1. Getting the best deal for your business
A PRESENTATION BY MASTER YOUR CARD
Getting the
best deal for
your business
Mastercard isn’t trying to sell you a card – we want to share the value of card technology for your business.
Using card technology and electronic payments can help your start-up or small business compete with bigger operations in your hometown.
Cards offer convenience, control, and security for both your business and your customers.
Choosing the right processor and negotiating the best deal for you is one of the most important first steps to having a smooth and successful transition to accepting cards.

2. Master Your Card is a community empowerment program from Mastercard that helps consumers, small businesses and governments learn how to get more from their money by using prepaid, debit and credit cards to access a financially empowering electronic payment network.

3. What we’ll cover today Steps for a successful processor relationship
Negotiating the best deal

4. What’s next?
Now that you’ve decided to accept cards, the next— and maybe most important step—is knowing how to find the right card processor and get the best rates. This is key to getting the most out of accepting cards!
Having a fair deal in place with a processor is a big first step to ensuring that businesses are enjoying the full value of accepting electronic payments.
The processor decision might be the most important decision in accepting cards; if you know all of your options then you can be confident in negotiating the best deal for your business.
Processors are one part of a four party system that handles every transaction that you make with a customer.
In order to help businesses make the right processor decision, you need to know how the system works.
These next slides will walk you through how the system works and how you can make it work for your businesses.

5. Know your business
It’s important to have a snapshot of your business model, since it will dictate pricing, equipment and services.
Keep in mind that what you sell, to whom and how will set the foundation of your price structure. This is known as liability on the account and will dictate any additional costs.
For example, retail or face-to-face would be low cost due to low risk and liability. Mobile or online transactions would be higher cost and higher liability as you have card not present and person not present, yet there is some interaction with the individual making a purchase. E-commerce is totally card not present and person not present with no interaction with any individual and therefore those costs are even higher as the liability has gotten much higher.

6. Before you talk to processors, be sure to have this information:
1. What do you sell, to whom and how.
2. Average transaction size.
3. Monthly volume.
4. Business history, process and model.
It’s important to have a snapshot of your business model, since it will dictate pricing, equipment and services.
Keep in mind that what you sell, to whom and how will set the foundation of your price structure. This is known as liability on the account and will dictate any additional costs.
For example, retail or face-to-face would be low cost due to low risk and liability. Mobile or online transactions would be higher cost and higher liability as you have card not present and person not present, yet there is some interaction with the individual making a purchase. E-commerce is totally card not present and person not present with no interaction with any individual and therefore those costs are even higher as the liability has gotten much higher.

7. Five steps to a successful processor relationship
Knowing five important sets of questions to ask before signing a contract will get you the best deal that fits your business.
You can research processors in your area online, which will give you a better idea of the landscape.
As we mentioned earlier, your bank may offer processing services through your existing relationship.
Some other large providers include First Data, Elabon, Vantive, and Heartland. 
Online-based processors like PayPal, Square and Stripe might also be worth investigating depending on your business and the services you need.

8. Step 1: Who? Understand the partner and who to contact with issues:
Who are they?
Do they outsource their processing?
What is their reputation?
Who will be your contact person?

9. Step 2: Fees and payment?
Understand the contract and how your fees will be calculated. All fees should be disclosed in the contract you are reviewing.
What is the timeline?
How can pricing change?
What are the rate structures that you will be subject to?
What are the monthly and annual fees?
The standard contract is three years, but that can be negotiated.

10. Step 3: Tech? What hardware and technology do you need?
How much will the equipment cost?
Can I buy (or lease/rent) the same equipment from a 3rd party?
Is it appropriate for my business?
What other products are needed?

11. Step 4: Support? Know how to get help when you need it.
Is there a relationship manager?
What happens when my system is down?
What do I do when I get a customer dispute?
Is there web support?

12. Step 5: Flexibility?
Understand what happens if you want to switch processors as your business grows and evolves:
Are there penalties for early termination?
Can I re-negotiate my fees when I grow?
What if I need new technology?

13. Negotiate and get the best deal for your business

14. Learn as much as you can about a processor before you make a decision
If you’re happy with their answers, then it’s time to negotiate through:
Comparison shopping and online auction.
Business groups and associations. Small businesses may gain some negotiating support and leverage.
Comparison shopping allows you to negotiate from a position of strength.
Remember: never sign a non-disclosure agreement when you’re negotiating for merchant services or even signing a contract. You have the right to openly compare different rates. 
Get multiple bids from a variety of processors and compare how services are priced.
Don’t let them talk you into signing a non-disclosure agreement until you have competitive bids and are sure you understand all the costs.

15. negotiation: Save money
Points of
negotiation: Save money
Don’t pay extra fees.
Look at penalties.
Don’t get “nickeled and dimed.”
You don’t have to pay extra fees. Just because your processor pays a fee to someone else does not mean you have to reimburse the processor for the fee. Understand the purpose of the additional fees, eliminate them or use the competitive process to negotiate them down to an acceptable level.
Look at penalties. Contracts are binding, but not so much that you should have to pay for termination fees should the processor prove to be negligent or incompetent. Make sure your rights are protected.
Don’t get “nickled and dimed” to death. Make sure you look at the full range of fees. Fees for statements, minimum billing and reporting may be negotiable, given modern digital transactions and online reporting. Ask for bids without these fees and insist on seeing a full list and explanation of any extra fees. While some fees, like interchange fees and PCI compliance fees, should remain constant, you can try to negotiate on items like monthly statement fees or service fees. Make sure you understand what you actually get in return for those fees, and if you can opt into any services (like electronic statements) that may save you money. 

16. negotiation: Timeline
Points of
negotiation: Timeline
The longer the contract, the lower the rate should be.
Determine payment timing.
Use exclusivity as leverage.
The longer the contract, the lower the rate should be. Most contracts last two or three years, but some are shorter. Longer contracts may be more valuable to the processor because they lock in fees. Use this as leverage for negotiating lower rates. If you enter into an exclusive agreement, you may have more power to negotiate costs.
Determine payment timing. Transaction settlements range from one to five days, with two days as the norm for a small business. You can negotiate for quicker settlements. That change may increase the costs, but you will gain an understanding of how fast the processor can settle your transactions and decide accordingly.  
Use exclusivity as leverage. If you’re locking into a relationship, make sure it serves both of your interests. Exclusivity gives the processor control and steady profit while reducing liability. Make sure you have negotiated more flexible termination terms in the event that that you decide to change processors because of poor service.

17. negotiation: Relationships
Points of
negotiation: Relationships
Look at reserves and holdbacks.
How do they handle chargebacks?
Understand your track record and face-to-face card transactions.
Look at reserves and holdbacks. Sometimes processors demand a reserve to guard against refunds and chargebacks. Make sure you understand the reserve or holdback amount in advance. Make sure you know what circumstances trigger reserves. You have the right to generate interest on reserve funds and should be clear about how you can recover them or move past them when account behavior no longer triggers the need for a reserve.
Chargebacks. Under electronic payment network rules and policies, businesses typically are not liable for certain chargebacks for in-person “card present” transactions. There is some exposure for remote or “card not present” transactions. Be sure to clarify how a potential payment processor will handle chargebacks for your business. Find out what type of access you will have to their customer service personnel to get your questions answered and any problems resolved. Also, find out what type of information reporting you will receive on chargeback issues.
Understand the benefits of your track record and face-to-face card transactions. Established businesses with good credit histories and an in-person card payment environment (as opposed to remote card transactions by phone or online) represent a more favorable underwriting and term situation for processors. In each case, the underwriting criteria for most face-to-face small merchants will be the same unless they are a new business and/or have poor credit. Underwriting sometimes varies in the non-face-to-face environment.

18. Get more resources: masteryourcardUSA.org
• Download this presentation.
• Access fact sheets and helpful tips.
• Contact a Master Your Card representative.
After deciding to accept cards, choosing your processor is the most important next step.
Knowing all your options and negotiating for a competitive deal will ensure that your business has a successful working relationship with that partner for years to come.
Learn more about choosing the right processor – and get other resources for your business – at masteryourcardUSA.org.

19. Thank you