By Margie Ragland- Corporate Sales Administration Manager
If you’re like most merchants these days, operate competitively and still turning a profit is a challenge. Accepting credit card payment is an essential part of doing business and in order to remain competitive in today’s marketplace you must operate as efficiently and profitably as possible: including accepting credit card payment as cost effective as you possibly can.
Below I offer some simple practices to avoid downgrades when processing your credit card payments. Be sure to take note: you’ll be glad you did!
First, what is a downgrade?
A downgrade is an increased interchange/discount rate charged by both the credit card associations (VISA, MasterCard, etc.) and your processing company. These downgrades can occur when you accept certain types of credit cards or because of the way the card transaction was processed.
In order to run your business, you cannot deny a customer from using certain credit card types, thus you will have un-avoidable downgrades.
There are three tiers of downgrades:
- Qualified transaction
- Mid-qualified transaction
- Non-qualified transaction
I will provide a brief explanation of each below:
Qualified Rate: As is the norm with most processing companies, the “Qualified Discount Rate” is the lowest rate you (the merchant) will be charged to process a credit card.
To receive the “Qualified Rate” the following are required:
- The credit card is present and swiped through a card terminal (and correct cardholder data is captured through swipe)
- The cardholder is present
- The card being used is a standard consumer credit card
- Cardholder signature is captured
Mid-Qualified Rate: A “Mid Qualified Rate” is a slight downgrade from the “Qualified Rate” and is charged with any of following:
- Credit card is manually keyed with AVS (address verification) information entered.
- If a rewards card is used (Yes, you as the merchant have to pay for Sally’s Southwest Airlines rewards points!)
- The Merchant not batching/settling transactions within 24 hours
Non-Qualified Rate: A “Non-Qualified Rate” is the highest discount rate, which I have personally seen as high as 4.5%. This rate will be charged when one of the following occurs:
- Credit card is manually keyed without address verification information being entered
- Authorization code is manually keyed in to your processing terminal
- Merchants not batching/settling transactions within 48 hours
To avoid downgrades, make sure to do the following:
1. Take as many transaction as you can in person (card present/card swiped) and verify with AVS
2. If you take most of your orders over the internet (MO/TO) be sure to ask your processor if you are set up to receive the best rate possible given that internet/telephone orders are your primary transaction type.
3. Inform your employees: make sure they understand it is better to swipe a card rather than type in the number and be sure to get AVS information.
To watch a live demonstration of the process and more great tips, visit our website at www.eBridgeGlobal.com/merchant-services
Saves 5% off budget price on six new vehicles in preparation for 2010 school year
A school district needed to purchase a variety of vehicles prior to the start of the 2010-2011 school year. With tighter operating budgets, the school was looking for ways to save on cost, but not cut safety or necessity when providing a quality education and supporting programs to its students.
The school district sought to purchase six different vehicles, including maintenance trucks and driver’s education vehicles. They enlisted the expertise of eBridge, to provide purchasing consulting and the reverse auction platform.
Six car dealerships participated in the event, placing a total of 38 bids on the six vehicles included on the reverse auction. The clock extended 32 times indicating that the dealerships were excited to win the business for the new vehicles and that the school district was closer to achieving true market value for the purchase.
At the conclusion of the event, the price was five percent lower than their budgeted value and the school district was able to purchase all six vehicles and still meet budget.
As our economic future remains uncertain, it is important to maintain quality education for our young citizens. By incorporating purchasing efficiencies in to our routine purchases in education facilities, like the reverse auction, maintaining quality education becomes a reality.
Last Thursday eBridge ran fuel auction for a large pizza company. The company wanted to purchase a fuel card with a low negotiated rate for their semi truck drivers and that was where we came in. Ten bids were placed and in eight of them there was a first place turnover! Only two suppliers were bidding but we still managed to get a great turn out. We were able to save them $84,000 off their total budgeted price and we were satisfied with that savings.
The company was so impressed with how our online reverse auction system works that they were immediately interested in turning their purchasing for their ten quality control centers over to us. Once you see how easy the savings is, it’s a no-brainer to do all of your purchasing in this way.
Next time you order a pizza, give us a call.
Columbia, SC, August 3, 2010–With reports of budget crises in nearly every state, the state government of South Carolina is taking action by incorporating cutting edge technology and industry best practices to increase efficiencies in its purchasing process. One major addition to its purchasing techniques is the reverse auction.
A reverse auction is a secure, real-time electronic sealed bid platform that allows suppliers to place multiple bids, rather than the one price per supplier response traditionally used in the paper bid process.
In July 2009, the State of South Carolina engaged eBridge Business Solutions, a proven eProcurement services provider, through a state contract. Since the inception of the contract, the State has utilized the reverse auction process for purchases budgeted at $5,344,000, resulting in over $1 million or 20.8% savings versus budget.
This savings was achieved over the course of 11 events between the Department of Transportation (DOT) and Information Technology Management Office (ITMO) on behalf of the Department of Motor Vehicles (DMV), Coastal Carolina University, Trident Tech, Midlands Tech, and Department of Natural Resources. A total of seven state organizations have utilized the reverse auction process.
“The State of South Carolina serves as a model for other states by incorporating best practices in purchasing through the reverse auction process”, said Jim Headlee, CEO of eBridge, “We commend State leadership for leveraging technology to be responsible stewards of tax payer dollars.”
The State is scheduled to run several more items this year as well as other city and local government organizations.
About eBridge
Founded in 2002, Louisville-based eBridge provides fully managed business solutions creating efficiencies and streamlining business operations. Leveraging years of experience in purchasing, sourcing and budget management, eBridge Business Solutions’ full suite of services includes purchasing, merchant card management, web based payroll and corporate purchasing cards. For more information, visit: www.ebridgeglobal.com.
Press Contact:
Whitney Headlee
Director of Sales and Marketing
whitney.headlee@ebridgeglobal.com
A city in Oklahoma left the end of their auction on Tuesday thrilled with eBridge’s results. Join the club we say! The items up for purchase were laptops and laptop docking stations. In the auction there were 88 total bids and 33 first place changes and eBridge saved the purchaser 2.71% off the city’s total budgeted price.
In the city’s last purchase of laptops, they paid $4200 per unit and on Tuesday they paid $3300 per unit. That is a 21.4% savings! Even more remarkable, they saved 43.7% from their last purchase of docking stations!
We strive to satisfy the buyers with the highest savings possible but not only are we saving our clients money we offer our top-notch expertise. If you’re interested in letting us sit on your side of the table you know where to find us!
Yesterday eBridge ran a bid for a school district in Illinois and saved them 27% on their budgeted price. Our faithful operations team sourced five copy paper suppliers and four of them bid in the auction. The suppliers bid a total of 99 times and first place changed 27 times.
A neighboring school system put out a bid for copy paper through the traditional paper bid process where suppliers may only submit one bid in order to win the business.
The school system that purchased the copy paper through the paper bid process paid $29.50 per case and our client paid $27.43, which is a savings of 7%. See, the paper bid does have a purpose. Its purpose here was to serve as a reference point.
The real savings is through eBridge and our reverse auctions. Have a great weekend!
Today at eBridge we had a successful bid run for a light-duty rescue truck. A northern city needed to purchase one and eBridge was more than happy to assist. We sourced 12 suppliers to bid, seven of which were new suppliers that had never had the opportunity to earn the city’s business.
Our team of procurement professionals trained each supplier on how the bidding process works and the auction was successful. There were 126 total bids and first place changed 10 times. Since the city chose to run this purchase through the reverse auction format we were able to save them 9.09% off their original budgeted price. We average a savings of 14% but the real goal is to achieve true market value. In this case, true market value was 9.09% below their budgeted price.
Remember eBridge for your light AND heavy-duty needs!
Today at eBridge we ran an auction for wheel loaders. This auction was unique because the purchaser was trading in their two old wheel loaders and purchasing two new ones. In the auction, the supplier bid up the trade-in value for the old wheel loaders’ and bid the new wheel loaders’ price down.
We sourced eight suppliers and there were 142 total bids made. First place turned over 13 times and the winning price came in with 9% savings. We were pleased with the results and look forward to doing business with this purchaser again.
In 2009, eBridge ran a successful auction for a garbage truck for a small city in Oklahoma. This year the city has come back to us to purchase three more trucks. This time they decided to run two separate bids with us; one for the cab and chassis and the other for the trash packer. Six suppliers competed over the packers and four over the cab and chassis. The overall saving generated was 3% and true market value was achieved in both auctions with less than 2% between first and second place.
Here at eBridge we provide a quality “no garbage” process and we would love to run your next purchase through a reverse auction.
In another auction for the DMV the competition was steep for print forms. Three suppliers bid 108 times exchanging first place over 100 times. The auction was extended 102 times further reaching towards the goal of achieving the lowest price possible. When the auction was over the winning bidder came in 5.5% below the purchaser’s budget.
From supplies in your office closet to print forms, eBridge is the answer to your purchasing needs!