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Education

Manufacturing could businesses to initiate payment of an invoice through Visa
to the selling company. For transactions over $100,000, the
be your next market interchange rate is 0.80% + $35. A marketing piece for Visa
outlines five benefits for the customer to pay through its
STP program:
1. Reduced payment costs (time and printing checks)
2. Improved reconciliation
3. Seamless integration
4. Stronger vendor relationships
5. Greater control on payment timing
By Bill Pirtle To use the Visa STP, the business needs to be set up by
SpotOn Transact LLC the processor. While the STP program may be great for
commercial HVAC companies and roofers with payments
uring this time of planning for recovery from between $1 and $100,000, manufacturers will more likely
the COVID-19 shutdown, ISOs, merchant level benefit from Visa’s Large Purchase Advantage Fee Program,
salespeople (MLSs) and processors should con- as the ranges go from over $10,000 to over $500,000.
D sider focusing on the manufacturing sector,
including auto suppliers and other businesses offering 30 All card-present transactions regardless of amount, and all
to 90 days to pay. card-not-present transactions of $10,000 or less go through
at regular purchasing card rates. Thereafter the rates range
Manufacturers typically face a long lag between the sale between 0.70% + $49.50 for sales of $10,000.01 to $25,000.00
and the payment. To encourage faster payments, they offer and 0.40% + $58.50 for sales over $500,000.
2/10 net 60 (customer can take 2 percent discount if paid
within 10 days or full amount within 60) or 5/15 net 90 (5 Manufacturing companies that allow 60 to 90 days for
percent discount if paid within 15 days or full amount in payments are creating a burden for themselves that some
90 days). But can they afford the 60 to 90 days to get paid will not survive. Payroll and payroll taxes will not wait;
coming out of a shutdown? plus manufacturers still need to buy raw materials to
produce more orders.
Many industries self-finance to avoid paying 3 percent in
card processing fees. But now and post COVID-19, this will Processors offering these programs incur much lower risk,
invite financial problems. Commercial roofers and HVAC as Visa has reduced the possible chargeback reasons to
contractors, for example, can receive over $250,000 on some three for the STP program:
jobs. Manufacturers can have deals with auto companies in
the millions of dollars. 1. Duplicate processing
2. Paid by other means
You may think few processors would want to mess with 3. Late presentment
single transactions ranging from $100,000 to millions
of dollars, but the card brands have Level III processing Understandably, underwriting is cautious. While fewer
to make transactions like these safer for processors by companies focusing on this may allow for higher profits,
entering more data. Because the company enters critical one hit of a $1 million transaction would be brutal. As
data from the purchase order and invoice number to the with the construction industries, manufacturing sales
quantity and part numbers, transactions have much less reps were hit hard by COVID-19. Processors engaging in
risk and thus much lower cost. this vertical should be open to people who represented
the manufacturers, because the good relationships
Companies that can benefit from Level III processing they developed over decades could benefit processors
include commercial service businesses such as paving tremendously.
companies, excavators, crane operators and more. If you are
an MLS, ask your processor if they want Level III business. This is truly a situation in which all parties can win. Pro-
If you own an ISO, find a partner that seeks this type of cessors and MLSs can open an expanding market in con-
business. If you want additional salespeople, seek some of struction and manufacturing. Manufacturers can receive
the many who lost their construction jobs to COVID-19, and income to pay employees and buy materials in days versus
train them to sell. Their connections may help you land months. And buyers can streamline payment process, sav-
more business. ing money and improving their reconciliation.
Two helpful Visa programs
Bill Pirtle authored Credit Card Processing for Sales Agents in 2012
Visa also has two other programs for higher savings and and is working on a second edition. He is currently employed by SpotOn
more security. Straight Through Processing (STP) allows
Transact LLC as a recruiter. He can be reached at billpirtle@gmail.com.
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