I have come across many merchant that are processing their credit cards through Intuit/Quickbooks. I always try and educate my perspective clients on the various rate plans offered by different processors so that they can make the best decision for their venture - Quickbooks is (somewhat) convenient but you end up paying through the nose for their service. Merchants currently using this program should seriously consider other options.
· Positives: works nicely with existing accounting software; no additional entry needed in to Quickbooks register.
· Negatives: very high rates through the tiered pricing program, which means merchants are paying far too much; we have found that more often than not those utilizing the program are not PCI compliant as well.
Quickbooks exclusively utilizes the tiered pricing program - as outlined in May’s monthly newsletter, any merchant on a tiered pricing plan is simply paying WAY too much for credit and debit card acceptance – period!
Under the tiered pricing plans, a business is given a qualified rate – generally around 1.69% + a $0.25 transaction fee - for processing. Businesses generally don’t ask what the mid-qualified or non-qualified rates are.
· Qualified rates are only assigned to the most basic credit cards and they must be physically swiped. Only 10-20% of cards actually are considered qualified - rewards cards and corporate cards are excluded!
Mid-Qualified rates are generally 2.5%-3.5%, and additional authorization fees apply.
· These include debit cards not swiped, rewards card that earn hotel/airline miles
Non-Qualified cards, generally come in at a rate of 3.5%-4.5%.
· This category includes business cards, international cards, plus basic cards and reward cards not swiped do not fall into the Mid-Qualified category are considered Non-qualified.
· This is far from the best deal. As I’ve advocated on many other occasions, interchange pass through pricing is the way to go for merchants who want to lower their processing fees and get the best deal.
Interchange plus is the term used to describe the wholesale rates charged by the credit card associations (Visa®, MasterCard® and Discover®). With over 150 credit cards in the market today, each of them correlates to a slightly different interchange rate.
As the name implies, Interchange plus pricing works by applying a fixed markup fee to the wholesale interchange rates from Visa, MasterCard or Discover cards. This includes two basic fees: one is often expressed in basis points (i.e. bps) and the other is an authorization fee (i.e. every time a business authorizes a credit card).
And finally, PCI compliance is key to lowering ones exposure to risk - whether they know it or not, ALL businesses that process credit cards are required to comply with PCI compliance. On the many merchant statements I have reviewed for those processing with Quickbooks, more often than not I find merchants are not compliant. The potential penalties for non-compliance are stiff. The credit card associations have given themselves the right to fine a merchant (through the issuing bank) fines from $5,000-$100,000 per month for PCI compliance violations. Ultimately, if a merchant is not PCI compliant, the associations can terminate their relationship with a business.
If a business chooses to process credit cards, their processor should work hard to ensure that their merchants are PCI compliant. But ultimately, the burden of that responsibility falls on the shoulders of the individual merchant.