Posts filed under 'Merchant Accounts'
A few weeks ago Elastic Path published their Ecommerce Checkout Report which was a great breakdown of the online trends of the top 100 internet retailing websites.
One area that I found particularly interesting is that only about half of the top 100 online retailers require additional card verification (CVV2, CID, CVC, etc) information to be entered when a customer makes a purchase.
Card Code Verification is a basic fraud deterrent because the purchaser must have the card in hand, or have copied the entire number, expiration date and code from the back of the card to use it. It eliminates fraud from credit card skimming as the card verification code is not on the magnetic stripe and therefore cannot be used where CVV2 is required. It’s by no means a complete solution, nor is it acceptable as the only method of preventing fraud. It is a great tool, that costs nothing, and can save a business from a lot of unnecessary fraudulent orders.
So, why would the biggest online retailers not require this most basic information for orders that they accept.
The simple answer is money.
Conversion rates were measured to be 40% higher on the websites that were not requesting card verification information. 40% is a massive amount when you are averaging it across millions or billions in sales. I would imagine that a large well organized company would leverage whether the cost of fraud from not requiring CVV2 outweighs the cost in lost sales from requiring it. It is apparent than many businesses find it less costly to deal with any fraud that might occur from not using CVV2, than to take a hit in their conversion rate and require it. This is a completely irresponsible practice, but isn’t the least bit surprising.
So should you use CVV2?
First off, if your merchant contract states that you must use card verification on card-not-present transactions, then Yes. It is fairly common for processors to require this information, and if you’ve opened a merchant account in the past two years, there’s a good chance that it’s required with your account. You could risk getting your merchant account shut down for not using CVV2 if you’re processor requires it.
My personal recommendation for businesses who aren’t required to use it is also Yes. Especially for the case of small businesses where the cost of a few fraud related chargebacks can ruin a business. Additionally, it is much easier to fight most chargebacks when you have a valid CVV2 match. If you have a positive CVV2 response, it is proof in most cases that the person who made the purchase had the card in hand. CVV2 also is a proactive approach at helping consumers. If a person gets their card skimmed or the number gets stolen, their card cant be used anywhere that CVV2 is required. If a database with credit card numbers gets compromised, the cards cannot be used where CVV2 is required since CVV2 is never allowed to be stored by a business. Lastly, CVV2 actually works for international cards while AVS (Address Verification) does not. It is really the only built-in fraud prevention method that is internationally usable at this time.
Currently CVV2 is not required, but only because some older cards don’t have CVV2 numbers on them. As soon as every card does, it’s very likely that it will be required for all card-not-present transactions.
Even now, if everybody used CVV2 for their transactions, there wouldn’t be a huge conversion rate gap like this, card holders would be safer, and banks would eliminate some of the cost of fraud, which drives up credit card related prices for consumers and businesses alike.
Related:
Credit card verification numbers
July 16th, 2007
A few weeks ago Arkansas passed a law that would cap merchant account termination fees to $50, or one month’s minimum charge.
Download Arkansas Act 911 .pdf
This law was passed un-democratically “quickly” as the Arkansas congress drafted, and passed it without any notice to media, processors, banks, citizens, or even merchants until the law was written.
As far as the law itself, it mainly requires processors to be transparent in the contract length, and any termination or other fees that would be incurred if a business closed their merchant account before the contract was ended. It ensures that merchants can read the contract because it goes as far as setting a minimum font size for the merchant application. The law does not provide any protection for businesses in leases, or other equipment related recurring fees or charges. It also only applies to businesses signing up after July 31, of this year.
Overall the fee transparency is something that a lot of ISO’s need to address better. Capping termination fees without any input from processors is completely unfair, even though termination fees are often excessive. The law is trying to help businesses from getting scammed but because of some poor editing, it isn’t going to do anything.
Here’s where they went and messed the whole thing up:
(d) The foregoing provisions of this chapter do not apply to:
(1) A state bank or a state savings association that offers a credit card processing service;
(2) A national bank or a national savings association as defined 31 in 12 U.S.C. 1813, as it existed on January 1, 2007, that offers a credit card processing service; or
(3) The parent, affiliate, or subsidiary of any bank or savings association that offers a credit card processing service.
Well, they effectively voided out this entire document with #3. Since every legal ISO is an affiliate of a bank, this law no longer applies to anyone, unless they are somehow providing services illegally, in which case they probably have other things to worry about. Someone obviously was mad, in a hurry, and forgot to do their research because it doesn’t take much see the conflict.
I guess that’s what happens when you pass a law without any public notice or input.
June 28th, 2007
If you are in the process of, or have applied to accept credit cards for your business at some point, there’s a good chance that you found or were found by several merchant service providers. And chances are you based a large part of your decision on who to process with, from the processing fee. The processing fee, while important, is the most overrated and overvalued fee that a business can pay attention to.
Here’s why…
The majority of businesses are only going to process a few thousand dollars per month. While most of us fantasize about doing millions of dollars in sales each month, it just simply wont be the case, ever. Because of this invisible cap on sales, and the fact that every decent merchant account provider is going to have a similar processing fee, you will pay about the same amount in processing fees no matter what company you process with. However, the other fees that are associated with your merchant account can tip the scale between affordable and a complete rip off.
Just to clarify before I go any further, I always recommend businesses not shop based solely on price. However, those fixed and extra little fees that you weren’t told about up-front, ignored because they were really small, or simply didn’t understand, are going to have a big affect on what you will actually pay to accept your customer’s cards. When those fees are hidden or not disclosed, it’s a pretty good sign that you found a company that you may not want to do business with.
And now the facts:
Let’s say a company processes twenty thousand dollars per month, with a volume two thousand transactions (Average sales of $10). The difference between 1.69% and 1.75% over $20,000 is only $12. Not really anything to call home about.
Now lets say the provider with the 1.69% rate is charging $.25 for each transaction while the other is charging $.20. That comes out to a difference of $100 per month, which is probably something worth considering. A difference of $.01 per transaction will have more affect on the monthly cost than .1% in processing fees.
In this case: 1.69% & $.25 = 2.19% & $.20.
The processing fee in the second scenario is over 75% higher, but the cost is the same as the perceived lower rate.
When you start to add in things like $.05 AVS fees that you didn’t know about (You mean they charge me for that, and it’s required?), maybe a Watts surcharge of $.05 (what the hell is that?), and maybe even some fee listed in the miscellaneous section for $.05 (run away now…), the extra cost adds up really fast. You don’t even need to take into account things like downgrade fees, which can double your monthly bill, to see that little fees can make a huge difference at the end of the month.
My advice to anyone looking to accept credit cards, or anyone looking to find a new processor, is to stop looking at the huge distraction called the processing fee, and look at everything else you will be paying. Your books will be far better for it, and you will truly find out what kind of company you are dealing with.
June 25th, 2007
I have to clear up some misunderstanding about what to do when you receive a chargeback.
So, you open your mailbox one day and see a letter from your merchant service provider. You open it and realize that it is a chargeback letter for a transaction that took place a few months ago, and upon examining the letter you notice the chargeback reason code is: 85. After looking up what this chargeback reason code means, you realize that it is because you forgot to issue the refund that you had promised the customer.
You log into your virtual terminal to find the transaction, and go to issue a refund. You might as well correct the situation now, since your customer is expecting their refund right? —- Wrong!
Once you receive a chargeback, you do not want to issue a refund to that customer. No matter if the situation was as described above, or if your customer is standing at your counter. When you get a chargeback, the money from that transaction is immediately withdrawn from your account. If you go and issue a refund now, you just paid your customer back twice. I know that refunding your customer is the best customer service that you can do, but if the chargeback wheels are already in motion, you need to go ahead and let the chargeback work itself out.
If you do issue a refund, and the customer was already reimbursed from the transaction, you need to contact your processor immediately and explain to them that you issued a refund. Since it takes several days for a refund to be completed, there is a chance that you can get your money back if you act quickly, but time is working against you. Once the refund hits your customer’s bank account it can be considerably more difficult, and many times impossible to get the extra refund back.
Once a chargeback is initiated, check to make sure that you had not issued a refund at an earlier time, and then follow the instructions on the chargeback letter. If you had already issued a refund on this transaction, let your processor know. I have seen Amex allow chargebacks on transactions that have already been refunded, and I’m sure that it has happened with other card issuers as well.
June 20th, 2007
In the green sheet this morning, there was a good article about how credit card interchange is still under fire. Especially since some of the more signifigant updates with the interchange schedules this April (Visa adding a new category of cards), interchange is again under the microscope.
At least a dozen bills pending in state legislatures address topics related to interchange, according to the NCSL. Here’s a rundown of several key initiatives:
- Two bills introduced in the Florida state legislature would require refunds to merchants paying interchange on sales taxes.
- Legislation pending in Kansas would require that merchants have better access to information related to interchange rates. It also defines interchange fees for purposes of state law.
- A bill pending in Nevada would prohibit interchange on certain transactions.
- In Oklahoma, legislation has been introduced that would prohibit certain contract provisions regarding merchant transaction fees.
- Lawmakers in Tennessee are considering legislation that would cap at 0.75% all processing fees associated with credit or debit card transactions. The proposal would apply to contracts entered into with merchants by banks or their agents after July 1, 2007.
- Texas lawmakers have a bill before them that would require more transparency in disclosing interchange and related processing fees. A tougher bill, introduced and quickly withdrawn in March after a large consumer letter-writing campaign, would have allowed retailers to surcharge credit and debit card payments to cover processing costs.
- In Washington state, lawmakers want to restrict interchange to 1.5% of the total cost of a retail card transaction.
Now, I can completely agree that interchange needs to be more transparent. As far as showing how much interchange is paid, itemized for every transaction that a business processes, it may be a little excessive. Imagine a business that processes a million or even ten thousand transactions per month, have fun with that statement.
From what I read on a weekly basis, lawmakers and interchange activists often completely miss the concept of interchange, and therefor are not developing strong arguments in trying to get interchange reduced or even more transparent.
Here’s what I think needs to happen before any major interchange changes are made:
- The first step in making any progress towards a more transparent and potentially lower interchange, is going to be a more widespread understanding of what interchange is and where the fees go. There is so much inaccurate information and opinions as to what interchange is, and what it is being called, that it is hard for anyone outside the industry to know what is fact.
- There needs to be a much better understanding of who interchange fees actually are paid to (Most of interchange does not go to Visa or MasterCard).
- There needs to be an understanding of what processing fees are, in relation to interchange. (Tennessee capping processing fees to .75% is going to do nothing but stop Tennessee businesses from being able to accept credit cards.)
- There needs to be some understanding that the billions of dollars in equipment that makes up the processing networks costs billions of dollars to maintain. Also, Visa, MasterCard, all of the processing banks, ISO’s, MSP’s, and other organizations that are needed to actually provide the processing services, employ tens of thousands of people and can’t run for free. (Yes there are many overpriced organizations out there, and ones that are just trying to rip business owners off, but there are good ones too.)
- Someone in congress is going to have to start caring before anything changes. Currently, there aren’t any congressman that have shown any remote interest in regulating interchange on a national level.
- Card holders are going to have to stop getting cards with huge rewards programs. Interchange categories are based on rewards programs associated with specific cards. This is also the reason that interchange is so complicated and keeps getting more expensive. The more rewards your card has, the more that a business has to pay to process it.
- Most Importantly: Consumers are going to have to take interest in what businesses have to pay to process their credit card. The sad fact of doing business in the US is that nobody really cares about how much a business has to pay for anything. If consumers started complaining about interchange, you can be damn sure that things would change quickly, but as long as consumers are happy with their super rewards cards, and they still want faster, more convenient ways to pay, interchange will go nowhere but up.
May 29th, 2007
I was checking out this chronology of data security breaches this last weekend, and I realized that the amount of breaches that have occurred is absolutely amazing. Over 150 Million records have been compromised in the past two and a half years, and this number doesn’t take into account the fact that the number of compromised records for about 1/3 of the total number of breaches is unknown.
From looking at this we can observe a few solid facts about data security breaches in general. First, the three most common reasons for data to be compromised are lost and stolen laptops and storage devices, disgruntled employees, and hacking.
The Top five data security breaches are:
TJ Max (45.7M) – Massive long-term hack
CardSystems (40M) – Hacking of unencrypted data
U.S. Dept. of Veteran’s Affairs (28.6M) – Stolen laptop (No data has been used to date)
iBill (17.7M) – Inside
Georgia Dept. of Community Health (2.9M) – lost disk
These are breaches relating to banks and financial institutions:
CardSystems (40M) – Hacking of unencrypted data
iBill (17.7M) – Inside
CitiFinancial (3.9M) – Lost backup tapes
Bank of America (1.2M) – Lost backup tape
Wachovia, Bank of America (676,000) – Inside
Providence Home Services (365,000) – Stolen backup tapes
Mortgage Lenders Network USA (321,000) – Inside
Ameriprise Financial Inc. (260,000) – Stolen laptop
Ameritrade (200,000) – Lost backup tape
Fidelity Investments (196,000) – Stolen laptop
Iowa Student Loan (165,000) – Lost laptop while being shipped
Firstrust Bank (100,000) – Stolen laptop
People’s Bank (90,000) – Lost computer tape
MoneyGram International (79,000) – Hacking
Mercantile Potomac Bank (48,000) – Stolen laptop
J.P. Morgan (47,000) – Tape drive missing
PayMaxx (25,000) – Accidentally exposed online
Bank of America (18,000) – Stolen laptop
Premier Bank (18,000) – Stolen data
KeyCorp (9,300) – Stolen computer
North Fork Bank, NY (9,000) – Stolen laptop
Univ. of Michigan Credit Union (5,000) – Stolen documents
Chase Bank and the former Bank One (4,100) – Documents left in desk that was sold
TransUnion (3,623) – Stolen computer
AllState Insurance (2,700) – Stolen computer
Equifax (2,500) – Stolen laptop
Sovereign Bank (Thousands) – Stolen laptops
West Shore Bank (1,000) – Security break
Westborough Bank (750) – Inside
Ceridian Corp (150) – accidentally posted personal data on website
City National Bank (Unknown) – Lost backup tapes
J.P. Morgan Chase & Co. (Unknown) – Stolen laptop
J.P. Morgan (Unknown) – Information found in trash
Bank of America (Undisclosed) – Stolen Laptop
Bank of America (Unknown) – Internet by former contractor
Bank of America (Limited Number) – Stolen laptop
La Salle Bank, ABN AMRO Mortgage Group (2M) – DHL lost but later found backup tape
Wells Fargo (Unknown) – Stolen computer
M&T Bank (Unknown) – Stolen laptop
Matrix Bancorp Inc.(Unknown) – Stolen laptops
U.S. Bank (Small Amount) – Stolen briefcase
VISA/FirstBank (Unknown) – Visa card processor’s compromised data
Home Finance Mortgage, Inc. (Unknown) – Accidentally discarded files
Columbia Bank (Unknown) – Hacking
How we can stop all of this:
The current focus on data security seems to resolve around PCI / CISP compliance and keeping data protected and properly stored. In truth, not storing sensitive data on portable devices would do far more good. The biggest reason of data compromise is stolen or lost laptops containing sensitive information on them. Many of the stolen incidents were from a personal vehicle or their home. Five data loss incidents by a single company (Bank of America) is completely unacceptable. Companies, especially ones where trust is a huge factor (Banks) need to take a much more serious approach to securing information. Only three of these data losses at financial institutions were due to hacking. There really is no excuse for the rest of them.
The next thing that I find particularly upsetting is that a huge overall percentage of the laptops and portable storage related losses were from government agencies, and the majority of all losses happened at universities or other educational institutions. Our government and educational institutions are obviously not being cautious enough with personal information. I wont list all of these because it would take about 10 pages to get them all in.
The bottom line is that everyone needs to take some common sense precautions to data security. The newest two million bit encryption, and all the security in the world isn’t going to help when an employee looses a laptop with sensitive information on it.
May 24th, 2007
Once a merchant account application is submitted by a business, there are several steps that it must go further through before a business can get setup accepting credit cards.
I very often see merchant account providers making same day setup guarantees to potential customers. While I’m in no way saying that it isn’t possible to set a business up the same day, this is most often nothing more than a marketing scheme. Depending on the back-end processor, some take a minimum of 24 hours for the actual merchant account to go live. In cases like this, there is nothing that any business can do to speed up the process.
The Steps:
- Application is submitted by the business owner to the sales agent or the ISO’s applications department.
- The application is reviewed to ensure that no required information is missing.
- The application is manually entered into the processor’s underwriting system.
- Depending in several risk factors, an instant approval may be received at this point.
- If there was not an instant approval, the application is placed into the underwriting department’s quee.
- The application is reviewed by an underwriter. The underwriter can approve the application, decline it, or request additional information. The ISO’s applications department is notified of the status change of the application.
- If additional information is required, the ISO will get the required information (could be utility bill, marketing material, etc.) and resubmit it back to the underwriting department.
- Once the application is approved, the ISO will setup the software, payment gateway, or credit card terminal for the business to process with. (After the application is approved, it normally takes about 24 hours before the merchant account is live. Only a few processors have the technical ability for a business to start processing immediately.)
- Once the account goes live, and the merchant’s processing system is setup, they can now process credit cards.
In the end, a considerable amount of human work needs to be done for a merchant account to get setup properly. Any problem or error at any step of the process can greatly delay the merchant account getting setup. Unfortunately, there is little ability for automation to occur through the application process. Even though, technically it makes sense to create an automated system, one of the main purposes of this process is to prevent fraud. Computer algorithms score application for fraud, but it must be a human to make the final decision.
May 17th, 2007
I just got my hands on a Verifone Omni 3750 WiFi module. The module replaces the dial, or Ethernet module on an Omni 3750, and it has a small Compact-Flash wireless card in it that allows it to connect to a wireless network. The module is a little hard to get a hold of. We had to check out suppliers and special order one, which took about a week extra to get. The other drawback with the WiFi module is that it is a bit expensive (about $200), and while many businesses could benefit from using one, it may not be worth the extra $200.
So I devised another way to connect an IP capable Omni 3740 or 3750 or other Ethernet compatible terminal to a wireless network.
Here’s what you need:
- An Ethernet compatible terminal that is currently able to process transactions over an IP connection.
- An encrypted wireless network. (WPA not WEP!)
- A wireless (WiFi) gaming adapter or wireless access point. (Must support WPA encryption!)
- One small length of CAT 5 / 5E / 6 Ethernet cable.
- A PC or laptop (Used only to configure the wireless adapter)
Introduction:
The idea behind this is that once your terminal has the ability to process over an IP connection, it really doesn’t matter how the terminal is actually connected to the internet. A WiFi connection through an adapter is no different to a credit card terminal than connecting directly to a switch or router.
Who this guide applies to:
This guide will be most useful for businesses that have an existing wireless network, and have an IP capable terminal, and they can benefit in some way from connecting their terminal to the wireless network instead of the wired network.
Typical Network Setup Diagram
It it important to be able to already process over an IP connection before you start setting this up. This will eliminate the terminal setup being the problem if something doesn’t work correctly.
Step 1 – Setup the wireless network:
Here’s a great guide from Microsoft on how to setup a wireless network. Make sure you enable WPA encryption when you setup your connection. The recent TJ Max security breach was thought to originate from an unsecured wireless network. Additionally, WEP encryption is not a sufficient form of protecting a wireless network so WPA or WPA2 encryption should be used instead of WEP. If you are interested, here’s a detailed summary of why WEP encryption is not sufficient.Personally I recommend D-Link brand components for home and small business networking. From my experiences, their reliability, price and ease of use is far better than other manufacturers (Linksys, Netgear, 3com, Cisco, etc.) for non-enterprise level wireless networking.
Step 2 – Setup the wireless adapter:
The D-Link DWL-G820 is the wireless adapter that I recommend for this guide. It’s small, cheap (~$60), and it supports WPA encryption. You will need connect the adapter to a PC or laptop and follow the installation instructions to properly setup the adapter. This should take about five minutes to complete and essentially consists of the following.
Basic steps to setup wireless adapter:
- Plug Ethernet cable from wireless adapter to computer.
- Connect AC adapter from electrical outlet to wireless adapter.
- Point web browser to 192.168.0.35
- Configure wireless adapter to connect to wireless network.
- Enable WPA encryption, enter the network pass-phrase, and restart the wireless adapter.
- Once the adapter restarts, verify the internet connection with the computer that is still attached.
- Done…
Once you verify that the computer is able to connect to the internet with the wireless adapter, and that the adapter is connecting using WPA encryption, the adapter is configured.
Step 3 – Connect terminal to wireless adapter.
Connect the terminal with CAT 5 / 5E / 6 Ethernet cable from the Ethernet port on the terminal to the Ethernet port on the wireless adapter. Depending on how close the terminal is to the adapter, you may only need a few inches of Ethernet cable to connect the two together.
Step 4 – Run a test transaction.
In theory, everything should work properly now. You should however run a test transaction to verify this. Run a $1 transaction (Don’t use the merchant account owner’s credit card). As long as the transaction processes the way it should have, everything is setup and ready to go. You can now move the terminal and wireless adapter anywhere that is within range of the wireless network.
You now have a secure WiFi processing terminal
Otherwise, If the transaction did not process correctly you need to find where the problem is happening at, and correct it. Re-check the internet connection, and that the adapter is still properly connecting to the wireless network. If necessary, run a test transaction with the terminal plugged into the Ethernet connection to rule out any terminal problems.
Related Posts:
Verifone Omni Ethernet and IP Network Setup
Convert an Omni 3740 or 3750 for Ethernet Processing
May 15th, 2007
There are about thirty credit card terminals that are currently being used for credit card processing in the United States. Of these, about five make up 90% of the terminals currently being distributed in the country.
Business owners are often told that they need some specific terminal, when in reality they are being sold something much more advanced and more expensive than they will ever need.
A few misconceptions
- Terminals must be purchased from the company you are going to process with.
- You should always buy the most recent, advanced terminal you can afford.
- Terminals are expensive.
Terminals must be purchased from the company you are going to process with.
This is only true when you process with a company that has their own proprietary equipment, or one that must make a huge profit from equipment sales. The majority of processors support a wide variety of terminals from different manufacturers. I personally recommend staying away from companies that use only proprietary terminals, or ones that force you to buy excessively marked-up equipment from them. Also, free terminal programs use proprietary equipment, but this is so they can protect their investment in the equipment, and the proprietary equipment rule doesn’t apply the same to this situation.
You should always buy the most recent, advanced terminal you can afford.
This is far from the truth. While some new terminals offer additional features like WiFi, or Internet (IP Based) processing, older terminal models are generally more reliable and much cheaper than the newer terminals. The more features a terminal has, the more complicated it is to use. I can’t count how many businesses I know that still use an old Tranz 330 and P 250 combination and have no intention of switching until the last possible second. Newer is not always better.
Terminals are expensive.
There are a number of terminals that are under $200, and even advanced terminals are normally under $500 if you buy them from the right place. If you were offered some terminal for a thousand dollars, it was most likely from a company that is trying to make a huge profit from their equipment sales. You will usually see this price right before you are offered a lease. There isn’t a single terminal that is available directly to businesses that costs over a thousand dollars. Not even a wireless terminal. Do a search on Google for the terminal you are being offered and you will quickly find what it is actually worth.
So, which terminal?
Since the ability to process over an IP connection became a very desired option, I classify terminals into three categories, Land-line, Ethernet compatible, and Wireless.
Land-line:
For most businesses I recommend a Nurit 2085, or Hypercom T7 Plus, or Omni 3730LE /VX510LE (if your processor supports it, 3730 is better supported and costs ~$250). These terminals are all easy to use, very reliable, and cheap (<$200). The Nurit can handle multiple merchant accounts, and all have thermal printers. You wont have the ability to process over an IP connection with these, but all support additional peripherals like pinpads, smart card readers, or check scanners. Most small retail businesses will be perfectly content using one of these lower cost terminals.
Ethernet:
If you don’t want to use up a phone line, are planning on switching your business services to the internet, or you already have a broadband internet connection and a router / switch, then an Ethernet compatible terminal is probably going to be your best bet. Currently the Omni 3750 has by far the best support for IP processing, but the Nurit 8320, and the Hypercom Optimum T4100 are also becoming more supported. These terminals will cost from $300 – $500 with Ethernet compatibility (about $100 less for land-line only). You should be absolutely sure that your provider supports the terminal you are interested in for IP processing before you go to purchase one. Many processors do not yet support the Nurit’s or Hypercom’s for IP processing, but almost all support the Omni.
These terminals all have a built in pinpad for PIN debit processing. (The entire terminal needs to be encrypted with your processor before you can use PIN debit with it.) All terminals have a thermal printer and the Omni 3750 and Hypercom T4100 come standard with a smart card reader.
These terminals are about as technologically advanced as any retail business will need at the present time.
Wireless:
Wireless terminals have advanced a long way in the past five years, and their price has dropped dramatically. Wireless terminals can be easily found between $500 and $700. My personal favorite is the Nurit 8000 GPRS, but the Way Systems terminals are coming in at a close second. There aren’t many options for wireless terminal. The Nurit 8000 is really the only well supported full-featured terminal, and the rest of the market is between the smaller wireless specific equipment manufacturers (Way Systems, Comstar, eProcessing Network, etc.).
Be careful when you do go to purchase a wireless terminal, especially if you decide to buy one from a company that you don’t have history with. Take a look at: How to safely Purchase a Wireless Credit Card Terminal to ensure that you aren’t buying something that you don’t want.
Conclusion:
Other than these, I can’t recommend any other terminal except for some specific business related circumstances. One of these terminals should fit the needs of almost every business that will need a credit card terminal. You should definitely be planning for the future when you purchase a terminal, but just because a salesman said you need some advanced terminal, doesn’t always mean it’s true.
Some related reading:
Verifone Omni Ethernet and IP Network Setup
May 11th, 2007
I’ve done a few posts relating to debit card acceptance in the past. This post is designed to explain a little more about PIN and signature debit, why, and what business should be setup with debit acceptance.
PIN and Signature debit?
PIN Debit (Online debit) is the acceptance of a debit card where the card is swiped and a customer’s PIN number is transmitted to process the transaction. PIN debit can only be done through a credit card terminal or POS software system with an attached pinpad.
Signature debit (Offline Debit) is when a debit card is run as a credit card. This can be done over the internet, through a credit card terminal, or pretty much any way a credit card can be processed. Businesses inherently have the ability to accept debit cards using the signature method as long as they have a Visa or MasterCard logo on them. But, not all businesses are offered the reduced rate that is available for these types of cards.
Both signature and PIN debit are great ways that a business can save money on their credit card processing fees. PIN and Signature debit both have different interchange categories than credit cards and both will normally be cheaper than a credit card transaction if your merchant account provider offers reduced debit rates.
Details:
PIN Debit is normally a flat fee per transaction. No processing percentage no matter ho large the transaction is, just a flat fee for each transaction. Now the actual fee that you pay to process a PIN debit transaction is actually based on two fees. The fee from the processing bank (which includes the interchange fee) and the fee from the debit network provider (PULSE, STAR, etc.). These two fees are bundled into a single flat fee which is normally $.35 – $.50 per debit transaction. Technically there is a percentage and transaction fee for PIN debit, but the cap varies from $.30 – $.50 so for simplicities sake, this is almost always a flat bundled fee.
One of the drawbacks with PIN debit is that the majority of banks place daily debit limits for their customers, so if you have a high average ticket size (>$300), PIN debit may not be a good solution for you. Also, a business must have a pinpad encrypted specifically with the bank they process through for PIN debit to be possible. Pinpads can range from about a hundred dollars to over a thousand depending on the complexity of the pinpad.
PIN debit transactions are almost impossible to dispute because only the card holder knows the PIN for the card that is being processed. Normal chargeback rules do not apply for PIN transactions, and a customer must have an extremely good reason for a dispute to go through.
Signature Debit works on a fee structure similar to credit cards. A percentage of the transaction plus a transaction fee is paid on each signature debit transaction. While the percentage is normally lower than a credit transaction, the transaction fee is normally slightly higher than credit transactions due to a $.05 higher interchange fee. Signature debit offers reduced fees for all interchange and qualification categories so any type of business can benefit from a reduced signature debit rate.
A reduced debit rate is not always offered by default, so you may need to specifically ask to get a reduced rate. Also, advertising a debit rate instead of a credit rate, is one of the most common methods that processors use to lure customers that are shopping only on price. If you are offered some extremely low rate that ends up being a debit rate, make sure that your credit rate is not ridiculously high.
What is best for a business?
Any business will save on every PIN debit transaction where the sale amount is above ≈$20, when compared to a credit card. Businesses with very small ticket sizes (<$15) will probably pay a little more to the same for PIN debit transactions. Every business will save with Signature debit transactions, but a business’s merchant account must be specifically setup with a reduced signature debit rate.
A few things to look out for:
- Check for separate PIN transaction and debit network fees. The total cost for a PIN transaction should be ≈$.50, not $.50 for each.
- Make sure you aren’t being charged a percentage for PIN debit fees. I have seen a few times where a business was being charged the same fee for PIN debit as for credit cards.
- Check to see how much an encrypted pinpad will cost and make sure that the cost is justifiable for your business. You can purchase a pinpad from another company, but it will need to be encrypted with your processor before you can use it. A low-end pinpad will normally cost from $75 – $150 with an additional $20 – $50 encryption fee.
- Check for additional monthly debit access fee. These are normally $5.00 per month, but I have seen them as high as $20.00. In most cases they can be waived or reduced to $5 at the most.
May 10th, 2007
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