Credit Card Processing Question

Is it allowable for a store to combine several separate purchases into a single credit card transaction to save processing fees.

A customer buys a $1.25 item several times a week. Can the store save up those transactions and submit a single transaction to the CC company, or is that a violation of the CC agreement?

Do you give two separate receipts for these purchases?
Is the customer consenting to ONE purchase or two?
If you had two $.63 purchases that he authorized, and you instead charge him one transaction for $1.25, did he in fact authorize the $1.25 transaction?
Could you set up a situation where the customer buys “tokens” to use in your business, or store credit?

I believe this must be disallowed somehow. I would imagine it would save WalMart significant costs to do this. WalMart loves to make their stores as efficient as possible… their charges show up on my credit card activity faster than most other businesses.

I recently bought something at WalMart for $2.79, and then 5 minutes later, another item for $3.22. They show up as separate transactions.

I guess it wouldn’t even technically be feasible. In cases of online card verification and processing, the first purchase would already have been processed when the second one is being made; you’d have to cancel the first one in order to combine it with the second, and I don’t think the card company would play along with that.
Similarly, if the purchase isn’t processed on an electronic terminal linked to a CC company server but with those old-fashioned carbon paper devices that imprint the embossed number on the card to the slip, you’d have two separate slips signed separately by the client. How do you want to merge those without cancelling one process?

The customer wouldn’t like it because it would make it more difficult to check his card bill for fraud. The CC company wouldn’t like it because the customers wouldn’t like it, because the number of wrongly reported frauds would increase, and because they’d lose on commissions. Why should they all agree on that?

Maybe it would help to give an example. Imagine an iTunes-like service (X-Tunes) where people are making lots of small transactions. I think that CC charges are a small fixed-cost plus a percent of the purchase price. X-Tunes could save up the purchases and then submit one CC transaction at the end of the week. The risk to X-Tunes is that the CC info is invalid and they gave out a few tunes that they won’t get paid for. This may be more than made up for by the reduced transaction fees. The consumer would presumambly benefit because the lower costs can be passed on to him (people say that I’m a dreamer). The CC company is getting screwed however.

Interesting question. **DanBlather ** has a good analogy.

In my school, we will quite often open an invoice for a student and hold it for a couple of weeks, allowing them to add things to it. We do that as a convenience for them. Eventually, we close the invoice, have them sign off on it and send it in to the CC company.

We could have done each one of those seperately, I suppose, but I’m going on the theory that the transaction is complete when the customer says it is.

iTunes already does this, I think. Certainly when I buy several songs over the course of a day, I get one receipt (usually a day or so later) with the combined total. I presume it gets billed that way, too.

iTunes already does this. They function as a subscription service, so they bill you every week or so for however many tunes you’ve downloaded.

I don’t think that is the case. Interchange fees - those are the fees the acquirer and issuer charge the merchant - are a percentage of a transaction only. At least if this description of them from Visa can be taken at face value. (link is a small 31K .pdf)

Nice cite, thanks. I learned a lot. The language is a little ambiguous:

Using “includes” seems to imply that there may be other fees as well.

I don’t recall reading anything in our agreement that forbids this.

You may be right, Dan. That is kinda ambiguous. Lemme ask my brother if he knows anything. He’s a VP at a large Northern Michigan credit union which issues branded credit cards as one of their financial products. He’s in charge of loan origination, so credit cards aren’t necessarily his bailiwick (I love that word - bailiwick), but it’s kinda tangential.

Regarding “holding an account open” type charges…

I know that my credit card processor for my Web site affairs, Authorize.Net, gives us the option of simply “running” a card without actually charging it. This process checks to see if the charge would go through if we made a charge at that time.

Also with my card processor…we get charged different % rates on different amounts and different flat fees on different amounts. So say a charge of $100 is “discounted” 2.5% and something under $100 would be charged 2.2%. Something like that.

I also think our batch processes are still charged per-item. Each month I run a batch of 50+ credit card charges and it works out to be the same as if I had 50 different transactions.

Unfortunately I am too lazy to know the specifics. I just revel in the ease-of-use of this system and let them charge me however much they need to. I am a horrible small businessperson :stuck_out_tongue:

It depends on the processing bank where the merchant account is setup, and what the salesman decided to charge.

I used to work in merchant sales for Discover Card (Discover sells terminals to process all major cards, and has banking relationships with v/mc processors allowing us to set up our customers for everything).

We set fees depending on the average ticket. A business with a $100 average ticket would get a fee something like 2.5%. A business with a $3 average ticket would usually get something like 5% + $0.20. We had a lot of leeway to negotiate fees and how they were structured.

So the answer is yes, depending.

:confused: You’d assume the fee was lower percentagewise for higher amounts, no?

No, it’s not. I think it’s because the processing company takes a greater risk with higher amounts.

Ours is a set percentage and if our monthly charges go over $2000 for 3 months in a row, the percentage goes up.

We have a few customers that have Net 30 Day terms with us and they’ll make a few purchases over the course of a month or so and then come in and pay the whole balance off with a credit/debit card. We just run the card and punch in the whole balance they owe us and they sign the slip.

On the rare occasion we have to take a manual imprint of the card, I just itemize the invoice numbers and the amount of each invoice and total it up. When it gets punched into the machine, the total amount is entered and nobody ever even sees the manual imprint unless the charge is disputed.

Oh yeah…we also get charged a higher “discount” if the card isn’t magnetically swiped.