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.

Deceptive Credit Card Processing Tacticts

Phil Hinke a veteran of the merchant service industry, has a great article at Practical E-Commerce.He goes on to discuss many of the various pricing methods used in the credit card processing business including tier and interchange pricing. Phil explains some deceptive interchange pricing practices:

"Interchange-plus pricing is typically the best way to go. However, there are some processors who claim to be offering interchange-plus pricing, but are deceptively offering something worse. The first are those processors who are offering interchange-plus pricing with the under-the-breath caveat that it is only for 'qualified' transactions. What they are really offering is a tiered pricing plan because there will be no qualifying transactions. Therefore, every transaction will downgrade at a much higher rate to one of their tiered pricing levels.

"The second deceptive interchange-plus pricing plan is the one that inflates the interchange rate. A salesperson recently sent me one of his own merchant statements to analyze — many salespeople do not trust their processor any more than merchants do. He felt something was not right but could not put his finger on it. I quickly figured out that the processor was adding 0.25 percent to the interchange-rate it was posting on the merchant statement."

He also discusses deceptive merchant statements:

Do not necessarily believe the numbers on your merchant statement. As previously mentioned, I analyzed a merchant statement where the interchange rates listed were not the true card association interchange rates. I analyzed a merchant statement where the per-item fee list was 6.2 cents, but after doing the calculations it was obvious that the merchant was being charged 6.5 cents; 0.3 cents may not seem significant, but for this large merchant it was.

"One of statement types I continually come across — which confuses merchants — is the one that does not show all the charges for the month on the statement, and in fact may delay showing all the charges for up to two months. I have spoken to salespeople who love this statement because when they sign up a new merchant, that merchant generally does a cost comparison after the first month to see how much money he or she is saving after switching processors. Unfortunately, the merchant does not realize that some of that month’s processing cost will not show up on the statement for up to two months. Therefore, a merchant’s total processing fees for April sales may not show up until the June statement."

Prestige Merchant Services offers potential merchants a free statement analysis so they can see how much they are paying and how much they can save by switching without a contract or set up fees.

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."