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The Problem:
Due to the nature of GSA SmartPay purchases, vendors and merchants are often charged much more than they expect in processing fees. With a large competitive contract, loosing even 1% of the total billing unnecessarily can be a serious problem.
Almost any credit card processor or bank can provide you with the ability to accept these credit cards. They may even quote you a very competitive 'standard rate'. However, when you start processing GSA SmartPay transactions using this service, you may find that the total 'effective rate' that you are charged is much higher. You may also find that your transactions are taking much longer than three business days to show up in your account.
GSA SmartPay processing is somewhat unique from standard credit card processing. It usually involves larger transactions, always involves a 'commercial' credit card, and usually involves a 'keyed in' (non-swipe) transaction.
New approaches have been developed which can keep the costs of this type of transaction down. However, there is little motivation for banks and credit card processors to invest the time and effort required to get them working.
The Solution:
One key way to cut the cost of high dollar (over $8750) transactions is 'Level 3' ('Tier 3') processing. With this, the vendor or merchant provides complete name and address information of the customer as well as line item detail of the purchase. This enables the transaction to be verified, reducing the risk and thus the associated fees. This can enable you to recover a full 1% of your total transaction as pure profit. True 72 hour processing is possible with this also.
Ultimately it comes down to finding a processor who fully implements this process and is willing to pass the savings on to you. Amazingly, not many seem to be doing this.
So far, we have only found one processor who took the effort to actually get level 3 processing working and pass the savings on to the merchant; Peak Payment Corp. They save one vendor thousands of dollars per month. They also get the funds in the bank in 72 hours. Other processors will have to follow this lead as vendors become educated. PeakPay still gets our honorable mention and trust for being the first.
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