Things Card Processing Companies Do That Make People Hate Them, Episode 219

About a month ago I took over the credit card processing for a printer in a little town in Missouri. He was under contract with his previous processor, but a quick look through his paperwork revealed an early termination fee (ETF) addendum, a form that said there was no ETF if he stopped processing with them during the term of the agreement.

After I had him up and running with new equipment and was sure everything was working properly I had him sign a termination of processing form and fax it to the old company.

He emailed me shortly after- customer service from the old processor had called and told him he was going to get charged a $700 ETF. I told my guy not to fret, and to tell them he had a signed ETF addendum. Customer Service asked him to fax that in. 

He did, and Got a new email from the old company- they were accepting the ETF addendum- BUT- they had already sent the ACH for the $700, so they would have to credit that back. No problem, said my patient new customer. 

Three days went by with no $700 returned so my customer called his old processor's customer service line again to inquire why. He was told that he would have to get a copy of his bank statement showing where the $700 cam out. He faxed his bank statement and is expecting to get his $700 back by the end of the week.

Two things about this drive me crazy. The first is sending in a copy of the addendum. Do you mean to tell me, huge and impersonal credit card processing company, that you don't have the ETF addendum, that YOU designed and YOU sent out a part of the paperwork to be done at signing; that you don't already have that in the customer's file? I'm calling BS on that move. 

But what's even worse is the request for a bank statement showing where the $700 ETF was ACH'ed from the the customer's account. YOU ACH'ED IT!! The processing company knows full and well that the funds came out of the account- they took it out!

This is a good example of a terrible processing company practise- if they can come up with enough hoops for a customer to jump through when the customer is trying to terminate the relationship, maybe the customer will give up and stay with the status quo. And it works, often enough for some companies to keep doing it.

Two Numbers That Bankrupt Locally Owned Businesses Every Day

A lot of small businesses fail because their owners never figure out the importance of knowing their cost per customer and their value per customer.

Let's look at a hypothetical business owner who decides to promote her retail business via direct mail. She sends out 10,000 postcards at a cost of $3,000, and gets a response rate of .5%, bringing 50 new customers into her shop.In this case the cost per customer is $60 ($3,000 / 50 customers = $60). She's very happy with the response, and writes a marketing plan that includes a new 10,000 mail drop every month. She figures with 50 new customers a month, after a year her little shop will be bursting at the seams.

But...Because she doesn't have a POS system in place, she has no way of tracking what each customer spends. If she did, she would know that most of her customers come in once a month and spend $20.00. She has a good product and is able to run a 20% profit margin, giving her a customer value of $48 per year. (twenty per cent of $20 is $4, times 12 months is $48).

And on it goes, month after month; our business woman spending $60 to earn $48. As things get tighter and the bills pile up, may be one month she even decides to triple her postcard drop, in a desperate attempt to bust out of her downward spiral- but instead of helping, that just sends her to bankruptcy even quicker.

This same scenario is occurring in countless businesses all across the country. Right now. And its unnecessary. Know your cost per customer. Know your value for customer. Make sure the value is higher than the cost. A POS system can tell you both figures at the press of a button.

Five Common Point of Sale System Mistakes

There are five common mistakes I see business owners make when it comes to their point of sale (POS) systems. Whether it be a tablet POS, a touch screen system, a Windows type software system or any other form of POS technology, these are mistakes that can be avoided.

1- Trying to solve an operational problem with technology. Technology is a great resource, but its not necessarily a great problem solver. A lot of POS salesmen will come into your business and promise that their technology will make all your problems go away, and that simply isn't true. A POS system is a tool to increase the efficiency of your existing processes. If your business is losing money, you have to find the root causes of  why you're losing money- don't look at a PO system as a magic wand that's going to solve all your problems.

2- Not considering future changes. EMV chip cards are the way of the future in the card payment industry. A tablet POS system I like is Global Bay by Verifone. Verifone makes EMV ready PIN pads that can plug right into the Global Bay tablet. A business owner that makes a POS system purchase without considering the future is going to be looking at purchasing a brand new system or an expensive up-fit next year when the changeover to EMV ready technology rolls out. Any sort of payment technology decision made now should be made with EMV cards in mind. 

3- Not considering integration with current systems. Bob down at Bob's Diner is all excited about his shiny new touchscreen POS system. One of his biggest reasons for getting a POS system was the ability integrate his email list into the POS system. Unfortunately he has just discovered that his email list is on Mail Chimp...and Mail Chimp doesn't integrate with his new system. Always make sure beforehand that all of your existing systems are going to be able to be integrated with your new POS system.

4- Not getting very much from the system. I was just looking through the ITunes app store. There are at least 100 different apps that turn your IPad into a POS system. But what do they offer in terms of support, coaching and training? Do they provide advanced training on how to use the system? Do you have to pay for technical support? Is technical support even provided? These are important questions that you need to find the answers to if you are going to get the most out of your new technology.

5- Not having a POS system at all. In today's economy a retailer or restaurant owner that is still using a cash register and ink and paper isn't doing all she can to make her business successful. There is really no excuse for not having a POS system. For a little more than $1000 we can offer you a complete tablet system that keeps your book, does your inventory, does your menus, tracks employee hours and does your payroll and more. For a little more than $3000 we can offer a touchscreen POS that  provides you the same systems and benefits that your Big Box competitors pay hundreds of thousands of dollars for. We do the installation, provide you with upfront training and all the ongoing training you need, and free technical support for four years. It's time to put away the cash register and compete on the same level with the national chain store down the street. 

Three Simple Steps to Save $1000 on Your Credit Card Processing

Your merchant services account representative should be concerned with the success of your company. If he's not, or you haven't seen him since the day you signed your paperwork, find one who is- they can make a big difference in your bottom line. Here are three simple ways you an shave $1000 a year off of your processing costs.

1. Stop trying to figure out your processing statement on your own; instead, learn your 'effective rate'.

You can study the myriad of rates and fees on your statement, and spend hours trying to learn the terminology and suss out the difference between 'commercial level II' and 'CPS-Commerce Preferred Retail'.

Or you can learn to calculate the most important number in a processing account, the one that tells you your real cost for accepting credit cards- the effective rate. 

To figure your effective rate, simple divide the amount you paid your processor by the dollar volume that you processed. Be sure you are accounting for all of our costs- if you pay an annual feel or annual PCI fee (you shouldn't be paying either, but that's for later) divide those fees by 12 and add that to your amount paid. If you are leasing or renting your terminal (shouldn't be doing either) or paid a lump sum up front for it (shouldn't do that), include that amount as well.

For example, let's say in December you processed $10,000, and it cost you $380. You lease your terminal for $49 a month, so add that in- $380 + $49 = $429. You then divide total payout, $429, by your amount processed, $10,000 and come up with an effective rate of 4.29. Another way to look at it is for every $100 you ran through your credit card terminal, it cost you $4.29 to do so.

If you are an average small business processing between $5,000 and $25,000 a month with an average ticket between $20 and $100 dollars you should be paying an effective rate of 2.0% to 2.5%. Anything higher than 2.5 means there is probably room for savings.

Let's go back to our example business owner who was paying 4.29% on $10,000 monthly volume. He switches to a processor watching out for the business owner's interests and his new rates and fees equal an effective rate of 2.5. He'll finding he's paying $179 less a month, saving his business $2148 a year.

2. Identify fees that you shouldn't be paying.

Most business owners look at the list of fees on their credit card statement and assume they are just the price of  accepting credit cards. Not so. 

One of the most insidious fees in the payment industry right now are the ones related to the PCI program. In order to be PCI compliant a business owner is required to complete a self assessment questionnaire. It takes about ten minutes, and can be done for free on the PCI DSS website. Most processors charge an annual PCI fee that ranges from $50 to several hundred dollars. Some charge non-compliance fees of $15 to $50 a month every month a merchant hasn't completed the assessment. The worst charge the annual fee, the non-compliance fee, and automatically enroll you in 'breach protection' coverage that they charge you $15 or more a month for.

If you question your processor about these fees they will tell you they are mandatory and every company charges them. It's not mandatory, and though most processors charge these fees, a few don't. If you can't find one, contact me.

Other fees you shouldn't be paying are set-up and application fees, annual fees, 'preferred customer' or 'customer club' fees (this is where they charge you $8 to $15 a month for terminal paper and advanced reporting. A good representative will supply you with free paper and answer any reporting questions for you), and customer service fees.

I know of a processing company that charges a $195 application fee, a $95 annual fee, $75 annual PCI fee, and $11.95 monthly club fee. Over the life of their mandatory three year contract it drains $1135 out of their customers- all of it unnecessary. 

And of course, you should never pay for your terminal. No lump sum up front. No monthly rental. And by all means, no four or five year lease. You should get a free terminal in exchange for letting a company handle your processing. And by free, I mean absolutely free- not free except for a $69 set up fee, or $39 for shipping. 

3. Don't get locked into a long term contract

The worst position a business owner can find himself in in terms of his credit card processing is to know he's over-paying a processor and could reduce his costs with a different company, but unable to switch without being hit with a big early termination penalty. Its time contracts for credit card processing went the way of the dodo bird.You should only work with a processor that offers month to month agreements with no early termination fee.

There you have it- three methods any business owner can use to save $1000 off his processing costs. If you have any questions just contact me, and I'll be happy to help.

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25 Most Common Internet Passwords

When Adobe revealed in October that a jaw-dropping 38 million Internet passwords had been nabbed and posted on the 'net for hackers to make use of it caused headaches in the IT departments of companies across the web.

If there was a silver lining to that debacle it was that when companies  combed through the passwords in order to warn their customers they found an astonishing number of people use the same simple, easy to guess passwords.

From the records SpiderLabs and BBC News were able to the 25 most common passwords in the hacker's hands. If you see a password of yours on this list, time to change it.

• 123456
• 123456789
• password
• admin
• 12345678
• qwerty
• 1234567
• 111111
• photoshop
• 123123
• 1234567890
• 000000
• abc123
• 1234
• adobe1
• macromedia
• azerty
• iloveyou
• aaaaaa
• 654321

• 
  

IRS Postpones Backup Withholding For Credit Card Accounts to 2014

Yesterday afternoon in a welcome bit of news the IRS announced that they are delaying the requirement to begin backup withholding for merchant service providers until 2014.

Backup withholding is a penalty the IRS submits to merchants that have an or  incorrect TAX Identification Numbers (TIN) on file with their credit card processor. If the TIN on file with the processor didn't match what was on file at the IRS the processing company would be ordered to withhold 28 percent of the merchant's credit card volume. This would continue until the merchant filed a return that the IRS judged to have a TIN that matched what was on file at the processors.

The postponement is terrific news for merchants and their payment card processors. The policy has already created a blizzard of new paperwork for the processing companies. And with withholding scheduled to begin in a few months the inevitable results were going to be: merchants furious with their processing companies, even though the processors hands were tied in the matter; and further hardship on businesses already struggling to keep their doors open. We should all breath a sigh of relief that's been postponed.

However, it's critical that merchants not overreact  become lax with respect to filing correct TINs. The IRS delayed backup withholding for one year but it is still going to come next year. And the match on file next year will be based on the 1099 that is filed in January 2014- only a few months away.

Touchscreen POS System With Free Technical Support For Less Than $3200

Are you a retailer or restaurant owner who has seen the benefits of a  touch screen Point Of Sale (POS) system but been deterred from purchasing one by the near-five figure price tag on most systems on the market? If so, your time has come!

CCSalesPro and HioPos have teamed up to offer a custom touch screen POS system for under $3200, printer, software and cash drawer included. If a business owner desires a heavy duty cash drawer or a bar code scanner they are available for a few hundred dollars more. Other options like a kitchen printer and digital scale are available.

There are no hidden fees and no monthly expenses. The purchase price includes installation and training. In addition, technical support is provided at no cost for four years. If a restaurant provides a menu, or a retailer provides an Excel spreadsheet detailing her product line, they will upload those into your new system for you at no charge.

Running your business on a shoestring budget? Choose to lease your new system for around $100 a month for 48 months.

Feel free to contact me for details or with any questions.

Merchants Are Running Out of Time to Prevent IRS Backup Withholding.

This is the time of year that credit card processors notify merchants for whom they do not have correct Taxpayer Identification Numbers (TIN) on file. Should you receive such a notice it is vitally important to your business that you contact your processor immediately.

As I covered in this post last year, http://brswitzer.blogspot.com/2012/08/tax-identification-numbers-and-your.html, having an incorrect TIN on file with your processor results in backup withholding, whereby the processor withholds 28 percent of all your credit card volume by order of the IRS. Fixing the TIN after withholding starts doesn't help- it will not end until you file a tax return and the IRS determines you are eligible for a refund.

In September and October the IRS requires processors to send "B" notices to affected merchants listing the steps they need to take to update their account information. The "B" notice will include a Form W-9. The Processing company has just 30 days from when they are notified by the IRS to get a corrected W-9 back from the merchants, after which they are forced to start backup withholding.

You should always read any communication from your processing company, but it's especially important during these two months of the year. If you receive notice that your TIN is invalid or doesn't match what's on file with your processor, contact them and update your account immediately.

Enormous Double Billing Error Affects Companies Across US

First Data Corp., the back end platform for thousands of credit card processing companies, revealed today to it's processing partner companies that they duplicated the ACH payment for July processing fees on one of it's largest  platforms.

First Data is still reviewing to see how many merchants are affected, but the number could be in the hundreds of thousands. First Data is also explaining that the ACHs may not be for the same amount. For instance if a merchant owed $200 for their July processing the first ACH would be $200 and the second $203 or some other close but not exactly the same number.

The company hopes to have the reversal file built today. Once the file is built they expect to be able to deposit refunds within 24-48 hours.

Reportedly the company will be working with any merchants that incur NSF charges as a result of the incident. They will require documentation and ask that you contact your processing company if this has occurred.

The Ten Most Easily Stolen ATM Card PINs

Credit and debit card fraud affects millions of Americans every year.  Your first line of protection against fraud is your PIN, and depending on how much thought you put into your personalized number, you could be at greater risk than you realize.

A new study from DataGenetics says that card thieves are able to successfully guess more than 25 percent of stolen card PUN's within 20 attempts. The study lists the most used PIN's. And because they are the most commonly used PIN numbers, they are by default the least safe.

The 10 most used PINs:

  1.  1234

  2.  1111

  3.  0000

  4  1212

  5.  7777

  6.  1004

  7.  2000

  8.  4444

  9.  2222

10.  6969

By the way, the study said the least used PIN is 8068.

Are you using SMS (text) Messaging to Engage Your Customers?

Email has been a transformational way for business owners to keep in touch and send offers to customers. However, mobile is emerging as THE channel of tomorrow, and merchants need to be able to use it to improve brand awareness and engage with new and prospective customers.

According to a 2012 Pew Internet and American Life research Report, the majority  (a whopping 82%) are sending and receiving text messages on a daily basis. Naturally, with this huge increase in text messaging, SMS (Short Message Service, or texting) campaigns present a way for businesses to reach customers on the channel they use most frequently to interact with family and friends. It has become one of the most powerful and effective new ways to activate and engage customers.

Retailers have traditionally built foundational relationships with their customers with email- but you should know that text messaging is an up-and-coming platform that you can use to maintain regular communication with your customers. By implementing a mobile strategy that appeal to customers who are familiar with and regularly use mobile, you can broaden your reach and appeal to a wider audience. By sending instant and relevant messages to customers and providing them with a strong call-to-action, businesses can bolster their brand as well as improve revenue.

SMS allows businesses to spread awareness of their mobile presence and keep customers engaged by offering coupons and initiatives.  You can also increase loyalty and increase future purchases by engaging with your customers by sending alerts on new products and sales. SMS campaigns that provide consumers with timely offers and insider brand information can turn casual shoppers into loyal customers and brand advocates.

With the steadily growing number of customers using mobile to access the web, in addition to the number of customers browsing and purchasing through mobile storefronts and retail applications, SMS is a key tactic you should incorporate to boost your marketing strategy.

Getting Your Share of the Credit Card Class Action Settlement

Visa and MasterCard have recently reached a proposed settlement agreement that  allows  merchants to receive a portion of the $7.25 billion total proposed settlement amount. The settlement is the result of a class action lawsuit brought against Visa and Mastercard by hundreds of businesses across the country. The lawsuit claims that merchants paid excessive credit card fees for accepting Visa and Mastercard due to an alleged conspiracy by the card companies.

Any merchants who accepted Visa or MasterCard between January 1, 2004 and November 28, 2012 are eligible to receive a portion of the Cash Fund based on the volume that was processed in this time frame. Merchants who are eligible to receive money from this fund will be able to collect it once the settlement is approved during the Fairness Hearing, scheduled for  September 12, 2013, in New York. 

There are two settlement classes. The first is a more than  six billion dollar fund set aside for anyone that accepted cards during the above time frame. An individual merchant's settlement amount will be 10 basis points, or ten one hundredths of one percent (.0010 percent) of the volume the merchant processed during the time frame.

So if Bob's Diner processed $10,000 a month between January '04 and the end of November 2012, Bob would take $10,000 X 107 months, for a processed amount of $1,070,000. Ten one hundredths of a percent of that figure is $1070- Bob's settlement payout. 

The second fund is open to certain merchants that accepted Visa and Mastercard and who  paid interchange fees during an eight month period that starts on July 29, 2013. This fund is estimated to be $1.2 billion.

A website has been set up at paymentcardsettlement.com for merchant informationand to file claims. 

Two very important points about the settlement- the first is its scope. This is FREE MONEY for anyone anywhere in the country that accepted Visa or Mastercard. All that is required is completing some paperwork and following the guidelines established on the settlement website. Nonetheless, fund administrators expect fewer than thirty percent of eligible merchants will claim their settlement share.

Secondly, dishonest processing companies are already trying to mislead merchants in regards to the settlements.Using phone calls, emails and faxes they promise they can help you get a huge settlement if only you let them take over your processing.

Each merchant's settlement amount is what it is. You plug your numbers into the formula and viola; the amount that results is your payout, and no one can change that.

So check out the settlement website, spend an afternoon totalling up the amount you processed over the settlement period, and start the paperwork to receive your funds. And pay no attention to the dishonest processing companies that give this industry such a bad name.

Feel free to contact me with any questions, concerns or problems you have concerning the settlement, or anything else concerning your businesses electronic payments.

Visa Allows Surcharging; Why You Should Think Twice Before You Surcharge

Beginning Monday business owners  are going to be deluged by sales people offering to make their credit card processing more profitable by adding 'surcharging' to their processing account.

And while it's true that as of Monday Visa has changed it's rules so that it is no longer against the card rules to add surcharges to credit transactions- to add a $1.00 fee to each card you process to cover your processing costs, for example- it is not a cut and dried situation.

First of all, surcharges are illegal in Kansas and Oklahoma by state law. Secondly, Visa's instituted  a myriad of rules and regulations that you must follow if you are going to add surcharges- it can only be done on credit transactions, not debit, you have to follow guidelines that tell you how much you are allowed to surcharge, and several others. The regulations that accompany surcharging are complicated, and I suspect that Visa will be watching very closely for a few months and coming down hard on violators, whether they intended to break Visa's rules or not.

And thirdly, I would urge you to really consider whether you should be surcharging at all. Your customers are not going to like it. Unless you think it wise to anger a broad section of your customer base you may not want to participate.

If you genuinely feel you are paying too much for your credit card processing and have to recoup some of those costs (and if that is the case you need to redo your processing agreement) there is a better option- you can always offer a small cash discount. That will encourage more customers to pay with cash, and allow you to cover some of the costs accrued when customers do pay with credit. (Just remember to adjust your pricing accordingly.)

If you are in a state where surcharging is illegal and someone claims it isn't or has a way to get around the law, contact me immediately. I'll get you the law's title number and exact wording- you don't want to be breaking the law. And if anyone has any questions or concerns about the rules and regulations that Visa has in place, feel free to contact me anytime.

Barnes and Noble Reports PIN Pad Fraud at 63 Locations

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.

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.

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.

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.

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.

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.

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.