Friday, April 25, 2008

Welcome to the Merchant's Guide

Welcome to The Merchant’s Guide Blog. The Merchant’s Guide, LLC provides merchants accepting electronic payments with methods to lower fees and improve revenues by offering informative training guides, payment operations audits, and professional guidance. At the time of this posting, our Website ( is near completion, and should be up within a week or so.

I am sometimes asked why I wished to abandon an “exciting” and lucrative sales management career to enter the relatively mundane existence of a trade writer and sometimes consultant. Well, for many of us, there comes a time in life when we become infatuated with a different lifestyle or another professional calling. At 45 years old, I just happened to have a yearning for both. Albert Schweitzer once said, “Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful.” Since my early school years, I have always enjoyed writing. Until just recently, it never occurred to me what I might write about, or that I might actually be able to earn a living at it (we’ll see!) The first “hints” that I would enjoy such a vocation emerged from my experiences writing articles for DM News and Electronic Retailer magazines.

Over the past 15 years, I have had the privilege of working amidst an extraordinary technological revolution. I am, of course, referring to the Internet and electronic commerce. In 1991, I started working for a small company called FTP Software, a firm that developed industry-leading TCP/IP (read Internet) software. At that time, the World Wide Web was in its infancy, if not just an idea. All we had to play with were the File Transfer Protocol, Telnet, and e-mail. No Web to speak of! Since then, I have primarily worked at companies specializing in electronic commerce and payments. My most recent adventure included a five-year stint building and running the sales force for Litle & Co., a payment processor well known for its transparent business practices, customer service, and developing innovative, technically advanced electronic payment systems.

One of the greatest lessons I learned while working in the processing industry was that relatively few merchants really understand credit card processing, especially as it relates to Interchange. Historically, Interchange rate information was restricted to members of the Associations and affiliated payment processors. So, it was impossible for merchants to “do the math” and determine their true fee structure. Ironically, Interchange generally represents the bulk of what merchants are required to pay the credit card systems! According to an extrapolation of data contained in Visa’s SEC registration statements, worldwide merchants paid over $100 billion of Interchange in 2006.

In the fall of 2006, however, both Visa and MasterCard decided to publish their respective Interchange rates in an effort to increase transparency into their payment networks – after all, they were going public! Although heralded as an epiphany, merchants quickly learned that the Interchange system was fairly complex, and that determining the equitability of their fees would be a challenge. Now, this I thought is a good subject to write about. It’s a big subject representing a lot of money to a lot of businesses. The subject matter is extremely complex – there are over 350 Interchange rates with thousands of rules and qualifiers. Simplifying the rules, I thought, would help a lot of merchants save a lot of money.

So, the fruit of my efforts thus far is a document entitled Understanding Credit Card Interchange In Card-Not-Present Environments, or Understanding Interchange for short. It’s about 80 pages, and pretty much tells you everything you need to know about CNP interchange and getting the best deal possible under the current rules. It has a lot of examples (including some impressive math), and even comes with a companion spreadsheet. You can buy this right from the website. I encourage you to check it out.

It will be my intention to post to this Blog once or twice a month, or as needed if something really important comes up. Like many bloggers, I am open to suggestion with regard to subject matter. Please feel free to e-mail me if you have an idea or would like something addressed on the Blog.