Credit Card Processing

Ever given any thought to what happens during a credit card transaction immediately after you swipe your card? It’s not all smoke and mirrors, but rather a highly-secure, high-tech process that transpires in mere seconds. In a nutshell, Merchant Account® presents Credit Card Processing 1.0.

Credit Card Processing begins with a card swipe (or, alternatively, with the manual entry of data on a website payment page or a PIN pad) by the customer or merchant. The credit/debit card account number, sale total and merchant ID number are transmitted electronically and simultaneously over the merchant’s credit card processor’s network. Companies like Merchant Account® that provide credit card processing services are known by several names: credit card processors, merchant services providers, processors and acquirers.

Once the transaction clears the processor’s network, it’s sorted by card brand and routed to the proper credit card computer network — MasterCard® transactions to the MC network, Visa® to Visa, and so on. From there, the transaction is routed to the bank that issued the card, which is responsible for checking the account to make sure the customer has adequate credit to cover the transaction charges. If so, the bank authorizes the sale and notifies the merchant over the network. The merchant issues a receipt to the customer, who leaves with their merchandise. But the sale is not yet complete.

Each day at the close of business, the merchant must send all that day’s charges through the merchant services provider to the credit card processing network. This is known as batch processing. Individual transactions are sorted out by issuing bank and sent on to the banks, which debit the cardholders’ accounts and pay the processor through the Federal Reserve’s Automated Clearing House (ACH).

The credit card processor, in turn, credits the funds to the merchant’s account. This part of the process can take up to two days. The processor charges fees, typically on a monthly basis, to the merchant account, although sometimes this is done on a per-transaction basis. The fees encompass payments to the issuing banks, the credit card networks and the processor for services rendered.

All merchants who accept credit cards must first establish a merchant account, which is the basis for credit card processing. This account is strictly between the merchant and the credit card processor and is totally separate from any other bank accounts the merchant may own.

If you’re interested in adding credit card processing to your business, Merchant Account can help. Contact a sales representative today to get started.

How To Save On Your Merchant Accounts Fees

With debit swipe fee reform now implemented, retailers nationwide are anticipating saving on the interchange portion of their merchant accounts fees.  Preliminary data indicates that millions of dollars in charges may be coming their way.

The Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 went into effect on October 1, 2011. Under it, the Federal Reserve capped the interchange fees banks can charge on debit card transactions at 21 cents, plus 0.05 percent of the transaction. Issuers are also allowed to charge an additional penny per debit transaction to offset their fraud prevention costs. The new average swipe fee for a debit card purchase is 23 cents, compared to the pre-Durbin average of 44 cents.

It’s important to note that the legislation applies only to Visa® and MasterCard® debit cards (not credit cards), and only to banks with more than $10 billion in assets. It caps the interchange fees that the banks charge, but does not apply to third-part processors, who can charge whatever they want to their merchant accounts customers.

“As an industry, we’re really pleased that the new rules have now taken effect,” Connecticut Retail Merchants Association President Timothy Phelan recently told the Hartford Business Journal. “We really won’t know the true benefit until the retailers get their statements.” Phelan added that he expects that merchants, in time, will pass along any savings they receive to their merchant accounts customers.

The business journal reported that Connecticut merchants could expect to save about $260 for every $100,000 in Visa and MasterCard debit charges they process.

In the months leading up to its enactment, the Durbin Amendment prompted an epic battle on Capitol Hill that pit credit card-issuing banks against merchants and their associations. The banks argued that they would lose billions of dollars in revenue from lower fees — income they threatened to recoup by charging debit card customers monthly fees to use their cards. Several major banks, including Bank of America, Wells Fargo and J.P. Morgan Chase, dropped that idea after cardholders rebelled and threatened to close their accounts.

For now, retailers are waiting for their first post-Durbin Amendment merchant accounts statements to arrive to see how they’ve fared under the new rules. If they have questions regarding their savings, they should discuss them with their merchant services provider representative.

Why It Pays To Accept Credit Cards

 

One of the biggest challenges for a small business is competing with larger businesses with greater resources. One proven strategy for leveling the playing field is to accept credit cards. After all, 78 percent of American consumers own a credit card, and 80 percent own a debit card.¹ That’s a huge market that no merchant can afford to ignore — especially small businesses who don’t plan on remaining small for long.

Small businesses that start to accept credit cards benefit in a variety of ways. Most obviously, they immediately become an option for patrons who prefer to pay with plastic. In their eyes, seeing the logos of the major credit cards in a merchant’s shop or on their e-Commerce website means that merchant is in the same league as much larger retailers. Since most small businesses strive to offer the superior customer service that the Big Boys often can’t or won’t, it’s a no brainer that they should expand their payment options to include the debit and credit cards consumers use so frequently.

Secondly, the convenience of credit cards cuts both ways. Consumers appreciate swiping their card and cutting the transaction time to just seconds so they can be on their way. But merchants benefit, too. Shorter transaction times mean they can serve more customers more efficiently. And, at the end of the day, merchants can send all their transactions in one batch to their credit card processor for electronic settlement, knowing that within days the proceeds will land in their account.

Credit card processing with a reputable merchant services provider like Merchant Account® is a very secure operation. State-of-the-art encryption technology keeps cardholder and account information safe, as does our PCI-compliant electronic payment gateway Transaction Express™. Whether a merchant accepts credit cards with a countertop terminal, an online virtual terminal or in the field with our mobile PayFox® service, the transaction is protected from fraudsters and identity thieves.

Merchants who accept credit cards also usually see an increase in sales. The reason is simple: Credit card shoppers tend to spend more than shoppers who pay with cash or a check. Impulse buying and upgrading to a higher level of merchandise are both possible when the shopper taps a line of credit instead of a wallet to pay.

Finally, there are savings to be realized from accepting credit cards. Merchants spend less time making bank runs and processing paper checks. New credit card processing options like wireless and mobile mean that merchants who deliver services or products to customers’ homes or businesses can collect right then and there, foregoing the time-consuming and expensive billing and collection process.

Today’s credit card processing is fast, convenient and safe, and the many options available give merchants the opportunity to work with a merchant services provider to design a package that meets all their requirements. For small business, being able to accept credit cards is the smart way to go and grow.

¹   Source: “The Survey of Consumer Payment Choice,” Federal Reserve Bank of Boston, January 201

Web Cam Credit Card Processing

Webcam Credit Card Processing

Credit Card Processing

It may sound strange but Webcam Credit Card Processing may indeed be on the way.  For those who accept credit card, technology keeps changing at a seemingly record pace.  Not all the new technologies will stick and some may leapfrog each other to gain traction in the marketplace but Webcam online credit card processing is certainly intriguing.
At first glance it would not seem to be the most secure process but we need to get used to the idea that electronic payments are here to stay and may be completely secure.  This particular method of credit card processing is based on secure video streaming which has become quite popular of late.
If we think about it, the way we pay for things has changed dramatically over the last decade.  Ten years ago most of wouldn’t dream of entering our credit card data into a web form but not it is second nature.  Paypal has created an online intermediary for credit card processing with some recourse for both merchant and customer.  Privacy policies have evolved to acceptable levels because the volume of online credit card processing demanded such a change.
This new video streaming is perfectly timed because of all the news of hacking and fraud taking place in the industry.  I cannot see how it would be foolproof but anything promising more security will lead to more people using online credit card processing under the guise of security.  This technology my prove only to be a just a convenience for consumers.  But it certainly is cool.
To use it, a merchant will have to enable special software which for all intents and purposes will turn the webcam of any desktop into a credit card reader.  The customer will hold their credit card in front of the webcam an after it is read, be prompted to enter the three digit CCV security code on the back of the card.  Then when the system accepts the card, the transaction is complete.
The enhanced safety measures are that the customer will never have to give their card to anyone else and it would be very difficult for criminals to copy down the account number, expiration dates and CCV security code without the card ever leaving the customer’s hand.  We are assuming here that this software is hack proof.  It may very well be but chances are that the merchant’s computer could be susceptible to hackers is more likely.  In general, securing business computers costs money and until Visa and other credit card providers require top level security for merchants, it would be impossible to tell which merchants are in compliance with security measures and which ones are just “saying” they are.
Most data leaving a business system through a merchant account is already encrypted and relatively safe and secure.  Secure video streaming technology is also encrypted which is what makes this data transfer relatively secure.  There are no paper trails or receipts to shred and the only real future security issue would be how a merchant stores yours financial data and purchase information for returns and exchanges.  Again, chances are the merchant doing the credit card processing has no bad intentions but there are those unscrupulous individuals looking to take advantage of a merchant with inferior security measures for their systems.

Watch Out For Credit Card Fraud

Credit Card Procesing Fraud

When we think of modern day credit card processing we think of high tech security features which make fraud almost impossible. Right? Wrong!  It seems that no matter who much we improve our credit card processing there are always some evil geniuses out there plotting to beat the system.
But in some cases, the plotters seem less than ingenious.  The hack pointed out at the Black Hat security conference seems rather a simple idea but defeats a high tech security system.  The guys over at Aperture Labs created less than 100 lines of code which can swipe credit card information for a system called Square.  That’s what we call and easy hack.
The Square is a payment system which supposedly was a safe way to do credit card processing from mobile devices like Androids and Iphones.  These devices would effectively turn into credit card processing machines with the use of Square, but now it doesn’t seem like such a good idea.
Well here is how the credit processing fraud is done. Aperture Labs figured out how to move funds from a stolen credit card in the bank account set up in association with Square.  This was done without have to even swipe the credit card physically with the Square card reader called the “dongle”.  They only needed to use the code they came up with to take all the information on the magnetic strip and turn it into an audio file.  This code allows you to somehow feed the info from the magnetic strip into the microphone for conversion.
So this new sound file which contains the card information is played as a series of coordinated sounds which are fed into the Square device by audio cable and understood by the Square application.  A very easy work around for people in the business but not something normal folks down on their luck would have figured out on their own.  But it is pretty interesting that Aperture was able to turn this credit card processing system designed to swipe actual cards to complete a transactions into one that can accept electronic payments.  Nice work fellas.  Now criminals don’t even have to go to the trouble of creating a plastic fake credit card, or even know the Personal ID number set up for the real card.
If this was not enough bad news for the poor Square Credit Card Processing App, Aperture Labs hit them with another goof. While testing they figured out that Square card reader can be used to make a cloned card because the data a criminal would need from the Square is not encrypted.  I thought everything was encrypted these days?
Here’s how they did it.  This was even lower tech than the low tech hack above.  By inserting the Square dongle cable into the mobile device via the audio input, the special code created by Aperture turns the new sound file into readable data which is used to make a credit card.  Hmmm.  So this makes Square a doubly ineffective technology for mobile credit card processing doesn’t it?
The real problem here is what this does to the skimmer market.  Skimmer products are available online for people who want to do bad things but this Square situation makes the difficult task of skimming into something very simple.  It lowers the barrier to entry into the skimming profession because you now need no skill are understanding of the complicated processes used in card card processing.
Of course Square is working on a fix for the problem which they have known about for sometime.  But, they didn’t really feel it was an effective method for fraud and wouldn’t cause problems.  But, when your technology is demonstrated at something called a “Black Hat” anything, it is time to make the fix.

It's Important To Accept Credit Cards

Why It Is Important To Accept Credit Cards

Accepting credit cards online іѕ incredibly іmрοrtаnt fοr аnу online store аnd аnу οthеr business thаt allows іtѕ customers tο mаkе orders online. If уου want tο gеt thе maximum number οf people ordering уουr service thеn уου need tο bе аblе tο inspire confidence whеn thеу bυу аnd уου need tο hаνе thе facilities thеrе tο accept аll kinds οf payments.
If there is one main lesson to be learned about conducting business online, it is that you must accept credit cards to compete.  It is by far the most convenient way for potential customers to spend money on your site and sets up the environment for impulse buying.
The impulse buy is an incredible advantage for businesses because of conversion.  If your site is set up properly to entice customers who may be on the fence about buying, your ROI on your site will increase dramatically.  Statistics show that consumers are becoming exponentially more comfortable with purchasing online and doing so in their own environment give them a sense of being in control of the transactions.
Customers are no longer bound by making purchases on the retailers home floor with pushy salesman and store hours creating a sales deadline.  When consumers are free to browse on their own terms they will not feel pushed into buying when in fact a website can be the most pushy salesmen of them all.  Giving your customers the ability to buy instantly, effectively taking money out of their wallet and into yours, changes the way business should be approached online.
Getting set up to accept credit cards online is first and foremost.  Most first time business people assume the easiest way to start accepting credit cards is by using PayPal.  This is a fairly reasonable assumption but it is not correct.  It’s true that PayPal transactions are simple and adding PayPal buttons to your site so your customers are alerted where to pay is easy, but what if you don’t have PayPal.
That’s right, believe it or not every one who uses the internet has a PayPal account and expecting them to set one up just to buy something from you is foolish.  In essence, you are killing your impulse sale opportunity by relying solely on PayPal.  But the good news is that most people who use the internet and are over 18 do have a credit or debit card and fairly well versed in using it online.
One of the best things about those businesses who have come before you online is that they are the ones who had to go through the bumps and bruises of establishing good ecommerce practices and training people to spend.  There is something called trust marketing which has evolved over the years and it shows that seeing a Visa or Mastercard logo on a site established a sense of trust with consumers.  Further it helps identify your brand as more trustworthy because of the association your business has with the credit card providers.
Whether this is true or not, a perceived level of trust from your potential customers bodes well for merchants just because they accept credit cards.  Now PayPal has come a long way over the years and their logo also elicits a trust relationship with consumers, but remember that the actual numbers of people who have an active PayPal account is extremely limited compared with those ready to use their credit cards to purchase.
So whether you are just getting started online, or are an established business entity looking for more sales, it is important to accept credit cards both for your customer’s convenience and to establish trust.  Using a third party merchant account provider to process your credit card transactions is simple

Accept Credit Cards At The Laundry

Accept Credit Cards In The Laundry Room

Laundry Rooms Accept Credit Cards

Accept Credit Cards in the laundry room?  What a marvel idea and it comes from a place we are used to getting a bunch of our smart ideas.  Yale University is one of the first in the country to begin to accept credit cards in the campus laundry rooms.
It may not seem like the type of technological breakthroughs we often hear about from a major University but if you have ever lived on a college campus, then you know how difficult it can be to get your laundry done.   In the old days you had to find some quarters or find a place that would make change for you, load up your laundry and hope that when you made it to the machine, it would be available for use.
At least at Yale, the students could load money onto a cash card for use in the laundry room which would eliminate the need to scrounge up some change but you still had to take the extra step of loading the card.  In Yale’s case the washing machines were not very reliable because of the tendency for the cash cards to fall apart and jam up the reading mechanism so upgrading to units that accept credit cards could be a better option.
The new machines are far better.  Even though it took a major upgrade to redo the laundry system at Yale, it will pay for itself in convenience for the busy students.  All machines are linked to a central website which will indicate when and where washing machines are functioning properly and available.  So far the machines are very reliable and the student feedback is overwhelmingly positive.  The cost for students has remained the same but it is unclear if the university has taken on merchant fees or transaction charges.
Again, the way our college students do their laundry may not be newsworthy for some, but how much life can change when you accept credit cards is.  In this case it is a huge time saver as opposed to finding change and heading to machines that may or may not be in use.  Time is our only resource we can not get more of and our only option is to use it more efficiently.  This is a good lesson for all but for college students just learning to manage their time and live on their own it is perhaps more challenging.  Combining online centralization and accepting credit cards in the laundry room is truly an on campus breakthrough.