Opening a Merchant Account? Some Inside Info.

Here is a short recap of what to watch out for when opening up a merchant account:

1) Contracts

Most companies will require you to sign a contract (usually 3 yrs.). This guarantees the processor 3 yrs. of guaranteed income. They also don't have to worry about you finding their hidden surcharges, fees or perhaps the lousy customer service  they provide since it will cost you too much to leave. Be very careful if a company "claims" not to have a contract. They may simply refer to it as a "termination fee" or something else entirely simply to fool you. Unless a merchant service provider actually advertises on their site that they have "no contracts" they probably do and it's somewhere in the fine print.

2) Fees

Credit card processors have all different kind of fees for various services. Make sure they are competitive and be smart about which fees matter most to your company. Many companies will advertise a really low  rate but you may find after much digging that it only applies to debit cards.
Remember a quote is useless unless it's the actual paperwork you will sign to apply for the account it self. Companies will often give a quote  while leaving out hidden fees. They can add  them after they send you the actual contract they want to lock you into. Be Carefull!

If you don't really process a lot of credit cards (10k or less) you may find that the monthly fees a merchant service charges, is more important than the actual rate. In other words, if one provider has slightly lower rates but much higher monthly fees do the math! Usually the lower rate will cost you more as the monthly fees are eating up most of the money.

3) Reputation

If a company has a bad rating on the Better Business Bureau or you see many things written about them on web sites like Ripoff Report that should raise a red flag. Take Costco for example. They advertise low rates but things are not what they seem. Read here for more details.

Another Mobile Credit Card Processing Unit Available

Yet another credit card reader to hit the market for iPhone for mobile credit card processing:


As per TMCnet.com

We already know there are a nearly unlimited number of applications for your iPhone , iPad or iPod Touch, but the good news is that if you are a merchant or a professional who works on the road or in clients’ homes, soon you can use any of these devices as a kind of cash register. Indianapolis-based company PhoneTransact.com this week begins shipping a peripheral device for iPhones, iPads and the iPod Touch that essentially acts as a credit card reader. The reader is designed to work with the company’s existing iPhone point of sale (POS) application, iMerchantPro.

Previous to the introduction of the reader, merchants could use iMerchantPro to type in card numbers and expiration dates. With the introduction of the company’s Credit Card Reader, which attaches to the device via a dock connector, the need to type in card numbers is eliminated and merchants can process payments quickly and more easily, much the way merchants in brick-and-mortar stores use card swipe devices linked to traditional cash registers. To meet security and encryption rules, the device uses 3DES (Triple DES) encryption mandated for the electronic payments industry. iMerchantPro is compatible with almost any merchant account, features bi-directional card reading and magnetic fingerprint technology to confirm the authenticity of a credit card and meets ANSI/ISO standards. Users must have a decryption-enabled gateway.

The company identifies the new card reader and its supporting iMerchantPro software as critical for merchants who frequently work on the road at festivals, flea markets and trade shows, and for professionals who do their work in private homes such as repairmen and contractors, private tutors or home health care professionals. The solution allows payers to add tips to the total charges. And here’s an extra fun detail: in case merchants miss the old-fashioned sound of a cash register, iMerchantPro can replicate it.

In addition to processing payments, iMerchantPro allows merchants to facilitate refunds, credits, voids, e-mail receipts, GPS map-enhanced receipts, multi-business environments, sales charts and statistics, password protection, audio feedback, fraud protection and recurring billing. The solution can be installed on up to five iPhone, iPad or iPod devices at no additional cost.

The new reader is debuting at a list price of $130 and begins shipping on August 15th.

New Debit Cards Coming to Prevent Fraud: LCD Screens.

In an attempt to further prevent credit card fraud MasterCard is marching out a new generation of debit cards. These cards will feature a LCD screen and a possible 12 digit keypad.This will allow for one time passwords that should curb fraud tremendously as per the press release:

MASTERCARD and NAGRAID Security Introduce new Display Cards with Extended Features for Secure Banking Applications

NagraID Security developed a new family of MasterCard financial cards with integrated display screen allowing:

Optimized security for online transactions thanks to strong owner authentication
Display of the card balance on the card’s screen

La Chaux de Fonds, Switzerland, 10th June 2010 – NagraID Security, a subsidiary of the Kudelski Group (SIX:KUD), is pleased to announce that its families of display cards passed MasterCard’s (CSI – Card Structure & Integrity) approval process, thus demonstrating the required levels of durability, safety and compliance to ISO standards required for the commercial launch of banking cards and the introduction into MasterCard’s brand standards and rules.

The innovative Debit and Credit MasterCard Display Card looks and feels like a normal credit or debit card but comes with an additional small display and a button that enables card holders to use the same card for standard banking payment functionality and to generate second-factor one-time passwords (OTPs), thereby providing strong authentication.

The cards are very reliable and extremely simple to use. They offer optimal security to achieve banking transactions outside payment terminals using one single device.

This password generation technology complies with the requirements of MasterCard’s 3D Secure Chip Authentication Program (CAP). Optionally, a touch-sensitive keypad with twelve keys permits access to advanced functionality such as electronic signature and authentication modes, as well as to enhanced security features such as challenge-response applications and PIN code card protection.

Historically, banking institutions who protected access to their services with a One-Time Password required the use of a separate cumbersome token.

“Cards were born from cardboard, they’ve been ‘mag striped’ and ‘chipped’ and now we enter their silicon age, with an LCD display and touchpad opening up a multitude of possibilities. With NagraID’s recent achievements to demonstrate compliance to industry standards, the stage has well and truly been set to deliver the next generation consumer’s card proposition” says Eric Tomlinson, MasterCard Europe.

“This display card is designed to provide a very high level of security and reliability as well as ease of use. Users simply press a button to generate an OTP for secure access to their online services,” commented Philippe Guillaud, Executive Vice President and CTO of NagraID Security. He also added “The programmable nature of this platform makes it future proof and one can expect to see even more exciting and fantastic functionality in the near future.”

MasterCard directed promotional initiatives and large scale roll-outs will ensure that market price expectations are achieved. “As the world evolves towards increasing online and cashless transactions, the timing of our partnership with MasterCard is ideal, as it enables the growing security expectations of a rapidly expanding base of digital technology users to be quickly addressed via a secure, reliable and unified solution in a familiar and convenient form-factor.” said Cyril Lalo, President and CEO of NagraID Security.

Mobile Credit Card Processing: Written up in Information Week

Google Chrome Extension Powers Android-Based Payments

Android phones can now authorize transactions presented on a separate computer through the Chrome browser.
By Thomas Claburn
InformationWeek
July 6, 2010 05:20 PM

Google last week introduced an extension for its Chrome Web browser that enables computer-equipped merchants to complete Google Checkout transactions through Android devices.
The Android Payment Chrome Extension lets merchants with Google Checkout accounts generate a QR code image on their Google Sites-hosted Web store checkout page. When captured by an Android-based QR code scanning application, the QR code provides the Android phone with the necessary information to authorize the transaction.

More Infrastructure Insights
WhitepapersData Center Service Management: A New Imperative for Managing Today’s Data CentersData Center Dilemma: Controlling Costs While Managing Risk
WebcastsWebSphere ILOG Business Rules Webcast Series: Part 2 : Lowest RiskData Loss Prevention: What Works, What Doesn't, And How to Make the Most of DLP
AnalyticsFederal SilosWhere In The World Is IPv6?
Videos

Some of the most influential cloud players discuss the future challenges and opportunities in Cloud Computing on stage at the Web 2.0 Summit.
"While this payment method may not be perfect for all cases, we hope you find it useful for setting up a shop on the go and that it inspires further innovation in the mobile and payment developer communities," said Google Checkout engineer Peng Ying in a blog post.
Mobile payment innovation in the U.S. has been booming recently. Abe Solomon, CEO of Houston, Texas-based Prestige Merchant Services, says that mobile credit card processing is becoming more and more accessible. A year ago, he said in a phone interview, merchants who wanted a mobile credit card processing solution would have had to purchase ($500-$1,200) or lease ($60/mo or more) a wireless credit card processing device, and would have had to pay setup ($20-$50) and monthly access fees ($20/mo).

Explore why you should design, build, monitor, and manage integrations centrally from the cloud.

Taking Enterprise Application Integration Into the Cloud
Now, he says, there are mobile apps for smartphones from several different companies that make it easy to accept credit card payments on the go. "It has greatly cut down on costs and made it much more available for the typical mom-and-pop store," he said.

While Google Checkout and PayPal may have some fans, Solomon argues that traditional merchant accounts remain a better option for most small businesses. "Most people realize that if you're serious about accepting credit cards, the traditional merchant account is the way to go," he said.

A Google spokesperson wasn't immediately available owing to a company-wide holiday. Google Checkout is used by hundreds of thousands of merchants in the U.S. and the U.K, according to the company.

PayPal in particular, said Solomon, has had trouble with customer service issues, alienating many merchants as a result. He claims that Google Checkout is more expensive than a traditional merchant account.

Google Checkout fees are: 2.9% + $0.30 per transaction for transactions less than $3,000; 2.5% + $0.30 per transaction for transactions from 3,000 - $9,999.99; 2.2% + $0.30 per transaction for transactions from $10,000 - $99,999.99; and 1.9% + $0.30 per transaction from transactions of $100,000 and greater. There are no gateway fees, monthly fees, or setup fees.

Solomon says that fees for merchant accounts vary, based on risk. Payment card companies, he said, consider mail-order or telephone-order transactions (MOTO in industry parlance) to be riskier since the physical card is not present, so they range from 2.1% and up, depending on the card. The risk for swiped cards is lower, so fees might be in the 1.69% range for credit cards or 1.49% for debit cards.

The issue that he sees among merchants is one of awareness. "The problem is that I think not enough people are actually aware that the [mobile payment] technology even exists," he said. "Most people I speak to say, 'Wow I didn't even know you could do that.'"

In June, Gartner said that it expects the number of mobile payment users worldwide to surpass 108.6 million this year, a 54.5% increase from 2009. Mobile payment users are expected to represent 2.1% of all mobile users in 2010, though in the U.S. the figure is expected to be about half that, at 1.1% or 3.5 million mobile payment users.

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?

July 4rth is also Cash Only Day!

In an effort to thwart the Durbin bill in congress that will regulate interchange fees, there is a movement proposing July 4rth be Cash Only Day! Now of course you might want to take a close look at the bill Durbin has proposed. It's really difficult to say what the outcome of this bill will be at this point. Will it help or hurt the consumer?

Processing Credit Cards on Your Cell Phone

It's unbelievable how many people are unaware that you can process credit cards on your smart hone.Mobile credit card applications are now available on the iPhone, iTouch, BlackBerry, Google Inc. Android and Microsoft Corp. Windows Mobile. Furthermore, while the service is obtained as a mobile download, it can be accessed through a Web portal on any computer, affording merchants a more encompassing view of reporting data than what's available on the tiny screen of a handheld phone. Merchants can also connect to the  gateway and conduct payments from desktop or laptop computers. The mobile application has a companion product in the MagTek Inc. encrypted card reader for merchants who want to conduct swipe transactions for even lower rates. For more information on accepting credit cards on your cell phone you can contact Prestige Merchant Services. This technology really affords people on the go, real affordable credit card processing options. Until recently you would have had to purchase a wireless card reader (cost-$499-$1200) and pay expensive wireless monthly fees ($15-20 a month) as well as set up fees ($20-50) or lease it ($60-100 a month plus wireless fees).