Accepting credit cards is crucial for any merchant but the obvious downside of this are the associated credit card processing fees which can amount to significant chunks of change. Usually fees range anywhere between 2 percent and 4 percent. Startup TransFS is hoping to help businesses sort through this issue by offering a comparison shopping website for credit card processing fees.
On TransFS, businesses submit information about their transactions including the percentage of online, in-store, mail-order and phone transactions; the merchant’s current credit-card processing fees; and monthly volume of sales and average transaction size. This is all variable information used by processing firms when determining fees for a particular merchant.
Once a merchant submit the form, their “auction” will begin. They will be presented with a series of competing bids from credit card processing companies and can review each proposal and select the bid that saves the most money. Bids are presented side by side to help users compare offers more easily and TransFS will also show businesses how much they will save vs. the fees associated with their existing credit card processing service. It’s a fairly simple and transparent process.
TransFS says that from the data collected from beta testers, their comparison engine can save businesses and average of 40 percent from their credit card processing. Another comforting feature is that TransFS vets all bidders in the site to make sure the the companies can put the money where their mouth is, so to speak.
The engine is completely free to the business or merchant and generates a small revenue from the processors if, and only if, a business chooses a new processor. And TransFS won’t pass on any merchant contact info to the bidders on the site until the business chooses a winning bidder (at which point the site only passes the info on to the winning bidder), assures TransFS’s co-founder and COO Eric Olsen.
Olsen says that TransFS will eventually extend its comparison shopping engine functionality to help companies compare employee health insurance fees, payroll processing, and property insurance. TransFS faces competition from lead-gen sites like BuyerZone.
Thank you for the article. The first two links are a little messed up though.
This is a great idea. In the past, I ran a seasonal online business with over $600k in credit card receipts over a 3mo period every year. We used BuyerZone, only to receive lots of uninformative sales calls (rather than clear written proposals) with obscure and unpredictable fee structure.
What you really need is a true domain expert. The biggest hassle of this industry is that few merchant accounts will guarantee the amount of fees you will pay *exactly*, as these vary depending on the type of cards used. For instance we had customers using corporate AMEX or government issued credit cards and the rates could increase for those.
If only there was a website where you could sign up with a merchant, and then reconcile all the data to see how much you pay in practice (ala Mint), given the type of customers/transaction you have, then you would have a really solid decision making tool.
Right on John. You hit the nail on the head. Finding and comparing merchant accounts is a huge headache for businesses. We saw it first hand with our other businesses and that is why we built TransFS.
Other sites have tried to address the problem with standard lead gen models but that tends to increase the headache for merchants. That is why we allow businesses to remain anonymous until they find a processor they want to work with. At that point we hook the business and processor up to finish the deal.
We do the comparing in apples to apples format, you choose and then you talk to one processor (and one processor only) who is contracted by us to follow a number of rules that make them clear, transparent and merchant friendly.
Cheers,
Eric
Co-founder: TransFS.com
If you are a small business just starting out, it is best not to worry about it and go with Amazon or Paypal. With the brick and mortar side, just go with the best ISO/MSP you can find. Use your bank’s partner.
Once you’ve established your business*, you can take a negotiating position and there’s a leg to stand on. With cash on hand, you have some leverage; it is exactly as you would expect.
*$10,000 per month in revenue is what you need to begin negotiations, in my experience
Good point “coldbrew.” That said, TransFS actually does give new merchants negotiating leverage by allowing processors to bid for the business. We have found quite a few new merchants a great deal (one that was significantly better than paypal or their local bank’s partner – those are usually a couple of the most expensive options for a new business actually).
However, if TransFS didn’t exist I think you would be correct in your assessment of what a new merchant should do.
Cheers,
Eric Olson
Co-founder: TransFS.com
Thank you so much for the thorough post Leena. Now a lot more businesses will be able to save some serious cash on their credit card processing.
Cheers,
Eric Olson
Co-founder: TransFS.com
This is by FAR the best business idea i’ve ever read on TC
I’m locked into a contract currently, but when it expires I will definitely give this a shot at finding a new processor.
There really need to be more selling engines like this out there. I’d love to see reverse auctions for all kinds of goods and services.
Hey Johnny,
Contract lock-in is tough for merchants. For that reason we don’t allow any credit card processors that bid on our site to have cancellation fees in their contracts.
I am happy you are going to give us a go once you can get out of your contract. In the meantime if I can be helpful please feel free to reach out.
Cheers,
Eric Olson
Co-founder: TransFS.com
We in the middle of the process in using TransFS, and so far it’s been excellent. Fairly easy to operate and understand, and apparently effective – the winning vendor sent us their normal (non TransFS) contract by mistake, and I can tell you there were significant savings going through TransFS.
They’re also good guys, very quick to respond to emails, and do a nice job of following up.
We in the middle of the process in using TransFS, and so far it’s been excellent. Fairly easy to operate and understand, and apparently effective – the winning vendor sent us their normal (non TransFS) contract by mistake, and I can tell you there were significant savings going through TransFS.
They’re also good guys, very quick to respond to emails, and do a nice job of following up.
My web company was getting reamed with bizarre credit card processing fees.
We were quoted one rate by our original processor. From there, it was a moving target. On certain “non-qualifying” cards, it went as high as 4.5%.
We know Sean at TransFS and he convinced us that we should give it a try. I was shocked the next time we received our processing statement.
The rates have been consistently low since then. I find that come the end of the month I’m not freaked out about what percent of our transactions were getting dinged at some outrageous rate.
Good stuff.
Congrats, Eric! This sounds great. Credit card processing fees are a major hassle and point of confusion for us online merchants, especially when working with brick and mortar customers. I look forward to seeing how this service shapes up.
There is more to cards than just the processing % fee. I’d rather pay a little bit more for a quality processor, than some of the shitty companies that will then end up screwing you over on other things.
I mean hell, look at that screen shot, 2 of the companies don’t even have a 1-800 #. Looks like a site that will attract only the bottom feeders, who’ll end up with a crappy experience.
Hey Alex,
You make a very valid point and one that we agree with 110%. I think you will find that the processors we choose to work with (and we do choose, and are also very picky about, who we work with) are top quality. The processors that we work with are ones who care about providing good service and about being ethical and transparent. The fact that we don’t list their 800 number may mean that we just haven’t added it into the system.
Another thing to note on this issue is that we significantly lower the cost of customer acquisition for processors that work with us. This means that even though they price lower with us, they actually do very well.
You don’t have to take my word for it though. You are more than welcome to talk to our customers (just email me if you would like to) and also to research the processors we work with to see how outfits like the BBB rate them (you can even do that on the credit card processing directory we provide on our site).
Thanks for the comment and I hope you will give us a shot to prove ourselves.
Cheers,
Eric Olson
Co-founder: TransFS.com
To add to Eric’s point, we only deal with top-quality processors and put them through an intense screening process.
Additionally, we require that the processor assign a relationship manager (RM) dedicated to serving TransFS customers. On the bid listing page, where possible, we put the RMs direct phone number (which isn’t always an 800 #). Of course all the processors also have a 24-hour call center.
If you look into the reputation of the firms where there isn’t an 800 number listed you will find that they are very well-regarded.
We will be rolling out over the next couple months a bunch of features that help evaluate the reputation of cc processors (even of processors that don’t participate in TransFS).
You’re right, though, we should list both the RMs direct line and the main number.
Eric, fantastic idea- coming from biz this was needed long ago. I have not looked at site but suggest having a few, independent experts to comment on questions as there are many. Additionally, what if these experts, for maybe a small fee assisted in choosing best option. As said above, just because you have lower fees does not mean you will get the service you need.
The add ons, variable names everyone uses, different type of cards, Intl, Travel, Rewards, Purchasing all have varying levels of fees. Needs a merchant processing 101 class to explain.
Anyway, great idea-
Thanks for the kudos, Dave. I really like your idea of having some TransFS experts on staff to answer questions for users. We will give that some serious thought. If you have any more ideas or just want to chat further, shoot me an email.
Cheers,
Eric
Eric,
I don’t know your background or history in the electronic payments industry, but I commend you on your efforts with your new venture.
EPI & owner Mike N. well let’s just say he’s a kid running a company that only cares about one thing like most processors and that’s residual revenue and how to get it.
I think in the long run your business model will fail because ultimately these 3rd party processors will dissappoint you and your agreements by screwing with the merchants—-GUILTY BY ASSOCIATION!
This industry will eventually get new reform and then all of us will see relief at the point of sale, from owners then hopefully consumers.
Sad thing is this industry relies on the ISO’s, ISA’s, MSP’s, MLS’s..etc to build it’s portfilios and most get sub par training then go out and mislead our business communities and then they get out, leaving a very frustrated business owner.
In closing: How many basis points do you see in backend residual revenue from these processors you have partnered with? These processors will have to calcualte what their referral kickback cost is to your company for the partnership.
This is a great idea, because you carry no liability and simply just broker this referral connection via online bidding, and collect a direct fee from the 3rd party processor and probably a small residual kickback.
Everyone could achieve pricing equality in this industry regardless of size and volume, it’s just the industry business model has never and probably will never support it.
Thank you for your thoughts, Richard. You do make some good points about the issues with the payments industry (and the screwed up value chain). Points that we agree with. I do think you underestimate the agreements with have with the processors that bid on our system and the value we bring them in terms of much lower customer acquisition costs. If you would like to continue the conversation via email I would be open to that. We always enjoy receiving feedback since it helps us to refine and better our business.
Cheers,
Eric Olson
Co-founder: TransFS.com
This is definitely a step in the right direction. Pretty cool presentation. These types of sites are starting to pop-up quite a bit. I tried your site and another new one, http://www.paymentsrus.com. I liked your auction approach, but can’t figure out if the “best deal” is still too high. I also didn’t want to send my statement (which was optional) without knowing who would see them. With paymentsrus, you also can get 3 or 4 “high” bids, although they provide content that gives you an idea of what range you should pay. The processors may ask you for your statements, though. Still, both your sites go a long way in helping sort through a sea of payment processors and sales types. Finding a good, honest one is hard.
I agree Micky, there are a lot of unknown factors which affect rates such as refunds, chargebacks, etc for credit card processing (and even personal credit in some instances). This model is really cool but I could see a lot of bait and switch type stuff happening here.
Agreed, Micky. Thank you so much for your feedback. Re: the statements. We are the only ones who see them and we simply use them to show you what your savings would be from your current processor. Without the statements all we can do is tell you how much each processor will cost you (which is nice but it doesn’t help you compare as easily).
@ Adam: We prevent bait and switch issues by contracting any processors who bid on our site to follow certain rules and guidelines. This way TransFS always has your back. If you want to know the details of these rules and guidelines just send me an email.
Cheers,
Eric
Is anyone who doesn’t work for TransFS commenting on this article? I’ve seen less annoying infomercials on late-night TV…
Are you US only, or do you service Australia?
I searched your site for something indicating this (including the FAQ) but could find nothing….
We are U.S. only at the moment and we absolutely should add that into our FAQ. Thank you for the heads up!
Cheers,
Eric
We are a satisified customer of Trans FS. We went through the auction process and are very happy. Ironically, our processor at the time bid for our business at a better rate than we were getting at the time. Goes to show the leverage gained via this process.
It’s surprising to me that they’re only starting to get more PR traction right now. Small businesses like mine have left a lot of money on the table over the years. The processors make their bills so tedious that most accounting departments just throw up their hands and pay the bill.
Thanks for the kudos, Tom. I am glad you liked our service. We’re working on getting more exposure for TransFS but the story isn’t necessarily sexy (it’s no twitter). If you have any ideas for good press opportunities I am all ears. In the meantime, if I/we can be of any further assistance please let me know.