merchant services | blog.firstffcu.com

Start-Your-Own-Online-Business Joe has this interesting hobby where he collects broken items and then turns them into furniture. In 2001 he created a coffee table and a chaise lounge made entirely of surfboards. In 2004 he made a lounge chair out of old skateboards and another in 2007 out of broken hockey sticks. Not only are these comfortable, they are different, hip and unlike anything anyone has ever seen.

In 2009, Bob, a friend of a friend, who runs the pro shop at a local indoor hockey rink suggests he sell them in the shop with a nice price tag attached. After about a month he has 3 more chairs on order. Joe strangely finds himself making weekly rounds to local ice rinks and placing want ads on craigslist to find broken hockey sticks.

Fast forward to early 2011, a sales rep for KOHO sees the chair in the pro shop and loves it. He wants to have one in his office and asks about adding something like this to his regional sales catalog. 2 design patents and about 6,000 hockey sticks later Joe is having a hard time keeping up with the demand. He needs to start a business! How does he do that?

The first key piece to starting a business is writing a solid business plan. In a nutshell, it is a detailed summary of who you are, what you do, marketing strategies, financial plans, competition etc… If you have never done this before there are several excellent resources out there. SCORE and the NJSBDC have chapters in almost every county and are eager to help you get started.

Next is choosing the type of business. Limited Liability Company, Corporation, Sole Proprietorship and partnership are common examples. Based on your size, volume, industry and structure there are so many variables involved that seeking professional help is strongly recommended. Find a trusted accountant, attorney, or seasoned business owner for the best advice. Once you have made your choice, simply register your business with the state or county and obtain a tax ID number from the IRS. These steps may be done right from home on the World Wide Web.

Separating business income/expenses from personal will save hours when tax season arrives. The best way to accomplish this is by opening up a business checking account. First Financial Federal Credit Union does not have a minimum balance requirement or monthly maintenance fee on their business accounts. This is unheard of in the financial services industry!

A Business Checking Account is a required in order to accept payments using a merchant services provider. Providing your customers the ability to pay with their debit or credit cards will result in more sales for your business. They are also less expensive than using Square or Paypal. In the highly competitive merchant services industry it is a very good idea to research the provider prior to signing on with them. If you already have a provider, it may pay to shop around. Many merchant services companies will pay your early termination fee to get you out of your existing contract. As always, contact your local Credit Union to see if they have any trusted professionals that they can refer you to.

For more information about any of First Financial’s business accounts and services, contact Business Development at business@firstffcu.com, call 732.312.1421 or simply leave a comment below!

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A professional on his lunch break walks down to a local eatery and enjoys a turkey club with avocado lime spread and a crisp dill pickle spear on the side. For twenty minutes out of his busy day he is calm, and he can already feel the tired 2 o’clock feeling coming on. He reaches for his credit card, swipes and in an instant his tab is settled. Let’s focus on that instant… blip… that instant when funds are transferred from consumer to merchant.

To break it down; the customer swipes his card through the terminal to pay $10.00 for his lunch. The terminal reads who the customer is and contacts the bank that issued the card. The bank at this point, must make a decision on whether or not to pay the merchant. Could the transaction be fraudulent? Are there funds available? Upon approval, the consumer’s bank sends $10.00 to the merchant’s bank, and then the bank deposits $9.80 into the merchant’s account. That $0.20 is sent back to the consumer’s bank and it is then split five times: with the issuing credit or debit card company at a predetermined rate, the issuing credit card brand (i.e. Visa, MasterCard, Discover, etc.), the processing company, then to an ISO selling the processing (if applicable), and finally, it is split for the last time if there is an independent contractor selling the processing for the ISO. We’re certainly not splitting the atom, but this is getting eerily close to nuclear fission.

At the end of each business day, all of the credits and fees are tallied by the processing company. After about 2 business days, the settlement is deposited into the merchant’s bank account. The processing fees are typically debited from the merchant’s account 3-5 days after the end of the month. Phew – that is quite the process! Why would a processing company go through all of this effort for pennies on the dollar… or sometimes fractions of a penny? Why would a business pay to have customers pay them?

Market trends and statistics provide an overwhelming answer to these questions. According to Javelin Research, in 2011 only 27% of all in person sales were made with cash. According to the SEC in 2011 – $17,782,000,000,000.00 were spent using Visa, MasterCard, American Express, Discover and Diners Club. When you start to take small percentages of nearly 18 trillion dollars, it becomes clear just how lucrative this business can be. For the business owner, according to Ari Shapiro of NPR, consumers purchase 40% more when they shop with a credit card vs. cash. Many interesting clinical psychological studies break down the why behind this.

So what does all of this mean for our small businesses? Well, with so many entities fighting for a slice of the dollar, the competition among merchant services providers is stiff. Given the dynamic nature of the industry, loyalty, transparency and honest hardworking member service are hard to find. Perform your due diligence and interview various clients to see just what kind of service is actually provided. A few minutes now will pay dividends later!

If you’re interesting in merchant services for your business, you’re in luck! First Financial has a processor who provides great service and excellent rates. If you would like more information on merchant services or business products and services, contact Business Development by emailing business@firstffcu.com

*Sources: Psychology Today, Nerd Wallet, Huffington Post, and Host Merchant Services.