What Every Small Business Owner Needs to Know About Square and PayPal!

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Vince: Ginger, thank you for joining me today! Hey, I wanted to ask a couple of questions to clarify on your YouTube channel episodes where you were talking about credit card processing fees, merchant fees and the different tiers of it that affect your pricing.  A lot of us who are entrepreneurs or business owners don’t really know the full extent of it. Can you add a little bit more clarity to that and thank you so much for being on with me today.

Ginger: Yeah! thanks for asking me and you hit the nail on the head. People just see their merchant statement fees at the end of the month and record it, but they really don’t understand how the rate is figured or what the fees are about. They think it’s some sneaky stuff going on. And in a lot of cases there is!

Vince: So, okay so you mentioned something in a recent video that kind of blew my mind in that what we’re getting charged by people like PayPal, Stripe, Square and others at 2.9% – 3% and that covers all types of transaction costs. You were mentioning that some costs could be 1% normally and others might be 3%, but what they do is charge a flat rate and it’s kind of like a maximum minimum rate that covers all of their risk into just one flat rate. You’re actually playing more on some types of transactions. Can you explain more because I know a lot of small businesses use Square, Stripe and PayPal.

Ginger: Right! Square, Stripe and PayPal have a flat rate and flat transaction fee and it’s a high rate because they have to cover all the different types of transactions and make sure they’re not going to lose money. So they’re covering their butt right? So, for example my husband likes to call on auto repair companies to solicit credit card processing because he’s a car guy.  So he goes into some place and finds out they’ve been on Square for five years.  Maybe when he opened his business the guy thought he would just get Square because it’s advertised.  It gets him up and going but when you’re running $50,000  to $70,000 a month through Square and they’re high tickets like an auto repair shop, that is just paying way too much! This business owner is not educated and doesn’t understand about rates and credit card processing services so he gets kind of stuck with them. Low and behold we can save them a lot!

Vince: Okay, so you mentioned that someone like an auto parts shop could be using Square just because it’s easily available and it’s simple for them to sign up. They could be paying less for their swiped and less risky transactions. Can you explain that and what the different types of less risky transactions are, that they could be saving money on.

Ginger: What we do is take a look at a merchant statement of a prospective business owner and look at what kind of cards they’re taking. If they’re taking a lot of debit cards, those cards have a very low interchange rate, which is the wholesale rate, because there’s not much risk. If we’re talking to a company that’s taking a lot of corporate cards, they do have high risk.  If it’s an electrical supply or plumbing supply company, they’re selling to other businesses and their customers are paying with a corporate cards most of the time. There’s a lot more fraud with corporate cards so the issuing banks need to charge more for that type of a card compared to the debit card.   Those big processing companies, like Square, do a lot of brand advertising and it’s easy for merchants to sign up. But, they could be paying a lot more than they need to.  Plus, those companies are called aggregates. They really don’t give you your own merchant account. They are lumping  your business in with all their other thousands of merchants all into one merchant account. So you don’t get reporting. With us, we give you your own merchant account. You get a portal so you can see your transactions as they happen live. You know, maybe you need to do a refund, and you’ve got to look up somebody’s transaction to refund it. Well you just go to the portal and search for it. Bingo, it’s there.  When you get your bank reconciliation and they took out x amount of dollars on the first, the second the third of the month, etc,  the deposits should match up perfectly with your batches and it does in our portal. It’s so easy to reconcile.  So a big difference is that you get your own merchant account instead of being lumped together with everybody else in the world.

Vince: So as someone who’s used Square, PayPal and Stripe, I think most business owners assume 2.9 or 3 percent is standard for all transactions, but you’re saying that’s a high rate. That would be standard for let’s say online transactions where you don’t see the person who’s swiping the card in person. And can you explain more what other types of transactions should cost?

Ginger: the question is, “Are you swiping the card are you taking it over the phone”? Because if you’re swiping card present cards the customer’s right there with you and those rates are a lot lower. You certainly don’t want to be on a high flat rate program.  Stripe,  Paypal and Square are making a huge margin off of you.

Vince: So, many small business owners fit that category of being charged a flat rate with Square, PayPal or Stripe but just be by answering a few questions you can customize their merchant fees to reflect their actual customers’ transactions instead of just the blanket fee.

Ginger: Yes, absolutely! We can virtually all the time beat the rate of PayPal, Stripe or Square. Plus don’t forget, we have customer service that those guys don’t. If you have a charge-back it’s like, “Oh well you lose it!”.  We help people fight a charge-back. People don’t get them often but when they do, it just really hurts, especially if it’s a large ticket!  You want to be able to know what you did wrong, how to fix it, and how to win it back. We give that personalized service to our merchants.

Vince: Okay, so one of the last things I want to talk about now is that you mentioned that in-person swipes cost less, no matter whether you have small or large transactions.   They can save a ton of money by not paying a high flat rate, right? What is just like a ballpark number of what these businesses could be saving?

Ginger: They could easily save a whole percent! Even a company that’s taking cards over the internet could easily save a half a percent.  There’s a lot of companies that can save way more than half a percent, for example B2B suppliers. They get a lot of corporate cards. We have advanced technology to lower the rates on those kinds of business and corporate cards.  We can lower the risk and lower the rate all behind the scenes and really get those cards down to closer to 2.25% percent.

Vince: Wow! That’s great! For someone like me who’s paid that flat fee for a long time, it was great to hear what it really means to have an aggregated account that you’re saying everyone kind of shares.  Those merchants are just paying a flat rate but could be saving half a percent or even much more!

Ginger: Right! Restaurants that take a lot of smaller tickets or a dime store kind of thing with a lot of smaller tickets take almost all debit cards. So we can really get those rates down below 2% and save people a lot of money!

Vince: So, you’re paying more just for the ease of using someone they saw on an advertisement or commercial or online and it has nothing to do with what your business should be paying in merchant fees or not, correct?

Ginger: Yes, they are throwing money away just because it was easy to sign up.   Well, we make it pretty easy to sign up too.

Vince: Thanks so much Ginger! So if someone wants to get more information on how you can help them save money, how do they get a hold of you?

Ginger: Go to our contact-us page and send us a message.
Or you can give me a call at 505-296-2847.

Vince: Thank you so much for your time Ginger, and we’ll see you in the next video okay.

Thanks everybody for watching! I’m Gingergaye, President of Electronic Money Company and we just try to help educate people about merchant services because it’s so confusing. Take care!

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