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Archive for December, 2009
A common question many users ask is what will happen with their existing credit card terminals if they choose to switch credit card processors. The good news is that switching terminals is simple and painless, as shown in the video below. Here is the first of a series of informational videos from TransFS which empower you, the business owner, to get informed and keep more of your hard earned money.
The New Year gives us a natural opportunity to look back and analyze our successes and shortcomings the previous year. Each year, we strive to do better personally and professionally, yet somehow usually fall short of our expectations. This year, Duct Tape Marketing has some great tips on high level ideas to jumpstart your business in 2010. Here are a couple in addition to a challenge for your business:
1) Don’t Make Too Many Resolutions- Try to stick to a couple of main ideas that you’d like to change this upcoming year. Making laundry lists is conducive to failing before you even begin. Choosing one area for business growth or a new product to launch will help you keep focus and do things right.
2) Make Meaning Matter- Take a step back and make sure your business is infused with meaning. Do employees have passion for your products? Is work conducive to personal growth and satisfaction? If not, it may be a meaningful endeavor to take a step back and figure out what makes your employees tick–where they may have found meaning before.
3) Embrace Social Media- You may have shrugged it off as a fad, but experts agree social media is here to stay. It’s time to start dabbling and figure out how to engage your customers using social media. It may be as easy as creating a Facebook page or following influential figures on Twitter. Luckily just googling “social media” will give your business enough ideas to get started until you get the hang of it. Not convinced? Check out the stats in this amazing video :Did You Know 4.0
Bicycle Shop hit by reserve
Bicycle Retailer recently profiled a Michigan bicycle shop that went out of business not only due to rough economic times, but rough policies by his credit card processor. Bikesport Michigan was in business for 17 years until owner Tom Demerly was hit by a surprise from his processor.
Demerly had not read the fine print on his processing contract (most businesses don’t) which stipulated that the processor had the right to require a reserve as a means of protection. The reason why processors do this is if customers dispute charges, the merchant is responsible to pay up. However, if the merchant for some reason cannot pay up, the processor bears responsibility for the return. Many times the reserve is a substantial sum, and in the case of Demerly, helped make his business go under.
Last January, Demerly’s processor established a reserve for $60,000 which was completely off limits to the business citing. The processor began collecting on the reserve right away. Demerly appealed to the processor saying the reserve would put him out of business, and the processor responded by lowering the reserve time from one year to six months. Attorneys who Demerly went to shook their heads and told him they could do nothing since the contract stipulated that the processor could institute a reserve whenever they felt was necessary.
Demerly advises all merchants to carefully read processing contracts before signing them. Unfortunately, we have seen merchants hit with reserves before. In fact, Sean dealt with the situation himself and describes the ordeal here. TransFS recommends the following steps if you ever find yourself hit with a reserve:
1) Cancel right away and switch credit card processors-This way the processor stops collecting to the reserve. Use TransFS to get unbiased and apples-to-apples comparison from top quality processors.
2) Demand your money back and threaten to sue- Most likely the sum will be small enough (since you cancelled immediately) that processor will be unlikely to take legal action.
3) Always read contracts in the future- And stipulate (in the contract) that the processor cannot have reserves on the account.
Image thanks to http://www.flickr.com/photos/9495733@N05/2269593579/
Tis The Season to be Wary
Many businesses hope to make up for a horrible sales year during the holiday season, however thieves are also on the prowl for opportunities to make some cash. The Green Sheet recently posted some tips from Bob Russo, General Manager of the PCI Security Standards Council on how to be vigilant during the holidays.
The reason for increased vigilance is an increase in sales volume which naturally leads to more opportunities for theft. Also, during the holiday season, people tend to spend more money per ticket. And since more and more people use credit cards (the National Retail Federation says 28% of shoppers may use credit cards this holiday season) lots of personal information will be out there, at the mercy of hackers. A third interesting reason for increased theft is the tendency for big retailers to hire temporary employees around this time of year to compensate for longer hours. These workers often forego necessary background checks and training, and may be a liability to retailers.
Monitoring cash registers may be an easy way to prevent theft. Check out the article for more detailed ways to maintain security this holiday season.
Check out this cool video from The CreditCardCon.com, a project of Consumers for Competitive Choice. This dedicated group of individuals is a “diverse national coalition of Americans who support a strong, vibrant, and consumer-focused economy.” The CreditCardCon.com lets you sign a petition to lower swipe fees and reports the latest news in efforts to lower credit card processing costs.
Image thanks to http://www.flickr.com/photos/28998362@N00/251944083/
The insurance industry, including carriers, brokers and agents increasingly accepts credit cards. Typically such businesses accept payment from their customers over the phone or computer, more similar to an internet business than a retail store.
Insurance companies have the added benefit, however, of a special category for Mastercard transactions (no special category exists for Visa, however). The full mastercard interchange guide is available at mastercard.com and below is a summary.
| Card Type | E-commerce Rate | Insurance Rate |
| Consumer Credit (non-rewards) | 1.89% + 0.10 | 1.43% + 0.05 |
| Consumer Rewards | 2.04% + 0.10 | 1.43% + 0.05 |
| Consumer World Rewards | 2.05% + 0.10 | 1.43% + 0.05 |
| Consumer World Elite | 2.50% + 0.10 | 2.20% + 0.10 |
The Mastercard insurance interchange rates are significantly lower than for other industries. To ensure you are getting the lowest possible rates:
- insist on interchange plus pricing
- ensure that you are set up to qualify for your industry-specific rates
- audit your bill afterward to ensure you are getting those rates
As businesses grow, they become increasingly complex…many times adding unnecessary layers of bureaucracy …Here are some simple tips for keeping things simple:
1) Collaboration- Figuring out ways to work across your business in order to identify ways of working together can greatly improve business processes and cut down on complexity.
2) Coordination- Finding simple answers to issues can’t happen without smooth coordination.
3) Communication- Complexity can creep its way back in should communication channels be closed. Make sure to have openness and steady, regular communication to keep things simple.
Read the full article for more tips from HBR here.
Image thanks to http://www.flickr.com/photos/56387066@N00/1810357551/
Here is the much awaited follow-up to our first blog post explaining common acronyms in the PCI (Payment Card Industry).
ACH- Automated Clearing House is an e-payment network which allows fund transfers to occur using Electronic Funds Transfer (EFT). The Federal Reserve, in addition to over 98% of US banks belong to the ACH.
Acquirer- A financial institution (bank, public or private company, etc) that develops a seller’s CCP (Credit Card Processing) account. Acquirers maintain all transactions from the seller and distribute them to credit card issuing banks.
AVS- Address Verification System. A service provided by the seller where he/she verifies the cardholder’s address with the issuing bank.
BIN- Bank Identification Number. The Federal Bureau of Standards assigns a 6 digit BIN which is used by credit card companies to keep track of financial transactions. For example, the Mastercard range starts with a 5 and becomes 5xxxx, and Discover starts with a 6, 6xxxx.(Visa begins with a 4).
ISO- Independent Sales Organization. Third party organizations between merchants and acquiring banks; they must all register with Visa/Mastercard.
MID- Merchant Identification Number. An ID assigned to each merchant by processors for billing and accounting purposes.
POS- Point of Sale. Refers to both the time and place a transaction occurs, and also the devices used to complete the transaction.
The Boston Globe reported that Boston businesses are taking action against inflated credit card processing fees by offering customers discounts if they pay cash.
A business profiled is a Japanese restaurant which decided to offer more than half off on Sundays to customers who would forgo using credit cards for cash.
“We’re like, ‘Why are we giving that money to the credit card companies? They’re like loan sharks,’’’ owner Diane Chung said. “Give it back to the customer and everyone’s happy.’’
Business owners have been increasingly complaining about swipe fees affecting their bottom lines in a down economy. Credit card companies counter that rates are fair and have not increased as much as businesses claim, and that even if fees were lower, businesses would not pass them on to the consumers.
“They [businesses] want to have Congress come in and regulate a business-to-business contract under the guise that they’re doing it for customers, when, in fact, they’re trying to line their own pockets,’’ said Ken Clayton, a senior vice president for card policy for the American Bankers Association.
Many consumers can’t think of denying themselves the luxury of using credit cards which they use to accumulate lucrative miles and points. To them, the benefit of miles outweigh the benefit of a discount.
Businesses should not have to forgo customers due to inflated credit card processing costs. TransFS.com exists to help business owners get the best deal on credit card processing. Check out our credit card processing calculator (it’s free) to figure out how much your business can save, and start an auction to begin saving today.
Image thanks to http://www.flickr.com/photos/78695167@N00/442805346/
The Retail Industry Leaders Association (RILA) recently reported that ultimately consumers are the ones bearing the brunt of paying for inflated interchange fees. Interchange fees have been in the spotlight in Washington, especially with last month’s report from the GAO (Government Accountability Office) which suggested that credit card companies and their banks are the ones profiting from higher fees, as merchants and consumers face rising costs.
The RILA has encouraged Congress to take action, as has The American Consumer Institute, which claims that this holiday season, the average household will pay $337 in “swipe fees.” Higher interchange fees have also hindered job creation in a sluggish economy where every dollar counts.
“Retail job creation is stifled in part by the rapidly escalating costs associated with credit card interchange ’swipe’ fees,” said John Emling, senior vice president of government affairs for the group. “Every additional dollar taken by banks through these excessive fees is a dollar unavailable to hire new employees and lower costs for customers.”
Read more: http://www.consumeraffairs.com/news04/2009/12/retailers_interchange.html#ixzz0ZIi3BaTV
Image thanks to http://www.flickr.com/photos/51035555243@N01/116585861/
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