Posts filed under 'Merchant Accounts'
With well over 10,000 new visitors per month, this post is to reference what I think are some of the better and more important posts and topics of this past year.
January 2007:
February 2007:
March 2007:
April 2007:
May 2007:
June 2007:
July 2007:
August 2007:
September 2007:
October 2007:
November 2007:
December 2007:
Also, a look back at the year 2006 in review.
December 14th, 2007
We recently installed a Verifone pay-at-the-table system in a restaurant here in Austin. Our customer, Ruth’s Chris Steakhouse, is the first restaurant in Texas to use a table payment system, and so far the result is very positive.
Pay at the table is something that has been around in Europe for a long time, but is just now gaining popularity in the US. Table payment offers much better card security (if setup correctly), and is a way to increase the speed of processing customer transactions.
Benefits of pay-at-the-table processing:
- Card skimming potential is eliminated.
- Customer can process their own payment with tip, without ever handing over their card.
- Faster than using a central location for processing.
The biggest benefit from any standpoint, is the increased security that customers have by not ever handing over their credit card. Card skimming is eliminated entirely, which protects business owners and their customers from bad employees. This is one of the few systems that truly benefit both the customer and the business.
Setup a pay-at-the-table system for your business:
The system that we used in the case of Ruth’s Chris Steakhouse is a custom Verifone system called “On The Spot”. This is not the only system available but it is ready virtually out of the box using WiFi Verifone VX 670 terminals, and it provides centralized reporting for any number of terminals being used with the system. VX 670 terminals work with most wireless networks, and if you already have one setup, integrating should be fairly easy.
Other possible methods include standard WiFi or Wireless terminals. These systems would lack the centralized reporting that On The Spot provides, but would be substantially lower priced. WiFi would be preferable to avoid wireless access fees. Wireless terminals are getting to a price that almost makes them affordable for a system like this, and a true wireless terminals would eliminate the need for a WiFi network, and would be much more portable than a WiFi terminal.
Both Verifone and Hypercom appear to be developing WiFi battery operated terminals for this specific purpose, so pay at the table may become mainstream rapidly. Once the prices on these terminals go down, I think that table payments will become common in the US.
If you’re interested in using a pay at the table processing, check out the On the Spot system that we offer.
December 12th, 2007
This theory isn’t yet a fact, but now that banks (Capital One) are offering reward programs for debit cards, we can all assume that more/higher interchange rates are going to result.
Until now there were no rewards card programs for debit cards, which helped to reduce the price for businesses accepting debit cards from their customers. For some businesses, more than 50% of all transactions are from debit cards, which contributes a significant savings over time.
The effect of Capital One making a card like this, will likely result in banks offering similar rewards for their own debit cards. A similar Visa labeled card to compete with the Capital One card is also a likely future development. The combination of this cascade of debit card expenses, will likely drive both MasterCard and Visa to increase debit card interchange, and create additional debit rewards tiers. This could be the beginning of huge growth and change in the debit card market.
The Capital One Card:
This system stands to actually have a major impact on the processing industry, because the new Capital One Debit card is unique compared to any debit card in existence. The new capital one card can be linked to any bank account that offers ACH capabilities. What this essentially means is that a person can sign up for this new debit card, and not switch banks. If you personal bank doesn’t have a reward program for debit purchases, then the Capital One program would be a great card without any drawback for using it.
The catch is that if a person does not have a Capital One credit card, they must get a co-branded debit card, where the rewards can only be redeemed at the place of co-branding (Most likely a large retailer). Even with this inconvenience, it is still a much better program than any other debit card out there.
The uniqueness of this card in conjunction with mega-retailers brute-force marketing, gives this debit card the potential to get very popular, very fast.
The whole problem lies in consumers:
Rising interchange fees are almost always a result of consumer credit card trends, as rewards cards are one of the leading causes of higher interchange rates. Until consumers stop buying into reward cards, interchange can’t go anywhere but up. It’s ironic that the people who spend money at businesses, are also responsible for rising processing costs.
November 12th, 2007
When you integrate a website with a payment gateway, you have to decide what to show your customer when a transaction is declined, or if their card received an AVS or CVV mismatch response. As simple as this may sound, doing it wrong can drastically impact a customer’s desire to change their information and try again.
In the past, I have supported giving a visitor a single response for any decline, AVS mismatch, error or otherwise because it eliminated one of the lesser-known types of online fraud. Card testing is not something that should be overlooked, because it can have severe consequences that many business owners are not aware of.
After some long-term observation, I think that there is a better way to handle card testing while increasing the chances of a prospect becoming a customer. Depending on how your customers react to their transaction not going through as planned, it’s possible to lose a measurable amount of sales by not displaying the correct message.
1.) The first step is blocking the IP’s that card testing often comes from. In almost every situation I can think of, blocking IP addresses is ineffective at best, but in this one, it works fairly well. I’ve analyzed a lot of card testing attempts on many websites over the past five years, and nearly every one of them has come from an address that falls in one of these IP addresses.
2.) The next step is to develop an error message for different responses that you get from your payment gateway. These should be broad, but specific enough for your customer to understand what they need to do to correct the situation. Too broad and your customer doesn’t know what they need to do. Too detailed and the card testing thing may become an issue again.
Example:
General decline: We’re sorry but your credit card was declined. Please use an alternative credit card and try submitting again. If you experience further problems, please call us at 555-555-5555 to complete your transaction over the phone.
AVS mismatch, error, unavailable: We’re sorry but it appears that the billing address that you entered does not match the billing address registered with your card. Please verify that the billing address and zip code you entered are the ones registered with your card issuer and try again. If you experience further problems, please call us at 555-555-5555 to complete your transaction over the phone.
AVS tips:
I do not recommend full street address matching with AVS. Your customer’s don’t need to know exactly what you match with regards to AVS. While the system works in theory, it is prone to errors, and more often than not street address errors are something other that the person entering the wrong street address. The zip code should most definitely be matched, but only the first 5 digits should be required. Very few people know the second 4 digits of their zip code.
Card Verification (CVV2, CVC, CVV, etc…) Tips:
Card code verification should be processed on every transaction. It costs nothing extra, and not using it is a poor practice at the expense of you and your customers. However, actually requiring a positive card code match is something that many would debate. Personally, I would require it on the website, validate that a card code is entered, process it, but don’t decline on a card code mismatch. It’s best to flag transactions for further review if a card code mismatch occurs. Card codes get worn off, the system often returns errors or not-available responses, and the number of declines is usually more than an acceptable or actual amount.
With either AVS or CVV, if you sell products that carry a high risk of fraud and chargebacks, have high dollar sales, or you have had problems in the past with fraud, then I would definitely require a positive match in both areas. This would include any custom products, electronics, and high dollar merchandise (>$1000), etc. Also, your processor may require a positive card code match for online transactions, and you should definitely abide in this case.
Finally:
You should always be on the lookout for card testing if you decide to show different responses for declines and errors. Blocking those IP addresses will do nothing if the person doing the testing is not in one of those ranges. If it ever becomes a problem, the numerous fraud prevention options that payment gateways have are designed to curb card testing. Whatever the case, action needs to be taken quickly to minimize the negative effects that can come from card testing.
November 2nd, 2007
Mastercard just released their own payment gateway.
This system appears to be a little different than the traditional (authoize.net / Verisign) payment gateway. It appears to be more like what we would consider a P2P money transfer medium, where buyers can pay businesses directly and businesses can invoice and collect payments from their customers. I guess you would call it a B2B money transfer system. There’s very little information about it currently, but I will be sure to post updates as they release more information about it. The website has some general information for buyers and for sellers.
October 4th, 2007
This is a quick tip for retail and other businesses who batch their terminals out manually, in the morning or late at night. If you make your daily batch in the afternoon rather than at night, you can often get the transactions from that day into your bank account earlier. Obviously you don’t want to completely screw up your books, but if you are looking to get your money a little faster and changing your batch time wont screw everything up this can reduce a day from your deposit time.
This can also work for merchants using payment gateways that allow them to specify their settlement time at the end of the day. If you can, find out what time your processor makes settlements every day, and set your batch to an hour or so before that time.
October 3rd, 2007
I get a lot of sales agents that stop by the blog looking for general and specific information. Since this blog is written with the business owner in mind and not necessarily directly for the MLS agent, you may not find the information that you are looking for.
Here’s a few good information resources for independent salespersons:
MLS warriors forum
Greensheet forum
Card forum
Visa partner network
Visa :: Merchants
Mastercard :: Merchants
Also, the blogs and websites under the ‘Payment Processing’ section of the left navigation are good places to get information.
August 17th, 2007
I’ve been working on a new project for some time now, and it is finally complete enough to make public (still has a long way to go though). I started making a payment provider directory a few months ago and after integrating various ideas into it, I think it is finally going to be something worth the effort. All of the other payment services directories (BOTW, DMOZ, Business.com) are terrible, and I hope to make this an authoritative, unbiased directory for processing services.
Basically, this payment directory is designed to list only real, registered payments related service providers. There is no bias to any company. This should help business owners that are trying to verify the validity of a company that they are looking at. It also has a visual feature on the front page that organizes different service providers in a hierarchical model. It’s the only visual model of processor relationships that I have ever seen, and it makes a lot of sense to me especially after seeing it come together. I don’t plan to have user reviews of any companies at this time, mainly to avoid the “this company sucks” reviews, which don’t provide a lot of value to most individuals.
Current Categories:
Registered ISO’s / MSP’s / Banks (Must be registered with Visa, Mastercard and a sponsor bank. Sales agents don’t count.)
1st Tier Payment Gateways (Co-branded payment gateways don’t count.)
Processing Equipment Manufacturers
Bankcard Attorneys (Must be an active member of a state Bar, and have experience in bankcard law)
PCI / SDP / CISP Security Services
Future Categories: (the spam potential is huge for these so I’m hesitant to add them)
Outside Sales Agents
Shopping Carts
There’s definitely some inaccuracies in relationships at this time, but I expect to work these out in the next few months. As more companies are added to the directory the visual model will become increasingly accurate. I have to give credit to smashing magazine, as their recent post on data visualization inspired me to apply it to the directory. Also, the data visualization code JsViz was used for the homepage which is pulled dynamically from the directory database.
I will admit upfront that the visual model is innaccurate in the sense that many ISO’s are registered with more than one processor. As a result, an actual visual model would look like a spiderweb rather than a snowflake.
So, if you get a chance, check out the payment directory. Contributions will be very appreciated, and please let me know if you find any incorrect information, or suggestions.
August 15th, 2007
I thought that this was appropriate considering my latest post.
First Data recently released a program for high-risk businesses so they would not have to go to an offshore or 3rd party processor. Not all high-risk businesses can use this program, but it does allow some of the industries that were previously considered too risky, to process with First Data. Card Service International could take some of these businesses before, but now any ISO that has the ability to sign with the tier 2 program can service these businesses without referring them to CSI.
Businesses that can process with the tier 2 program:
- Adult Products/Merchandise-Not Unqualified (Non Graphic Images)
- Auction Houses
- Charities (other than well known events or causes which are Low Risk)
- Companion/Escort Services (Non-Adult)
- Coupons/Certificates
- Custom Made Items (Except Golf Clubs)
- **Dating Services (on-line, no Adult)
- Diet programs/vitamin sales/herbal remedies-Via MO/TO or Internet
- Discount Buying Clubs/Home Shopping Clubs
- Financial Aid/counseling/student loans/scholarship search services
- Financial Consultants
- Flea Markets (Defined as firms/individuals operating from a Booth, on a part time basis with no lease or telephone availability; whether indoors or outdoor)
- Fortune Tellers (Brick and Mortar)
- Fulfillment Centers (not Aggregators which are Unqualified)
- Gambling advice/Sports Forecasting or Odds making (unless audio or video text which require Visa Registration)
- Membership Clubs -Health and Sports (Extended Memberships)
- Import/Export (Non Mag Stripe or MO/TO)
- Investment Programs/ Opportunities/Seminars
- Pseudo-pharmaceuticals (anti-aging pills, Sex Nutrients, etc.)
- Real Estate Agents/Brokers engaged in vacation
- beach or ski home rentals.
- Seminars (including Real Estate)
- Shippers/Forwarding Brokers and Motor Freight Carriers
- Subscription Services (magazine, newspaper, newsletter).
- Telephone Services/Prepaid Cards
- Theatre/Concerts
- Ticket Brokers
- Timeshare
- Timeshare Advertising Services
- Travel Agents/Tour Operators
- Travel Clubs
- Water Filters/Purifiers
- Door to Door Sales
As I understand, not all First Data ISO’s are allowed to sign businesses on the tier 2 program. Also, these businesses will have to pay a slightly higher rate, but it should be very reasonable when compared to an offshore provider (~ + 10 - 20 basis points, and $.05 - $.10 above a standard rate).
July 31st, 2007
These are the business types which are prohibited with most US processors. Some processors may allow a few of these assuming they have business history, but generally these businesses won’t be able to process with a US provider.
- All Sexually Oriented or Pornographic merchants including:
- Adult Book Stores
- Adult Telephone Conversations or video text
- Companion/Escort Services/Dating Services
- Massage Parlors
- Topless bars/clubs
- Modeling agencies
- Misc entertainment (not elsewhere classified)
- Aggregators (third party payment processors)
- Audio/video text
- Airlines
- Cruise Lines
- Any Illegal products/services or any service or product providing peripheral support of illegal activities
- Auction Houses
- Bail Bondsmen
- Cellular Phone/Beepers (Services, not equipment)
- Chain Letters
- Charities (other than well known)
- Check Cashing
- Collection agencies or firms involved in recovering/collection past due receivables
- Credit Repair
- Credit Card Protection or Identity Theft Services
- Currency Exchanges
- Drug Paraphernalia
- Extended Warranty Companies
- Flea Markets (with no lease and phone availability) (Virtual terminal/Wireless consider High Risk)
- Fortune Tellers
- Merchants offering free gifts, prizes, sweepstakes or contests as an inducement to purchase a product/service
- Get Rich Quick Schemes
- Health Membership Clubs (Extended Memberships)
- Import/Export (Non Mag Stripe or MO/TO)
- Investment Programs/ Opportunities
- Non face-to-face pharmacy sales (non-institutional)
- Non face-to- face tobacco/cigarette sales
- Lotteries, Gambling, internet Gambling, contests or sweepstakes
- Sports forecasting or odds making
- Mortgage Reduction Services
- Taxi/Limousines (singletons) Virtual terminal/Wireless consider High Risk)
- Pseudo-pharmaceuticals (anti-aging, sex nutrients, etc.)
- Prepaid Cards/quasi cash
- Real Estate Seminars
- Shippers/forwarding Brokers
- Timeshare
- Travel Agents/Tour Operators/Travel Clubs
- Merchants engaged in Door to Door Sales
- Pyramid or multi-level marketing distribution
- Third party order fulfillment
- Merchants engaged in Outbound Telemarketing
- Infomercial merchants or other inbound telemarketers engaged in upsell
- Merchants offering rebates or special incentives
July 27th, 2007
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