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According to MasterCard’s presentation at the Goldman Sachs US Financial Services Conference on Dec 8, retail sales are showing positive signs – relative to payment cards.  They cited November as the third consecutive month of growth since July, 2008.  They attributed the growth to changes in consumer attitudes.  Consumers are focusing more on quality and value, have more control over finances and have become more frugal, which is a shift back to traditional roots of credit card use.  When the first payment card, Diners Club, was introduced in 1950, members had to pay off their balances each month.  There was no such thing as revolving credit.  Today, consumers are still using credit, but more responsibly. Continue reading "What Card Payment Usage is Telling Us"

With the threats to data security in e-commerce, web application security should be the on the top of the list of concerns for any merchant. If a survey conducted by the Open Web Application Security Project (OWASP) is any example, organizations and merchants are only responding to security threats when they should be testing the secure coding of all web applications accepting electronic payments.

The Open Web Application Security Project (OWASP) was created to help improve the security of application software. The project, whose online home is a wiki site, is a forum community open to anyone and its primary mission is to promote the visibility of web application security. The project also exists to aid organizations in making educated decisions about the security risks of web applications.

Continue reading "How Secure Is Your Web Application?"

Most merchants like to think they are savvy when it comes to shopping for a merchant account. I mean how hard can it be, you just look at the rate, find the cheapest one and sign up, right? It is no wonder that many merchants feel taken advantage of by their processor and angry with their sales representative. Many sales agents are not educated on what to ask merchant service providers, and it may be up to you to provide them with the appropriate questions.

Here are some tips to ensure your account is set up correctly:

Continue reading "What to Know When Opening a Merchant Account"

Online shopping is at an all time high. According to The Nielsen Report, over 875 million consumers have shopped online. This is up 40% in the last two years. The most purchased items are books, clothes, accessories, video games, airline tickets and electronic equipment. While 2008 holiday purchases at retail locations were down 5 percent, shopping on the internet was up 15 percent, on Cyber Monday alone. If your business is not online you are missing out on huge potential profits.

Once your business is online and your shopping cart has been built, you have to select a payment gateway. Many merchants select their payment gateway based on what their merchant services provider tells them. There are hundreds of payment gateway options out there, and not all of them measure up.

A gateway facilitates your online payments by connecting your secure order from your merchant account to a processing bank. Something as important as the transfer of money should take some research. When selecting a gateway, consider available features, reliability, and support.

Continue reading "Does Your Payment Gateway Measure Up?"

When starting a new business, most merchants generally focus on the features of their cart and how the website itself looks. We pick our colors and how much items cost. We look for how the customer will enter their order, or how we will track shipping. The most important consideration is: When customers buy your product, how do they pay you?

There are many different shopping cart options for people to choose. Every online business is different, and shopping carts are customized to fit your business needs.

First, when looking for your business’s shopping cart, it is important to know what features you would like it to accommodate. Most shopping carts can total orders, calculate tax and shipping costs, and transmit information via a payment gateway to process a sale.

Continue reading "Is One Shopping Cart Better Than Another?"

Many merchants violate the credit card companies’ rules and don’t even know it. Most stores don’t have any procedural information about how to process a credit card sale as part of their employee training other than hitting the “sale” button, and why should they? Are there any consequences?

I am continually shocked by the number of Visa and MasterCard violations made by merchants I shop with a daily basis.

Here are a few mistakes I’ve personally witnessed merchants make:

Continue reading "How Do Merchants Violate Visa and MasterCard Rules?"

I belong to a networking group and have been told multiple times my monthly dues need to be paid and I have to remember to bring a check. For those who refuse to adopt current forms of payment, there are ways that people can still pay by check but do so electronically. This process is called e-check and is facilitated by a process called ACH (Automated Clearing House).

ACH is only used in the United States and Puerto Rico. Similar systems exist in other countries but they have different names and run on separate networks.

Many articles say this is a safer way of taking checks because you don’t have to worry about looking for forged or counterfeit checks. But one thing I learned the hard way is, if you are a merchant and you are using the ACH process you may be in for a huge run around if you have a chargeback. An ACH chargeback does not occur in the same way that a credit card chargeback occurs. A merchant’s bank account can be debited as soon as the consumer reports to their bank that they did not authorize the transaction. The difference is the merchant will not receive a letter requesting proof of the transaction before, or after, the debit occurs. Instead, the merchant will have to dispute the charge with the customer’s issuing bank directly. You may find yourself spending hours on the phone between the gateway, merchant services provider and the customer’s bank.

Continue reading "ACH Processing: Replacing Check Writing?"

With 80% of online shoppers using credit cards, you can’t afford NOT to take credit cards. Did you know that merchants offering credit cards as a payment option increase their profitability by estimated 50%? With the inherent advantages involving credit card processing, should you really go with your initial instinct and choose the cheapest option?

Let’s face it – we all strive to have that BMW as opposed to a Dodge Neon, and even shop around for the best appliances. Knowing this, have you ever stopped to wonder why we, as business owners, opt for the lowest bidding credit card processor for something as important as our business?

As with other products, cheaper does not necessarily equate to better. How about reliability? If your customers are charged the wrong amount, or transactions are declined due to an unreliable or inaccurate gateway, who do you think they will blame? That’s right, YOU! Consider this – is the money you’re saving using the cheapest solution worth the cost of losing future business?

Let me share with you this example, a few weeks ago, a merchant was having trouble getting cards approved on his website. He then had his funds held by his processor. His merchant services provider told him it was his gateway and conversely, the gateway provider told him it was his merchant services provider. Needless to say, this merchant chose his provider based on the lowest bid, and what he got as far as service and reliability was a whole lot of finger-pointing and denial of liability.

I’m sure as business owners you are bombarded with calls and mailers from merchant services companies on a daily basis claiming their fees are the lowest. Fees for merchant services are an unfortunate reality, irrespective of the processor you choose, so it is important to choose the right company to partner up with. Here are some things you should know when deciding on a merchant services provider:

• Make sure whatever gateway you choose is compatible with your shopping cart software.
• Rates and fees are determined by many factors: length of time in business, percentage of sales made over the phone or the internet, type of business, personal credit rating, and dollar amount of sales per month. A typical rate should be about 2.30% to 3.5%, but some companies charge as high as 6%. Poor personal credit or business type may warrant a much higher rate.
• Do not agree to a high discount unless you are sure no other company will process your charges for lower.
• Be sure to ask about all fees involved such as Gateway fees, ACH fees, monthly minimums, Address Verification Fees, transaction fees and statement fees.
• Read all agreements closely to determine the circumstances for which your money can be put on hold.
• Find out if there will be a hold or reserve on your account. If so, how much with be held and how long will it be held for?
• What types of fraud and risk monitoring does the processor and gateway provide?
• Who do you call when you have questions? For instance, a processor offering its own gateway is a better choice since there will be fewer support calls to make in the event of service interruption.

In my experience in this business, I have come across numerous merchants that got exactly what they paid for – very little.

Take my advice, do your homework and don’t settle for the lowest bidder.

I frequently get calls from merchants who say they were quoted one rate, but claim different rates are showing up on their statements. Unfortunately, merchants can experience a rate increase or surcharge because of the type of card your customers are using, such as sky miles cards and rewards cards. Another cause of increased processing costs is transactions being processed incorrectly by the merchant. How can merchants avoid being charged these surcharges and still qualify for the best rate possible?

First, it is important to understand the different types of transactions that can occur when running a credit card sale:

Continue reading "What are Non-Qualified Transactions and How Can Merchants Avoid Them?"