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.
Wednesday, August 15, 2012
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.
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