Posts filed under 'Merchant Accounts'
If you’re not setup with a reduced rate signature debit, and / or a pin debit system, you should be.
Already 50% of plastic transactions are debit card transactions rather than credit card transactions. Getting a reduced processing rate on debit cards is one of the best ways for any businesses to save money on processing fees.
There are two different types of debit card transactions, Signature and Pin debit. Signature debit is where the debit card is processed exactly the same as a credit card. Pin debit is where a pin number accompanies the debit card transaction, similar to an ATM machine.
Signature Debit
Any business that is setup to accept credit cards can accept debit cards using the signature debit method. This method is simply running a customers debit card the same as you would a credit card. The debit card must have a Visa or MasterCard symbol on the card for it to be processed as a credit card. When running a signature debit transaction, a processing percentage fee and a per transaction fee will be charged, just like a credit transaction. For about 6 months now, most merchant service providers can setup a business with a special signature debit rate for signature debit transactions. This reduced fee can vary from a few hundredths of a percent to a full percent less than the credit card processing fee. When spread over hundreds or thousands of transactions, a merchant can save a large amount of money without actually having to do anything different.
Pin Debit
Pin debit is a system when a customer enters their pin number to complete the debit card transaction. A merchant must have an additional pinpad to accept debit cards using the pin debit method. Pin debit transactions normally use a flat per-transaction fee and no percentage at all. What this means to a businesses is that no matter the amount of the transaction, the fee will always be the same. Pin debit transactions have the additional advantage of eliminating a customer’s ability to request a chargeback for a stolen credit card and most any other chargeback reason. To get setup with Pin debit, a businesses would need to purchase an additional pinpad. The cost of pinpads varies, but one will cost at least $80. Most terminals are compatible with a pinpad so if you already have a terminal, the additional cost is fairly low. If you are planning on purchasing a terminal, you might look at a terminal with a built in pinpad.
All businesses should inquire into getting setup with a reduced fee signature debit program. If you find that many customers are using debit cards, a pin debit system can be a great idea as well. For large ticket businesses, the cost of a pinpad can be paid for by the savings from a single transaction. Once your business is setup with a debit program, you start saving without any further action. There’s really no reason not to get setup.
August 8th, 2005
Wireless credit card processing is not a new technology. It has been around for several years, and has been slowly growing in popularity and in the technology that it uses.
Several months ago, the GPRS wireless network, which is a network that many cellular phones currently use, opened up to wireless credit card processing. Before, wireless processing was limited to the Mobitex and Motient wireless networks. Both of these networks are severely limited in their area coverage with several states having no coverage at all. To further make matters worse, the expansion of the Motient and Mobitex networks, which are considered business networks, is completely stagnant. There is very little coverage expansion on these networks. With GPRS, all fifty states have at least some wireless coverage, and cellular carriers are continuously increasing the coverage range for the GPRS network.
GPRS Processing Coverage
Mobitex Processing Coverage
Currently there is only one wireless credit card machine, the Lipman Nurit 8000G, that has the necessary certifications to process on the GPRS network. The Nurit 8000G is the GPRS version of the popular Nurit 8000. It has a thermal printer, a signature accepting screen, and is a very fast and reliable wireless terminal. This terminal is quickly becoming the standard for wireless credit card processing.
The Nurit 8000G is available through many merchant service providers but currently must process through First Data. If you are planning on purchasing a Nurit 8000G, make sure that it is coming from a reputable dealer. There is no way to differentiate a Nurit 8000 from an 8000G until programming is attempted. The Nurit 8000G will cost around $800 from a good online retailer. You may also have to purchase a SIM card which will run an extra $20 – $30. Wireless processing also has an extra monthly fee for use of the cellular service which is usually $20 – $30 / month.
GPRS processing is a huge step in the wireless processing industry, and although it may be still to expensive for some businesses, it is a perfect solution for others. Either way, GPRS processing offers a vast improvement over any previously available wireless processing at no additional cost. If you are looking to start wireless processing for your business, there is no other way that I would recommend.
August 4th, 2005
I can’t count the number of times that I have been asked to help a merchant decipher their credit card statement. What is worse, is that I have failed to accurately do this several times in the past. Of all areas in the credit card processing industry that needs a touch up, statements rank near the top of my list. Compare your monthly statement to another business. Even if you both process through the same company, chances are that your statements look completely different. Not just in numbers which is expected, but in terms and layout as well.
Merchant Service Providers are the group that is responsible for providing their customers with good support. Unfortunately Merchant Service Providers have no control over how a statement is calculated or laid out. This is entirely up to the processor that the merchant is processing through. Processors seem to try and make the statement as difficult as possible to understand. Processors also like to change the layout of the statements about every 6 months. Just when you think you are starting to understand your statement, they go and change the whole thing.
The key to understanding your statement is to know what fees you should be looking for and how your merchant account is setup. If you remember when you setup your merchant account there were certain fees. These fees should theoretically show up on your monthly statement. If you look for fee trends in your statement that relate to your expected per transaction, processing percentage, statement, and any other listed fees, you should be able to figure out your statement.
There is one of two types of fee structures that your business will fall under, daily discounting or monthly discounting. Knowing which you are setup with will help a great deal in understanding your statement. Ask your provider which you are setup as if you don’t know.
Daily Discounting:
For daily discounting, your discount processing rate fees are taken out before the money ever reaches your bank account. The discount processing rate is your base processing rate, before any potential downgrade charges. At the end of the month, your transaction fees, statement fees, any monthly fees, and downgrade charges will be charged to your account. Expect your end of month bill to be lower for daily discounting than monthly discounting.
Monthly Discounting:
For monthly discounting, all of your fees are charged to your account at the end of the month. This includes all processing fees, transaction fees, statement fees, monthly fees, and downgrade charges. This can make tracking your business finances easier, but expect a higher end of month bill.
When you are setup on monthly discounting, the full transaction amount will appear in your bank account whereas daily discounting, the transaction amount minus the processing fee will appear in your bank account. By looking at your bank statement and comparing it to a batch report, you can discern whether you are on daily or monthly discounting.
Downgrade Charges:
A downgrade charge is a extra processing percentage and, or transaction fee that is charged when a transaction that you process fails to meet certain requirements. There are hundreds of reasons that a charge can downgrade, but the most common reasons for downgrading are keying in transactions on a retail merchant account, failing to use AVS for a keyed account, and taking a business or international credit card. The reason that a charge downgrades is that there is an increased risk of fraud associated with the transaction since certain requirements are not being met. Downgrades are unavoidable, but can be minimized by running transactions the way your account was initially setup, and always using AVS or CVV when prompted.
By comparing your expected fees with your statement’s fees you can usually figure out how much and what you are being charged for. If you are still having problems call your provider and if possible fax them a copy of your statement. It will be much easier for them to break your statement down if they have a copy of it in front of them.
July 29th, 2005
In light of recent news about major credit card and personal information breaches, credit card security seems to be a suitable topic for today’s post.
Credit card and personal information security have become major topics with recent large security breaches. It is unfortunate that a large company like CardSystems was the victim of one of the largest security breaches in history. It seems like almost every other day I read about a new breach of security. These are almost never small businesses, but rather large, well-trusted Fortune 500 corporations. This makes me wonder, if these huge trusted corporations that spend millions of dollars a year making sure that their data is protected are loosing customer data the easily, then how bad can this problem be at the small business level?
Credit card truncation is a simple system, which helps to protect consumers from becoming a victim of fraud if they lose a credit card receipt. But, truncation laws allow merchants to keep full copies of credit card numbers and expiration dates. Furthermore, merchants who take information over the internet or over the phone, have full access to their customer’s credit card information. It is assumable that most merchant have the ability to, or do keep full copies of their customers credit card and personal information. There are over 40,000,000 businesses in North America. Through these businesses there were 19.8 billion credit card transactions in 2004. This is a staggering amount of data and information that needs to be protected.
This is where security comes into play.
CardSystems was a victim of a computer hacking attack, but had their data been properly secured, there would have never been a loss of customer information. CardSytems and its customers became a victim of their negligence in not securing the data that they stored.
For retail businesses there are Visa and MasterCard regulations, credit card truncation regulations, and individual processor regulations that govern how information must be kept. For internet businesses there are CISP, Visa and MasterCard, and processor regulations to follow. But, in a country with 24,000,000 businesses, who keeps track of and ensures that businesses are following all of these regulations.
The real answer is nobody.
It is essentially the merchant’s responsibility to make sure that the data that they keep is secured and protected properly. When signing up to accept credit cards, a merchant must agree to protect the information that they record. But, there are many businesses that do not adequately secure the information that they keep. Many businesses have virtually no idea how to secure the information that they keep. This falls true especially for newly established internet merchants. Merchants often don’t have the time or resources to even learn about how to ensure that the data they collect is secure. Retail merchants often keep their receipts in a filing cabinet or in folders. If there ever was a break-in and their business was robbed, a thief could accidentally come across all of the businesses transaction information. If a website was hacked, the hacker could accidentally come across all of the merchant’s customer information if stored improperly.
The problem is that there is no official guide on how to secure information, either for internet or retail businesses. Until there is a standard for securing data, the loss of customer information is going to continue. The government is very fast to prosecute any case involving credit card fraud, but nobody is trying to help merchants to prevent the loss of data in the first place. More and more regulations pile up without any extra help on how to fully comply with them. This is just another classic example of trying to fix the symptom of a problem, while ignoring the cause.
If you are a businesses owner and you are reading this, it might be a good time to look at your current data protection practices. Don’t let your business or your customers become a victim of negligence.
July 28th, 2005
Welcome to the merchant account blog. This is where you can find news and information about the credit card processing industry. We search the web daily and find information that is important so you don’t have to.
July 26th, 2005
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