This spring, U.S. Representatives Peter Welch (D-VT) and Bill Shuster (R-PA), introduced HR 2382, the Credit Card Interchange Fees Act of 2009.  Welch, the bill’s author, states that “credit card fees are killing small businesses.”  The act, targeted to help small retailers, would limit the fees charged to merchants.  It would also prohibit charging higher fees to merchants when customers use reward cards and would give the Federal Trade Commission the right to review interchange fees. Continue reading "Interchange Fee Legislation – Who Will Pay The Price?"

As a follow-on to my blog about alternative payments, it looks like one big player is either afraid of the competition – or maybe it is simply making smart business decisions.

Announced yesterday was American Express’ deal to purchase Revolution Money, launched by AOL Co-founder Steve Case’s Revolution LLC in 2007. Continue reading "American Express Acquires Revolution Money"

“Minimum Credit Card Purchase is $10″.  If you have seen a sign like this at a retail store, you are not alone.  No matter what the sign says, if a merchant accepts credit or debit cards, you are allowed to use any card they accept for a purchase of any amount.  Merchants cannot, in any case, impose minimum or maximum purchase amounts for card payments.  Those who try to pull this off think they are being smart by avoiding merchant fees on small dollar items that may already have a thin profit margin.  What they don’t realize (or they do and think the customer will be naïve) is that they are in violation of card association operating guidelines.  They can also anger customers who must purchase more in order to pay by card. Continue reading "Want to Pay by Credit Card? Minimum Purchase $10."

The latest news about Heartland Payment Systems’ 2008 security breach revealed some alarming, yet important, issues about the reporting of breaches and responsibility of the players involved in data security.

Heartland’s 2008 data breach is supposedly the largest breach of that year, but not the only one hit by the same hacker. According to Bob Carr, CEO of Heartland, most of the companies affected did not come forward. However, news articles are blasting Heartland for not reporting the 2008 breach earlier so customers and merchants could take action and precautions. While the Department of Justice has been successful in capturing individuals behind the recent data breaches, this should be a strong sign to any company involved with sensitive data that they should be stepping up efforts in the prevention of data loss.

Continue reading "Data Security: Who is Responsible?"

All applications for a merchant account go through an underwriting process to gauge the level of risk for that particular business and business type. Some of these processors are directly affiliated with the member bank and in some cases owned by the member bank. All of these processors must be “registered” as an Independent Sales Office (or ISO) with a member or acquiring bank. Member Banks need ISO’s in order to generate and approve as many merchant accounts as possible. The Payment Card Industry strictly monitors activity at all levels in order to provide retailers and their customers the highest level of privacy and security.

The Independent Sales Office, or ISO, is not only focused on generating merchant accounts for the Processor they are registered with, but are responsible for maintaining their relationships with the merchants that are accepting and processing credit cards through them. An ISO can be anywhere is size from a few people to hundreds and can offer everything from merchant accounts and customer service to technical support and credit card terminals.

Continue reading "What is an ISO and How Does it Affect Merchant Accounts?"

One would be hard pressed to find anyone in the United States or around the world that doesn’t have at least one credit card in their wallet. Whether you have one or ten credit cards, chances are you have used it to purchase something recently. I can only speak for myself, but I am still amazed (and sometimes annoyed) when I go to pay for something with my credit card just to be told “We don’t accept credit cards” or “Sorry cash only.” The first words out of my mouth are always “Why don’t you accept credit cards?” and I have noticed time and time again that the reasons these merchants give never make any sense to me.

The majority of merchants seem to have no idea just how beneficial accepting credit cards can be for their business. If they just took a little time to learn how the Payment Card Industry works, I am sure I would hear a lot fewer negative comments. There is a common misperception that accepting credit cards or opening a merchant account is expensive, time consuming and just not really worth it. For every merchant that has turned away a paying customer because they wanted to pay with a credit card I ask, “Can you afford not to take credit cards?” More often than not I find myself spending some time with the merchant to let them know what the benefits to their business could be and also explaining the simple process of getting a merchant account.

Continue reading "Merchant Accounts and the Payment Card Industry (PCI)"

Not all credit cards are the same. No I don’t mean they are different colors, or have different designs on them. Different card issuers have cards types of cards. So how do people know they are picking the right credit card? There are cards that have rewards programs, cards with low interest rates, cards for people that have bad credit and cards for people with special needs.

The first thing that most look for in a credit card is the interest rate. Cards may have a low introductory rate and offer great rates on balance transfers, but these may be nothing more than teaser rates. Reading the fine print can save some from paying as high as a 30 percent APR. Look in the fine print for the variable rate or how high the rate will go after the introductory period.

Continue reading "What Distinguishes One Credit Card from Another?"

In 2005, a credit card giant was brought down by a massive security breach. It was said that at least 68,000 MasterCard account numbers were taken from the CardSystems database and that approximately 40 million cards of various brands were exposed. Since this breach, we have implemented PCI DSS and have come a long way in fighting these types of security breaches…or so we thought.

On Tuesday January 20^th, 2009 Heartland Payment Systems, a New Jersey based payment processor, disclosed that they had been hacked. Heartland Payment Systems processes about 100 million transactions a month for over 250,000 merchants. Although Heartland has not released numbers on how many card numbers have been compromised, it has been said that this breach will set a historic record. A breach of this magnitude will no doubt create a surge in fraudulent transactions all across a wide range of ecommerce sites and affect online purchases for a long time.

Continue reading "Heartland Security Breach Shakes the Card Processing Industry"

As if there is not enough controversy over Interchange Rates charged to merchants, we now have to deal with consumer credit card interest rates increasing drastically without notice. Some consumer spending experts say this may hinder spending even more this holiday season. What is our government doing to fix the issue?

Federal regulators jumped into action and passed laws to protect consumers from increased interest rates on existing account balances. Government rules seem to run at a snail’s pace as these laws will not take effect until July 1^st 2010; that’s a lot of money in the banks’ pockets in the interim. Millions of card holders will get raked over the coals, paying high fees on previously made purchases until these laws kick in.

Credit card companies will still be able to raise rates on new credit cards, future purchases or cash advances. Finally, the Federal Reserve and National Credit Union Administration are cracking down on arbitrary hikes in interest rates. It would seem that we  have learned a lot from subprime lending. These rules will also stop the issuing of credit cards to people that all ready have a large amount of debt, and who were previously getting approved by banks for high interest rate cards.

Some of the new rules include:

Continue reading "Rate Gauging on Consumer Credit Cards Gets the Boot"

It is projected by many economists that the downturn in our nation’s financial status is only going to get worse in 2009. A few business owners and entrepreneurs have been turning the financial crisis into big profits and some say they are preying on instability. Mortgage company owners have opened mortgage restructuring companies, and debt consolidation business opportunities are booming.

Many merchant services providers have begun offering card processing for high risk business types. Some of such business types require additional information to get approved and can also be associated with higher rates. If you are looking to get card processing for a high risk business you are in luck and now have many choices. Some of the criteria to get a high risk account approved are as follows:

Continue reading "Profits from High Risk Businesses May Not Last Long"