February 7, 2012

Retail Requires Speedy Settlement

Retailers, if you’re not settling your batches every night, you’re probably losing money.
Each category/type of merchant account has its own quirks and requirements. Retail merchant accounts, for example, require that all transactions be settled within 24 hours. This can be difficult – but pays off almost immediately.
Processors offer three rate levels to retail merchants: 1) Qualified, 2) Mid-qualified, and 3) Non-qualified. Each of these is billed at a different effective rate, meaning only those merchants who process 100% of their transactions as Qualified will actually receive the discount rate they negotiated with their MSP or ISO.

Luckily, getting Qualified is not too difficult. In order to obtain Qualified status, the transaction needs to be completed with a standard consumer credit card (Visa, MasterCard, etc.) that is swiped accurately and that receives an electronic authorization code in response. The vast majority of transactions you process meet these requirements. After that “standard” transaction occurs, the only thing required of you to obtain Qualified status (and the best available rate) is to settle in a timely manner.

This is why daily auditing is so important. If you don’t have someone submitting batches every night (or early every morning) you are almost guaranteed to miss the Qualified rate on those days that you don’t settle.

Some of our clients use our Aging Warning feature to remind them to settle batches on time but for retailers that is usually ineffective. Even if you set the Aging Warning to one day (its lowest possible setting), by the time the alert triggers, it may be well past the 24-hour point for many of your transactions. Aging Warning is designed to alert management to transactions that have gone unsettled or overlooked for an extended period of time (for example, if the person usually responsible for settling batches missed a night or if there was an issue with submittal and the transaction didn’t process).

We encourage you to monitor the late submittal indicator in DOLLARS ON THE NET®, which triggers daily and flags any unsettled transactions. This will give you the chance to spot unsettled transactions and get most of your information submitted within the required 24-hour window. (Depending on your processor’s sweep window even this alert may be too late, so be sure to find out at what time your processor sweeps for new transactions to settle – and establish policies to ensure your settlement is completed before that cutoff.)

If you need help finding the late submittal notifications or have additional questions, feel free to contact us at 702.597.2480, option 2. We look forward to helping you!