Qualified, Mid Qualified & Non Qualified Credit Card Processing Rates

If your business is paying qualified, mid-qualified and non-qualified charges to process credit cards, it’s paying too much. The key to lowering your business’s credit card processing expense is not avoiding non-qualified fees. The key is completely eliminating a processor’s qualification altogether. Who Determines Rate Qualification Qualified, mid-qualified and non-qualified rates are set and manipulated entirely by credit card processors through something called tiered pricing. Visa and MasterCard have absolutely no influence in determining how various processors qualify transactions under tiered pricing. In reality, there are far more than just three (qualified, mid-qualified and non-qualified) credit card processing rates. In fact, there are hundreds of different rates between Visa and MasterCard called interchange fees. Interchange fees are the basis for all credit card processing charges, and they remain exactly the same regardless of which processor a business uses. A processor uses tiered pricing to route hundreds of interchange fees to its own qualified, mid-qualified and non-qualified rates. A couple important points to keep in mind about tiered pricing and rate qualification are: Individual processors control how interchange fees are qualified under a tiered pricing structure. This leads to something called inconsistent buckets, which makes comparing rates from different processors virtually impossible. For example, one processor may consider a Visa reward interchange fee as qualified, while another considers the same interchange fee non-qualified. Processors can change how interchange fees are qualified at any time without notice. This allows processors to lower a business’s qualified rate while still increasing the business’s gross processing fees. To do so, the processor simply routes more interchange fees to the business’s mid and non-qualified rates.... read more

How Tips Paid by Credit Card Could Affect Your Restaurant

Now that credit and debit cards have become a popular way to pay for meals, customers often add tips for servers when they sign their credit card receipt. However, this common practice could have implications for your bottom line. Tips over a certain percentage of the bill can trigger flags for fraud, resulting in card issuer-initiated chargebacks, or can cause your transaction to be downgraded to a more expensive interchange category. Tip tolerance When credit and debit cards are swiped in a restaurant, the amount authorized includes a 20% “tip tolerance.” This means that when you swipe a customer’s card, it will be approved if the customer has funds available for the total cost of their bill plus 20%. For example, if a customer’s bill is $100, the actual authorization amount will be $120. This is done to ensure that there are enough funds available for the possibility of a customer leaving a 20% tip. In some cases, customers tip more than 20%. If they do, the transaction may set off a warning (“flag”) to the issuer to check for fraud. The issuer could decide to initiate a chargeback, requiring information from your business about the transaction to determine the validity. Issuers initiating chargebacks for small checks or for tips close to 20% isn’t very common, but can happen. Tips that are much larger than 20% are more likely to be subject to a card issuer chargeback. Visa provides a best practices guide for restaurant staff to help ensure smooth card acceptance. Update 12/7/2015: MasterCard has announced that starting in mid-2016, it will be eliminating tip tolerance for several... read more

The Truth Behind “We’ll Give You $500 if We Can’t Beat Your Rates” Offers

If you accept credit cards at your business and have spent any time researching processors, you’ve probably come across sales gimmicks offering cash if the processor can’t beat your current rates. You know the one: “If we can’t lower your rates, we’ll give you $500 and a free unicorn!” Okay, the offer doesn’t usually include a unicorn, but it might as well for all the good it does you if you’re trying to secure competitive pricing. Credit card processors that offer cash if they can’t “beat” or match your current processing rates will use a variety of tactics to get your business, and manipulate pricing so that they rarely have to pay out the cash. Even worse, if you’re not careful, you could end up with more expensive rates than the ones you already had. The offer What happens is that a processor promises that if they can’t match or lower your rates, they’ll give you money, usually $500. They’ll lure you in with the reassurance that you don’t have to accept their quote, and remind you that in the worst case scenario, you’ll end up $500 richer. What they don’t tell you is that they use methods to make the deal worthwhile for them, not for you, and can even “lower your rates” without saving you any money on processing.  The true worst case scenario is that you don’t lower your actual costs at all, or secure lower rates temporarily only to see your costs skyrocket when your new processor changes your pricing. It’s a tactic to catch your attention with the goal of converting you to a... read more

Early Termination Fees: Canceling Your Merchant Processing Agreement

At some point in business ownership, you’ll probably find yourself needing to cancel your merchant account for credit card processing. When you do, will you be stuck with cancellation fees? Can you be personally held responsible for ongoing costs, like chargebacks that occur after cancellation? The biggest concern most small businesses have with Merchant Processing Contracts (MPCs) is how to avoid the industry-standard cancellation fee, also known as an early termination fee.  Remember, the lawyers drafting these agreements on behalf of credit card processing companies are smart, and typically you are not the party with leverage when first entering this payment space.  However, your MPC itself may help guide you to successfully terminating without the burden and expense of an early termination fee. First Things First: Personal Guaranty If you are considering terminating your merchant processing contract there is one important thing you should know immediately: nearly every MPC I have reviewed includes a “personal guaranty.” Thus, the effects (whether it be penalties, fees, or damages for a breach of the agreement) can be brought against you individually and not just your company. With a personal guaranty, even if you are closing your shop, going out of business, or selling your assets as part of an assets purchase agreement, the terms of the MPC may still follow you, the individual business owner. Where to Look for a Personal Guaranty Typically, there will be a separate section indicating that you are signing personally and on behalf of the Company. It may be titled “Individual Guarantor(s)” or “Individual Guaranty”. You should also look above or below the actual signature block of... read more

How long has it been?

How long has it been? When speaking with prospective clients, there is always an “interview” process to determine what individual needs are important.  During this brief Q & A, we try to understand several things like location, size, and condition of the kitchen exhaust system.  Inevitably, we ask the question, “How long has it been since the system was cleaned last?”  There really aren’t too many answers we get to this question; more often than not, the informed restaurant manager has had the vent hoods on their normal schedule and the last cleaning falls within the last three to six months.  On the other end of the spectrum, often times the restaurant will tell us the last time the hoods were cleaned was eight months ago, over a year, two years or, heck, we couldn’t tell you the last time the hoods were cleaned. One main reason, we find, there has been such a long gap in the kitchen exhaust cleaning is that the restaurateur has recently taken over the space from another tenant.  If this the case, congratulations.  Getting the kitchen exhaust cleaning service set up should be towards the top of the list of things to do.  From a safety standpoint, you shouldn’t do any type of cooking under a vent hood that has not been cleaned and inspected.  Typically, when a restaurateur is on the decline, maintenance expenditures are not a high priority.  He or she could have been neglecting that system, thus allowing unknown amounts of grease to accumulate in the system, and potentially causing a fire hazard for you, the new owner, that could... read more

Importance of a Kitchen Exhaust System Inspection

As a former restaurant manager, I relied on my Kitchen Exhaust Cleaner to help manage and maintain my exhaust system.  Making sure a restaurant is within NFPA 96 code and safe from potential fire, are two paramount responsibilities of any exhaust cleaning company. Like most front of house managers, I was naive to the importance of maintaining the exhaust system properly.  I had a maintenance program set up for our baffle filters and polished our hoods, but that was the extent of my involvement.  I put my trust in the hood cleaner to manage the rest. The “bottom line” is always at the forefront of running any business.  With that in mind, another exhaust cleaner approached me, and he was able to under bid my current vendor by a significant amount.  I was operating under the misconception that the service and product would be equal, so I went with the lowest bid and based by decision solely on price. The service seemed to be the same and both parties seemed happy with the relationship. After leaving this particular restaurant to come work with Hood Boss, the opportunity to inspect and bid my previous workplace presented itself.  Now, on the other side of the relationship as a vendor, I understand the meaning of, “inspect what you expect.” The previous company had not held up its responsibility to maintain the system properly.  Horizontal duct work had not been serviced and thus leaving the system at risk of fire.  The exhaust fans had been neglected which caused expensive roof damage.  There were inaccessible areas that had not been addressed that resulted in excessive grease build... read more

Trouble Shooting Your Kitchen Exhaust Fan

Vent hood cleaning can be a very invasive process.  The process includes using power washers and heavy duty degreasers.  Our work includes working on the roof top, in the sub ceiling, and downstairs in the kitchen. From time to time, issues arise after a cleaning has occurred.  The most common call we get is that the exhaust fan is not turning on, or it is not working at its full capacity.  Here are a few frequently asked questions and resolutions.   Fan is not turning on at all. Check main switch on canopy hood – flip on and off to make sure that it is getting power. If no power is getting to the hood – check the breaker box. Flip switches for fans back and forth, even if they do not looked tripped. If fan is getting power – check switch on roof top fan – these are sometimes accidentally left off after the cleaning process – if you are not comfortable with the location of the fan – call the last service provider. Fan is still not turning on after these trouble shoots were completed. Check for any exposed wiring on or around the exhaust fan. Check switches and ground wires.  Call an electrician to accomplish a thorough inspection. The fan motor makes a humming or clicking sound when turned on, then shuts down. The motor takes twice as much power to start up, than it does to run normally. This may cause motors that are already worn out to fail.  Call an HVAC company to either install a new motor or repair it. The start-up of... read more

Evaluating the Cause of Grease Build Up on Your Roof Top

There is a common misunderstanding between kitchen exhaust cleaning service providers and facility managers regarding grease build up on their roof tops. Most restaurant or Facility Managers feel that if there is grease on their roof top then there must be a deficiency in the work being performed by their service provider. Often this can be the case. However, there are some cases that grease can accumulate on your roof top in between services. There are three different ways that grease can accumulate on your roof top. It is important to be able to evaluate whether the service being performed is below par or if there is a need for preventative maintenance at your facility by knowing how grease accumulates and what to look for. The first way that grease can accumulate on the roof top is through poor waste water management during the cleaning process. This is the easiest of the three to evaluate, though it does require follow up by the restaurant staff. During the cleaning process there are a few ways that grease can accumulate on the roof top. An example of poor waste water management is when a technician is spraying the bottom of the fan blades with the fan off the duct or when the fan is held open by the hinge kit. What typically can happen in this example is the technician sprays the bottom of the blades while allowing them to spin. By doing this, the blades spin and grease and water are slung out of the fan on to wall, roof top, A/C units, etc. This can cause multiple problems but typically can be detected easily.... read more

How Often Should My System Be Cleaned?

Frequency of kitchen exhaust cleanings is always a matter of concern when discussing service with new clients and building relationships with current clients. The ultimate goal of the Fire Protection Act is to reduce the risk of a fire in your commercial kitchen.  As we all know, though, there are always going to exceptions to any rule, and the NFPA 96 addressed this in Annex A: “A.11.6.2:  When to clean: A measurement system of deposition should be established to trigger a need to clean, in addition to a time reference based on equipment emissions. The method of measurement is a depth gauge comb…which is scraped along the duct surface.  For example, a measured depth of (0.078 in.) indicates the need to remove the deposition risk.  The system would also include point measurement in critical areas.  For example, (0.125 in.) in a fan housing requires cleaning.” What does this all mean?  Basically, there are guidelines and then there are specifics to getting the hoods cleaned.  Let say your restaurant used hickory wood in the grill.  By code, you should expect the hood over the grill to be cleaned on a monthly frequency.  Now let’s say you are killing it volume wise, and the grease and creosote levels in the system are reaching the .078 in. (which is 1/8”) faster than a month between cleanings.  You could potentially be at risk for fire spreading one week, two weeks, or maybe longer before your next scheduled vent hood cleaning. Most of us are getting our hoods cleaned on a quarterly frequency, and in most cases, this is accurate timing based on code... read more

5 Reasons to Ask for OptBlue Pricing if You Take American Express

Like many businesses, you probably think of American Express as the expensive credit card to accept. That’s changing thanks to American Express’s new pricing, called OptBlue. If you already take American Express cards or are considering accepting them at your business, you’ll want to make sure your processor charges you with OptBlue. Here’s why: It’s cheaper Well, probably. The new OptBlue pricing is a cost plus model, so if you’re not on a tiered pricing model and if have a competitive processor markup, you’ll likely save money. But be careful – those two factors can be big ifs.™ It’s more transparent Cost plus pricing models are more transparent because you’ll see the actual cost to process American Express cards. It won’t be hidden from you, unless your processor hides it. If they do, switch processors! A competitive processor will always show you what you’re paying. Faster access to funds OptBlue aims to fix another problem that businesses have previously had with American Express, namely that funds aren’t deposited as quickly as they are with other cards. On American Express’s OptBlue site, they state that payments will arrive for businesses in the same timeframes as other card types. That’s great news for businesses, when quick access to funds from credit card sales can make all the difference. The final rate you’ll pay to take an American Express card is not set by American Express Under the previous AMEX pricing (called OnePoint) the final rate to accept American Express cards was directly set by American Express, and your processor had no control over it. Now, your processors markup will dictate your... read more