Where is the CVV # on Credit Cards?
July 8, 2009 by Matthew Hunt · Leave a Comment
I have had a few merchants recently not understand what the CVV # is on credit cards and how they can use it to protect themselves from potential fraud and/or chargebacks. In the image (the left) shows you where to find the CVV number on credit cards.
It is a three or four digit security code on your credit card. If your customer is prompted to enter that and it matches the security code on file the transaction goes forward, if it doesn’t match it is flagged and the transaction is halted. It’s important to match this up on mail-order and telephone-order businesses. I’d also incorporate it into my e-commerce shopping cart too. It’s not a 100% fool-proof, but it is just one more measure that enables Merchants to protect them selves from credit card fraud.
What’s the Deal with: “Merchant Accounts & Personal Guarantees”?
June 28, 2009 by Matthew Hunt · Leave a Comment
This question comes up often from many merchants “Why do I have to sign a personal guarantee?” and it’s a valid good question. In this blog post I will try to shed some light on this merchant account subject matter.
Basically all merchant account providers will require that a personal guarantee be signed by the owner(s) before approving an account for credit card acceptance. Now I do know providers that will accept applications, but it requires 2 years worth of accountant ready financials (which most new companies obviously do not have) so any new company does not have this as an option and will have to make a personal guarantee to get approved on a merchant account.
Some business owners are justifiably reluctant to sign a personal guarantee, and I get that (and hear you loud and clear)… that is the point of having incorporations and limited partnerships, or other legal entities that are set-up to protect your personal assets from the business’s liabilities.
So what’s the big deal, right?
Well, what most Merchants do not understand is that these merchant accounts are consider short term loans (only with higher risk associated to them). A merchant account provider is at risk for every dollar that passes through the merchant account during a 6 month peroid.
Look at this scenerio:
Company ABC comes out with a new… I dunno… lets say a… MP3 Player for $50 bucks. During their first month, sales are over $50,000 and everyone in the company is excited. Because ABC Company feels they have a hit on their hands they take all remaining capital and toss into advertising to try to drive more sales to their new MP3 Player. Only 2 weeks later ABC company finds out their is problem with their player, a manufacturing bug that is causing almost all their MP3 Players to stop work a couple months after working.
ABC Company doesn’t have the cash to replace them because they dumped all their capital into the extra advertising so they tell customers that they are sorry, they won’t be able to honor the six month warranty that was included.
What do you think these customers who bought the MP3 Player are going to do…? That’s right – issue a chargeback. Then the merchant account provider will try debit ABC Companies bank account to recover the chargeback amount only to find out there is no money to be able to debit. Guess who is on the hook for all these chargebacks…? The merchant account provider, if… they don’t have a guarantee.
Hence why Merchants have to give a “Personal Guarantee” for approval on a merchant account.
You see Merchant Account underwriters have to determine what the risk factor is for each company and business. They look at projected sales and multiply that by 6 months because that is how long a card holder has to issue a dispute a charge (a.k.a. chargeback).
Yes the above example is a Merchants honest mistake, but it is still the merchant account provider that does not want to stuck holding the bag, if Merchant’s businesses goes bust. The above example even though the business made an honest mistake it could be taken the wrong way and they could end up on the TMF Match List. Merchant Accounts are very serious stuff – it’s not just as simple as apply for a credit card (which I think a lot of newbie business owners think).
These procedures are also set-up to prevent your typical fraudsters too. This is where they try to set-up a merchant account, sell stuff (or so they say), get paid by the merchant account provider within 48 hours and then skip town. The “Personal Guarantee” is to try to prevent fraud.
I hope this has shed some light on why a “Personal Guarantee” is required when applying for a merchant account. If not, please let us know your questions by using the comment section below.
Terminated Merchant File (TMF) Match List – One List You DO NOT Want To Be On!
June 25, 2009 by Matthew Hunt · Leave a Comment
I recently had a client who we submitted an application into the merchant account underwriters and the application came back being on the dreadful “TMF Match List“. Now this has only happened to maybe half dozen of my clients (out of about 1000 applications), and I felt it warranted a blog post on the subject matter to help Merchant understand what the LIST is how to try to prevent ending up on the ‘TMF Match List‘.
You may be asking yourself “What is the TMF Match List“?
When you apply for a merchant account, the underwriters will check to see if you are on the Terminated Merchant File (TMF). If you’re on it, this means that another payment processor has terminated a merchant account with you, and sends up a red flag to all the other payment processors that you’re a credit risk. Once you are on this list nobody can get you approved from any of the merchant account providers until you are removed.
How do you get on the TMF Match List?
The bad news is… is it’s not difficult to end up on this list and it can happen to good, honest hard working Merchants. Not enough merchant processors take the time to educate merchants about the “Do’s & Do n0t’s” merchant account services. And when they do, its in some legal type document in tiny print that even the smartest bankcard lawyers would have difficult time digesting it all.
All it takes is one accounting error or technical mistake or even a little dispute over billing practices and your business is in jeopardy.
So how do you get on the Match File? The most common ways to violate you merchant agreement includes:
- Credit card fraud – If your fraud detection controls aren’t strong enough you could end up with too many chargebacks.
- Friendly fraud – This is when a consumer disputes a legitimate charge such as from an adult website, hence why adult sites are consider ‘high-risk’. Card processors do not like high chargeback businesses.
- Factoring – Factoring is when a merchant deposits transactions for sales generated by another business. You must never do this, you are approved for your business and your business only. Do not let a friend convince you of using your debit machine for the weekend or whatever. This a for sure way to get your merchant account terminated. People are usually caught because the billing on consumers credit card statements shows you info, yet they purchase from your friends business and now that they do not recognize the business info they issue a dispute causing chargebacks, etc.
- Not delivering products or misrepresenting products or services.
- Owing money to the merchant account processor
- Refunding money to your own credit card – you think they can’t tell your credit card was refunded on your merchant account.
- Running your own credit card on your merchant account – big no-no.
- Basically excessive chargebacks – card processors do not like to see chargebacks above 1%
One of the fastest ways to get on the Match list is to close your merchant account and not pay your last statement. It’s a simple oversight with costly consequences. Even a matter of a couple of dollars can land you on the dreaded list. Fortunately, this is one of the easiest fixes – just pay your remaining bill/fees.
Tips for staying off the TMF list:
- Don’t go over your officially authorized maximum sales without permission from your merchant processor. Many merchants are unaware that when you applied and put down your expected monthly sales volume that creates your profile of sales limits. You see merchant account are seen kinda like a ’short term loan’ and you are approved for a certain amount. Credit Card Processors do not like it when you exceeding those amounts with prior notice or growing your business organically over time (kinda like improving your credit limits through years of good credit). The worse thing you can do to a merchant account is slam it with ton of sales – this causing ‘huge’ RED FLAG and with cause your funds to held until the securities department decides it safe to release your funds.
- Make sure you make easy for your customers to resolve any issues they may have had with your products and/or services. Provide your customers with up-to-date information about how and when you will debit funds from their accounts. Give them easy access to contact methods for them to reach you with any of their questions, concerns or complaints. Respond to all inquires in a timely fashion. If you don’t do this you are just asking for a flood of chargebacks.
- List your customer support phone number on your customers’ monthly statements. If they don’t recognize your debit they should call you first before hastily-and mistakenly-disputing the charge.
- Provide excellent customer service and stay in touch with your customers. Send emails, call them to confirm higher-than-normal charges or to solicit customer feedback, and send newsletters. The more they know you the better the more they will feel comfortable with and trust you.
- Monitor transactions closely with a transaction management system, so that you can protect your business from an expensive interruption of service.
If you find out that you’re on the TMF list, there is hope-but it will take some work. Sometimes bad things happen to good honest Merchants, but don’t lose hope, it is possible to get off the ‘Match List’…now that being said…if you committed fraud, you probably won’t ever get off the list.
As soon as you find out that you’re on the TMF, call the merchant account company that placed you on the list. Prep yourself to be speaking to many different departments before you will reach the ‘right person’. Once you have reach the ‘right’ person keep your cool (no matter how frustrated you are) The ‘risk department’ is NOT customer service and they don’t deal well with angry Merchants, nor do they have to. Think of them more like a collection agency only this collection agency is trying to get their money back from you they usually have it already. If they have your money they can legally hold up to 11 months in trust before they have to release your funds back to you. This enables them to protect themselves from any chargebacks. I have seen this cripple businesses before. Please be patience, nice and do exactly what they ask. Some people are going to not be nice anyways, but you were for warned.
If you believe your business or name was mistakenly added to the Match file, you must work with the acquirer that added the listing to the file. Only the company that placed you on the list is authorized to request a change or deletion of the information.
If you were placed on the match file for a high chargeback ratio, time is usually the only thing that will get you off the list. Your card processor needs to know that it isn’t going to get stuck with unpaid bills resulting from the merchant’s former customers’ chargebacks. They sometimes will request a deposit or rolling reserve if you do not already have one.
It can take several weeks to get off the match file in many cases. If after a few weeks you don’t make any progress, you may need to hire a lawyer. If you need legal assistance in getting of the Match file, seek a lawyer with experience in bankcard law.
Canadian Credit Card Processing Wars
April 28, 2009 by Matthew Hunt · Leave a Comment
Tim Wilson at the NationalPost wrote yesterday an interesting piece on Canada’s Credit Card Wars over regulating interchange and allowing Visa to introduce debit cards in Canada.
Tim states, “While we respect businesses’ desire to manage their expenses, government intervention is not the right solution in a functioning industry.”
I know many Merchants who would be as fast as a wild cat and pounce on this statement. However, after reading more of what Tim had said in his article reminded me how important credit cards are to a business. Tim states:
“Retailers benefit from the speed, efficiency and reliability that only electronic payments can bring. They also receive guaranteed payment and can avoid the need to extend credit directly to their own customers. According to the economics firm Global Insight, over the past two decades, electronic payments have contributed $122-billion to the Canadian economy, which represents nearly 20% of our total GDP growth over the same period.”
In reality, without credit cards businesses would not be able to be as profitable as they are. Just try and imagine how a website would be able to transact without the ability to accept credit cards or even by phone. How would your business sales be without credit cards…?
The REAL ISSUE (if you read between the lines) that merchants are really complaining about is they feel they are paying too much in fees. It always comes down to the “$”.
Now I am all for keeping Merchant processing fees as low as possible. The issue really isn’t Visa and/or Mastercard with their Interchange rates because the interchange rates are not that high. If you have really high rates it’s usually due to your credit card processing company. This is Moneris, Global Payments, Chase-Paymentech, Elavon, First Data, TD Merchant Services, and other sub ISO’s who also broker credit card processing services. They make their money by marking up on top of the interchange rates and they really understand interchange.
Let’s use Tim’s example of:
“Visa Canada’s premium product, the Visa Infinite card, is available to a small subset of cardholders and its interchange rate, which is the small amount of money transferred from one financial institution to another each time a Visa product is used, is one fifth of one percent (0.2%) higher than other card products.”
What merchants don’t understand is how interchange really works and how the Merchant Account companies that sell/set-up merchants are the ones who can sometimes mark-up those rates big time. So if the card present buy rate for a non-reward card is approximately 1.6% for most categories of business and then the infinite card is 0.2% higher that would make the buy rate 1.8%.
Now many Merchant Account Companies will offer those card present cards at almost cost (let’s say 1.7% – only 10 basis points higher than cost) but they’ll mark all infinite cards by a full 1% higher making the Merchant pay 2.8% on those transactions. Now this could be good or bad for your business, it’ll depend on how many of your customers will pay using an infinite card – which you will not know until you are processing.
The question again is do you really understand how your customers transact with you…? If not you will want to figure it out.
This is where it is important that the Merchants understand how interchange works for their type of business category and/or the way their business will transact. By understanding this they will have a better chance at securing competitive rates because they can then look at the interchange tables and understand what the buy rates are from their type of business. However, as long as the Merchant remains uneducated on how all this merchant processing really works they will continue feel confused, alienated and over charged.
Now there have been some major shifts in the industry that have compounded these issues.
“In 2008, Visa introduced the first significant change to its interchange rate structure in 30 years, which resulted in some transactions attracting a higher interchange rate and others attracting a lower rate. Even with the change in structure and the introduction of the Visa Infinite cards, Visa Canada’s effective interchange rate has remained relatively flat at 1.6%. Interchange rates for Visa Canada are transparent and are available on our Web site.”
What people don’t realize is the change in the interchange structure is not really the problem. The REAL challenge is in educating merchants on how all the fees work. They are really just upset because they don’t understand why they are being charge more for some cards and how all their fees have change so much over the last year. The transparency has not been there and so they feel lied to or even like they have been swindle.
And sending a merchant in fine print 60 days before the change that their rates are going to change is NOT being transparent nor is that any kind of education on how it all works.
I don’t blame Merchants – I’d feel the same way if I were in their shoes. Again, as usual with anything in life – it breaks down to poor communication between the card processors and merchants. Which is fine with me – because it’s this type of poor communication that keeps me in business. 
I take the time to explain and help merchants understand how all these complex merchant MDR’s work and how to structure an application that is competitive and fair to both the merchants and the card processors.
Regardless, of what I think…what do you think…? Let me know in the comments below.
Is NFC The Future of Payment Processing?
April 17, 2009 by Matthew Hunt · Leave a Comment
I found this press release yesterday and it just proves again that we are getting closer and closer to payment processing moving towards being conducted on our mobile devices.
“MasterCard Canada, in partnership with Citi Cards Canada and Bell Mobility, has completed the first near-field communications (NFC) trial of Mobile PayPass(TM) in Canada. This was the first trial in Canada to use Bell Mobility’s wireless network allowing trial participants to make purchases using their mobile device at MasterCard(R) PayPass(TM) acceptance locations across Canada. The four-month closed trial was a major step towards bringing mobile payments to Canadian mobile phone users.”
Read more on the near-field communications trial here.
A Great Merchant Account Q & A
April 10, 2009 by Matthew Hunt · Leave a Comment
I was answering a merchant’s question(s) today and realized that a lot of what these two individuals were asking would relate to a lot of other Merchants so, I asked if I could add their questions to my blog and they (very kindly) agreed. I did however change their names to ‘John’ & ‘Jane’ and blocked out their emails, to give privacy.
I hope you too can grab some nuggets from this Q & A. Be sure to let me know in the comment section what you think or what you learned or if there is something you still have a question about.
The Merchant is in regular text and my answers are in BOLD CAPITALS.
———————————————————————————————-
Q & A Email
John & Jane,
Answers to your Q’s are below in CAPITALS.
Also, would you mind if I used your Q’s as a blog post on my website. I will not have any information that says, it’s you, but I feel that you asked very good questions that a lot of merchants in your shoes would want to know and I thought it might make a really nice conversation Q & A piece that could help other Merchants who are looking for the perfect merchant account provider.
I am in my office until 5pm today if you’d like to speak on the phone and then again (Good Friday) tomorrow from 1pm until 5pm. Have a nice Long Weekend!
Regards, Matthew
Thanks for getting this information to us so quickly! When we started taking Visa/MC a few years ago, we started with Moneris because our bank recommeded it. At first, they allowed us to keep our old fashioned hand operated machine and did not charge us in our down months. This quickly changed. Last season, the for the first time, we used a wireless/printing terminal which we leased from them. However, the fee structure kept changing. RATE ADJUSTMENTS ARE BECOMING MORE REGULAR IN CANADA NOW THAT VISA AND MC INTERCHANGE CHANGE THEIR RATES (VISA EVERY APRIL 1ST ADN MC EVERY OCT 1ST). IT’S NOT JUST MONERIS THAT ADJUSTS THEIR RATES. I FULLY UNDERSTAND HOW THESE RATE ADJUSTMENTS ARE FRUSTRATING FOR MERCHANTS AND THE LACK OF COMMUNICATION ABOUT HOW ALL THESE RATES WORK COULD BE COMMUNICATED MUCH, MUCH BETTER WITH MERCHANTS. THERE A TON OF MIS-UNDERSTANDINGS AND EVEN LAWSUITS GOING ON OVER THIS EXACT ISSUE. JUST SEE THIS SITE CALLED ‘STOP STICKING IT TO US‘. Fortunately, we were not on contract, so we cancelled last October and decided that a little research was in order! It’s certainly a confusing world though… I’ve seen quotes of 4 cents a transaction (which I don’t trust by the way) GOOD 4 CENTS IS BELOW THE BUY RATES SO THEY HAVE TO BE MAKING UP FOR SOME WHERE – SO LISTENING TO YOUR GUT IS HERE IS ‘RIGHT’… up to 25 cents a transaction. Hugely diverse set up fees, monthly statement fees… and varying contract lengths. The cost of buying a terminal outright or rent to own are often very far apart. And then there’s the discount percentages! But you know all this!!! YES I DO. AND I UNDERSTAND HOW CONFUSING IT CAN BE.
A couple of things I’m not clear on… are cellular terminals the same as wireless???NO NOT THE SAME. CELLULAR IS COMPLETELY MOBILE JUST LIKE A CELL PHONE, WHERE WIRELESS WORKS LIKE A CORDLESS PHONE ONLY SO GOOD FROM A CERTAIN AMOUNT OF METRES FROM THE PLUGGED IN BASE. I’m feeling that most people will want a receipt printed… do cellular terminals do this too??? YES THEY HAVE A PRINTER BUILT IN. We are quite new at ‘wireless’ piece of this process, given that we’ve been doing it by hand for so long. I know Moneris did not charge us air time… so I’m not sure how their system differs from cellular. IF IT WAS CELLULAR YOU PAID FOR AIR TIME, THEY USUALLY USE BELL MOBILITY AND SOMETIMES THE BILLED IS SENT FROM BELL AND NOT MONERIS. THE SERVICE PROVIDER I USE, USES ROGERS, BUT YOUR ARE BILLED FROM THE SERVICE PROVIDER AND NOT ROGERS.
We would like to be able to process Debit Cards as well as Visa/MC as they were a good percentage of our business last season. THEN YOU WILL WANT TO DO A CELLULAR UNIT, THE VIRTUAL TERMINAL WILL ONLY REALLY ALLOW YOU TO PROCESS CREDIT CARDS ONLY.
By the way… are you a company who provides sale/terminal services, or are you a broker for the best fit for your clients??? BROKER.
Thanks for now… I’m sure I’ll have a bunch more questions as we go. Oh, and we keep being deluged by hustles from Monex! Certainly their numbers are seductive, however my web research on them seems to say… “beware, beware, beware”! I guess it’s the old, “if it sounds too good to be true (or that simple!)… etc.” YES, THIS IS VERY TRUE. I TOO HAVE HEARD A MANY “BEWARE” STORIES ABOUT MONEX (I DON’T USE THEM), BUT DON’T HAVE ANY REAL EXPERIENCE DEALING DIRECTLY WITH THEM EITHER.
PART TWO – EMAIL TWO
John & Jane,
Again I’ll answer your Q’s below in CAPITALS. ALSO, FORGIVE ME IF THERE ARE ANY MIS-SPELLINGS BELOW, I AM A LITTLE TIRED SINCE I DECIDED TO ANSWER THIS LATE.
Have a nice long weekend!
Regards, Matthew Hunt
On Thu, Apr 9, 2009 at 5:54 PM, <@shaw.ca> wrote:
Hi Matthew… again, thanks for your answers!!! Of course you can use my questions as part of your blog! It reassures me when you say I’m asking the right questions! And, it seems to me, that the best way to for you to attract business, is to find a way to make this mish mash of information understandable for us poor, bewildered tiny to small business folks! YOUR EXACTLY RIGHT. MERCHANT ACCOUNTS CAN BE EXTREMELY COMPLEX, BUT I ALSO DON’T WANT THEM TO SCARE YOU INTO NOT HAVING ONE. PLASTIC IS A FACT OF LIFE AND PEOPLE LIKE TO PAY ON THEIR DEBIT AND CREDIT CARDS AND AS BUSINESS OWNERS AND ENTREPRENEURS WE NEED TO CATER TO OUR CLIENTS/CUSTOMERS NEEDS TO HAVE HEALTHY BUSINESSES. For me understanding = safety, and safety = comfort! YES, I AGREE. Anything that will help… go for it. A couple of other things that have been important for me to learn & might be helpful on your blog are these: From my research, I’m discovering although fees may seem to swing wildly from company to company, it often turns out that they are charging them under a different name… for instance, the company that claims they have no airtime fee, are in fact, burying it somewhere else!!! YES THIS IS UNFORTUNATELY TOO OFTEN THE CASE. I AM NOT SURE WHY SOME MERCHANT ACCOUNT COMPANIES THINK THAT MARKETING THEIR SERVICES WITHOUT TOTAL TRANSPARENCY IS HELPING THEM GAIN BUSINESS. MY PERSONAL OPINION IS THEY ARE STUCK IN AN OLD WAY OF SELLING WHICH IS VERY “BOILER ROOM or DEATH OF SALESMAN‘ MENTALITY – THIS WILL ULTIMATELY BE THE DEATH OF THEM BECAUSE WHAT THESE TYPES OF COMPANIES DON’T REALIZE IS THE WORLD IS EXTREMELY SMALL NOW, ESPECIALLY WITH SOCIAL MEDIA AND AS YOU HAVE ALREADY DISCOVERED A LOT OF P.O.’ED MERCHANTS ARE BLOGGING AND TALKING ON FORUMS ABOUT THEIR EXPERIENCES AND WHICH ALL GET INDEXED ON THE SEARCH ENGINES REALLY WELL, JUST SITTING THERE FOR ALL TO READ. I’m also discovering that there is such a thing as a ‘medium qualified’ or ‘non-qualified’ credit card transaction that often incurs a higher discount rate.YES THERE ARE DIFFERENT RATES FOR DIFFERENT TYPES OF:
- CATEGORIES OF BUSINESS
- TYPES OF CARDS PROCESSED
- HOW A TRANSACTION IS TRANSACTED
MOST COMPANIES BREAK THESE TYPES OF TRANSACTIONS INTO A THREE TIERED PRICING, USUALLY KNOWN AS:
- QUALIFIED
- MID QUALIFIED
- NON QUALIFIED
YOU SEE IN CANADA THERE ARE OVER 35 DIFFERENT BUY RATES FROM VISA AND MASTERCARD TO THESE CARD PROCESSOR WHICH IS CALLED INTERCHANGE. (BETTER THAN THE USA WHO HAS OVER 225 LEVELS OF INTERCHANGE) THE INTERCHANGE BUY RATES IS USUALLY POSTED ON EACH OF THEIR WEBSITES BECAUSE EACH COMPANY IS A PUBLIC COMPANY AND SO THEY SHARE WITH THE WORLD WHAT THE BUY RATES ARE.
THE REASON THERE ARE SO MANY DIFFERENT BUY RATES FROM VISA AND MASTERCARD IS DUE TO USUALLY 3 MAIN FACTORS:
1.TYPE OF BUSINESS – SOME BUSINESSES HAVE HIGHER RISK FACTORS WHEN COMES TO PROCESSING CARDS THEN OTHERS, FOR EXAMPLE A BUSINESS IS A CHIROPRACTOR HAS A DIFFERENT RISK FACTOR OVER A GROCERY STORE AND SO THERE ARE DIFFERENT BUY RATES FOR EACH CATEGORY OF BUSINESS.
2. REWARDS CARDS – THOSE SPECIAL CARDS THAT OFFER INCENTIVES FOR CONSUMERS TO SPEND MORE ON THEM TO GAIN POINTS THAT TURN INTO AIR MILES OR WHATEVER, OBVIOUSLY HAVE HIGHER BUY RATES BECAUSE THAT IS HOW THEY PAY FOR THOSE AIR MILES TO THE CONSUMER. NOW THERE ARE STATS THAT SUPPORT THE POINTS CARD USERS SPEND ALMOST TWICE AS MUCH AS NON-POINT CARD USERS AND THUS THIS A REALLY A BENEFIT TO THE MERCHANT. I HOWEVER, THINK THOSE STATS ARE NOT REALLY PURE BECAUSE I THINK POINT COLLECTING CARD USERS DO WHAT ME AND MY WIFE DO, WE PUT EVERYTHING ON OUR POINTS CARD AND PAY ONE BILL AT THE END OF THE MONTH SO WE CAN GET OUR FREE VACATION EVERY YEAR, BUT WE DO NOT SPEND ANY MORE THAN WE WOULD IF POINTS CARDS DIDN’T EXIST. WE ARE JUST BEING SMART ABOUT IT. HOWEVER, THE CREDIT CARD COMPANIES ARE USING THESE STATS TO SUPPORT HIGHER INTERCHANGE RATES, WHICH ULTIMATELY THE MERCHANT PAYS FOR AND EVENTUALLY THE CONSUMER BECAUSE AS THE MERCHANTS COSTS GO UP SO DOES THE PRICING OF PRODUCTS. ANYWAYS THAT IS A WHOLE OTHER STORY AND DISCUSSION.
3. THE THIRD REASON THERE ARE DIFFERENT RATES IS DUE TO HOW A MERCHANT TRANSACTS. OBVIOUSLY A TRANSACTION WHERE THE CARD IS PRESENT AND IS BEING SWIPED ACROSS A TERMINAL AND A HUMAN IS (SUPPOSED TO CHECK SIGNATURES) ETC. IS SAFER AGAINST FRAUD THEN LET’S SAY A NON FACE TO FACE TRANSACTION LIKE AN ONLINE TRANSACTION. SO WHEN THE TRANSACTS ARE NOT FACE TO FACE THEY TYPICALLY HAVE A HIGHER RATE ASSOCIATED WITH THEM.
NOW WHERE IT GETS CONFUSING IS EACH CARD PROCESSING COMPANY WILL TAKE THESE 35 PLUS INTERCHANGE RATES AND ASSEMBLE THEM IN EACH TIER – ONLY EACH COMPANY DOES IT DIFFERENTLY, SO ONE COMPANY’S MID-QUALIFIED TRANSACTIONS IS NOT EQUAL TO ANOTHER COMPANIES MID-QUALIFIED’S. THE SAME WITH NON’S TOO.
DID I LOSE YOU YET?
FOR EXAMPLE,
ONE COMPANY MAY SAY ALL MANUAL KEYED TRANSACTIONS ARE CONSIDERED NON-QUALIFIED (WHICH IS NORMAL) BUT ANOTHER COMPANY MAY HAVE THE SAME BUT HAVE ALL ‘INFINITY CARDS’ BE ALSO CONSIDERED NON-QUALIFIED.
SO IT’S NOT ENOUGH TO JUST FIND OUT WHAT THE “QUALIFIED’S , MID-QUALIFIED’S, AND NON-QUALIFIED’S ARE, YOU ACTUALLY NEED TO DRILL DOWN FURTHER AND FIND OUT WHICH CARDS FALL UNDER EACH UMBRELLA.
THIS IS WHY I ONLY USE A COUPLE OF COMPANIES FOR MOST OF MY CLIENTS. I AM PERSONALLY A FAN OF SIMPLE AND TRANSPARENCY. THE RATE I QUOTED YOU ON THE CELLULAR WAS A BLENDED FLAT RATE AND IT COVERS ANY TYPE OF CARD AND/OR ANY TYPE OF TRANSACTION YOU PROCESS. FOR YOUR BUSINESS MODEL THIS WOULD PROBABLY BE BEST AND TO ALSO SUBMIT AS SEASONAL SO YOU DO NOT GET DINGED WITH MINIMUM PROCESSING FEES DURING THE MONTHS YOU ARE NOT USING IT.
DON’T GET OVERWHELMED, I WILL HELP YOU MAKE THE RIGHT DECISION FOR YOUR BUSINESS REGARDLESS OF WHETHER WE PERSONALLY DO BUSINESS OR NOT.
I’m also learning what rates are negotiable and what rates are not… and why! For instance… if the airtime comes through Rogers… the rate is theirs and is only likely to be negotiable when you are their direct client, as in a personal cell phone. Oh my, there’s so much to learn! YES SOMETIMES RATES ARE NEGOTIABLE, I USUALLY GET MERCHANTS VERY COMPETITIVE RATES RIGHT FROM THE GECKO. IT’S NOT ALWAYS THE BEST PRICE THIS IS BEST, IT’S A COMPETITIVE RATES WITH EXCELLENT SERVICES.
So for now, thank you for all of your help. We are currently sorting out, not only what our options re: POS services are, but how we will be structuring our little business this season. We have pretty much always been ‘a travelling show’ and this is a physically demanding process. My husband/partner is beginning to object!!! So, we are looking at the possibility of doing fewer events and more on-line & wholesale business. We need to decide just how viable that will be.
We’ll be in touch,
I AM HERE IF YOU HAVE ANY MORE QUESTIONS.
15 Ways to Prevent Chargebacks
April 9, 2009 by Matthew Hunt · Leave a Comment
Merchant Account providers DO NOT like chargebacks, getting a lot of chargebacks can cause you to have your merchant account terminated or even worse end up on the TMF List. Some chargeback situations can’t be helped, but many can if you understand how to protect your self. Here are 15 ways to help prevent chargebacks.
- Here is the most obvious way to prevent a chargeback – Do not complete a transaction if the authorization request was declined. Do not repeat the authorization request after receiving a decline. Be sure if you want to get a second verification then phone it in.
- If you receive a “Call” message in response to an authorization request, call your authorization center. Be prepared to answer questions. The operator may ask to speak with the cardholder. If approved, write the authorization code on the sales receipt. If declined, ask the cardholder for another Visa card.
- Make an imprint for all card-present transactions. If you have a point-of-sale terminal with a magnetic-stripe reader, swipe the card through the reader for every face-to-face transaction. If the terminal isn’t working or a card’s magnetic stripe cannot be read, key-enter the account information and make an imprint of the embossed information onto the sales receipt using a manual imprinter. Even if the transaction is authorized and the cardholder signs the receipt, if the receipt does not have an imprint of the embossed account number and expiration date, the transaction may be charged back to you for “no imprint” if the cardholder later denies participating the transaction. This is why having a manual imprinter is essential and make sure staff is trained on how to handle situations like this too. The number one reason merchants end up with chargebacks is due to untrained staff.
- Obtain cardholder signature. The cardholder’s signature on card-present transactions is required. Failure to obtain the cardholder’s signature could result in a chargeback for “no signature” if the cardholder denies authorizing or participating in the transaction. You should also look at the signature to make sure it somewhat matches what you see on the back of the credit card. If doesn’t ask for I.D.
- Stay organized. Make only one imprint of the card for each transaction. Making more than one imprint can lead to duplicate deposits and increase the chance of a chargeback. If you need to redo a sales receipt because of an error, write “VOID” across the incorrect sales receipt, inform the cardholder, and tear up the incorrect sales receipt in view of the customer.
- Ensure that transactions are entered into point-of-sale terminals only once—and deposited only once. Entering the same transaction into a terminal more than once, or depositing both the merchant copy and the bank copy of the sales receipt with your acquirer, or depositing the same transaction with more than one merchant bank can all result in “duplicate transaction” chargebacks. And chargebacks can be anywhere from $10-$50. You end up with 5-7 of these every month and you’ll feel it.
- Ensure that incorrect sale receipts are voided and that transactions are processed only once.
- Be clear about your policies at check-out. If your establishment has policies regarding merchandise returns, refunds, or service cancellation, disclose these policies to the cardholder at the time of the transaction. Your policy should be pre-printed on your sales receipts; if not, write or stamp your refund/return policy information on the sales receipt near the customer signature line before the customer signs (be sure the policy shows clearly on all copies of the sales receipt). Failure to disclose such policies at the time of the transaction will be to your disadvantage should the customer return the merchandise. This is a tough one, but it’s always the Merchant’s burden of proof to show that policies are clear.
- Do your batch closes or sometimes known as settlements daily. Deposit sales receipts with your merchant bank as quickly as possible, preferably within one to five days of the transaction date—do not hold on to them. Failure to deposit in a timely manner can result in chargebacks for “late presentment.” It can also result in higher discount rates or cause your transactions to fall under the higher Non-Qualified MDR rates with some providers.
- Deposit credit receipts with your acquirer as quickly as possible, preferably the same day as the credit transaction is generated. Failure to process credits in a timely manner can result in chargebacks for “credit not issued.”
- If a customer requests cancellation of a recurring transaction which is billed periodically (monthly, quarterly, annually), always respond to the request and cancel the transaction immediately or as specified by the customer. As a customer service, advise the customer in writing that the service, subscription, or membership has been cancelled and state the effective date of the cancellation. Failure to respond to customer cancellation requests almost always leads to chargebacks.
- Keep customers informed on the status of their transactions.
- If the merchandise or service to be provided to the cardholder will be delayed, advise the cardholder in writing of the delay and the new expected delivery or service date.
- This one is common sense for most Merchants, but there are always a few creative individuals out that who decide to conduct business in an interesting manner. If the merchandise ordered by the cardholder is out of stock and delivery will be delayed or this item is no longer available, advise the cardholder in writing and offer the cardholder the option of purchasing a similar item or canceling the transaction. Do not substitute another item unless the customer agrees to accept it. By giving the customer notice and the option to cancel, you may help avoid a customer dispute regarding the merchandise and a possible chargeback.
- Know your shipping time lines. Ship merchandise before depositing transaction. Don’t deposit transactions with your merchant bank until you have shipped the related merchandise. If customers see a transaction on their monthly Visa statement before they receive the merchandise, it could lead to a preventable chargeback.
Back-up Hardware
March 31, 2009 by Matthew Hunt · Leave a Comment
Many Merchants today don’t have a manual credit card imprinter kicking around and that is not a good thing. Every Merchant should always have one those out-of-date “Knuckle Busters” handy with some carbon copy credit card slips.
The reason being is if your POS system is down you can quickly do a manual swipe on your customers credit card and let them proceed through the check-out without any hiccups. Doing this will enable you to still capture the card present rates and help protect you against potential chargebacks.
Now be sure to have your staff trained on these procedures of how to use this older equipment because I was a Winners the other day and their debit machine when down and the staff didn’t know how to manually process credit cards. I asked them to do it this way so I could be on my way. They said at this time they could only accept cash. I had 2 pairs of jeans in my hand and decided to leave even though a bank machine was two floors down.
I was not the only customer that did this. And most people would just leave.
If they had been trained right on the back-up procedures of how to process a credit card through a manual imprinter then they would made an additional $150 worth sales from me. Now I am sure that is hardly a blip on the sales volume of a Winners, but multiply that by how many times the POS system goes down in a year by lets say 10-15 customers by 100’s of locations and we are talking 100’s of thousands of dollars a year in missed sales all because staff was not trained correctly on how to process credit cards manually.
Technology is great, but only when its working. You can buy an inexpensive credit card swiper here.
MasterCard Fights Back Against Interchange Myths
March 26, 2009 by Matthew Hunt · Leave a Comment
Mastercard Canada released a press release a couple of days ago announcing they have accepted an opportunity to appear before the Senate Standing Committee on Banking, Trade and Commerce in order to discuss the payments industry, as well as to address the significant misinformation being propagated by retail sector lobbyists.
“The many benefits Canadian merchants receive from card acceptance continue to be downplayed,” said Kevin Stanton, President, MasterCard Canada. “I look forward to the opportunity to discuss the important role card payments play in helping maintain a well-functioning financial system in Canada.“
They have even created a full website explaining how interchange works and common myths associated with interchange. The website is called InterChangeTruth.com, this seems to be a offensive approach to dealing with groups like Stop Sticking It To Us coalition, who Mastercard Canada says are fueling myths about how interchange works and affects Merchants and consumers.
A couple of examples they make on their InterChangeTruth.com site are:
Myth: Interchange fees cover the cost of incentive programs, corporate card programs and marketing.
Fact: Interchange fees do compensate card issuers for the variety of activities they undertake in offering credit cards in the market. Incentive programs, card programs and marketing are some of those components but so are security and fraud programs, credit risk, promotional programs executed with retailers to drive business to their stores, and many other initiatives that benefit merchants. Merchants pay a fee to their acquirer for each transaction they process in exchange for the value they get from card payments, including:
- payment guarantee for authorized transactions
- increased sales
- customer satisfaction
- increased safety and reduced pilfering
- ability to serve international customers
- infrastructure, security and innovation investment
- the ability to process e-commerce, phone and catalogue sales
Myth: The current debit system in Canada offers the greatest benefits to consumers and merchants.
Fact: The incumbent Canadian debit system is a privately-held monopoly which for many years had no direct competition in Canada. Therefore it faced no competitive pressures to innovate, improve service, enhance security and fraud systems, or establish attractive pricing for merchants.
Anyway it is an interesting read and the site is only 6 or 7 pages, well worth a read to hear Mastercard’s side.
What are your thoughts as a merchant…? Let us know in the comment section below.
Another article related to this exact topic that you may like is:
Rebuttal to MasterCard Canada Assertions
Is Your Business Going to Ottawa This Week?
March 25, 2009 by Matthew Hunt · Leave a Comment
The “Stop Sticking It To Us” Coalition, representing over 200,000 Canadian businesses, small, mid and large, says it is gathering in Ottawa this week to combat overcharging by VISA and MasterCard.
The reason why is because the U.S.-based credit card companies have been pushing worldwide to take over the debit card business and increase service charges on credit card transactions. For or example, currently in the U.S. Visa and MasterCard now control over 75% of the debit card market. U.S. merchants and customers pay heavily for the card company’s dominance of that market. Debit transaction fees are (on average) anywhere from 20-50 cents in the U.S. In contrast, most Canadian Merchants pay from 8-15cents on average for a debit transaction – that’s a huge percentage increase!
My question to you is will your business be in Ottawa this week…?
Is protecting our Made-in-Canada, not-for-profit debit card system (Interac) a key objective for your business…?
Love to hear the thoughts directly from the Merchants. Add you comments below.
