Store and Forward Merchant Account

A store and forward merchant account is not actually a specific type of merchant account by itself. The term "store and forward" refers to the way a credit card is processed using special equipment.

Store and Forward Explained

"Store and forward" refers to the process of using a special credit card machine to store a swiped credit card transaction in order to electronically send the data to a processor a later time.

Special credit card machines are able to store credit card information within their memory so that it may be sent to the processor once there is access to a telephone line or wireless signal.

Credit card machines that are able to store and forward also have built-in printers making it possible to swipe a customer's credit card and provide them with a receipt.

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Positives and Negatives

Positive Aspects of Utilizing Store and Forward:

Low Rates and Fees - Store and forward technology makes it possible to obtain an electronic data capture without having to utilize a more expensive wireless merchant account. In most cases, processing credit card s with store and forward technology will allow you to qualify for the same low rates offered for a retail merchant account.

Lower Equipment Costs - The only other way to acquire a retail swipe rate while mobile would be to utilize some sort of wireless merchant account. Although great for some businesses, wireless merchant accounts can be cost-prohibitive for new business because of the high prices of wireless credit card machines. Credit card machines that are capable of store and forward are often half the cost of a wireless credit card machine.

Professionalism - Store and forward credit card terminals have built-in thermal printers allowing a merchant to swipe a credit card and provide the customer with a receipt all without access to a phone line or (with some terminals) a power source. Using this sort of technology gives a professional appearance to any business.

Negative Aspects of Utilizing Store and Forward:

Inability to Obtain a Real-Time Authorization - Store and forward technology does not give you the ability to tell whether or not a credit card is good or bad the second you swipe it. You will not know if the transaction was good until you have access to a phone line making it possible to transmit the transaction information to the processor. The inability to obtain a real-time authorization is the main downfall of utilizing store and forward technology to process credit cards.

Many merchant who use store and forward to process their transactions will perform a voice-authorization if they are uncertain about the validity of a transaction, or if the transaction if for a large sum of money.

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Rates and Fees

Store and forward merchant accounts are often given the same low rates and fees as a retail merchant account or wireless merchant account.

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Usage and Popular Business Types

Generally, store and forward processing is used by businesses that have a need for portability, have a low occurrence of declined transactions, have repeat dealings with the same customer, have a lot of repeat customers, and for businesses where store and forward is more cost-effective than wireless processing.

Tradespeople - Store and forward processing is often ideal for tradespeople. Businesses that deal with renovation, construction, decorating, interior design, etc. are perfect candidates for store and forward processing. The nature of their business often requires repeat contact with the same customer making a declined transaction a minor inconvenience instead of a financial burden. These business types also tend to have a high average ticket making the low retail rates associated with store and forward very appealing.

Craft Businesses/Home parties - Crafters and home-party businesses often consider store and forward as an option. However, these businesses like this have to use a little more caution because they often have only a single contact with their customer and would have no chance to recoup losses if a transaction were to be declined. Lower retail rates and lower monthly fees make store and forward a good alternative to Mail order telephone order merchant accounts or wireless merchant accounts if the risk is supported by the savings.

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Compared to Other Merchant Accounts

In order to ascertain if store and forward processing is the right fit for your business you must weight the options available. Any business that has a need for store and forward processing also has a need for portability. The four types of merchant accounts (aside from store and forward) that are able to meet this need are wireless merchant accounts, touchtone telephone merchant accounts, and MO/TO merchant accounts. These accounts each operate differently and have their respective rates and fees that should be compared to store and forward. The main points of each account has been compared to store and forward below.

When Compared to Wireless Merchant Accounts -

• Same low discount rate and per transaction fee
• Store and forward will not have a monthly wireless fee
• Wireless terminals will require a larger up-front investment
• Store and forward does not provide a real-time authorization where wireless does
• Wireless terminals will not always have coverage. When they do not have coverage most will utilize a store and forward system negating the ability to obtain real-time authorizations

When Compared to Touchtone Telephone Merchant Accounts -

• Store and forward will have a considerably lower discount rate and per transaction fee
• Merchant account statement fee for each account is usually the same, where merchant account monthly minimum fees may be higher for touchtone
• Store and forward does not provide a real-time authorization where touchtone telephone processing does
• Touchtone telephone processing relies on cellular service and there will not always be coverage available. When coverage is not available a touchtone merchant would have to save transactions for later processing making a real-time authorization impossible.

When Compared to MO/TO Merchant Accounts -

• Store and forward will have a considerably lower discount rate and per transaction fee
• Statement fee for each account is usually the same, where monthly minimum fees may be higher for MO/TO accounts
• Neither account provides a real-time authorization when away from a telephone line

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Comparative Cost-Effectiveness

Store and forward processing may be cost-prohibitive for businesses that have a high occurrence of declined cards, or those that have high average tickets. In order to ascertain if store and forward will be cost effective for your business when compared to other merchant accounts consider the following points.

Likelihood of Declined Transactions - Store and forward will not provide you with a real-time authorization making it possible for some sales to be lost. The true cost of a declined transaction is your cost of goods sold (COGS) associated with that sale. Do your best to estimate the likelihood of a declined transactions on a monthly basis and multiply that figure by the COGS of an average sale (monthly declined transactions X COGS of an average sale = Store and forward expense or SAFE). This equation will give you an idea of what it will cost in lost declined transactions if you were to utilize store and forward instead of another merchant account.

When comparing store and forward to other merchant accounts to determine the cost-effectiveness of each account, remember to consider the SAFE as a monthly charge associated with store and forward processing.

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Equipment

As the demand for store and forward continues to grow more credit card machine manufacturers will begin to build to store and forward technology into their terminals. Currently, Lipman commands the vast majority of the store and forward market. Lipman also manufactures wireless terminals that are able to store transactions when cellular service or a phone line is not available and forward the transaction at a later time.

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