Wells Fargo found that they were ripping off customers?

Surprise! Wells Fargo found out that after an internal probe, some of it's account executives were ripping off customers and charging some very high fees as per the WSJ. Unfortunately this practice is all too common among processors. I have seen companies that sent in statements where for some credit cards they were being charge 14%! This happens at the big name firms all the time as they take advantage of a merchant's trust in their established name. The bottom line: always make sure to deal with a reputable merchant service provider.

EMV Technology: Hurting Merchants?

One of the latest discussions many merchants have been having is the new implementation of the EMV technology for credit card processing. One of the biggest issues that are arising for merchants, is how slow the chip readers can be. This will be detrimental to sales when the holiday season comes around. Imagine long lines of people many of whom will simply ditch their shopping carts and go elsewhere as the readers take forever to approve a transaction? The problem stems from the platforms the merchants are using to process the chip readers and not the reader itself. If you are looking for a solution to your chip reader issue and want one that is the fastest you can find, contact Prestige Merchant Services. The platform they utilize has a median time of 1.60 seconds for the terminal interaction with the chip. Chip reading does not have to be slow any longer.

Law Firm Merchant Account

Law Firms at times need specialized merchant accounts. This may be do to the fact that they have money in escro or they need to send out a bill. Make sure to find a good Law Firm Merchant Account that can handle your Law Firm needs.

The right point of sale (POS) technology can help your back office operations run much more smoothly so your attorneys and staff aren’t side-tracked to deal with administrative headaches. With law firm payment processing from Prestige, you can:

Easily track your clients’ appointment history, side-by-side with their complete case histories—without having to fumble through paper records

Streamline, or even automate, client appointment reminder calls, via SMS text or email confirmation

Track and manage inventory of your office supplies 

Allow your clients to pay how they want to pay.

Would your clients prefer to pay for your services online, via a mobile app, or in-person using a credit or debit card? When you partner with Prestige for your law firm credit card processing, the choice is theirs—and the list of options is growing all the time. In fact, payments industry experts estimate that by the year 2020, there will be 455.1 million mobile wallet users.

Consider choosing a law firm credit card services partner that enables your office to accept the latest in payments options—including mobile wallets—in order to attract new, young clients, as well as keep your current clients happy. Today consumers expect the very latest in payments processing wherever they go, even when they’re at their attorney’s office.

Built-in payments processing wins the case.

When you choose Prestige for your law firm credit card processing, you won’t have any surprises or additional software to buy. In fact, our payment processing is already built into the most popular POS systems for attorneys. Your new payment solution will be ready to go from day one, meaning there will be less downtime and more revenue coming in for your office.

10 Tips on Avoiding Chargebacks

Chargebacks are something all businesses try to avoid at all costs. Have too many chargebacks (as little as 1% of the total amount of your sales) and your merchant account might be terminated. That would mean you no longer could accept credit cards and that would hinder any business.

What is a chargeback?

There are a few possibilities for a chargeback but the most common cases are:

1) Customer is unhappy with the product or service they were given.

2) Customer is disputing the charge because it was never authorized (I never bought this!).

3) Clerical- Customer is double billed or billed incorrectly.

4) Insufficient funds.

There are variations of this theme such as the customer does not recognize the name of the biller (which is why you should always try to keep the name on the bill the same as the business type).

In most cases a customer can have up to 120 days (depending on the type of card) to chargeback a transaction and/or they have an issue with the product purchased.

10 tips to avoid chargebacks:

1) Avoid Clerical Errors

Make sure you are careful about the information you are using when billing the customer

Visa has some great tips here

2) Use Your Company Name on the Bill

If the customer does not recognize the name of the company for the charge they are more likely to charge it back due to fraud or unauthorized use.

3) Get a Contract

Basically make sure you have an agreement signed for the product or service you provide. 

If they signed off on it, it will be hard for them to dispute it.

4) Dispute it

If you think the chargeback is unfair or fraudulent it may be worth fighting (if you have time) and dispute it as each chargeback has a fee associated with it.

5) Protect yourself against fraud

Many companies won't ship out items if they don't match with the billing address or if the security code is wrong. They might then  contact the customer to verify the purchase is legitimate.

6) Don't Wait

If your company is notified about the chargeback it would be best to contact the customer right away and resolve any chargeback disputes.

7) Clarity

Be clear about the service or product you are selling! Don't lie or leave out things about your product or service as that is one way to almost guarantee the customer will chargeback.

8) Policies

Make sure you have clear return/refund policies stated on your website or store. This way there are no misunderstandings and you are less likely to have a dispute.

9) Call Me

Make sure the customer knows how to contact you. If your phone number is readily available on the bill the customer is more likely to call first then charge it back.

10) Set the right expectations

If you provide truthful expectations about your service or product you are less likely to have a dispute. A great example: Delivery dates or stock availability.

Beware of Bait and Switch Rates!

As mentioned previously, when  looking for a competitive deal on a merchant account, beware! It's good to know that I'm not the only one warning people about the pitfalls of "teaser rates". Like anything in life, "if it's too good to be true, it probably is". If you have learned nothing else from reading this blog it should be this: Never sign a contract! The rate should also not be the only determining factor in which merchant service provider you choose. A merchant account is a very important aspect of your business and if something goes wrong, you want to know you are dealing with a company that can service you well and quickly. It is very unusual to get the deal you are sold and that's because the hidden fees will keep you in the dark. Make sure you do your homework and pick the company you are most comfortable with. This will help you in getting a true
deal on credit card processing.

News: Small businesses are getting ripped off

Fox News has an article and video that discusses how small businesses are getting ripped off bycredit card processors:

"I'm almost embarrassed I fell for their scam," said hair salon owner Magic Munson. 

She was approached by a salesman representing a company called Payment System Corporation who promised the halve her costs for processing credit cards and debit cards. It's a strong pitch to small businesses that are struggling in a bad economy.

But after she signed up, the company couldn't help her hook up several card swipers. She began getting bills even though the machines weren't hooked up.  The salesman was nowhere to be found and the friendly faces pictured in a list of customer service representatives were missing in action.

"If you try to call any of these people, they'll put you on hold. It's a fight to talk with a real person. i was on hold for 20 minutes (once) and after 20 minutes, they just hang up the phone.  She also began getting bills for services that she never used and was denied refunds that were promised.

There are  a 2 things one should take from this article that differ from what the article implies:

1) Never sign a contract! If there is no contractual obligation you will never have an issue going elsewhere, which should make the company you are with bend over backwards to keep you business by servicing you and doing it well. It will also make it less likely that they are hiding fees.

2) If the rates you are being quoted seem to be good to be true...they probably are.

Rates like 1.09% for credit cards are simply impossible as that is below the actual cost.

Be careful out there and only deal with the most reputable company.

Although few companies have  a no contract policy a merchant service provider that advertises as such is Prestige Merchant Services.

Interchange Plus Pricing: Not Everything?

Another great article by credit card processing veteran Phil Hinke:

I am a strong advocate of interchange-plus pricing. To date, I have allowed only merchant account providers that offer interchange-plus pricing to bid for my clients' business. However, I am also concerned about how some providers and salespeople appear to be pitching interchange-plus pricing as a panacea for ensuring merchants are being priced fairly. Therefore, I decided to turn last month’s article into a 3-part series on interchange-plus pricing — so merchants can see that while interchange-plus pricing can be important, it does not automatically guarantee fair pricing. 

This article is the second installment of that series.

Interchange Plus: 2 Things to Understand as a Merchant 

First, card processing is a very perplexing and convoluted industry. You can have, say, 30 different customers use their debit or credit cards to buy the same product at the same price on your website, and you theoretically could be charged 30 different processing rates. This is one of the reasons why a clever salesperson can offer what appears to be a good processing rate — and ends up being anything but that.

Second, don’t expect a salesperson to offer you the best possible price. If you are currently overpaying for processing by $20,000 per year and the salesperson thinks he can entice you into changing providers for $5,000 in savings, he may offer you a rate that saves you $5,000. There is nothing wrong with this type of sales approach. Merchants — like credit card salespeople — want to make as high a profit as possible. However, this perplexing and convoluted industry puts merchants at a disadvantage in the negotiations, which is the reason for my articles here each month. 

An Actual Interchange-Plus Example 

I have worked with several merchants recently that were offered interchange-plus contracts. Fortunately, they understand that interchange-plus pricing was not necessarily fair. As a result, each eventually received — after negotiations — far better pricing and terms and conditions than originally offered. Here is an example of one such merchant. 

This merchant was with one of the largest merchant account providers. The merchant was on a tiered pricing schedule — I explained tiered pricing in a previous article — and was grossly overpaying for the service. Its provider offered interchange-plus pricing at 0.31 percent plus $0.05 plus normal fees, all of which would save more than $100,000 over three years. As impressive as this may sound, in fact there were three problems with this offer.

First, the merchant was overpaying by more than $175,000 during that timeframe. The provider thought it could wow this merchant into thinking that the savings it offered would keep this merchant. However, after negotiating, the merchant ended up getting pricing at 0.07 percent (versus .31 percent) plus $0.08 plus normal fees, which saved the merchant the additional $75,000 over three years. Both rates were interchange plus, but only the latter pricing was fair.

Second, the provider included a “liquidated damages” clause for early termination. I encourage my clients to never sign a contract with a liquidated damages clause. Depending on the specific verbiage, it could cost thousands of dollars to terminate the contract early. In fact, I know of an ecommerce merchant who was forced to continue processing with his provider — or pay several hundred thousand dollars to terminate early. It should never cost more than $400 to terminate your contract early. 

Third, the provider was charging its processing percentage on returns. The provider charged the merchant 3 percent to process a $1,000 sale with a specific card type; the merchant paid $30 in processing for the sale. If the customer returned the goods, the provider would charge an additional 3 percent to reverse the credit card charges. Therefore, the provider received $60 and the merchant had a net sale of zero. There is no reason why a merchant should pay a processing percentage for refunds — other than it’s another way a provider can make money without the merchant understanding he or she overpaid. I know of one ecommerce merchant that was paying $6,000 per year in refund-processing fees.

An Important Interchange-Plus Question to Ask

I now see merchant account providers increase their fees or add new fees, while at the same time claiming to be passing through all of the Durbin Amendment debit-card interchange reductions. This does not seem right to me. Yes, they may be passing on the lower debit interchange rate. However, if at the same time they are taking more money out of the merchants' pockets with new or increased fees, are they really passing through all of the Durbin Amendment reductions? Are they really any different than the provider that is not passing through all the Durbin Amendment reductions? 

So, one of the questions I ask the salesperson during the negotiations is simply “Has your company increased any fees or added any new fees over the last year? If yes, explain why.” This is a question of provider integrity that each merchant should ask. I am not saying that the provider isn’t justified in increasing or adding new fees. However, all merchants should ask this question during the pricing negotiations. 

Conclusion 

In summary, remember these seven points when you negotiate an interchange-plus contract. Interchange-plus pricing is not a panacea. The card processing industry is perplexing and convoluted. Do not expect the salesperson to offer you the lowest rate. You need to work to get it. Do not be wowed by a large savings amount, as there may even more savings left on the table. Do not focus on just the rate. Understand, also, the fees, funding, and terms and conditions in the contract. Avoid liquidated damage clauses. Ask the tough questions during negotiations.

Square Credit Card Processing Raises $100 Million

The NYT is reporting that the mobile credit card processing company "Square" has raised a whopping $100 million in in a financing round led by Kleiner Perkins Caufield & Byers. As part of the deal, Mary Meeker, a partner at Kleiner Perkins, will join Square’s board.


“Square has a great product with extensibility which we believe has the potential to have a lasting impact on how people make payments,” Ms. Meeker said in a statement. “Square’s product is fast, easy and fun for both consumers and vendors; a small business can be up and running within minutes.”


There is little doubt that although this space within the merchant service industry is getting a bit crowded, Square is a force to be reckoned with. As I've mentioned the problems with square is that many don't fully comprehend it's limitations. They are great for someone with a very small side business but for serious vendors a traditional merchant service company is what they need.

Credit Card Processing at Hotels: Is it Safe?

Evidently any time you have a point-of-sale system that is computer based there is a potential for problems. As long as that computer is connected to the internet it has the ability to be hacked and have credit card information stolen from it. The story surrounding Destination Hotels is proof of just that: Guests who recently stayed at 21 of the resort's 30 hotels may have been victimized by the scheme, which appears to have compromised point-of-sale systems. The company refused to release many details of the incident -- citing an ongoing investigation by the U.S. Federal Bureau of Investigation -- but in a note posted to its Web site said that it had "uncovered a malicious software program inserted into its credit card processing system from a remote source."

Makes you think twice about giving your credit card information at a hotel doesn't it?

Accepting Credit Card Payments with Your iPhone

There is no question that credit card processing smart phone applications are changing the dynamic of credit card processing today.With new gadgets hitting the industry the mobile credit card processing industry is getting pretty crowded quickly. One of the most popular applications is the iPhone application that works in connection with a payment gateway service such as Authorize.net. Although iPhone has an application you can download for a one time fee for $49.00 there are credit card processors who have their own applications that are free and have Bluetooth rechargeable card reader for swiping cards, which deliver enhanced security, savings and convenience. These mobile smart phone applications work with other smart phones such as the iTouch and Blackberry and Storm.

Accepting Credit Card VS Cash Only

Many merchant who have always been a "cash" business worry about switching over to credit card processing.One of their main concerns and rightfully so is the cost. There are of course ways to keep those costs down but there is a cost nonetheless. I read an interesting article by Jim Prevor where he discusses Cash or Credit? Which is more expensive? He points out:: The whole issue of complaining about the cost of credit card fees is really an example of how hard it is to change our perspectives in business.Because the use of cash came first, we tend to view the cost of handling credit as an additional cost. But credit and, more broadly, electronic payment devices such as debit cards and key fobs are clearly destined to be the payment devices of the future. For a consumer, they facilitate easy record-keeping, avoid the risks of carrying cash, etc. He goes on to explain that handling cash has a cost for merchant's too.

Debit Card Processing and Technology: BIN $mart

There are many ways you can process a debit card. The most common are pin based and signed debit card (i.e. you swipe the debit as "credit " and then sign the receipt). Depending on the scenario one may be less expensive then the other.BIN$mart works by evaluating each card transaction by using a complex algorithm to estimate the least expensive processing method. After the card is swiped, BIN$mart will prompt the cashier to either collect more data, prompt for PIN entry, or simply have the customer sign the receipt. Your staff simply needs to follow the prompts on the terminal – BIN$mart does all the thinking for you.

You have probably seen similar technologies at work in the big box retail stores. When you swipe your debit card, the terminal will automatically prompt you to enter your PIN number. Large retailers have known for years that getting the customer to enter their PIN saves them money on larger transactions. In fact, small merchants may save up to $1.00 on a $100 sale by having the customer enter their PIN. The problem with many of these solutions is that they are only looking to see if a card is debit and not calculating to see if PIN-debit is actually less expensive or if there are other cost saving opportunities.

Compare that to BIN$mart’s technology, which looks at all of the following:

• Your specific rates and merchant
• account structure
• The exact sale amount
• The card type (debit, credit, corporate)
• Your SIC code
• The likely Interchange category for this transaction
• Probable debit network costs
• Your zip code

Each one of these can influence the decision to favor one transaction method over another. BIN$mart uses them all in real time to maximize your potential savings.Our company is currently proud to offer this technology to small and medium sized businesses.Feel free to visit Prestige Merchant Services for a demo on BIN$mart technology at work.

Hotels and Credit Card Processing: Saving Money

Hotel News had an interesting article about saving money on your merchant account. Hotels certainly process a lot of credit cards and in different ways that can effect the rates their charged.The author, Joel Ross wants to point out that more important than the actual rate itself is being aware of downgrades and reclassification of cards which is very prevalent in the hotel industry. As he explains:

It is not what you think you are being charged it is what you are really being charged that matters. The real costs often are intentionally difficult to decipher when the monthly statement arrives. Transactions get downgraded or reclassified for a wide variety of reasons, and unless you are a real expert at analyzing the statements, you will not see it.

These are just some of the reasons to stay away from contract as companies can pull all sorts of dirty tricks and by the time you figure out what way is up you are stuck paying heavy fines. Hotels unfortunately are  sometimes limited to the processors they can use especially if they are using propitiatory software.

The problem with PayPal : Reasons for a Merchant Account.

Although PayPal has certainly made it easy for online merchants to accept credit cards, it is not without it's share of problems. If you are going to accept credit using PayPal it would be a good idea to sign up through a separate bank account. Pay Pal has a history of siding with the customer much more than a bank would with a traditional merchant account. Reading through PayPal's agreement may surprise you ( and not in a good way) and few ever do. This way if they Pay Pal decides to debit your account they won't get much until the issue is resolved. I have heard many horror stories about PayPal freezing funds for a merchant for several months. Although this could certainly happen with a traditional merchant account (i.e. if you did something that would raise a red flag for fraud) it seems to happen a lot more often with PayPal. Another problem many client's tell me is that it's very difficult to get anything resolved with PayPal when things go wrong. Many credit card processors have 24/7 customer service so should an issue arise you can always get a live person on the phone.

What is a Downgrade? How can I avoid them and save money?

People who accept credit card now or plan to in the future, should be aware of the various surcharges and markups that can occur. Some can be easily avoided ( i.e. Interchange plus pricing VS Tier Rate Pricing ) while others can not (i.e. higher risk cards are always more expensive to process). The question is: what is a downgrade? Can I avoid downgrades on my merchant account? Downgrades refer to a card that has a higher cost associated with it (i.e. reward or corporate cards). There are other things that can cause downgrades which are easily avoidable such as batching out within 24 hrs. If you fail to batch out within a 24 hr period, in most instances your rate will jump automatically to "non-qualified" status and you will pay the highest rate category for that card processed. An easy way to avoid this problem is to set your merchant account to "auto-batch". This will allow the merchant account to check and see if anything needs to be "batched out" and you can set up the time for the batch beforehand.

Visa: Playing Card Games with Merchants?

The NYT has an interesting article on how Visa seems to be playing a game with merchants in regards to how it can obtain higher fees. Especially for larger retailers, pin based debit fees are lower than signed debit fees. Visa is promoting the use of signed debit (i.e. with chase offering  a "pay your bill" sweepstakes) through banks and other efforts. This pushes up fees for retailers and it's interesting to note that: The Justice Department is investigating if rules imposed by payment networks, including Visa, on merchants regarding “various payment forms” are anticompetitive, a spokeswoman said. Several bills have been introduced in Congress seeking to give merchants more ability to negotiate interchange, which is largely unregulated. Large retailers are steering customers to use only pin based debit by prompting them to use their pin after they swipe their debit cards. Visa seems to have a real hold on the industry as it increases it's domination over rhe debit card market and raises it's fees. It is a real cause for concern for retailers.....

Merchant Accounts & Search Engine Optimization

A Merchant Account is a very important aspect of your business as is having a website and good search engine optimization. The common denominator among these ideas: they help expand your business. accepting credit card for your business will help it several ways:

1. People are not limited to the amount of money they have on hand
2. It allows them them to pay for your product or service over time
3. They are more likely to by more since they don't have these restrictions
4. If you advertise the fact that you accept credit cards you will most likely get more interest

In today's economy more than ever people are relying more on credit even for small purchases. Why else would 7-11 accept credit cards for everything from milk to chewing gum?

Getting back to your website and SEO: these are other ways for people to find you. The first thing is you need to build a website and as I mentioned that is a very inexpensive venture to start. Now once you have a website you want people to find it. Of course you can always start an online ad campaign like google word ads and use various keywords to get traffic. There are free ways to drive traffic as well. If you are just starting out it's very difficult to get listed in the top 10 on major search engines because you are most likely fighting many other sites nationwide for those very same spots. The easier more cost effective methos is working on local seo. After you have submitted your website to all the major search engines like Yahoo, Google, Bing etc. you need to check out local business litings on sites like Google and Yahoo. These websites can give you great exposure and it's free. You also want to list your website on all the online yellow pages such as superpages.com, yellowpages.com and others.The next step is to have your website listed on all the major local listing websites like Yelp, Best of the Web, Kudzu and others. Stay tuned for more ideas....

What is a Merchant Account?

Many people wonder just what is a merchant account? How can I obtain one? A Merchant Account is an agreement between a retailer, a payment processor for the settlement of credit card and/or debit card transactions. You don't have to open a special type of bank account with the processor to get started. You can use a personal bank account if you are a sole proprietor and if you are a corporation or LLC you must have a business account. In order to open up a merchant account and start accepting credit cards as a form of payment you can only use a checking account. Savings accounts won't work. There is usually a verification process in order to prove your existence to the bank ( not all that different from a loan application requirement). Many processors will require some of the following documents:

1. Driver's license (proof of signature)
2. Business License or Sales Tax ID ( sole prop could use a utility bill etc.)
3. Printed voided check ( or bank verification letter)
4. Marketing materials (i.e. website, brochures, business cards etc.)

Understanding Credit Card Processing Rates & Fees

This video is a tutorial into understanding some of the rates and fees and fee structures associated with a merchant account. It can be confusing to understand but if you listen carefully you will certainly gain some insight as to how pricing policies work to some extent and how risk is associated with the rate you pay.

It explains the following fee structures:

1. 3-Tier Pricing
2. 6-Tier Pricing
3. Interchange Plus Pricing
4. Bill Backs

Wireless Credit Card Terminals and Leases: Be Careful!

Many people just jump into a lease with a wireless credit card terminal without thinking about the consequences. Perhaps their business goes up in smoke or they feel that the equipment no longer serves it's purpose. Any way they cut it they are locked into a lease ( typically 48 months) and they  may be paying anywhere from $60-$100 a month for something they are not even using.  Leases are a big source of income for credit card processors and you trypically end up paying 10-30 times what the equipment is actually worth. Our company offers the lowest prices on wireless credit card terminals so that if you really need one  you can purchase it and then you own the equipment. If you need a wireless credit card terminal and settle for a cheap model you get what you pay for. The king of wireless credit would be a nurit 8020 (shown here) which has superb wireless connectivity and a built in printer.