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.
Tuesday, July 30, 2013
Thursday, May 30, 2013
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.
Friday, January 25, 2013
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.
Wednesday, October 24, 2012
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 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.
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.
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