Smart sales: protect your customer while minimizing costs: credit card terminals and point-of-sale systems are a critical decision in merchants' operations.

• Author: Lawrence, Mark

Today, productivity and efficiency are the drivers for every industry. The complex network of partners and suppliers that help businesses get products to market are second only to customers. Now, suppliers in your value chain need to adapt and respond to add more value to your customers' wants and needs. Suppliers that simply add inputs, and don't focus on your customers, are destined to fail in this new world of value-driven partnerships. Credit card processing is no different. Credit card transactions now account for more than 50 percent of all purchases in the U.S. Considering its importance, what criteria should be examined when evaluating a new credit card processing partner? Partners need to ask what do your customers want? Your customers will be happy to know you kept your prices low, the transactions seamless and quick, and your staff is vigilantly protecting them against fraud. These are the issues a credit card processing partner solves so merchants can focus on increasing sales.

Pricing is always a consideration in any business service decision. Visa and MasterCard have over 110+ different percentage rates and transactions costs that are differentiated by card type, industry and reward program. This is why merchants have looked with bewilderment at statements for years. The systems of percentage rates and transaction costs are collectively called Interchange. Merchant's SIC codes listed on their business licenses and average tickets determine their Interchange qualification. Interchange is published every time Visa or MasterCard change their rates. As merchants' daily operations become more complicated, merchants should not have to worry about how these rates and fees are changing. A value partner should interpret how they affect the bottom line. When Wal-Mart settled the lawsuit with Visa and MasterCard in April 2003 over rates for offline debit card transactions, your partners should have explained to you the bottom line benefits of this monumental and far-reaching settlement. Interchange rate changes should always necessitate a review of your credit card statement. Your processor should be able to explain the changes and what will they mean to your bottom line. In order to maintain margins, a re-alignment of your product pricing might be in order.

THE DOWNSIDE OF LEASING

Credit card terminals and Point-of-Sale systems are a critical decision in merchants' operations. Historically, terminals could be bought, rented and...