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Over the past couple of weeks I have run into many merchants that feel ripped off by their merchant sales representative. Time and time again I hear “I just didn’t know what to ask for.” Like with any other purchase for your business, it is important to learn about your product.

Here is a list of common terms you should know when talking to credit card processing companies:

• Qualified Rate – This is typically the rate you are quoted when you sign up for a merchant account. This rate only applies to swiped regular retail cards. Be sure to ask what your Mid-Qualified and non-Qualified rate will be.
• You may also be charged an Authorization fee. This is the amount charged to a merchant account each time communication happens between the software or point of sale terminal and the authorizing network. Make sure you are not charged an additional transaction fee because the two are the same.
• Your sales agent may refer to Basis Points. Basis points are the percentage that you are charged on a credit card transaction. One basis point is equal to 1/100th of 1 percent. Thus a rate of 1.85% is equivalent to 185 basis points. For some merchants, a basis point mark above Interchange is advantageous. Continue reading "Terms to Know When Shopping for a Merchant Account"

Viruses come in all different forms, from the common cold to life threatening plagues. Computers are no different. Hackers try to break into banks at least once a day. RSA, a security division of EMC, is a premier provider of security solutions for Fortune 500 companies. Since February 2006, RSA has been tracking the Windows Sinowal Trojan. This virus has single handedly stolen the details of over 500,000 online bank accounts and credit and debit cards. This Trojan Virus installs itself on a user’s computer and steals all the information. RSA says “Sinowal Trojan is one of the most advanced pieces of crimeware ever created.”

More than 240,000 credit and debit cards have been compromised. This affects ecommerce businesses every day, as well as banking institutions all over the world. Most companies think they are safe because they have anti-virus software, but just having anti-virus software many not help stop this virus. The Sinowal virus uses a method known as “drive-by downloads.” Users can get infected without knowing if they visit a website that has been setup with the Sinowal code. Common websites include community sites such as Facebook or Myspace. Do you know what websites your employees are visiting? It only takes one person surfing the web. This virus has been around for over two years, and is maintained by a group of obviously very savvy hackers who would have had to create a very solid infrastructure to house the mass information collected. The software is hard to catch because new variations are constantly released.

Continue reading "The Sinowal Trojan Still Plagues Our Systems"

Most people don’t distinguish a difference between Visa and MasterCard – both are champions going head to head in a fight to see which plastic is going to be in your wallet. As far as the average person is concerned, the two cards are identical. In most other industries when you have two similar companies, they typically have some different products. Let’s sound the bell and let the battle begin.

Both companies have a lot going for them.  They are (even in today’s economy) considered to be excellent stocks with prospects of a bright future. They have an excellent product in a world moving to cashless options. Visa has gotten a great deal of attention because of its IPO earlier this year. It is my opinion that both companies have exploded from their respective IPOs, but MasterCard still remains the more stable bet.

Here are some things to consider:

Continue reading "Visa or MasterCard – Who’s Stronger?"

We have seen the contactless functionality pop up in many stores over the last few years. You have probably seen the popular commercial where people are walking in an efficient circle, taping their card onto a contactless device, until one guy pulls out cash and the whole line comes to a screeching halt. Contactless payment systems are credit cards that have a device using a Radio Frequency Identifier (RFID) to make a secure payment. The consumer is able to wave their card over a reader at the consumer location to make their purchase. There is typically no signature required for purchases under $25.00.

Although many large retail chains such as Regal Cinemas and McDonalds have the technology available, the process has been put under a great deal of scrutiny because it is said to be more susceptible to identity theft and other types of fraudulent activity. The devices are easily hacked using a wireless frequency. Regardless of the security risks, all the major credit card companies were ready to get their piece of the action. In July of 2005, AMEX launched ExpressPay, which was quickly ditched because of a lack of response by consumers. The Discover Network released its Zip technology, Visa Inc released payWave, and MasterCard has PayPass.

Continue reading "The Evolution of Contactless Technology"

Most businesses seem to think that an old fashioned knuckle buster is not needed. Most merchants don’t want to purchase a manual imprinter, but this decision can end up costing them more in the long run. There are situations in which an imprint of the card is required.

One example of such relates to non-swiped transactions. Manually keyed transactions typically occur when the magnetic reader on the card doesn’t work or if an order is taken over the telephone. Visa and MasterCard regulations require that a manual imprint of the card be taken whenever possible and that the cardholder signs the imprint. This will provide proof that the card was present during the time of sale or delivery.

Another example would be if there was an equipment failure. When this occurs, a manual imprint and voice authorization is required. During a voice authorization a transaction will be entered into the terminal as a “post authorization” with the 10-digit authorization number keyed, and the funds are reserved for 10 days.  If the transaction is never keyed into the terminal, then the transaction will never be processed. Again, keeping the signed manual imprint is your proof that the customer was present at the time of the sale.

Getting an imprint of the credit card in the above situation would assist greatly in the event of a dispute or a chargeback. Visa requires that merchants keep all sales receipts for up three years and MasterCard requires you to keep receipts for 180 days. When a Retrieval Request occurs, your sales imprint will come in handy. A Retrieval Request is when the cardholder’s bank requests a copy of your sales draft. If you obtained an imprint of the card, you will be better prepared. So next time you are asked if you need an old fashioned knuckle buster, your answer should be yes.

It is amazing to me how many different sized businesses still do not accept credit cards as a form of payment, and do not know about other value added products. Many business owners I have talked to that do not accept credit cards at their business seem to have the same two objections. The first reason is that the fees are too expensive, causing it to not be cost effective for them. The second reason is that no one has ever asked them to pay with a card. Although we may find the later objection odd in today’s world, where everyone seems to pay with a credit card, it is frequent in the landscaping, IT, delivery, home based businesses and many more.

Credit card acceptance has been said to add many different benefits to a business. Most business owners report large increases in profits when they begin accepting credit cards. Credit cards allow customers to make a purchase, despite a shortage of cash.

Services businesses, such as IT professionals, will see a large decrease in the number of past due accounts. It is also historically true that people will even spend more because they don’t have to part with cash. It is less expensive for you to accept a $50.00 payment by credit card, than the costs of labor, supplies and postage required to mail an invoice.

Continue reading "How Can Accepting Credit Cards Benefit A Business?"

The credit card companies have been hard at work coming up with programs to entice consumers to spend more and travel more this holiday season. With the uncertain economy, shoppers are holding on to every penny and looking for the best deal possible. It’s no wonder that the credit card companies and banks have begun to turn to value-added solutions, and laying the marketing on pretty thick.

MasterCard has teamed up with American Airlines to launch “Travel Concierge Sweepstakes.”  Visiting their site during the sweepstakes and using the concierge to book airfare, hotels and car rentals gives customers multiple chances to win several different prizes. You can earn $50,000 in MasterCard gift cards or $25,000 in American Airlines gift cards as well as many other great prizes.

Continue reading "What Will The Credit Card Companies Do To Spark Spending?"

Banks are becoming more leery to issuing credit cards. The alternative is to issue debit cards so that there are no default payments. Although this is good in the short term, they also eliminate a huge stream of income by not being able to collect interest.

Many people are trying to avoid using credit cards by turning to debit cards instead.  Some banks have turned to prepaid programs tapping into the unbanked markets – the millions of people who don’t have a bank or credit card account – and some employers are turning to employee payroll debit cards. Employees have their paychecks deposited onto a card which they use for all their purchases to try to avoid debt. According to The Nilson Report, debit purchases are expected to climb 13% in 2008, to $1.2 trillion. According to Visa, debit spending could surpass credit this year.

Continue reading "Are Debit Cards Outweighing Credit Cards?"

Thus far, it seemed the credit card processing industry was impervious to market conditions. But it seems that streak has come to an end when it comes to credit card giant American Express. American Express announced today that it will lay off 7,000 workers, or 10% of their headcount. American Express is also putting a freeze on management salary increases, and have cut their entertainment expenses.

Income has dropped 8.7%, the biggest drop since 1947, and Americans have slowed down spending on everything from cars to appliances. American Express typically charges absorbent fees to merchants to begin with – in some cases double and triple that of Discover, Visa, or MasterCard. So how can they be in trouble?

Continue reading "American Express Is Hit Hard By the Economy"