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How Does Credit Card Processing Work With RetailEdge Point of Sale Software?

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How Does Credit Card Processing Work With RetailEdge Point of Sale Software?

Postby RetailEdge Moderator » Thu Feb 19, 2015 9:49 am

RetailEdge works with three processing Gateways (i.e., OpenEdge (PayPros), Cayan (Merchant Warehouse) and Mercury (Vantiv)). We do this because we want to provide choice, but at the same time we don’t want to spend all our time programming to credit card processing solutions. There is a lot more to Point of Sale than just credit card processing (although you would have a hard time knowing it these days with all the “POS” Systems on the market that are just a front end to credit card processors (Square, etc.).

There are around 16 plus or minus companies that are authorized to do credit card processing. These are the big players that you probably have already heard of (First Data, Global, Chase PaymentTech, etc.). So whichever company/bank you choose to do credit card processing with, they will be using one of these backends. You as a retailer probably have people coming in everyday telling you that you are going to be getting the best rates, etc. and that they will provide you with great service, etc. We see this all the time. Local banks coming in and saying that you should process with them because they are local. The processing is not local and they are all just using the same backends. Most of these people will just put what we call a dumb terminal on your counter and really provide no add-on service or features to their “offering”.

The next level up are the Gateways. That is who RetailEdge is talking to. These Gateways offer a way for our software to communicate with the backend processor and they also add additional features/services, that the backends don’t like gift cards, loyalty programs, different payment methods, recurring billing programs, etc. We have chosen to talk to these gateways, for a number of reasons, however, primarily because they provide:

1. an easy way for us to talk to the backend processors and allow RetailEdge to accept credit cards so that the checkout process is quicker and seamless. This is becoming more and more important as new technologies like Apple Pay and EMV are being implemented viewtopic.php?f=4&t=3147&p=5470 and retailers are going to need a customer facing device on the counter.

2. a level of service to us that the backend processors are not going to. So if the backend processors make a change to the way that they do things or add a new technology, they will protect us from this change or at least make it easier to incorporate these changes into RetailEdge.

3. additional features.

4. out of scope solutions (VERY IMPORTANT). viewtopic.php?f=12&t=3047&p=5283.

To make things more confusing a number of these Gateways are being bought up by the backends. For instance Global acquired OpenEdge. Mercury is Vantiv. So there is consolidation happening. This is not necessarily a bad thing. Getting closer to the backends hopefully will allow these companies to get better rates and provide more additional services (e.g., better AMEX rates, same day deposits, consolidated AMEX/MC/Visa statements, etc.)

So to sum up what we are trying to do with our integrations:

1. Give you flexibility to get the best rates. This can be a daunting task. Here is a link on how you should calculate what you are really paying on credit card rates. viewtopic.php?f=4&t=3113&p=5411. We actually use one of our processors to process our credit card sales. Looking at the pages of fees and add-ons can be aggravating to say the least. There are systems out there that talk to one processor. Intuit’s Quickbooks POS talks to Intuit Merchant Systems. Do you think you are going to be able to get the best rate when they talk to one processor? It is so confusing that I have talked to people that think Square’s 2.75 rate is a good deal (It isn’t you should be paying less. On the flip side, I have talked to people who think their processor is giving them 1.3% per swipe on their credit card sales. They aren’t. The rates are set by MasterCard and Visa, and although there are business types that do have lower rates, I can pretty much guarantee that they are not getting that rate. Here is a link to MasterCard’s site that calculates interchange rates. http://www.mastercard.us/merchants/interchange.html. Once again your best method to determine what you are paying is to calculate the effective rate.

2. Give you different features and integration with RetailEdge.

3. Improve security for our customers.

The payment technology space is changing at a very fast pace (ApplePay, EMV, Chip and PIN etc.) We are working with all our partners to get the latest out and are in the process of certifying some new devices. Each of the devices have different features and you will pay for these features. The Genius device is actually a Verifone MX815. These are about $700. The Verifone VX805 is about $250. The Magtek IPAD is around $100. So you will end up paying for these devices in some way. Most of the processing partners have a rental program to defer these costs, but if you will need to weigh whether the feature is going to pay for itself. You may see some of these devices on the internet for much less or even free, but they are being discounted because they are attached to someone’s processing. Nothing’s free and I am sure they will be making it up somewhere else and you will be paying more in the long run.

Hopefully this helps you navigate the credit card processing morass. If you have any questions please feel free to ask. You are probably not the only one and we have been at this for 25 plus years and so lots of information about how the process works that many companies don't want you to know.

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