Why Do Business With Us

WHY DO BUSINESS WITH US?

BVCC. is a register ISO | MSP with Transfirst, LLC., a register agent for the following banks: Fifth Third Bank, Cincinnati, OH 45263 | Columbus Bank and Trust Co., Columbus, GA 31901 | Merrick Bank Corp., Woodbury, NY 11797

Business Ventures Capital Corporation 546 Hamilton St. Suite 313, Allentown PA 18101 610-572-1712 (M) 610-572-1722 (F)

Presented By: Jesse A Roldan

THE BASICS

Understanding How Credit Card Processing Works

To appreciate the value that our company brings to your business, you must first understand how credit card processing truly works. Most merchant’s do not fully understand this process. My goal is to educate you because an informed Merchant is our best customer.

I hope to rationally explain the following in laymen terms:

1. How does a typical credit card or EBT processing transaction truly work?2. What is Interchange, and why should it be important to you?3. How are you currently being charged for credit card processing?4. Why is our Company a better choice for your Credit Processing Business?

The primary source for my information was the US Government Accountability Office Report to Congressional Addresses (GAO-10-45 Credit Card Interchange Fees) that stemmed from the 2009 Credit Card Accountability, Responsibility, and Disclosure Act.

Transfer of Fees in a Credit Card Transaction

Sources: GAO (analysis); Art Explosion (images)

1. Notice the Majority $2.20 in total fees for this transaction goes to the financial institution that issued the customers card.

2. This $1.70 is referred to as the interchange rate, and is non-negotiable for you the merchant. It is set by the issuing bank, and will be applied no matter who your processing company is.

3. The remaining $.50 is split between the Acquiring Bank, and your processing company. This is your only room for negotiation.

4. Please keep in mind, these numbers are greatly skewed due to large companies processing the majority of transactions. Chances are that you are paying much higher fees on the acquiring end of the transaction due to economies of scale.

THE BASICS

Following the Money

Issuing Banks(Card Holder)

Interchange Fees

Vary From:$0.20 & 0.95%

to $0.10 & 3.25%

Non-negotiable

Card Network (Visa / MC)

Assessment Fees

0.11%

Non-negotiable

Merchant Bank /

Processor

All Other Fees

Charged in many varying and

creative ways

Markup over Interchange

Ex:$0.20 & 1.80%

Flat FeesEx: Statement

Fees

SurchargesEx: Batch Fees

NegotiableSources: GAO (analysis); Art Explosion (images)

Understanding who is getting paid is half the battle. Once you identify where your money is going, you will be better suited to negotiate your best possible terms. Below is a diagram that explains who is receiving the money from each fee your merchant account is charged.

THE BASICS

• Interchange is the classification of rates that member banks of a general processing card network , such as VISA or MASTER CARD, charge the merchant for the privilege of accepting their cards.

• These fees typically offset risk to the card issuer, pay operating expenses, and provide rewards to card holders.

• These interchange fees generally vary from 1 to 3 percent of the total transaction.• Four main factors determine which interchange fee rates apply to a given transaction

1. Type of Card2. Merchant Category3. Merchant Size4. Processing Mode

• Due to economies of scale certain large merchants, such as grocery stores or gas station chains qualify for lower interchange rates. However, the vast majority of all merchants do not have this ability.

• Visa currently has 60 categories of interchange rates, and Master Card has over 240.

Yes, by training your staff to use a little common sense when processing a transaction, you can affect the interchange rates applied to your transactions.

1. Use Pin Based Debit whenever possible. These transactions have the lowest risk of fraud, and the lowest rates to reflect this.

2. Card Swiping is always better than manually entering the card numbers, as it takes out the aspect of human error, therefore it is considered less of a risk and merits a better interchange rate.

3. When a card is not present, the risk of fraud is the highest, therefore, the increased risk will be reflected in the interchange rate. Try to use address verification in this instance.

4. Be sure to close out your batch each day. If a payment sits on your terminal and is not batched by the end of the next business day, it will be charged a higher interchange rate.

What is Interchange?

Do you, the Merchant, have the ability to minimize interchange fees?

THE PUZZLE OF TIER PRICING

THE PU

ZZLE OF TIER PRICIN

G

Standard Tier Pricing ModelHow am I currently charged?

As with any complex financial transaction of this sort, the devil is in the details.

Although there are literally more than 200 Interchange rates, most merchants are paying only 3 different rates. Over 90% of all Merchants work on some type of tier system.

First Tier - Qualified RateThe qualified rate is most commonly quoted to a merchant when they inquire about pricing. A qualified rate is the percentage rate a merchant will be charged whenever they accept a regular consumer credit card and process it in a manner defined as "standard" by their merchant account provider using an approved credit card processing solution.

Second Tier - Mid-qualified RateThis is the percentage rate a merchant will be charged whenever they accept a credit card that does not qualify for the lowest rate (the qualified rate). This may happen for several reasons such as:•A consumer credit card is keyed into a credit card terminal instead of being swiped•A special kind of credit card is used like a rewards card or business card

Third Tier - Non-qualified RateThe non-qualified rate is usually the highest percentage rate a merchant will be charged whenever they accept a credit card. In most cases all transactions that are not qualified or mid-qualified will fall to this rate.•Many Reward Cards, which have higher interchange fees are processed at this rate.•If you fail to run your batch by close of business the next day, all of your transactions will be processed at this rate.

Are my Transactions Qualified?

The Ugly Truth

Your Merchant Processor has the freedom to determine where to set the tiers in relationship to interchange, and each processor uses this to their advantage.

Qualified Transactions

Generally Interchange Rates from

0.95% - 1.05%

1.45%

Mid-Qualified

Transactions


1.60% - 1.90%

2.40%

Non-Qualified

Transactions


1.95% - 2.99%

3.29%

20%

45%

35%

What Percentage of my Transactions are Qualified?

QualifiedMid-QualifiedNon-Qualified

THE PU

ZZLE OF TIER PRICIN

GSeeing Through the Fog

Visa CPS Retail Debit Qualified 0.95% + $0.20

M/C Merit III Retail Card Present Swipe Rate Debit 0.95% + $0.20

Visa CPS Retail Qualified 0.95% + $0.20

M/C Merit III Retail Card Present Swipe Rate 1.05% + $0.15

Visa CPS Retail Key Enter, Debit Mid Qual 1.80% + $0.10

Visa CPS Card Not Present, Debit Mid Qual 1.80% + $0.10

Visa CPS e-commerce, Debit Mid Qual 1.60% + $0.15

M/C Retail Key Enter Debit Mid Qual 1.64% + $0.15

M/C Merit I Debit, Timing & transaction tolerance limits exceeded or Electronic commerce

1.73% + $0.15

Visa CPS Retail Qualified Rewards 1.90% + $0.10

M/C World Merit III, Card Present Retail Swipe 1.82% + $0.10

M/C Enhanced Merit III – transaction detail data req 1.82% + $0.10

Visa CPS Retail Key Enter, Mid Qual 1.94% + $0.10

Visa CPS e-commerce, Mid Qual 1.94% + $0.10

Mail/Phone Order & Electronic Commerce – Con Debit 1.96% + $0.10

M/C Retail Key Enter, Mid 1.98% + $0.10

Visa CPS Retail Key Enter, Mid Qual Rewards 1.99% + $0.10

Visa CPS Card Not Present, Mid Qual Rewards 1.99% + $0.10

Visa CPS e-commerce, Mid Qual Rewards 1.99% + $0.10

Visa Commercial Level III0.82% 1.89%

+ $0.10

Visa Commercial Level II – Purchase, Bus, Corp T& E 2.09% + $0.10

Mail/Phone Order & Electronic Commerce – Con Credit 2.13% + $0.15

M/C World Elite Commercial Face to Face Corp 2.29% + $0.10Visa Commercial EIRF – Corporate T & E 2.29% + $0.10M/C World Elite Merit III 2.29% + $0.10Visa Commercial Card Not Present - Business 2.34% + $0.10Visa EIRF Electronic Interchange 2.39% + $0.10M/C Commercial Face To Face or Data Rate II Business 2.41% + $0.10M/C World Elite Commercial Face to Face Business 2.41% + $0.10Visa Commercial Card Not Present – Purchasing 2.49% + $0.10Visa Commercial EIRF – Business 2.54% + $0.10Visa Commercial EIRF – Purchasing 2.79% + $0.10Visa Standard Interchange 2.79% + $0.10Visa Commercial Standard Interchange 2.79% + $0.10M/C World Key Enter 2.14% + $0.15

Below is a sample of 35 commonly used interchange rates

Tier 11.85% + $.20

Tier 22.20% + $.18

Tier 33.30% + $.18

Tier 22.40% + $.20

Tier 33.50% + $.20

Study this chart carefully and determine which of these two processors provides a better overall value to you the merchant, assuming the static fees (statements, etc.) are equal among both providers.

Company A Company B

Tier 11.65% + $.18

Which Is The Better Value?

THE PU

ZZLE OF TIER PRICIN

GWhen We Run the Numbers










1.73% + $0.15












+ $0.10





Tier 11.85% + $.20

Tier 22.20% + $.18

Tier 33.30% + $.18

Tier 22.40% + $.20

Tier 33.50% + $.20

Can you tell how much profit either of the two companies made?

Tier 11.65% + $.18

Company ATier 1: ($100 x 1.85% + $.20) x 9 = $18.45Tier 2: ($100 x 2.40% + $.20) x 21 = $56.40Tier 3: ($100 x 3.50% + $.20) x 5 = $52.20

Total Expenses: $91.55

Company BTier 1: ($100 x 1.65% + $.18) x 4 = $18.45Tier 2: ($100 x 2.20% + $.18) x 16 = $56.40Tier 3: ($100 x 3.30% + $.18) x 15 = $52.20


Assuming you processed a $100 transaction in each of the 35 interchange classifications below for a total of $3500 in transactions processed.

THE PU

ZZLE OF TIER PRICIN

GIf Company A is the better value, how does Company B win your business?

• Your Tier Rates are already fixed by Company A, and your bill will read.• X number of charges Tier 1 (Qualified)• Y number of charges Tier 2 (Mid-Qualified)• Z number of charges Tier 3 (Non-Qualified)

• However, this does not account for which interchange rates each Tier Includes.• Company B will then use this information to compare tier rates, not the true cost.• As you can see below, Company B will lead you to assume that his Tier Settings vs. Interchange

will be exactly the same as Company A, and then simply compare Tier Rates for you.• This will always appear to provide a savings to you the merchant, but now you know better.

Notice, that Company B boasts that they will save this merchant over $150 every month.

In reality, we now know that Company B will most likely cost this merchant well over $150 more each month.

They do this by comparing Tier Rate Charges, not where their Tier Rates are set according to interchange.

With this many moving parts, you can now see why so many

merchant are in the dark. It leaves you at a clear

disadvantage, as you can never compare apples to

apples.

So how would Company B possibly win your business as a merchant? Assuming you are currently working with Company A for your merchant processing. The sales rep from company B will ask for your most recent 3 months transaction statements. From this information he will find the following information and put together a proposal that will probably look very similar to the sample below.

INTERCHANGE PLUSA BETTER WAY TO DO BUSINESS

A BETTER WAY TO

DO

BUSIN

ESS

What is Interchange Plus Pricing

Put simply, Interchange Plus is nothing more than adding our merchant account pricing to the interchange rate from the Issuing Bank and the Assessment Fee from the Card Network .

We wipe the slate clean of the Tier Rates. You essentially will see exactly where every penny of your money goes. You will be able to tell how much money our firm, is making from your business on each and every transaction. There are no hidden fees, every penny is accounted for.

This form of transparency has most likely never been offered to you before. For years, only the largest of corporations, such as Big Box Stores, Fast Food Chains, and large retail merchants have had the negotiating power to overcome the Tier Rate Game.

We , believe every business owner has the right to know exactly how

much they are paying for merchant services.

Wiping the Slate Clean

In order to understand Interchange Plus pricing, you have to first shake off the your current way of thinking about merchant services. Very often the first question anyone asks us when we approach them on the subject is: “What’s your rate?”. These merchant’s have been trained to think this way from years of working with the “Tier System” and the countless sales reps that continually push these numbers and promises of savings to the merchant.

As we have pointed out in the previous pages, a better question might be what is that merchant paying to their service provider? Due to all the moving parts of the Tier System it is virtually impossible for the merchant to know. As with any financial transaction, the less you know, the more it will cost you. .. Literally.

So let’s change the game. Instead of focusing on what the merchant processor is offering as a rate, let’s focus on what the merchant processor is actually grossing as a profit margin.Follow your Money

Interchan

ge Fees

•Between $.20 & 0.95% - $.10 & 3.25%•Variable / Non Negotiable

Assessme

nt Fees

•0.11% from Visa or Master Card•Fixed / Non Negotiable

Paymen

t Corp

•Interchange Plus, 2 Fixed Fees•Fixed / Negotiable

The numbers

Business Ventures Capital Corp0.45% + $.18 = $0.63

VISA/MC Assessment Fees0.11% = $0.11

Interchange Rate (Sample)1.60% + $.15 = $1.75

Example: A $100 transaction will cost this merchant $2.49

Revisiting the Numbers


Let’s look at our same Interchange chart again. But this time, let’s apply the interchange plus pricing model to the interchange rates. Revisiting our same parameters from earlier, a $100 transaction in each interchange category for a total of 35 transactions and $3500










1.73% + $0.15












+ $0.10




35 Transactions / $3500


Profit to the Payment Corp: $15.75

• No Tier Rates• No Hidden Fees• No Guessing Games• Just Facts

As your processor’s fees are the only negotiable

fees in the entire transaction, doesn’t it

make sense to focus on these costs, as they are the only costs you can

control?

INTERCH

ANG

E MAD

E SIMPLE TO

UN

DERSTAN

D

A BETTER WAY TO

DO

BUSIN

ESSThe PAYMENT CORP Fixed Fees

Now that you understand the Interchange Plus pricing model. I’m sure you want to know what fixed fees can be expected from our company.

Batch Fee: $0.18All batch closing and batch inquiries are considered “transactions” and will be billed at the same rate as V/MC/Disc trans fees unless specified.

Monthly Service Fee: $9.95Also referred to as the Statement Fee. This fee is used to offset our fixed cost of processing and mailing out statements each month to you the merchant.

Monthly Breach Coverage: $6.95Consider Breach Coverage as a form of insurance. In the event you are found responsible for a secure information leak, resulting in identity theft, this coverage will cover you responsibility for the losses up to $100,000. It is mandatory on all new accounts through our processor, but can be removed after the account has been opened for 1 month.

Monthly Minimum Fee: $25Applies to Discount Rate & capture fees. It costs us money to keep your account open and active. If for some reason, your processing fees do not equal $25 in gross profit to our company in a given month, we will charge you the remainder of the $25 minimum fee. This will not be assessed on most accounts.

It’s Time To Partner

The Fine Print

Cross border international transaction assessments/program support, MC network access/brand usage (NABU), Visa US acquirer processing fee (APF), Visa Zero Floor Limit, Visa misuse of the authorization system may apply. Further Visa/MC/DISC mandated fees, including association Base II and kilobyte fees, may also apply

BVCC does not add any additional hidden fees we pass interchange pricing directly through to the merchants at 100% of cost.

NEED NEW EQUIPMENT?

NEED

NEW

PROCESSIN

G EQ

UIPM

ENT?

Retail Processing Equipment

In the field Equipment Financing

Way 1581 GPRS, Wireless Terminal / Cell PhoneRetail: $485.00Way S40 Printer - Retail: $242.00One time SetUp: $99.00Additional: $24.99 Monthly Gateway Fees $0.15 per transactions

Retail VeriFone Vx510LE - $575.99Retail VeriFone Pin Pad 1000SE - $150

Retail Hypercom T4205 - $485Includes Internal Pin Pad Hypercom P1300 Pin Pad $150

Equipment Model Monthly Pricing

Hypercom, T4205, 24 Mb, Dial $19.95

Hypercom, Pin Pad P1300, 6” $5.85

VeriFone Vx 510LE $22.50

VeriFone Pin Pad 1000SE $5.85

Way, 1581, TDES/SDES - Wireless

$23.00

Way, S40 Printer $9.50

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Why Do Business With Us