Barnes and Noble Inc. reported Wednesday that a "sophisticated criminal effort" was able to tamper with 63 PIN pads in nine states. The company indicated that in addition to personal identification numbers, debit and credit account data may have been compromised.
The chain discovered the breach more than a month ago and promptly disconnected every PIN pad in all of it's nearly 700 stores. They said the held of disclosing the breach on the advice of federal authorities, who are investigating.
"Barnes and Noble has completed an internal investigation that involved the inspection and validation of every PIN pad in every store," the company said in a press release. "The tampering, which affected fewer than 1% of PIN pads in Barnes and Noble stores, was a sophisticated criminal effort to steal credit card information, debit card information, and debit card PIN numbers from the customers that swiped their cards through PIN pads when they made purchases."
The New York Times reported a senior company executive said some customers had unauthorized purchases on their credit card accounts.
Barnes and Noble did not say specifically how the pads were tampered with. "The criminals planted bugs in the tampered devices, allowing for the capture of card and PIN numbers," the release said. The bugs might have been razor thin devices with a chip and an antenna that captured the PIN numbers as they were entered on the pads.
Criminals have used such methods before, according to technology analyst Avivah Litan. "Its not that hard to plant them." she added. "Its pretty easy to distract a clerk or find an unattended terminal."
Steve Elefant, a credit card industry consultant, theorized another way the fraudsters could gain access to the PIN pads. Since much of today's payment hardware is tamper resistant a likely scenario is the criminals replaced PIN pads with what he called "malicious PIN pads" that captured customer data. Fraudsters often do this by sending someone dressed as a technician out to a store claiming that the company is repairing, replacing or upgrading terminals.
However the fraud occurred, there is no doubt Barnes and Nobles has a hard road before it. In addition to law enforcement the company said it is working with payment card networks, banks and card issuers to identify accounts that may have been compromised. Most certainly Barnes and Noble has already been or will soon be declared out of compliance with the Payment Card Industry (PCI) data security standards even if it was compliant on its last quarterly assessment. They are looking at non-compliance fines in addition to breach related fraud and card re-issuance reimbursements sustained by card issuers. They will also have to go through a re-validation process to regain PCI compliance.
Wednesday, October 24, 2012
Friday, August 24, 2012
The Key to Not Getting Gouged by Your Credit Card Processor
It's rare for me to come across a business owner that knows more than the most basic of details about his credit card processing account. Depending on the type of business, anywhere from ten to almost 100 percent of revenues come in through a credit card terminal or gateway- thus, every business owner should be well versed on his or her account.
Here are six things every business owner should know about their merchant services account:
1) Most merchants had the opportunity to see a big decrease in their debit card rates when The Durbin Amendment took affect in October. Did your processor make you aware of these potential savings, and did you receive them?
2) Does your statement have any odd sounding fees like 'TIN fee', 'TFN fee', 'IRS fee', etc., and do you know what the fee is for?
3) Since a majority of card types used today are rewards cards, do you know the surcharge you pay for processing those cards?
4) Are there miscellaneous fees like 'Compliance Fee' or 'PCI Fee' that shows up on your bank statement but not your processing statement?
5) Are you currently paying monthly and/or annual fees for PCI compliance, and do you why you are paying those fees?
6) Are you under contract with your processor, and if so, does your contract have an early Termination fee? Does it have a roll-over provision?
When it comes to your merchant services account, knowledge is power. Only when you understand your processing statement in full, rather than just knowing the rate you pay for the most common transaction type, can you negotiate from a position of strength for the best possible rates.
Processing companies and representatives know this (that's why they make the statements so hard to read) and use it to their advantage, counting on you giving up in frustration before you find the factors that add up to you over-paying for your processing to the tune of $1500 a year.
Make sure you know the answers to these questions. Call your account representative and make him go over your statement with you, line by line. If your rep. has already come in and back out of the industry call the customer service number and ruin some CSR's average call time by making them explain it, line by line.
Also, feel free to contact me. I'll find the answers and explain your statement, no strings attached. But one way or another, get knowledgeable about your account.
Here are six things every business owner should know about their merchant services account:
1) Most merchants had the opportunity to see a big decrease in their debit card rates when The Durbin Amendment took affect in October. Did your processor make you aware of these potential savings, and did you receive them?
2) Does your statement have any odd sounding fees like 'TIN fee', 'TFN fee', 'IRS fee', etc., and do you know what the fee is for?
3) Since a majority of card types used today are rewards cards, do you know the surcharge you pay for processing those cards?
4) Are there miscellaneous fees like 'Compliance Fee' or 'PCI Fee' that shows up on your bank statement but not your processing statement?
5) Are you currently paying monthly and/or annual fees for PCI compliance, and do you why you are paying those fees?
6) Are you under contract with your processor, and if so, does your contract have an early Termination fee? Does it have a roll-over provision?
When it comes to your merchant services account, knowledge is power. Only when you understand your processing statement in full, rather than just knowing the rate you pay for the most common transaction type, can you negotiate from a position of strength for the best possible rates.
Processing companies and representatives know this (that's why they make the statements so hard to read) and use it to their advantage, counting on you giving up in frustration before you find the factors that add up to you over-paying for your processing to the tune of $1500 a year.
Make sure you know the answers to these questions. Call your account representative and make him go over your statement with you, line by line. If your rep. has already come in and back out of the industry call the customer service number and ruin some CSR's average call time by making them explain it, line by line.
Also, feel free to contact me. I'll find the answers and explain your statement, no strings attached. But one way or another, get knowledgeable about your account.
Wednesday, August 15, 2012
What the Visa/Mastercard Settlement Means to You
On July 13 a proposed settlement was reached between a group of retailers and Visa, Mastercard, and some of the nation's biggest banks. The settlement was an attempt to reach a conclusion to over 50 lawsuits that have been filed since 2005 alleging collusion and anti-trust practices in the way the card companies set their interchange fees (the fees they charge for using your card, as opposed to monthly fees, transaction fees, batch fees, etc.).
How will the settlement affect you? First of all, it's not a settlement yet. It still has to be approved by a federal judge, which could take up to a year or longer. Also, merchants have the right to withdraw from the settlement, which would allow them to pursue additional suits in the future.
Already some heavyweights in the processing arena are voicing disapproval of the settlement. Trade groups like the National Grocer's Association and National Association of Convenience Stores have voiced their displeasure. And some big box retailers, including Target and Wal-Mart have come out against it. This is important, because if enough merchants withdraw from the settlement, even if they weren't involved in the lawsuit, it could derail the whole agreement.
If the settlement ever comes to pass, Visa, Mastercard, and a few banks will have to pay merchants more than six billion dollars. In addition merchants will see a .10 of one percent reduction in their interchange charges, estimated to be worth another $1.2 billion. There is a blizzard of issues surrounding the implementation and disbursement of these funds, if they ever come to pass at all. Figuring it all out could take to 2016.
The settlement also lifts the ban surcharges applied by merchants for credit card transactions. A business would be able to impose 'check out' fees on credit card transactions at the point of payment. The surcharge would be capped, probably at around three percent of the transaction, and he merchant would have to have prominent signage announcing the surcharge and allow customers to opt out of the transaction. This wouldn't apply in the 10 states that already ban surcharges at the state level. Kansas and Oklahoma are among those states. Payment experts question the practical ability of merchants to implement surcharges given the complexity of the credit card rules, and how customers would react to the new charges is another question mark.
So that's the nuts and bolts of the settlement. Bottom line is that it is a complicated, fluid situation with many issues still to be resolved. I'll keep you filled in with news and changes as they occur.
How will the settlement affect you? First of all, it's not a settlement yet. It still has to be approved by a federal judge, which could take up to a year or longer. Also, merchants have the right to withdraw from the settlement, which would allow them to pursue additional suits in the future.
Already some heavyweights in the processing arena are voicing disapproval of the settlement. Trade groups like the National Grocer's Association and National Association of Convenience Stores have voiced their displeasure. And some big box retailers, including Target and Wal-Mart have come out against it. This is important, because if enough merchants withdraw from the settlement, even if they weren't involved in the lawsuit, it could derail the whole agreement.
If the settlement ever comes to pass, Visa, Mastercard, and a few banks will have to pay merchants more than six billion dollars. In addition merchants will see a .10 of one percent reduction in their interchange charges, estimated to be worth another $1.2 billion. There is a blizzard of issues surrounding the implementation and disbursement of these funds, if they ever come to pass at all. Figuring it all out could take to 2016.
The settlement also lifts the ban surcharges applied by merchants for credit card transactions. A business would be able to impose 'check out' fees on credit card transactions at the point of payment. The surcharge would be capped, probably at around three percent of the transaction, and he merchant would have to have prominent signage announcing the surcharge and allow customers to opt out of the transaction. This wouldn't apply in the 10 states that already ban surcharges at the state level. Kansas and Oklahoma are among those states. Payment experts question the practical ability of merchants to implement surcharges given the complexity of the credit card rules, and how customers would react to the new charges is another question mark.
So that's the nuts and bolts of the settlement. Bottom line is that it is a complicated, fluid situation with many issues still to be resolved. I'll keep you filled in with news and changes as they occur.
Thursday, August 2, 2012
Tax Identification Numbers and Your Credit Card Processing Account
The IRS is scheduled to start backup withholding in 2013 for businesses that have invalid or non-matching Tax Identification Numbers (TINs). Backup withholding was supposed to start in 2012, but the IRS postponed it for one year. It's been on the back burner, but its time to start thinking about it again.
The IRS requires that processors have a valid TIN on file for each business they process for. If a processor doesn't have a valid TIN, or it doesn't match the number on file with the IRS, the processor is obligated to institute backup withholding- they will keep 28% of the merchant's gross sales.
This is going to sit terribly with merchants, primarily because when a merchant corrects the issue with an invalid/mismatched TIN they are going to expect the withholding to stop. However, this is not the case. Merchants will not be refunded until they file their tax return and the IRS determines they are eligible for a refund.
In addition 2013 will be the year the IRS rolls out the new 1099-K for merchants that contains a line for the merchant to report their gross credit card sales. That figure must match the gross sales amount reported by the merchant's processor.
These reporting requirements represent a big expense for processors, and most have reacted by passing on a new reporting fee to merchants. This fee will go by different names on your processing statement, but is usually some variation of IRS Fee or Reporting Fee. The most common amount of the new fee is $5.00 a month; unfortunately there are a few processors who never miss out on a chance to gouge their merchants and are charging as much as $25-$35 a month.
Ideally merchants have proactive processors or account representatives who will contact them this fall to make sure that their TIN numbers are valid and guide them through the new reporting requirements. If not, don't wait until 2013 to handle the matter yourself. Contact your processor and make sure the TIN numbers they have for your business are the same ones you will use to file your 2013 taxes.
Processors have until February 1 to provide you with documentation of the the amount of gross sales they reported for your business. Be on the phone to your processor the morning of February 2 if you haven't received the documentation.
Feel free to contact me with any questions, concerns, or problems you may have about your TIN requirements and reporting requirements- it can seem very confusing. The IRS don't like to make things easy.
The IRS requires that processors have a valid TIN on file for each business they process for. If a processor doesn't have a valid TIN, or it doesn't match the number on file with the IRS, the processor is obligated to institute backup withholding- they will keep 28% of the merchant's gross sales.
This is going to sit terribly with merchants, primarily because when a merchant corrects the issue with an invalid/mismatched TIN they are going to expect the withholding to stop. However, this is not the case. Merchants will not be refunded until they file their tax return and the IRS determines they are eligible for a refund.
In addition 2013 will be the year the IRS rolls out the new 1099-K for merchants that contains a line for the merchant to report their gross credit card sales. That figure must match the gross sales amount reported by the merchant's processor.
These reporting requirements represent a big expense for processors, and most have reacted by passing on a new reporting fee to merchants. This fee will go by different names on your processing statement, but is usually some variation of IRS Fee or Reporting Fee. The most common amount of the new fee is $5.00 a month; unfortunately there are a few processors who never miss out on a chance to gouge their merchants and are charging as much as $25-$35 a month.
Ideally merchants have proactive processors or account representatives who will contact them this fall to make sure that their TIN numbers are valid and guide them through the new reporting requirements. If not, don't wait until 2013 to handle the matter yourself. Contact your processor and make sure the TIN numbers they have for your business are the same ones you will use to file your 2013 taxes.
Processors have until February 1 to provide you with documentation of the the amount of gross sales they reported for your business. Be on the phone to your processor the morning of February 2 if you haven't received the documentation.
Feel free to contact me with any questions, concerns, or problems you may have about your TIN requirements and reporting requirements- it can seem very confusing. The IRS don't like to make things easy.
Tuesday, June 12, 2012
Take Advantage of Auto-Recurring Billing
Auto-recurring billing is a system by which you receive payments from your customers on a regular basis. It not only greatly reduces the amount of time and money spent on billing and collections, it also provides your customers a convenient way to pay you on time, every time.
The process is easy, and all you need is an internet gateway. Once you have written permission from your customer to begin an auto billing program, you simply upload their information into your gateway. (You only do this once, reducing the opportunity for data entry errors). You set your customers up to pay you an agreed upon amount at regular intervals, and after that their payments flow in with no effort on your part.
Most gateways are can be customized with different billing periods, and flexible if your customer needs to change her payment date or amount.
Once set up, you get your money on time, every time. Cash flow variances are reduced, and you have a determined amount of money coming in on a regular basis. The time and money associated with printing and mailing invoices is eliminated, and past due accounts and their accompanying collection calls are a thing of the past.
Your customers will appreciate that auto billing makes doing business with you simple. They will be able to pay you automatically without the hassle of receiving an invoice, writing out a check, and finding time to get it out in the mail.
Although anyone can use auto-recurring billing, it works best for two types of businesses. The first type is service providers who charge the same amount every month such as daycare providers, contractors who pro-rate their billing out over time, attorneys, fitness centers, storage facilities, etc. The other type are businesses who generally carry accounts for their customers- doctors, dentists, bars, hospitals, etc.
As we hurtle onward toward a cashless society the businesses that succeed are going to the ones that offer flexible payment options- auto-recurring billing is a great way to do just that.
The process is easy, and all you need is an internet gateway. Once you have written permission from your customer to begin an auto billing program, you simply upload their information into your gateway. (You only do this once, reducing the opportunity for data entry errors). You set your customers up to pay you an agreed upon amount at regular intervals, and after that their payments flow in with no effort on your part.
Most gateways are can be customized with different billing periods, and flexible if your customer needs to change her payment date or amount.
Once set up, you get your money on time, every time. Cash flow variances are reduced, and you have a determined amount of money coming in on a regular basis. The time and money associated with printing and mailing invoices is eliminated, and past due accounts and their accompanying collection calls are a thing of the past.
Your customers will appreciate that auto billing makes doing business with you simple. They will be able to pay you automatically without the hassle of receiving an invoice, writing out a check, and finding time to get it out in the mail.
Although anyone can use auto-recurring billing, it works best for two types of businesses. The first type is service providers who charge the same amount every month such as daycare providers, contractors who pro-rate their billing out over time, attorneys, fitness centers, storage facilities, etc. The other type are businesses who generally carry accounts for their customers- doctors, dentists, bars, hospitals, etc.
As we hurtle onward toward a cashless society the businesses that succeed are going to the ones that offer flexible payment options- auto-recurring billing is a great way to do just that.
Thursday, June 7, 2012
Visa Warns Merchants of Email Phishing Scams
Visa USA has detected an increase in email "phishing" scams directed at merchants. These scams use fake emails that appear to originate from legitimate financial institutions, processors or other businesses that often conduct business with merchants.
Through these fake emails criminals attempt to convince merchants to provide sensitive information such as account information, passwords, logins, or other payment information, which then can be used fraudulently.
In most of these phishing emails the merchant is asked to click on an internet hyperlink embedded in the fake email. This link connects to a fraudulent website or server and may lead to the installation of 'malicious software' (malware) on the merchant's computer.
Visa has posted several examples of phishing emails as well as a list of signs that the email you are looking at may be fraudulent at Visa.com.
They ask that you remember that neither Visa nor it's personnel will ever ask you for personally identifiable information by email or by telephone. Any merchant the receives a suspected or actual phishing message should contact their financial institution and Visa. To notify Visa send an email to phishing@visa.com with the phishing email attached.
Through these fake emails criminals attempt to convince merchants to provide sensitive information such as account information, passwords, logins, or other payment information, which then can be used fraudulently.
In most of these phishing emails the merchant is asked to click on an internet hyperlink embedded in the fake email. This link connects to a fraudulent website or server and may lead to the installation of 'malicious software' (malware) on the merchant's computer.
Visa has posted several examples of phishing emails as well as a list of signs that the email you are looking at may be fraudulent at Visa.com.
They ask that you remember that neither Visa nor it's personnel will ever ask you for personally identifiable information by email or by telephone. Any merchant the receives a suspected or actual phishing message should contact their financial institution and Visa. To notify Visa send an email to phishing@visa.com with the phishing email attached.
Friday, May 25, 2012
Heaven
So there you are, laying on a bed in a mostly dark room with your ten month old granddaughter. You're on your side, and she's on her back, snuggled in against you. You're propping your head up with one hand, and the other is on her belly. she has your index finger clutched in her tiny hand, and every few seconds she strokes the back of of your hand with her two littlest fingers. She's looking up at you with an expression that tells you that not only does she believe you are responsible for the very oxygen she is breathing, but she is also firmly convinced you are going to keep her safe and happy for all her days.
There will come a day that you let her down; it's impossible not to. No one can stay atop a pedestal the size she has placed you on forever. But that day hasn't come yet, and unlike you, she doesn't know it will.
So as she snuggles in even tighter and shuts her eyes, drifting into dreamland you thank God for giving us the gift of little girls.
There will come a day that you let her down; it's impossible not to. No one can stay atop a pedestal the size she has placed you on forever. But that day hasn't come yet, and unlike you, she doesn't know it will.
So as she snuggles in even tighter and shuts her eyes, drifting into dreamland you thank God for giving us the gift of little girls.
Monday, May 21, 2012
'Spend Graphs' are Here
The next stage of shopping evolution has begun, courtesy of American Express' new spend graph program.
Spend graphing is the combination of GPS technology and high speed data mining capabilities. Your credit card issuers have been tracking your spending habits since the day you made your very first pulled out a piece of plastic rather than cash. Very complicated algorithms give the card company the power to predict to the penny how much you will spend, for what items, at what store, with amazing (or frightening) accuracy. These models predicting your spending habits have existed in a vacuum until recently- the missing variable was the 'when' you would make the purchase, and without a when, the what, where, and how many couldn't be acted upon. Enter global positioning satellites.
The card companies figured out there was no need to guess when you would make a purchase if GPS technology could tell them when you were walking into a store.
Based on that, American Express now offers their cardholders the ability to receive to their mobile form or tablet real time offers.
Once a cardholder opts into the system it works as follows- GPS telemetry pick up that a member has just walked into Macy's. Amex has stored on it's servers that you spend $400 a month at Macy's, at an average of $200 per visit, and that 50 percent of your purchases are women's clothing, and that 75 percent of that is spend on Calvin Klein dresses and active wear.
Almost immediately upon entering the store, you are alerted to a new text, and therein is an offer for 30 percent off of all Calvin Klein women's wear- good for the next hour only.
Privacy advocates are howling about the program, but American Express calls in a win for consumers and businesses alike.
"In an increasingly crowded marketplace, where consumers are bombarded with daily deals, we saw an opportunity to help our Cardmembers save time as well as money by curating meaningful offers for them," said Josh Silverman, president of the U.S. Consumer Services Group at American Express. "At the same time we can help our merchant partners build their business by helping them reach the right Cardmembers with the right offer at the right time. We developed our mobile offer engine with three key points of differentiation in mind; relevance, convenience and value."
Spend graphing is the combination of GPS technology and high speed data mining capabilities. Your credit card issuers have been tracking your spending habits since the day you made your very first pulled out a piece of plastic rather than cash. Very complicated algorithms give the card company the power to predict to the penny how much you will spend, for what items, at what store, with amazing (or frightening) accuracy. These models predicting your spending habits have existed in a vacuum until recently- the missing variable was the 'when' you would make the purchase, and without a when, the what, where, and how many couldn't be acted upon. Enter global positioning satellites.
The card companies figured out there was no need to guess when you would make a purchase if GPS technology could tell them when you were walking into a store.
Based on that, American Express now offers their cardholders the ability to receive to their mobile form or tablet real time offers.
Once a cardholder opts into the system it works as follows- GPS telemetry pick up that a member has just walked into Macy's. Amex has stored on it's servers that you spend $400 a month at Macy's, at an average of $200 per visit, and that 50 percent of your purchases are women's clothing, and that 75 percent of that is spend on Calvin Klein dresses and active wear.
Almost immediately upon entering the store, you are alerted to a new text, and therein is an offer for 30 percent off of all Calvin Klein women's wear- good for the next hour only.
Privacy advocates are howling about the program, but American Express calls in a win for consumers and businesses alike.
"In an increasingly crowded marketplace, where consumers are bombarded with daily deals, we saw an opportunity to help our Cardmembers save time as well as money by curating meaningful offers for them," said Josh Silverman, president of the U.S. Consumer Services Group at American Express. "At the same time we can help our merchant partners build their business by helping them reach the right Cardmembers with the right offer at the right time. We developed our mobile offer engine with three key points of differentiation in mind; relevance, convenience and value."
Sunday, May 20, 2012
MasterCard Issues Security Alert
MasterCard has issued an alert that some merchants have received fraudulent 'MasterCard Security Alert' email messages. The messages refer to a fictitious recent hacking attempt, and ask the merchant to run a 'test transaction' to determine if they were affected by the hack.
MasterCard said this is an attempt by an outside party to gain transaction information. Once the outside party has the stolen information they can use it to try to make purchases and get refunds.
The company said if any merchant receives an unsolicited email, phone call, text message or social media request from an individual or organization purporting to be a MasterCard security representative do not respond. Instead report the attempt at the following address: datasecurity@mastercard.com.
MasterCard said this is an attempt by an outside party to gain transaction information. Once the outside party has the stolen information they can use it to try to make purchases and get refunds.
The company said if any merchant receives an unsolicited email, phone call, text message or social media request from an individual or organization purporting to be a MasterCard security representative do not respond. Instead report the attempt at the following address: datasecurity@mastercard.com.
Wednesday, April 25, 2012
Ten Reasons Why a Payment Gateway is Better for Your Business
- Card on file. Merchants have a secure way to store credit/debit card and checking account details so they can charge their regular customers without requiring them to present a card or check.
- Email receipts. With a gateway merchants can send receipts their customers can easily store electronically.
- No extra hardware to maintain. Why have multiple devices to manage and pay for when most businesses have personal computers on site already?
Unlimited users who can log on from anywhere. With the merchant's express permission, their bookkeeper can log in from their office to get transaction reports, clerks can log on from the front desk to process payments and merchants can log in from any Internet connection to check on the business from anywhere in the world. - PCI Compliance. Most payment gateways are continually updated to remain fully PCI compliant while most existing POS terminals simply aren’t PCI DSS compliant. After the massive recent data breaches with Global Payments, Sony et al., this issue will become increasingly important as the card associations start cracking down on non-compliance.
- Customer Data at your fingertips. Gateways generally support loading customer information which gives the merchant a great way to communicate with their customers for promotions and loyalty.
- Re-Occurring Payments . With a gateway re-occurring payments need only to be entered one time, and told how often to occur.
- Doesn’t tie up a phone line. Standard POS terminals use phone lines to communicate with the processor which requires merchants to either lose their line while the transactions process or get a second phone line which is often times more expensive than the monthly fee for a gateway.
- Rental/lease fees. Merchants often pay $30-$80/month to rent or lease their POS terminals which is more expensive than simply using a payment gateway.
- Marketing. With a gateway, receipts can be printed on preprinted sheets that market the Merchant’s business. They are larger than normal receipts so a consumer will be more inclined to keep them and respond to a marketing message than if it’s printed on a small POS terminal receipt. What a great way to incent your customers to save your marketing message. With a VPOS, you can actually turn your credit card processing into a great new way to make grow your business!
Monday, April 2, 2012
Every Processing Company's Niightmare
Global Payments announced Friday that 1.5 million credit card numbers from its systems may have been exposed after detecting “unauthorized access” into its processing system. Global is a processing company that moves the money around for the parties involved in a credit card transaction. The company said that 1.5 million records may have been exposed, from Visa and MasterCard. Global said that while credit card numbers may have been exposed, personal information such as names, addresses and Social Security numbers were “not obtained by the criminals.”
Global detected the breach in “early March,” but has not specified when exactly the attack took place or how it happened. According to the latest statement released by Global, the breach has been “contained.” The company said it is working with “industry third parties, regulators and law enforcement to assist in the efforts to minimize potential cardholder impact.” It is also working with security and forensics firms to get to the bottom of the access.
Global detected the breach in “early March,” but has not specified when exactly the attack took place or how it happened. According to the latest statement released by Global, the breach has been “contained.” The company said it is working with “industry third parties, regulators and law enforcement to assist in the efforts to minimize potential cardholder impact.” It is also working with security and forensics firms to get to the bottom of the access.
Visa Inc. has dropped the card processor involved in a massive data breach from its registry of providers that meet data security standards.
Global Payments CEO Paul Garcia noted that the company continues to process Visa transactions, but that being dropped from the registry “could give our partners some pause that they’re doing business with someone who experienced a breach.”
The company said it will set up a website later Monday to help consumers who might be affected by the breach. Visa and Mastercard's systems were not compromised.
The company said it continues to work with regulators, industry third parties and law enforcement to help in the effort to minimize the potential impact on credit cardholders.
Tuesday, March 27, 2012
Google Is The New Phone Book
Last year, social media guru/ sales trainer Jeffrey Gitomer rented an office for the summer in a 41 unit building outside New York. On the day he moved in, the local phone company dropped off 41 phone books in the building's lobby. All summer, as he came and went, he watched those books. They sat there. And sat, and sat, and sat. At the end of September, as he left the building for the final time, curious, he counted the phone books still sitting and gathering dust. There were thirty nine.
Your customers don't look you up in the phone book anymore. A cattle hauler from Wyoming who breaks down on the Pittsburg bypass doesn't go to the nearest gas station for a phone book- he googles diesel mechanics.
Where are you going to be when someone googles your business? First? Near the Top? On the first page? If you're not at least on the first page you're business is in trouble, whether the receipts show it or not.
The beauty is that it's easy to get near the top of a Google search. You don't have to understand search engine optimization, you don't have to pay a company thousands of dollars. All you have to do is take advantage of business social media.
Have a business Facebook page that you post on at least three times a week. Have, and use, a twitter page. Make sure your Twitter profile contains all the words and phrases someone might use in a search for your business. For example, my Twitter page says I am a "Profitability Improvement Specialist- Credit Card processing, Merchant Services, Electronic Payments at Central Payment". It may not flow off the tongue, but every time I tweet Google is reading, and saving, those words and phrases in conjunction with my name. ( A friend calls using key search words in this way "spreading Google dust").
Have, and use, an account with LinkedIn. LinkedIn especially gives you four or five different places for you to use your key words. In my personal opinion, it is also the best place for posting valuable content that gets noticed by your peers.
When your done with all that, start a Youtube account. After you post a value message, record yourself speaking it, and post it to your account. And- you guessed it- use your key words as often as possible.
It is not time consuming to set this up. You can set up accounts, with your key-word laden profiles, at all four sites in less than an hour. And you can set it up to when you post a message at one site, your other sites pick it up. In other words, you can post a tweet on twitter that automatically shows up on Facebook and LinkedIn.
Now comes the fun part. At night, while you are warm and comfy in your bed, the Google fairies scan the web, collecting your Google dust and applying it to your name.
It is amazing how quickly this will rocket you to the top of Google searches for your name, your business, and your keywords. If you have never set up a business social media site, try this experiment. Google your name, and note at what page and page location you find yourself. Do the above for one week, and Google your name again. If you are not in the first five entries on the first page I'll eat my shoe.
Track and play with your keywords. When I started using Google dust my name would come up near the top of a search for 'credit card processing', but not 'merchant services.' I found new places in my profiles to use the phrase 'merchant services' and for a week every time I posted anywhere I used the phrase in the title of the post. When I tested again at the end of the week, mine was the second name to come up when I searched.
Google is the new phone book. And you have control over the size of you r phone book ad. You can have a little two inch square ad and never be found on Google, or you can have the back cover and come up first in Google searches for your business. The cost is the same- the centerfold takes a little bit of work.
Your customers don't look you up in the phone book anymore. A cattle hauler from Wyoming who breaks down on the Pittsburg bypass doesn't go to the nearest gas station for a phone book- he googles diesel mechanics.
Where are you going to be when someone googles your business? First? Near the Top? On the first page? If you're not at least on the first page you're business is in trouble, whether the receipts show it or not.
The beauty is that it's easy to get near the top of a Google search. You don't have to understand search engine optimization, you don't have to pay a company thousands of dollars. All you have to do is take advantage of business social media.
Have a business Facebook page that you post on at least three times a week. Have, and use, a twitter page. Make sure your Twitter profile contains all the words and phrases someone might use in a search for your business. For example, my Twitter page says I am a "Profitability Improvement Specialist- Credit Card processing, Merchant Services, Electronic Payments at Central Payment". It may not flow off the tongue, but every time I tweet Google is reading, and saving, those words and phrases in conjunction with my name. ( A friend calls using key search words in this way "spreading Google dust").
Have, and use, an account with LinkedIn. LinkedIn especially gives you four or five different places for you to use your key words. In my personal opinion, it is also the best place for posting valuable content that gets noticed by your peers.
When your done with all that, start a Youtube account. After you post a value message, record yourself speaking it, and post it to your account. And- you guessed it- use your key words as often as possible.
It is not time consuming to set this up. You can set up accounts, with your key-word laden profiles, at all four sites in less than an hour. And you can set it up to when you post a message at one site, your other sites pick it up. In other words, you can post a tweet on twitter that automatically shows up on Facebook and LinkedIn.
Now comes the fun part. At night, while you are warm and comfy in your bed, the Google fairies scan the web, collecting your Google dust and applying it to your name.
It is amazing how quickly this will rocket you to the top of Google searches for your name, your business, and your keywords. If you have never set up a business social media site, try this experiment. Google your name, and note at what page and page location you find yourself. Do the above for one week, and Google your name again. If you are not in the first five entries on the first page I'll eat my shoe.
Track and play with your keywords. When I started using Google dust my name would come up near the top of a search for 'credit card processing', but not 'merchant services.' I found new places in my profiles to use the phrase 'merchant services' and for a week every time I posted anywhere I used the phrase in the title of the post. When I tested again at the end of the week, mine was the second name to come up when I searched.
Google is the new phone book. And you have control over the size of you r phone book ad. You can have a little two inch square ad and never be found on Google, or you can have the back cover and come up first in Google searches for your business. The cost is the same- the centerfold takes a little bit of work.
Monday, March 26, 2012
Some Miscellaneous Stuff
Here are a few bits of news important to credit card processing, that may be relevant to your business.
Omni 3740 and 3750 say goodbye. Nearly every processor I know of says they will no longer support these terminals, most as of October 2012. That means if you have one, come November, it will no longer process cards. The most common replacements are the Verifone VX510 (for dial up accounts) and the VX570 (internet processing.) Those are Central Payments free terminals, so if you have an old Omni you can upgrade for free.
Visa is introducing a new fee in April. A 'fixed acquirer network fee, it will add $2.00 to $2.90 to most merchant accounts. Theoretically a business can recoup the costs through a lowered network fee, but don't count on it. When this was first announced it seemed some processors (including Central Payment) were leaning toward assuming the fee on behalf it's merchants, but now all the processing companies are treating it as a pass-through. The fee can be very expensive for companies with thousands of locations that process millions of dollars (read: Wal Mart and McDonalds) and if the processors assume the $2.00 for Bob's Diner they will have to assume the hundreds of thousands of dollars for the mega-merchants also.
And finally, The IRS formally drives processors to the brink of ruin for no good reason. As most of you are probably aware, the IRS decided "it would not require merchants to explain how and why their business income differs from their credit card receipts in 2012, nor do we intend to require reconciliation in future years.
Now that processing companies have spent millions of dollars, and hundreds of thousands of man hours, trying to match merchant information with what the government had on file, not to mention scaring the beJesus out of merchants with the punishment nightmares they (the merchants) would face for non-compliance- the IRS says "Just kiddin." This comes after some processing companies spent a year charging merchants up to $20.00 a month for 'IRS compliance', too.
That's what's happening in my world- if you have any questions about any of the above, or electronic payment processing in general, holler to me at bswitzer@cpay.com.
Omni 3740 and 3750 say goodbye. Nearly every processor I know of says they will no longer support these terminals, most as of October 2012. That means if you have one, come November, it will no longer process cards. The most common replacements are the Verifone VX510 (for dial up accounts) and the VX570 (internet processing.) Those are Central Payments free terminals, so if you have an old Omni you can upgrade for free.
Visa is introducing a new fee in April. A 'fixed acquirer network fee, it will add $2.00 to $2.90 to most merchant accounts. Theoretically a business can recoup the costs through a lowered network fee, but don't count on it. When this was first announced it seemed some processors (including Central Payment) were leaning toward assuming the fee on behalf it's merchants, but now all the processing companies are treating it as a pass-through. The fee can be very expensive for companies with thousands of locations that process millions of dollars (read: Wal Mart and McDonalds) and if the processors assume the $2.00 for Bob's Diner they will have to assume the hundreds of thousands of dollars for the mega-merchants also.
And finally, The IRS formally drives processors to the brink of ruin for no good reason. As most of you are probably aware, the IRS decided "it would not require merchants to explain how and why their business income differs from their credit card receipts in 2012, nor do we intend to require reconciliation in future years.
Now that processing companies have spent millions of dollars, and hundreds of thousands of man hours, trying to match merchant information with what the government had on file, not to mention scaring the beJesus out of merchants with the punishment nightmares they (the merchants) would face for non-compliance- the IRS says "Just kiddin." This comes after some processing companies spent a year charging merchants up to $20.00 a month for 'IRS compliance', too.
That's what's happening in my world- if you have any questions about any of the above, or electronic payment processing in general, holler to me at bswitzer@cpay.com.
Monday, March 12, 2012
Is There a Merchant Revolt Brewing Against the Credit Card Companies? Part 2
If you accept credit/debit cards at your business there is a lawsuit that goes to trial this fall in New York that you should keep on your radar. The suits began as approximately 55 lawsuits filed in various jurisdictions, with all but ten of them seeking class action status. Plaintiffs range from local and regional retailers to national trade associations and chains such as Kroger, Walgreens and CVS. Losing could cost Visa and Mastercard billions of dollars, and a negative outcome for the credit card companies could change the way you accept credit and debit cards at your business.
A merchant's agreement with the card companies is thick enough to choke a Brahma bull and written by lawyers for lawyers. Most of the items in the rules and regulations section are centered around the Big Three Rules- 1) a merchant can't have a 'minimum amount', but must accept a card as payment for any transaction, no matter how small, 2) a merchant can't add a surcharge onto a transaction to recoup his processing costs, and 3) if you accept a card for any transaction type you must accept them for all transaction types. That means that a business that accepts credit cards can't refuse a certain type of card, a 'rewards' card or a business card for example, because the processing costs for that type of card are higher than other types.
Numbers two and three is the reasons behind the lawsuits.
The suits cite the Sherman and Clayton antitrust acts as well as state law and depict the U.S. credit and debit card interchange process as a price-fixing scheme operated by the card issuers to the detriment of merchants. They are challenging the legality of rules that prohibit surcharges on credit card transactions and prevent the steering of customers to the merchant's preferred transaction types. Merchants are demanding changes in business terms that could potentially include cuts to credit card fees and recognition by the card companies of merchant's rights to surcharge. They also want rights of 'steerage', or the ability to offer an immediate discount, rebate, or free or discounted product or service to cardholders for using a particular low cost card or other form of payment.
In other words a merchant with an average transaction of $200 knows a rewards card costs them four percent of a transaction and a debit card costs them one percent. They are suing for the right to offer a free gift to the cardholder in exchange for using the less costly card, or to refuse to accept the more expensive card at all and ask for nother form of payment.
A jury verdict against the card companies could be catastrophic to them. Mastercard has estimated it's cost to settle the claims individually at $500 million. But that does not reflect the 'class component' of the case- it is considerably more expensive to settle a class action than a series of individual cases. Some observers estimate they card companies could owe billions in damages should they be found liable for the alleged counts, which are subject to trebling under anitrust law.
Visa has not commented on estimated expenses but their financial reports list $2.93 billion held in escrow for litigation expenses.
But monetary damages are only part of the story- a plaintiff's verdict would effectively blow up a business model that has been in place for decades. Indeed, the non-monetary aspects of card acceptance are among the issues most merchants have concerns about.
"One issue that merchants have complained about is the extraordinary restrictive rules we have to operate under," says Mallory Duncan, senior vice president and general counsel at the National Retail Federation.
Both sides point to a antitrust suit over many of the same issues brought by seven states and the Department of Justice in 2010. In a settlement Mastercard and Visa agreed to allow merchants in those states (including Missouri) that process more than a million transactions a year to offer an immediate discount or rebate or free or discounted product or service for using a particular low cost card or other form of payment. Opponents of the card companies say the settlement effectively establishes precedent; card industry insiders say it will allow the companies to say, "We gave them nearly everything they wanted in the settlement. It would be unfair to add surcharge into the mix now."
As complicated as the facts of the case are, it seems inevitable that once the dust clears merchants will be better off. Any settlement will almost certainly include lower card fees. A plaintiff's verdict could open the doors for each merchant to craft card acceptance guidelines according to what best serves his own business.
And in the event of a verdict for the card companies, they will have little time to catch their breath; other lawsuits are working their way through courtrooms across the country. Merchants are slowly coming to realize that you can demand fair business practices from the card companies. Let's hope it continues.
A merchant's agreement with the card companies is thick enough to choke a Brahma bull and written by lawyers for lawyers. Most of the items in the rules and regulations section are centered around the Big Three Rules- 1) a merchant can't have a 'minimum amount', but must accept a card as payment for any transaction, no matter how small, 2) a merchant can't add a surcharge onto a transaction to recoup his processing costs, and 3) if you accept a card for any transaction type you must accept them for all transaction types. That means that a business that accepts credit cards can't refuse a certain type of card, a 'rewards' card or a business card for example, because the processing costs for that type of card are higher than other types.
Numbers two and three is the reasons behind the lawsuits.
The suits cite the Sherman and Clayton antitrust acts as well as state law and depict the U.S. credit and debit card interchange process as a price-fixing scheme operated by the card issuers to the detriment of merchants. They are challenging the legality of rules that prohibit surcharges on credit card transactions and prevent the steering of customers to the merchant's preferred transaction types. Merchants are demanding changes in business terms that could potentially include cuts to credit card fees and recognition by the card companies of merchant's rights to surcharge. They also want rights of 'steerage', or the ability to offer an immediate discount, rebate, or free or discounted product or service to cardholders for using a particular low cost card or other form of payment.
In other words a merchant with an average transaction of $200 knows a rewards card costs them four percent of a transaction and a debit card costs them one percent. They are suing for the right to offer a free gift to the cardholder in exchange for using the less costly card, or to refuse to accept the more expensive card at all and ask for nother form of payment.
A jury verdict against the card companies could be catastrophic to them. Mastercard has estimated it's cost to settle the claims individually at $500 million. But that does not reflect the 'class component' of the case- it is considerably more expensive to settle a class action than a series of individual cases. Some observers estimate they card companies could owe billions in damages should they be found liable for the alleged counts, which are subject to trebling under anitrust law.
Visa has not commented on estimated expenses but their financial reports list $2.93 billion held in escrow for litigation expenses.
But monetary damages are only part of the story- a plaintiff's verdict would effectively blow up a business model that has been in place for decades. Indeed, the non-monetary aspects of card acceptance are among the issues most merchants have concerns about.
"One issue that merchants have complained about is the extraordinary restrictive rules we have to operate under," says Mallory Duncan, senior vice president and general counsel at the National Retail Federation.
Both sides point to a antitrust suit over many of the same issues brought by seven states and the Department of Justice in 2010. In a settlement Mastercard and Visa agreed to allow merchants in those states (including Missouri) that process more than a million transactions a year to offer an immediate discount or rebate or free or discounted product or service for using a particular low cost card or other form of payment. Opponents of the card companies say the settlement effectively establishes precedent; card industry insiders say it will allow the companies to say, "We gave them nearly everything they wanted in the settlement. It would be unfair to add surcharge into the mix now."
As complicated as the facts of the case are, it seems inevitable that once the dust clears merchants will be better off. Any settlement will almost certainly include lower card fees. A plaintiff's verdict could open the doors for each merchant to craft card acceptance guidelines according to what best serves his own business.
And in the event of a verdict for the card companies, they will have little time to catch their breath; other lawsuits are working their way through courtrooms across the country. Merchants are slowly coming to realize that you can demand fair business practices from the card companies. Let's hope it continues.
Thursday, March 8, 2012
It's the Wave of the Future; It's Free; And Your Competitors Ain't Doing It
Suppose someone offered you a piece of equipment that could double or even triple your revenues. Would you be interested? What if the equipment were free? And what if your competitors were blissfully unaware the equipment even existed? Would you jump at the chance to own it? Of course you would.
Good news! Such an item really exists. It's known as 'business social media', and it's the wave of the future.
Business social media (bsm) is the use of social web sites like Facebook, Twitter and LinkedIn- not to broadcast your latest bowling score to your friends, but as a marketing and sales tool for your company. In much of the country bsm has supplanted newspaper and radio as a business owner's preferred method of marketing. Over three quarters of the respondents to a Constant Contact poll said they used social media, predominately Facebook, as the most important part of their marketing strategy. In San Francisco, where the company I work for is located, a merchant would no more try to start a business without a Facebook and LinkedIn page then they try to start one without electricity hook-ups.
But the Joplin are hasn't caught the wave yet.
A study by a MSSU business group estimates that just 2.3 percent of the locally owned businesses in the Joplin Metropolitan Statistical Area have active business Facebook pages. ('Active' is defined as a page that gets more than eight posts a week). The Joplin LinkedIn group has 96 members, and only four local members have posted on it over the last 30 days. The Carthage group has six members, none from Carthage. (One hales from the Netherlands). Northeast Oklahoma and Southeast Kansas don't have LinkedIn groups for business owners at all. I couldn't find any numbers for local businesses on Twitter, but there are only a handful of locally owned Twitter business accounts that are easy to find. The nearest Groupon (a social site dedicated to promoting a business's 'deals') accounts are in Tulsa.
I could go on, but you get the drift- business social media, the biggest advancement in marketing since the creation of the daily paper, the way business will be done in the future, is in it's nascent stage in the Joplin area.
And that creates an incredible opportunity for local businesses.
The dominant businesses in Joplin in five years are going to be the ones that are the biggest players on the bsm sites. Right now almost no one is vying to be that leader. And that's why you need to get started right now, today, building your social media presence.
It's easy, and it's free. All you need is a computer and an internet connection. Really- that's it. And it's free.
Start with Facebook. DON"T start putting business posts on your existing Facebook page. At the bottom of your Facebook site there is a menu that includes the option 'create a page'. Click on that, and follow the directions. Twitter, LinkedIn, Google+ and YouTube are all as easy as pulling up the site and clicking on 'create an account.'
Look at pages that you like on the bsm sites, see what others are doing, to get an idea what sort of content others are posting. Follow my blog, sekcreditcardguy.blogspot.com- about every other post will be orientated toward business social media. Jeffrey Gitomer has written the definitive book for starting out in bsm- it's called Social Boom. Read it and learn well. Hubspot has more good material than you can read in two lifetimes. And it's free.
Business social media is the best opportunity to grow your business and beat your competition that you have ever had. It's just sitting there, waiting for you take advantage of it. And it's free.
Sign on. Establish an account on each major site. Post something. Tweet something. Connect with someone. Post value messages every day. If you do it every day, and do it right, you will create loyal customers and profit from your ability to expose yourself, your thoughts, your and value-driven message to your market and around the world.
And two years from now when your biggest competitor decides it's time to find out what Facebook is all about he will quickly discover you own his ass.
Good news! Such an item really exists. It's known as 'business social media', and it's the wave of the future.
Business social media (bsm) is the use of social web sites like Facebook, Twitter and LinkedIn- not to broadcast your latest bowling score to your friends, but as a marketing and sales tool for your company. In much of the country bsm has supplanted newspaper and radio as a business owner's preferred method of marketing. Over three quarters of the respondents to a Constant Contact poll said they used social media, predominately Facebook, as the most important part of their marketing strategy. In San Francisco, where the company I work for is located, a merchant would no more try to start a business without a Facebook and LinkedIn page then they try to start one without electricity hook-ups.
But the Joplin are hasn't caught the wave yet.
A study by a MSSU business group estimates that just 2.3 percent of the locally owned businesses in the Joplin Metropolitan Statistical Area have active business Facebook pages. ('Active' is defined as a page that gets more than eight posts a week). The Joplin LinkedIn group has 96 members, and only four local members have posted on it over the last 30 days. The Carthage group has six members, none from Carthage. (One hales from the Netherlands). Northeast Oklahoma and Southeast Kansas don't have LinkedIn groups for business owners at all. I couldn't find any numbers for local businesses on Twitter, but there are only a handful of locally owned Twitter business accounts that are easy to find. The nearest Groupon (a social site dedicated to promoting a business's 'deals') accounts are in Tulsa.
I could go on, but you get the drift- business social media, the biggest advancement in marketing since the creation of the daily paper, the way business will be done in the future, is in it's nascent stage in the Joplin area.
And that creates an incredible opportunity for local businesses.
The dominant businesses in Joplin in five years are going to be the ones that are the biggest players on the bsm sites. Right now almost no one is vying to be that leader. And that's why you need to get started right now, today, building your social media presence.
It's easy, and it's free. All you need is a computer and an internet connection. Really- that's it. And it's free.
Start with Facebook. DON"T start putting business posts on your existing Facebook page. At the bottom of your Facebook site there is a menu that includes the option 'create a page'. Click on that, and follow the directions. Twitter, LinkedIn, Google+ and YouTube are all as easy as pulling up the site and clicking on 'create an account.'
Look at pages that you like on the bsm sites, see what others are doing, to get an idea what sort of content others are posting. Follow my blog, sekcreditcardguy.blogspot.com- about every other post will be orientated toward business social media. Jeffrey Gitomer has written the definitive book for starting out in bsm- it's called Social Boom. Read it and learn well. Hubspot has more good material than you can read in two lifetimes. And it's free.
Business social media is the best opportunity to grow your business and beat your competition that you have ever had. It's just sitting there, waiting for you take advantage of it. And it's free.
Sign on. Establish an account on each major site. Post something. Tweet something. Connect with someone. Post value messages every day. If you do it every day, and do it right, you will create loyal customers and profit from your ability to expose yourself, your thoughts, your and value-driven message to your market and around the world.
And two years from now when your biggest competitor decides it's time to find out what Facebook is all about he will quickly discover you own his ass.
Wednesday, February 29, 2012
What Is This Nonsense In My Statement?
When you get your credit card processing statement at the first of the month it is full of mysterious terms like 'mid-qual', 'non-qual', 'discount' and 'auth.fee'. Understanding this terminology is the first step to fully understanding what it is costing you to process your credit cards.
The vast majority of statements are 'tiered'- that is, the processing company has taken the hundreds of types of credit card transactions and grouped the similar types into like categories, or tiers. The most common tiers are as follows:
Pin-Based Debit or On Line Debit- transactions made with a debit card and with the card holder entering their pin number into a pinpad or terminal. This tier usually has the lowest rates. However, the debit companies that own the networks these transactions run on charge the processing companies usage fees that are almost always passed on to the merchant (A fact seldom mentioned by the processing company rep). Look for Debit Network Fees, Network Access Fees or just Network Fees on your statement, and add those to your pin-based debit charges to get the true cost for this tier.
Debit, Off Line Debit, or Bank Card- transactions made with a debit card, but without a pin number being entered.
Qualified or Credit- a transaction in which a credit card is swiped, not hand entered. The most common type of transaction.
Mid-Qual or Mid Qualified- a swiped transaction with a credit card that has some sort of award for the card holder; cash back or airline miles or anything of value. The credit card companies pay for those awards by charging you, the merchant, a surcharge on the transaction. There are several lawsuits winding through the courts to try and end the practice of charging the merchants for these types of transactions, or at least let the merchant choose to not accept rewards cards.
Non-Qual or Non Qualified- transactions that are 1) keyed into a terminal, rather than swiped, or 2) held by a business rather than an individual, or 3) transacted with a card that is backed by a non-US bank, such as The Royal Bank of Scotland or Credit Suisse. More of these types of charges end up fraudulent than other types, so a surcharge is added to them, also.
So there you have it- what just a few of the terms you see on your statement mean. Down the road we will talk about what interchange fees are, and what all the add-on fees are for, and PCI, and IRS fees, and it goes on and on. Fortunately Central Payment doesn't nickel and dime our merchants to death with fees, so I don't get a lot of "What the heck is this??!!" phone calls. But when I'm out talking to merchants that work with other processors all sorts of things can come up. Learning the terminology behind the fees will help you keep your processing costs as low as possible.
The vast majority of statements are 'tiered'- that is, the processing company has taken the hundreds of types of credit card transactions and grouped the similar types into like categories, or tiers. The most common tiers are as follows:
Pin-Based Debit or On Line Debit- transactions made with a debit card and with the card holder entering their pin number into a pinpad or terminal. This tier usually has the lowest rates. However, the debit companies that own the networks these transactions run on charge the processing companies usage fees that are almost always passed on to the merchant (A fact seldom mentioned by the processing company rep). Look for Debit Network Fees, Network Access Fees or just Network Fees on your statement, and add those to your pin-based debit charges to get the true cost for this tier.
Debit, Off Line Debit, or Bank Card- transactions made with a debit card, but without a pin number being entered.
Qualified or Credit- a transaction in which a credit card is swiped, not hand entered. The most common type of transaction.
Mid-Qual or Mid Qualified- a swiped transaction with a credit card that has some sort of award for the card holder; cash back or airline miles or anything of value. The credit card companies pay for those awards by charging you, the merchant, a surcharge on the transaction. There are several lawsuits winding through the courts to try and end the practice of charging the merchants for these types of transactions, or at least let the merchant choose to not accept rewards cards.
Non-Qual or Non Qualified- transactions that are 1) keyed into a terminal, rather than swiped, or 2) held by a business rather than an individual, or 3) transacted with a card that is backed by a non-US bank, such as The Royal Bank of Scotland or Credit Suisse. More of these types of charges end up fraudulent than other types, so a surcharge is added to them, also.
So there you have it- what just a few of the terms you see on your statement mean. Down the road we will talk about what interchange fees are, and what all the add-on fees are for, and PCI, and IRS fees, and it goes on and on. Fortunately Central Payment doesn't nickel and dime our merchants to death with fees, so I don't get a lot of "What the heck is this??!!" phone calls. But when I'm out talking to merchants that work with other processors all sorts of things can come up. Learning the terminology behind the fees will help you keep your processing costs as low as possible.
Sunday, January 29, 2012
Know When Your Processing Contract Really Expires
Last week I was visiting with the owner of a small manufacturing company in Parsons.
I had shown him how to reduce his processing costs by sixteen percent, thus freeing up almost $60,000 a year to invest back into operations. His current rep had come down from Overland Park, and the last time they had spoken had been the day he signed the paperwork. His staff despised calling his current processor's customer service line; they said it was a mess of auto-messages, phone trees, and long hold times. Simply put, we were ready to do business together. All that remained was to verify that his contract with the other guys was expired, which he was confident had happened last June.
Well, it turns out he was right- sort of. And wrong- sort of. Nearly every processing company out there has a "rollover " provision in their contract- a fact that few processing reps even know about, much less inform their merchants of.
Say you sign a 3 year agreement with a $400 early termination penalty set to expire on May 1, 2012. Come May 1, you have a window, the length of which varies between processors, to notify the company in writing that you no longer wish to use their services. If the window is 30 days, when June 1 comes around and you haven't canceled, you are automatically rolled into another year's contract replete with the same early termination penalties you had in the first three years. Some companies roll you over once, some twice, and some roll their merchants until they cancel within the window or pay the penalty.
Dig out the fine print in your processing agreement, or have your company send you a copy. Find your rollover clause. Knowing how it works will save you some scratch should you ever desire to fire your credit card company.
I had shown him how to reduce his processing costs by sixteen percent, thus freeing up almost $60,000 a year to invest back into operations. His current rep had come down from Overland Park, and the last time they had spoken had been the day he signed the paperwork. His staff despised calling his current processor's customer service line; they said it was a mess of auto-messages, phone trees, and long hold times. Simply put, we were ready to do business together. All that remained was to verify that his contract with the other guys was expired, which he was confident had happened last June.
Well, it turns out he was right- sort of. And wrong- sort of. Nearly every processing company out there has a "rollover " provision in their contract- a fact that few processing reps even know about, much less inform their merchants of.
Say you sign a 3 year agreement with a $400 early termination penalty set to expire on May 1, 2012. Come May 1, you have a window, the length of which varies between processors, to notify the company in writing that you no longer wish to use their services. If the window is 30 days, when June 1 comes around and you haven't canceled, you are automatically rolled into another year's contract replete with the same early termination penalties you had in the first three years. Some companies roll you over once, some twice, and some roll their merchants until they cancel within the window or pay the penalty.
Dig out the fine print in your processing agreement, or have your company send you a copy. Find your rollover clause. Knowing how it works will save you some scratch should you ever desire to fire your credit card company.
Monday, January 16, 2012
Is There a Merchant Revolt Brewing Against the Credit Card Companies? Part 1
As credit cards increasingly take the place of hard cash businesses find themselves increasingly at the mercy of the credit card companies. Accordingly, the card companies have more leverage over merchants than ever before. When the life or death of your business is dependent on keeping Visa happy, if Visa institutes 'Slap A Merchant Fridays' then on Friday you line up to get slapped.
That's been the case until recently, when their have been a couple of signs that businesses have had enough. One such business is a Park City, Utah restaurant called Cisero's.
Visa and MasterCard both claimed that Cisero's allowed fraudulent credit card charges and broke the card companies security rules by keeping information on too many card accounts in the restaurant's computers.
When a business owner signs the contract with a credit card processing company, almost all of the fine print in the contract deals with the relationship between the business, the processing company (the processing company is a middleman who's job is to move the money around between all the parties involved in a credit or debit transaction) and the banks. Your agreement with the credit card companies, known as an operating contract, usually arrives one to three weeks later in the form of a Processing Terms and Conditions, Funds Transfer Instructions and Association Rules. It is 30 dense pages of illegible fine print and is unreadable by anyone except for top notch contract attorneys.
This treatise, that a business owner either agrees to follow sight unseen by signing the processing contract or 'agrees by deed' when he processes his first credit card, is the source of grief for Cisero's. MasterCard and Visa used arcane provisions buried in the operating contract to fine the restaurant enormous sums of money and debit the funds from it's bank account with no warning, notice, or explanation. The credit card companies never proved their allegations nor gave the business an opportunity to answer the charges.
At first Visa said the amount of the 'actual fraud' was $1.26 million and Cisero's total liability was $1.33 million. The liability changed to $511, 513 when court papers were filed, and finally Visa said the restaurant owed $55,000. For their part, MasterCard said they could assess charges totaling $100,000 but was only imposing $15,000. They later added another $13,823 in 'loss claims'.
In Cisero's law suit against Visa and MasterCard it's lawyers point out that these shifting dollar amounts imply that the card companies were simply making the numbers up as they went along and contend that the whole mess is less about fraud than randomly taking money from small business owners that they don't expect to fight back:
"These various shifting numbers based on unexplained calculations” show that the “process is little more than a scheme to extract steep financial penalties from small merchants,” reads the suit.
The suit also brings up the operating contract:
"When the restaurant entered their first contract arcane operating rules- over 1000 pages in length- were not publicly available to merchants and didn't contain provisions on data security."
Observers expect the card companies to settle rather than to expose and try to explain their operating procedures in open court and possibly providing more ammunition to interested trial attorneys.
That's been the case until recently, when their have been a couple of signs that businesses have had enough. One such business is a Park City, Utah restaurant called Cisero's.
Visa and MasterCard both claimed that Cisero's allowed fraudulent credit card charges and broke the card companies security rules by keeping information on too many card accounts in the restaurant's computers.
When a business owner signs the contract with a credit card processing company, almost all of the fine print in the contract deals with the relationship between the business, the processing company (the processing company is a middleman who's job is to move the money around between all the parties involved in a credit or debit transaction) and the banks. Your agreement with the credit card companies, known as an operating contract, usually arrives one to three weeks later in the form of a Processing Terms and Conditions, Funds Transfer Instructions and Association Rules. It is 30 dense pages of illegible fine print and is unreadable by anyone except for top notch contract attorneys.
This treatise, that a business owner either agrees to follow sight unseen by signing the processing contract or 'agrees by deed' when he processes his first credit card, is the source of grief for Cisero's. MasterCard and Visa used arcane provisions buried in the operating contract to fine the restaurant enormous sums of money and debit the funds from it's bank account with no warning, notice, or explanation. The credit card companies never proved their allegations nor gave the business an opportunity to answer the charges.
At first Visa said the amount of the 'actual fraud' was $1.26 million and Cisero's total liability was $1.33 million. The liability changed to $511, 513 when court papers were filed, and finally Visa said the restaurant owed $55,000. For their part, MasterCard said they could assess charges totaling $100,000 but was only imposing $15,000. They later added another $13,823 in 'loss claims'.
In Cisero's law suit against Visa and MasterCard it's lawyers point out that these shifting dollar amounts imply that the card companies were simply making the numbers up as they went along and contend that the whole mess is less about fraud than randomly taking money from small business owners that they don't expect to fight back:
"These various shifting numbers based on unexplained calculations” show that the “process is little more than a scheme to extract steep financial penalties from small merchants,” reads the suit.
The suit also brings up the operating contract:
"When the restaurant entered their first contract arcane operating rules- over 1000 pages in length- were not publicly available to merchants and didn't contain provisions on data security."
Observers expect the card companies to settle rather than to expose and try to explain their operating procedures in open court and possibly providing more ammunition to interested trial attorneys.
Later in the week in Part 2 will be the story of a merchant based class action suit that caused MasterCard to cry 'Uncle".
Monday, January 2, 2012
You Can Keep Your Resolutions This Year.
It's January second. The tinkling noises you will hear over the next two to twelve weeks is the sound of 2012’s New Year's resolutions being broken all around you.
Year in and year out January is the month that gyms get the highest number of new members. Jenny Craig, Nutri-Systems and Weight Watchers all have their best months. AA and NA groups see more new faces in January than any other two months of the year combined, and on line book sellers deliver self-help books by the truckload.
And next year will be the same, because statistics tell us that by the end of March only three percent of the people who made resolutions will still be following them.
What makes us unable, year after year, to make the changes we know we need to make in our lives, for our health, for our families, for our careers? It's not what you think. It's not laziness, or complacency, or sloth. It's because making those changes is damn near impossible.
Scientist who study the brain don't agree on much, but one thing they all seem to line up on is that when we have done an activity or engaged in a behavior enough to hard wire it in our brain as a habit then it becomes incredibly hard to unwire. This was very useful back when our food hunted us while we hunted it and hesitation was the difference between eating supper and being supper. But in modern times it means that dropping twenty pounds so you'll have a shot when you ask out the hot redhead in the next cubicle it near impossibly hard.
Near impossible, but not impossible. Remember, three percent of the people that set New Year's resolutions are still living by them three months later. That begs the question- what is different about that three percent, what do they do differently than the vast majority? Studies have given us two answers.
The first is that the three per centers are goal setters who write their resolutions down and refer to them often. Many successful resolution setters tell of leaving Post-its with their goals on the bathroom mirror, on the refrigerator, on the TV screen. One man made his cell phone ringtone a recording of his resolution, to be reminded every time his phone rang. It is hard to settle back into the old habits when the new ones are staring you in the face wherever you go.
Secondly, the people in the three percent know that changing their own behavior is going to be an enormous undertaking. They approach it with the single-mindedness of a tired marathoner approaching a steep hill. One foot after the other, keep plodding, don't quit, don't stop, must not let up. No matter the difficulty or the pain, unflaggingly putting one foot in front of the other. Until finally the hill is crested, the old habit falls away, and a new one snaps in to take its place.
That's the sort of effort it takes to make changes in our brain's hard drive. Very few are willing to put forth that effort. But the ones that do find success.
If you made a New Year's resolution (and are serious about wanting to make the change), write it down so that it is always on the periphery of your thoughts. And start running your hill. Good luck- hope to see you on the downhill side
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