) competitive pricing that will actually
save you money, iii) transparency, with no hidden charges
or fees, iv) simplified merchant statements that are easy
to understand and customer-friendly reconciliation tools,
v) robust security to minimize your liability from credit/
debit card fraud, and vi) superior customer service,
with minimal downtime through quick responses and
resolutions to issues.
Why did Sourcing Alliance Develop the Merchant Services Program?
Sourcing Alliance members expressed frustration with the cost, complexity, and inefficiency of their merchant services and payment processing. Common challenges included evaluating merchant services providers, managing inefficient point-of-sale (POS) terminals, understanding fee structures, and reconciling complex monthly transaction reports. Members were also facing the implications of the industry’s transition to Europay/MasterCard/Visa (EMV) technology.
Through extensive research of the industry, Sourcing Alliance learned that:
- Many credit card payment processors hide fees in their payment reports. The higher the merchant’s credit card traffic volume, the easier it is to inflate and hide fees.
- Financial institutions issue over 600 different credit card products, with varying fees, rewards programs, and transactional costs for merchants, making it extremely difficult for merchants to track their true credit/debit card processing costs. Monthly statements from processing companies are often intentionally confusing, even to financial expert (e.g., CFOs and treasurers).
- Effective October 1, 2015, liability for fraudulent credit card charges from cards without, EMV chips shifted from banks to merchants, imposing a significant cost on merchants to upgrade their terminals.
- Public sector entities need more efficient reporting methods to capture the irregular but steady stream of payments they process, such as online utility payments, library fines and purchases, and various school fees.
Businesses are faced with a daunting challenge when going out to bid for merchant services. There are nearly 3,000 merchant services providers nationwide. It is difficult to cull through the providers’ offerings to find a partner that offers low-cost services, excellent, customer service, and cost transparency. There may be thousands of dollars of hidden costs in typical merchant services contracts through such nefarious tactics as:
- Attractive introductory rates escalate to 2 to 3 points above standard rates
- Transaction rates ranging well above standard bank rates
- Monthly minimum payments, regardless of transaction volumes
With this knowledge, Sourcing Alliance set out to develop a comprehensive payments processing solution for its members that provides flexibility, improves reconciliation, offers customizable management tools, lowers risk for exposure to fraud, includes a wide range of terminal options, and reduces processing costs.
The Procurement Process
Sourcing Alliance developed detailed selection criteria for third-party, independent merchant services providers:
- Transparency – no hidden charges or fees
- Flexibility – customized payment solutions that meet the current and future needs of the individual member, including as in-store, online, mobile, and over the phone transactions
- Ease-of-use – easy to understand invoices and simple reconciliation tools
- Security – minimize members’ exposure to- and liability from credit/debit card fraud
- Customer service – quick response and minimal downtime are critical to merchants
- Competitive pricing – provide members with the lowest total cost of ownership
In an exhaustive process, Sourcing Alliance evaluated several potential suppliers against these criteria. We started by talking to our members to gain an understanding of what works and what doesn’t with their current merchant services provider. We also researched the industry overall to understand the opportunities and challenges, and what the future holds for merchants.
Sourcing Alliance met in person with multiple potential suppliers to understand each of their differentiators and capability to meet the current and future needs of our diverse member base. We looked at the sophistication and ease-of-use of their software and hardware, their approach to customer service, and their ability to serve small businesses as well as large organizations with multiple locations and complex payment processing needs. We also wanted to know how each of the providers were positioned to respond to future changes in the industry before making a final section.
We narrowed the field to two finalists, and held additional interviews to further scrutinize their qualifications before selecting USPay as our provider of merchant services and negotiating a master contract to make their products and services available to Sourcing
Why Did Sourcing Alliance Select USPay as our Merchant Services Partner?
We selected USPay for its customer-focused use of cutting-edge technology to streamline the acceptance of credit/debit card payments, improve transparency, and reduce costs. Specifically, USPay:
- Provides clear, concise invoices so you know what your real costs are
Leverages state-of-the-art technology that offers members maximum flexibility in how they can take payments, including in-store, online, mobile, and over the phone payments. Each client’s set up is a customized solution based on USPay’s onsite assessment of their current and future needs.
- Enables their clients to set up payment plans online using their proprietary virtual terminal, called LUCY, which stands for Let Us Connect You.
- Offers sophisticated software that enables merchants to offer online bill pay.
- Uses the latest embedded chip technology that reduces clients’ exposure to- and liability from credit/debit card fraud.
- Leads the industry as the only service provider to achieve a perfect score in both the Merchant Services and Payment Gateway categories of TopCreditCardProcessors.com’s independent ratings of Top 50 service providers.
- Boasts a remarkable 99% client-retention rate. Theirs is relationship-oriented business, not transactional.
Sourcing Alliance’s contract with USPay is designed to lower your total cost of ownership. To achieve this goal, USPay conducts a no-cost analysis of your needs to: a) understand your current and future needs; b) establish your current total costs; and c) provide a side-by-side comparison of your current costs versus your costs with USPay. With this information, USPay designs a customized solution, with the appropriate deployment of software and hardware that cost-effectively meets your needs.
Read more about USPay’s industry-leading rankings here.
When reviewing merchant services and payment gateway proposals:
- Look for hidden fees. Many credit card payment processors hide fees in their payment reports. The higher the merchant’s credit card traffic volume, the easier it is to inflate and hide fees.
- Ask if the provider offers EMV chip technology? This will lower your exposure to risk from credit card fraud.
- Inquire about customer service levels and guarantees. Many providers fail to properly serve their clients once the salesperson has your business. USPay keeps their client services, sales, and technical support personnel under one roof, and in close proximity to one another so they can promptly address any service issues that may arise. They go the extra mile to support their clients.
- Make sure you are clear on how long it takes for money to be deposited into your account. USPay deposits directly to your bank, so you’ll receive your funds as quickly as possible.
- Be aware of any volume commitment or requirement. Some contracts require the merchant to pay a fee if they don’t meet a minimum monthly transaction volume. The Sourcing Alliance and USPay agreement does not require a minimum transaction volume, either in number or in total dollar amount.
Please contact Sourcing Alliance at 844.289.6728 or info@SourcingAlliance.org with any questions. We are here to help make this process easier for our members.
USPay excels at providing a customized solution to each merchant. To learn more about this program or to receive a comprehensive, no-cost analysis of your needs and potential cost savings, contact our dedicated USPay representative at 866-725-8500 x104 or info@SourcingAlliance.org, or simply complete the form below.
The no-cost analysis begins by gaining an understanding of your business—how you are currently taking credit/debit payments and what the transaction volume and amounts are. USPay will also discuss with you your future anticipated needs. As part of their commitment to transparency, they will walk you through a side-by-side comparison of invoices from your current processor versus USPay. The process will demonstrate how USPay’s approach provides clarity and budget certainty for your organization.
Have questions? We are here to help make this process easier for our members. Give us a call at 844.289.6728 or get started with a demo.