The problem with Intuit Go Payment brought to you by Verizon

Verizon is now going to be promoting Intuit's answer to Square mobile payment systems: GoPayment.

The basics:

The pocket-sized GoPayment reader plugs into the audio jack of any supported smartphone or android BlackBerry operating systems. Merchants can swipe consumer credit and debit cards through the reader or enter card information manually, with all transactions processed immediately and funds automatically deposited into the user's bank account within a few business days.

We mentioned previously the problems with Square credit card processing  and as you can imagine with Intuit there is also a big catch. The free version that has no cancellation fees is not cheap: 2.7%. It is not clear but it would not be surprising to find out that is has similar limitations to square (only process $100 per transaction or 1k per month). The paid version of Intuit most likely does have it's typical 3 yr contract and has the regular monthly fees of $12.95 and although they advertise a rate of 1.7% they fail to mention this only applies to regular credit cards but do not mention what is charged for reward and corporate cards ( if it is anything like what they charge for a typical merchant account you can be assured you pay between 3.5-5% or more for those cards). Do your homework as  the seemingly cheapest way can end being the most expensive. The are companies that have secure mobile payment solutions without contracts or set up fees and those payment would hit your account much faster.

Move over Square! Here come Jumio!

We have discussed Square and it's credit card processing via a smart phone from the makers of Twitter. Well they may be getting pushed out a bit by Jumio. Jumio from the Co-Founder of Facebook, is threatening to take a chunk of the pie from Square. This new technology allows the simply a picture of a credit card to be used as a way of making a transaction. The smart phone simply scans the card similiar to the way a barcode scanner would work on your smart phone. How can this be you ask? The technology behind Jumio allows it to sense things such as if the card is actually plastic and if the hologram is real and if the numbers are embossed. They claim it is not only secure but has the ability to interface with E- Commerce. This means that if implemented, instead of entering credit card information you simply upload a picture of your card.  I'm not sure how many customers will feel comfortable about the idea of their credit card picture floating around out there. Time will tell....

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.

Don't Get Fooled by Credit Card Processors!

A great article is written here on the 5 deceitful practices by merchant service providers.




Tactic #1: The “Rate Game”


There is no question that without looking at your actual merchant statement no one can tell you they
can actually save you money or even how much. Yet many people get calls such as these and are duped into believing they will. Some switch only to pay even more! This is because of hidden fees and contracts that many processors will try to lock you into without your knowledge.


Tactic #2: The Binding Contract…

Another trick processors use is to lock you into a 2,3, or even 5 year contract – without verbally telling you they’d done so. Sure, you could have found it somewhere in the details of your processing agreement, but it’s rare for someone to read page after page of small print “legalese” when jumping through all the hoops of filling out a contract and listening to a well skilled, friendly salesperson.

Similarly, at the end of the original contract term, another devious trick is to include a clause somewhere in the contract stating that unless the processor is notified in writing at least 30 days prior to the expiration of the original processing agreement, the contract will automatically renew for a period of 1 year.

A good solution is to find a processor with NO BINDING CONTRACT. Which leads to the next problem…

Tactic #3: Early Termination Fees…

Competition is fierce. In an attempt to lower or eliminate high merchant turnover processors have added Early Termination Fees (ETF’s) to the fine print of their contracts. ETF’s ‘fine’ a merchant if they decide to switch processors before the contract terms are up.

The problem with ETF’s is that it gives an unscrupulous processor power over their merchants. Many of them use this clause as a green light to abuse their customers, knowing most merchants will give up an attempt to leave and go to a new processor once they’re made aware that by contractual agreement it’s going to cost them money.

A good solution is to demand, in writing, a contract with NO EARLY TERMINATION FEES!

Tactic #4: New PCI Fees

While it is true that merchants need to be in compliance with Payment Card Industry Data Security Standards (PCI-DSS), most Level-4 merchants are able to achieve compliance without too much difficulty. As long as they use PCI compliant hardware and software, and don’t store sensitive cardholder information, most of their PCI issues are resolved.

Yet credit card processors have almost universally seen fit to require a monthly, quarterly, or yearly “PCI compliance fee” (which really amounts to nothing more than a new ‘annual fee’). At the same time, processors rarely, if ever, do anything to educate their merchants about PCI. Instead, they simply slap them with a new fee which shows up on their statement as being “for PCI compliance”. No wonder merchants get so angry.

Solution? Find a processor that’s committed to educating their merchants on the important issues of data security, and doesn’t require an arbitrary “PCI fee”.

Tactic #5: The Bewildering Statement

Another tactic processors use is in the format and content of the processing statements mailed monthly to each merchant to summarize their card activity. The majority, from what I’ve seen, look as if they are designed to confuse, rather than disclose the rates and fees paid for the month.

Some even go so far as to hide certain fees, or even completely eliminate disclosing what they are. When a processor doesn’t reveal fees on a statement it’s usually an attempt on their part to prevent a competitor from going over it and coming up with a competitive analysis.

While it does protect the processor, it does so in a way that seems highly manipulative. If a processor is fair, open and honest with a merchant then THAT ALONE will go a long way in preventing merchant turnover. Why would a merchant leave a processor that was open, fair, and honest to go with a new one they didn’t yet know if they could trust? Highly unlikely.

The solution is to ask to see a processors statement before going with them. If it looks like it’d take a semester in college to read you may want to keep looking for a processing company with nothing to hide.

These and more are just some of the reasons many merchants have chosen a merchant service provider such as Prestige Merchant Services. They are one of the few companies that advertise clearly "No contracts". the statements are easy to read so the merchant clearly understands what they are paying and why. Interested in finding out how they compare to your merchant provider? Simply fax them your full statement at 832-203-1974 and they will analyze it for savings with a line-by-line comparison.

FTC Goes After $450M Online Scam

By Darren Waggoner

The Federal Trade Commission has brought a legal action against an online operation that allegedly scammed more than $450 million from consumers in five countries.


Jesse Willms and several companies he controls obtained consumers’ credit or debit card account numbers by enticing them with bogus “free” or “risk-free” trial offers that supposedly required only small shipping and handling fees - and also promised “bonus” offers just for signing up, according to the FTC's complaint.


The FTC charges Willms and his companies used deceptive tactics in offering various products online - including acai berry weight-loss pills, teeth whiteners and health supplements containing resveratrol (the supposedly healthful ingredient in red wine) - as well as for a work-at-home scheme, access to government grants and free credit reports. The FTC seeks to stop the operation’s practices and make the defendants repay fraud, injured consumers.


Consumers lured into the scam were located in the U.S., Canada, the United Kingdom, Australia and New Zealand.


The defendants allegedly contracted with affiliate marketers whose banner ads, pop-ups, sponsored search terms and unsolicited e-mail led consumers to the defendants’ Web sites, and the defendants paid the affiliates for each consumer whose credit or debit card was charged.


The defendants allegedly made false claims about the total cost of products, recurring charges and the availability of refunds. They also buried important terms and conditions in fine print, the FTC alleged.


The defendants named in the complaint are Willms, Peter Graver, Adam Sechrist, Brett Callister, Carey L. Milne, 1021018 Alberta Ltd., also doing business as Just Think Media, Credit Report America, eDirect Software, WuLongsource, Wuyi Source, 1016363 Alberta Ltd. - also doing business as eDirect Software, 1524948 Alberta Ltd. - also doing business as Terra Marketing Group, SwipeBids.com, SwipeAuctions.com, Circle Media Bids Limited - also doing business as SwipeBids.com, SwipeAuctions.com, and Selloffauctions.com, Coastwest Holdings Ltd., Farend Services Ltd., JDW Media LLC, Net Soft Media LLC - also doing business as SwipeBids.com, Sphere Media LLC - also doing business as SwipeBids.com and SwipeAuctions.com, and True Net LLC - also doing business as Selloffauctions.com.


Willms could not be immediately reached for contact.


Consumers had no reason to believe they would be charged for the trial product or the extra bonus products, but they were often charged for the  trial plus a monthly recurring fee, typically $79.95. Consumers also were charged monthly recurring fees for the so-called bonus offers.


Although the defendants offered a money-back guarantee, consumers were often unsuccessful in canceling the charges or obtaining refunds, and the process involved time-consuming phone calls and other steps that made the deals far from risk-free, the FTC complaint alleged.


“The defendants used the lure of a free offer to open an illegal pipeline to consumers’ credit card and bank accounts," says David C. Vladeck, director of the FTC’s Bureau of Consumer Protection. " 'Free' must really mean ‘free’ no matter where the offer is made."


The FTC worked with Canadian law enforcement, including the Alberta Partnership Against Cross Border Fraud, in investigating this international scheme. Most of the defendants are located in Alberta.


"Internet fraud is a global problem that requires an international enforcement response,” says Lisa Campbell, deputy commissioner of Competition for the Competition Bureau of Canada. "International cooperation ensures that fraudsters can’t hide behind borders."


The FTC further alleged that the defendants provided merchant banks with false or misleading information, in order to acquire and maintain credit and debit card processing services from the banks in the face of mounting chargeback rates and consumer complaints.

Willms and his companies also allegedly violated the Electronic Fund Transfer Act and Regulation E (issued by the Federal Reserve System’s Board of Governors) by debiting consumers’ bank accounts without their signed written consent and without providing consumers with a copy of the written authorization.

Why Apple is Poised to Become the King of Payments

Via Micheal Koploy of Software Advice

Bear with me as I imagine grocery shopping in 2013. You walk into Sam’s Club and grab a shopping basket. Your iPhone lights up with a new push notification:

“Welcome to Sam’s Club. Do you want to use your standard shopping list?”

You click no, and instead select the “Summer BBQ List” that you found on Epicurious. The app pops open a map of the store and tells you to head to aisle 2. You enter the aisle and find your first item: pickle relish.

“Please scan each item as you place it in your shopping basket,” the screen reads. You locate the bar code on the jar, and scan it with your iPhone.

The iPhone responds, “You have selected Josh’s Pickle Relish. This brand is $0.22 cheaper at your nearby Safeway. Would you like a Safeway coupon?”

Not worth it today. You press, “No,” and continue shopping, guided by your phone, and scan each item as you place it in your basket. The app is smart, of course, and it guides you around the store in the most efficient route, alerting you as you near each item on your list.

You have completed your shopping list. Based on your selection of: pickle relish, ketchup, onions, hot dogs, and buns, would you also like to purchase potato salad? It’s $1.00 off today. If so, head to aisle 11.

Sounds like a good deal. You go for it.

As you walk towards the exit, your iPhone reads, “You have previously chosen to pay with your Visa card ending in 4128. Select, “Pay,” to complete your purchase using this account.

You select, “Pay,” take your cart, and exit the store. You’ll receive an email on your drive home detailing your purchase with electronic coupons for your next shopping trip.

***

Apple has the potential to change our retail experience, and this future is becoming closer to reality.

Apple Payments Would Be a Game-Changer
“It Gets Better.” This slogan has become a staple of Apple’s World-Wide Developer Conference each year, and a creed for the company’s services. If the scenario above is what I can dream up, imagine what the minds in Cupertino can invent. Apple has revolutionized how we consume music, mobile applications, and media, in general. I fully expect them to revolutionize the retail experience, too. In the process, I think they will come to own a huge chunk of the payments industry.

Why is that important? For one, it’s a $48 billion opportunity. Assuming companies like Visa, Mastercard, and American Express receive about 1.5 to 2.5% of every transaction, that’s easily over $20 billion in swipe fees alone. Meanwhile, merchant services providers – the companies that set up retailers with terminals and act as a conduit to Visa, et. al. earn .5 to 1% of every transaction—up to another $16 billion for their role in the process.

We think Apple has a chance to own the later opportunity by acting as a merchant services provider. If Apple can revolutionize the point of sale, consumers will use their iPhone for retail checkout. Behind the scenes, Apple will be processing payments as a merchant services provider. Consumers won’t care who’s processing the transaction or earning fees.

Here’s my experience. I used to only have a Visa credit card, but was forced to obtain a Mastercard because it was the only one accepted by my loan provider. And that is the beginning and end of my payment preferences. I don’t care if I make a purchase with a Visa, Mastercard, or any other card brand, or if the merchant I am purchasing from uses merchant services company A or company B—it makes no difference to me. Consumers are indifferent to the various payment service providers.

I would, however, care if one provider gave me tools to make informed purchases and make the retail experience more enjoyable. And this is why Apple has the potential to shake-up retail and own the payments industry.

The NFC iPhone Will Change Everything
There is increasing speculation that Apple will soon release a touchscreen device with near field communication (NFC) capabilities, most likely a next-generation iPhone. This technology powers services such as Mastercard’s PayPass, where consumers just need to tap their credit card or other PayPass-enabled device to make a purchase.

When Apple releases this device, they’re poised to leave a heavy footprint on the payments industry. Purchases would be facilitated by presenting an iPhone instead of a credit card; Apple can create a merchant services offering to receive the processing fees for these transactions.

This iPhone would not only be a device that facilitates purchases, but one that creates a more robust, efficient, and enjoyable shopping experience. This is why Apple Payments would be different and a game-changer. It would create reason for the consumer to choose one payment network over another, and give Apple leverage to enter and own the payments market.

Apple Has the Done It Elsewhere
Apple already acts as a merchant for its iTunes and App store, and receives a cut of all transactions. Here’s how much they receive from App Store revenues:

• Apple collects 30% of all revenues from App Store sales
• Apple collects 30% of sales revenues from in-app purchases
• Apple collects 40% of ad sales from in-app ads (iAd)
• Apple charges $99 per year for developers to have access to its SDK

Services like iTunes and the App Store enhance the quality of Apple’s products by extending their functionality. And the market for iPhone and iPads is just beginning to reach its potential, as estimates are that only 30 to 40% of mobile phone users have a smart phone.

As Apple has matured their hardware and adopted this revenue-sharing model, they have become increasingly closer to Apple Payments. Apple is poised to enter the merchant services market—as soon as they release an NFC iPhone.

Consumers Would Force Merchants to Switch
iPhone users would input their credit cards numbers into their iPhones, and present their phones at virtual checkouts to complete their transactions. No more waiting in line. With consumers overjoyed at the convenience of iPhone checkouts, retailers would have no choice but to adopt Apple payments.

But why would merchants switch to Apple Payments? Traditionally, merchants made these decisions based on their own interests. But Apple could offer an experience that other providers don’t, and can’t. Bundled with Apple’s customer loyalty, this could potentially force the merchants’ hands, and allow Apple to demand whatever they saw fit for processing fees. By doing so, Apple could enter the $16 billion merchant services market I alluded to earlier.

But what if they take it a step further. What if Apple owned the entire payment network? What if consumers didn’t pay with their Visa card on their iPhone, but their Apple credit account on their iPhone? This could entitle Apple to up to another 2.5% of every purchase.

Yes. I realize I’m starting to get a bit out there, but who ten years ago would have thought Apple would dominate the music industry today? Or the smartphone industry? Or tablet computers? Apple is sitting on Scrooge McDuck-esque cash reserves, an amount sure to grow over the next few years. A few years from now, maybe Apple could just buy Visa and own the entire payment industry.

What Will It Take For Apple to Be the Payments King?
If and when Apple announces an NFC-capable iOS device, it will assuredly be bundled with an official Apple Payments app—third-party apps would be subject to Apple’s revenue sharing, and that would never work.

Apple will need to release an NFC iPhone, and prepare a merchant services portal. This means that Apple will have to prepare these services well before they announce the device, meshing with new rumors that the iPhone 6, not 5, will be the one with NFC capabilities. Once in place, merchants can accept iPhone transactions, and will pay Apple a processing fee. After they establish this network, Apple can blow the entire industry out of the water, and become a new credit brand à la Visa and Mastercard.

So, what do you think? Do you think Apple could shake-up the payments industry? This would assuredly make Apple one of the most powerful companies in history, so maybe a better question would be: would Apple play nice as the King of Payments?

Square: Getting a Boost from Visa

The latest big news for Square is Visa coming on board as an investor. This no doubt gives the mobile credit card service a boost of credibility and warning shot to potential competitors that it is here to stay. What's in it for Visa? As Forbes explains they get  a piece of the action when it comes to really small business who normally use cash and are switching to credit cards. Square is a fantastic solution for people with a small side business that perhaps use it for small dollar amounts and use it somewhat infrequently. Square does not accept Amex nor can it deal well with larger dollar amounts on a daily or monthly basis (as explained here). It also does not work with a blackberry. For those who are serious about accepting credit cards they should be seeking a merchant service provider who can provide software and/or hardware for your smart phone but stay clear of contracts and termination fees.