Paid for by Plastic and your Local Merchants

"A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor and bread it has earned - this is the sum of good government."

--Thomas Jefferson

Ron Paul Activity Alert
Tomorrow (11/17) will be "The Great Freedom Rally" of Ron Paul supporters, hosted in Clearwater, Florida. The purpose is to raise awareness of Ron Paul, in preparation of the CNN/Youtube Debates @ the Progress Energy Center in St. Pete.
Link to Freedom Rally's Site and Registration: http://ronpaulfreedomrally.com/index.php
Link to my meetup group's event: http://ronpaul.meetup.com/242/calendar/6455850/

In Honor of Freedom
Since I had started college, I have held multiple jobs that have always handled high volume transfers of monies. It has been my experience that the worst thing that could happen to a business is if something were to happen to credit card processing. We, as Americans, cherish our plastic and often deem it as a secure way to disperse our funds for bills, clothing, food, and pleasure. The inconvenience of going into a business and at the time of purchase, you are told that their credit card system is down or that your card is not accepted at their business.

Until recently, I never understood why it was so difficult for a business to do credit card processing and what the big deal was around it. Truth be told, the industry itself is the biggest problem.

Level 1 The bank
It all starts with the banks. They issue the credit cards that are either tied to your bank account(s) or credit line. These are the people that you pay all your fees and interest to. When it comes to any disputes you may have over a transaction, the bank has ultimate say in the resolution since they are issuing the card and usually tend to favor the customer, because you pay their bills.

Level 2 The Processor
Next in line are the credit card processors that handle the credit card transactions. They provide the communication line from the point of purchase, to you bank for authorizations and credits on your card. This is, by no means, a free service and they usually tack on a rate/fee to the merchants that is variable, depending on what information was provided with your card number.
The role of the processor is to receive any card transactions and distribute the transaction requested to the authorizing bank or company (Amex, Bank of America, Etc) and once they receive a response (usually declined or approved), they will relay that to the merchant to be handled accordingly.

Level 3 Merchant Services
On top the of that most merchants do not process directly through these companies, they usually go through a third party processor that provides the service of setting up their merchant account, maintenance and any other merchant services they provide. These companies will generally add a price tag for their services that is either a direct payment or an additional rate on top of what you already pay to the previously mentioned processors. Most sales reps for these companies make a commission off of how much business you do and you usually will see better service (if this is the case) if you have a higher volume of transactions.

Level 4 swipe where?
Currently there are a myriad of solutions when it comes down to how you are going to process a customer's credit card. Most consumers will be familiar with the stand alone terminals that you see in gas stations or mom&pop shops. This is the most widely used form because it is simplest to setup and usually is received from the company you set your merchant account up with for credit card processing. This is not the only solution, however, in the day and age of computers there is software everywhere and it all depends on the needs of your business.

-MODEMS
The first to come along outside of terminals was computer software. With the (now dead) technology of dial up, programmers could make software that would take in credit card data and use the modem to dial out. This took some time and became started to have considerable drawbacks as businesses with high volumes were forced to wait for the modem

-INTERNETS
In the golden age of the Internet, information is readily available and with each generation of service, it gets delivered faster and faster. Programmers saw this as a great opportunity to do transactions at faster speeds and this was a big must for high volume stores. Most processors will charge extra for processing on the Internet, but some do not.
Recently, it has been a growing trend to be able to process credit cards wherever the merchant may be at the time of sale. With the growth of the Internet spreading to every corner of the globe and most places having access, companies have begun taking advantage of mobile processing. They use the web as an interface to processing your transactions. As a result the only thing preventing them from running your card is access to the web and a browser. Usually the companies that provide this service will set up your merchant account for you and charge you in one, or both, of the following ways. Since they are paying for the servers and providing a merchant service you will be charged a monthly fee for keeping your account and service and/or they will charge you a small fee on top of what you pay your processing company for the account.

FIN
In the end, there is still a lot more to this industry than I care to go into, but probably will at a future date. In the world of plastic payments the only people that win are the processing companies and the banks that back the cards. The merchant is extremely vulnerable if a customer is to dispute a transaction and by them providing the service of allowing you to use your Visa, MasterCard, Amex, Disc and etc card they are giving up money every time you buy. If you ever wondered why places have a minimum purchase or convenience fee when you pay with your card, this is why.

"All wars are follies, very expensive and very mischievous ones."
--Bejamin Franklin