The benefits of accepting credit cards.

The B2C has a great article that really outlines some of the many benefits of accepting credit cards for your business. Not all of them have to do with expanding your customer base:

Security – Besides the obvious fear of losing or being robbed of their cash, more and more consumers appreciate the security of using credit cards offered by their bank. This often comes in the form of backing up the consumer in the event of a dispute, lost card, etc. In addition, these protections are often provided for free as long as the event is reported in a timely manner.

Tracking – All of a consumer’s purchases are accounted for and can be totaled at the end of each day, week, month, and year. This also assures the consumer accuracy and regularity when it comes to their bank accounts and speeds up the rectifying process.

Convenience and Protection – When purchasing high dollar items with their credit or debit card, consumers are free to do so without having to write a check or carry large sums of cash. Some cards offer insurance for larger ticket items as part of the agreement. Many of the higher-end cards also offer protection on certain items purchased in the event of theft or acts of God. In addition, the record of the purchase can also be valuable for insurance claims.

Employee Purchases – Many employees make purchases on the behalf of their employers, or when they travel on company business. These people are often issued a company credit card that is to be used for all purchases for the company. These potential customers are therefore limited to merchants and service providers that accept credit cards.

Rewards – People who are enrolled in rewards programs will often go out of their way to pay by credit card. There are special incentives and rewards programs offered by almost every bank or Credit Card Company to their customers today. The points can go towards travel, shopping, even event tickets. While it is true that the merchant generally pays slightly higher rates for accepting these cards, the customers that use this type of card tend to spend more because they are incentivized.

Business to Business – Many sales can be lost to B2B purchasing by individual specialty type buyers and their companies. Businesses that are making purchases of products or services for their own internal use often prefer to pay with a credit card. This usually is for accounting reasons, but by not accepting credit cards you are losing out on the opportunity to serve those specialized and likely repeat customers.

Business Travelers – A smaller, but relevant group of potential customers are the business travelers. These customers almost always avoid carrying cash on them in any large amounts, plus they are more than likely writing much of their trips off of their taxes, so they want receipts as well as clear documentation in the form of a credit card statement.

Every day, credit card companies are finding new ways to entice consumers to use their plastic rather than paying with cash or a check. At first it may seem like the cost of accepting credit cards is too high for your business, but the truth is in most cases you cannot afford not to. Every year the numbers show that more and more consumers are using plastic to pay for their wants and needs, so it is better to get on board the trend before you are left behind.

Wondering Why PCI Compliance Is a Big Deal?

Cyber criminals are targeting point-of-sale terminals. 

POS devices read the magnetic stripe on the back of a card that contains account information, which is then transmitted for payment processing.

The POS systems that are connected to the Internet could fall prey to cyber attacks particularly  for small businesses. This is all according to Trustwave's global Security report of 2011:

Although there are rules for security controls that developers should use for the devices, such as the Payment Application Data Security standard (PA-DSS), Trustwave said that "these controls are rarely implemented properly."

Further, many small businesses rely on third-party integrators to support the POS devices. But those integrators often have poor security practices. In 87 percent of the breach cases it studied, the integrators make mistakes such as using default credentials in operating systems or with remote access systems, Trustwave said.

Using SEO to Grow Your Business: Black Hat SEO

Recently big corporations have run afoul of Google's webmaster guidelines. Companies like JCPenny and Overstock.com have been caught using tactics to inflate their positions within Google's rankings. If you want to make sure your business doesn't get blacklisted, you probably want to stay away from Blackhat SEO. What is Black Hat SEO? Black-hat SEO utilizes tricks to inflate your Google ranking positions but when Google finds out what your up to they will do to you what they did to these corporations or worse. How do you avoid this? PC World has some good tips and I suggest you read them.Remember, if you hire an SEO firm to help you get better search results, it's your responsibility to keep them in check.

Problem with Square Credit Card Processing

Square has been getting  tremendous media coverage for the past few months. They now have a lot more competition but they are still getting the most press. The fact still remains that unless you are a small timer, square is not the product for you. There are some serious drawbacks to using square as far as the allowed processing amounts go, which are not listed but vaguely referenced in their terms of service. Basically if you process more than $100 a day or $1000 a month they may hold your funds for 30 days! Between that and the high rates if you are serious about accepting credit cards you are best off with a merchant service provider that offers low rates and no contracts and free software.

Phishing Campaign Targets First Data

(Via Softpedia)

Researchers from email security vendor AppRiver warn about a phishing campaign that targets merchant accounts from a payment processing vendor called First Data.

It the pool of phishing attacks targeting online banking accounts, credit card information, personal details and other online accounts, scams aiming at merchants are not very common.The rogue emails detected by ApprRiver bear a subject of "MERCHANT ACCOUNT UPDATE" and purport to come from "FIRSTDATA SERVICES."

The message contained within reads "Dear First Data customer, please update your login. Download the attachment in this e-mail and proceed."

The attachment is an HTML document called "Update Your Account Information.html," which, when opened inside the browser, displays a spoofed First Data Global Gateway login page.

The page contains a form for inputting the merchant's store number, user ID, tax ID, phone number and password.

"Once the hacker has gained access to the First Data account they will likely have gained control over that specific merchants account," warnsTroy Gill, security researcher at AppRiver.

The obvious danger here is that compromised merchant accounts might contain records of customer transactions, however, according to Mr. Gill, this aspect of the breach remains unclear.

First Data is an Atlanta-based provider of online and on-site payment solutions which caters to merchants, financial institutions and government agencies.

Its product portfolio includes credit and debit card processing, check acceptance and cashing solutions, international payment processing, automated clearing house payments processing and PCI compliance.

The company explains on its site that "the Global Gateway Virtual Terminal is an online payment application that allows you to accept credit cards and other payment types using your PC.

"The Virtual Terminal also acts as your Global Gateway account management application and allows you to view gateway processing reports, edit fraud settings, manage users, and more."

Square and Intuit Face Off With Mobile Payments

Square and Intuit are facing off with their very own versions of mobile credit card technology. As mentioned previously, Square is a great solution for a vendor processing small monthly amounts and small per transaction amounts. Once you get more serious you run into issues: Process large amounts and square will hold onto your fund for 30 days. You can't accept Amex and many complain the swiper unit is easily lost. The problem with both of these solutions is the rates are far from competitive and when you process larger amounts the rate is what is most important. If you are serious about using a Mobile Merchant Service you will bes best off to find an honest credit card processor with great rates and service but beware of contracts, termination and set up fees.

Cutting Debit Card Fees-Durbin Amendment

Via CSPnet.com:

Federal Reserve seeking comment on rules to cut debit-card fees up to 90% 

WASHINGTON -- The Federal Reserve, fulfilling a Congressional order to examine whether merchants were being charged excessive fees to process debit-card transactions, has proposed new rules that analysts said could cut those fees as much as 90%, reportedThe New York Times. "It's bad for the issuers and the card networks," Rod Bourgeois, a payments analyst at Sanford C. Bernstein, told the newspaper.

As part of the Dodd-Frank Act's overhaul of the financial code, Congress directed the central bank, which oversees the regulation of electronic payments, to ensure that the swipe fees charged by the banks and payment card networks like Visa and MasterCard were "reasonable and proportional" to the cost of processing the transaction.

The Fed has proposed limiting interchange fees from 7 cents to 12 cents per transaction, or approximately 0.3% of the face value of a purchase. Merchants now pay debit-card processing fees averaging about 1.3%, according to the Times, citing the Nilson Report, a payment industry newsletter. Smaller retailers are charged more because of lower transaction volume and limited bargaining power, said the report.

The Fed proposed that it re-evaluate the fee cap every two years and asked for more time to consider whether it should be increased to reflect the costs of fraud protection.

The National Association of Convenience Stores (NACS) called the Fed's proposed rulemaking related to debit-card swipe fees a "positive step" and said it will continue to push for the reforms demanded by Congress and consumers alike. "The proposed rules are a positive step in addressing the anti-competitive behavior of the banks and credit-card companies and an acknowledgement of the voice of American small businesses and consumers," said NACS president and CEO Hank Armour in a separate statement.

Both Visa and MasterCard argued that the Fed had not considered all the costs incurred to operate debit-card programs.

Visa said it had "concerns that the [Fed's] proposal includes artificial caps on debit interchange that do not realistically reflect the value of card acceptance."

MasterCard went a step further and openly criticized the proposal, saying it would simply shift costs to consumers from merchants. "This type of price control is misguided and anticompetitive and in the end is harmful to consumers," Noah J. Hanft, MasterCard's general counsel, said in a statement cited by the paper.

Gate Petroleum, which operates about 100 gas stations in the Southeast, has seized on a separate piece of the Dodd-Frank Act that lets merchants charge different prices to customers using different forms of payment, said the Times. This fall, Gate began offering a discount to customers who used cash to buy one of the company's new prepaid fuel cards. Just over two months into the discount program, about 20,000 cards are in use, the company said.

David Dill, the company's vice president for sales and marketing, said Gate saved about 4 cents a gallon whenever it made a sale that did not touch a Visa or MasterCard payment network. Customers receive a discount of 3 cents a gallon; the other penny goes toward the cost of operating the card program. "It's really a loyalty program for the customer," Dill told the paper.

For years, some stations charged higher prices when customers used credit cards, sometimes simply in defiance of the card processing contracts and other times taking advantage of legal technicalities, the report said. In many states, stations could comply with the rules by posting separate prices for cash and credit.

Dodd-Frank lifted that barrier by allowing merchants to steer customers toward the payment method that is cheapest for them to process, without having to post separate prices.

Dodd-Frank also forces Visa, MasterCard and others to compete more aggressively for merchants' business by requiring that all debit cards run on the networks of at least two different payment companies. So when a customer uses a Visa debit card, for example, the merchant could process the transaction on a network other than VisaNet.

Through exclusivity agreements, many debit cards run on the network of only one payment company. The change will take effect in July, after a review by the Fed.

Taken together, these measures significantly strengthen the hand of merchants. Analysts expect merchants to negotiate sharply lower prices with the banks and reclaim a portion of the tens of billions of dollars they spent last year on processing fees for debit and credit cards.

"All of the sudden, the merchants have bargaining power," Bourgeois said. "They have an ability to drive prices down because there will be multiple payment brands on every card, and on top of that, the merchants will have the ability to use the lowest-cost route of whatever payment network they choose."

The banks are setting out to make up for the expected drop in card processing fees, the report said. Bankers say they may offset part of the lost revenue by assessing higher monthly fees on deposit accounts. Debit cards offering rewards points, which cost merchants more to process so they can cover the cost of the programs, could be another casualty, added the report.

The Fed has requested comment on a proposed rule that would establish debit-card interchange fee standards and prohibit network exclusivity arrangements and routing restrictions. The Fed's proposal would implement the debit-card interchange fee and routing provisions of the Dodd-Frank Wall Street Reform & Consumer Protection Act.

The proposed new "Regulation II, Debit-Card Interchange Fees & Routing" would establish standards for determining whether a debit-card interchange fee received by a card issuer is reasonable and proportional to the cost incurred by the issuer for the transaction. These standards would apply to issuers that, together with their affiliates, have assets of $10 billion or more. Certain government-administered payment programs and reloadable general-use prepaid cards would be exempt from the interchange fee limitations.

The Fed is requesting comment on two alternative interchange fee standards that would apply to all covered issuers: one based on each issuer's costs, with a safe harbor (initially set at 7 cents per transaction) and a cap (initially set at 12 cents per transaction); and the other a standalone cap (initially set at 12 cents per transaction). Under both alternatives, circumvention or evasion of the interchange fee limitations would be prohibited. The Fed also is requesting comment on possible frameworks for an adjustment to the interchange fees to reflect certain issuer costs associated with fraud prevention.

If it adopts either of these proposed standards in the final rule, the maximum allowable interchange fee received by covered issuers for debit-card transactions would be more than 70% lower than the 2009 average, once the new rule takes effect on July 21, 2011.

The proposed rule would also prohibit all issuers and networks from restricting the number of networks over which debit-card transactions may be processed. The Fed is requesting comment on two alternative approaches: one alternative would require at least two unaffiliated networks per debit card, and the other would require at least two unaffiliated networks per debit card for each type of cardholder authorization method (such as signature or PIN). Under both alternatives, the issuers and networks would be prohibited from inhibiting a merchant's ability to direct the routing of debit card transactions over any network that the issuer enabled to process them.

According to the recently released 2010 Federal Reserve payment study, debit card use in the United States now exceeds all other forms of noncash payments and, by number of payments, represents approximately 35% of total noncash payments.

Comments on the proposal are due by February 22, 2011.

NACS and other organizations that are part of the Merchants Payments Coalition (MPC) will carefully study the rules the Fed has proposed and offer its suggestions for strengthening the final rules, which the Fed expects to publish in April 2011 and go into effect June 21.

Click here to view the Federal Reserve's official statement.

And click here to view the full text of the Notice of Proposed Rulemaking.