Information on Merchant Accounts,
Ecommerce and Credit Card Processing

April 28th, 2008 by Jamie Estep

Nova is now Elavon

Filed in: Industry News | 1 comment

Nova recently changed their name to Elavon to create a unified global name. Nova has a better than most reputation in the processing industry, and it seems like changing a company name from Nova to Elavon is a brand suicide.

Anyone processing with Nova should expect to see their statements reflect the new name if it hasn’t been changed already. Other than the name change there should be no difference in service from Elavon.


April 9th, 2008 by Jamie Estep

Discover to Buy Diners Club

Filed in: Industry News | 1 comment

Discover just signed an agreement with Citi to acquire Diner Club for $165M. Diners club is all but extinct, but this merger may bring some hope into Diners Club’s future. Since Discover is now settled along with Visa and MasterCard it’s possible that we will see the ability to accept Diners Club cards pushed to all businesses that currently process credit cards.

Press Release: Discover Financial Services to Acquire Diners Club International Network


March 24th, 2008 by Jamie Estep

PCI compliance

Filed in: Industry News | 1 comment

Digital Transactions magazine has an outstanding article regarding current PCI standards. I highly recommend reading it to any business that processes credit cards and businesses that are involved with any step of a credit card transaction.

Download the March 2008 issue and check out the article “Once is not enough”.


March 19th, 2008 by Jamie Estep

Visa trading starts today

Filed in: Industry News |

Despite uncertainty and a poor market, Visa’s IPO went through yesterday raising about $18B, making it the largest IPO in US history, second largest in world history. The stock market got an additional boost yesterday as the Federal Reserve lowered interest rates again.

Trading starts today and Visa’s stock was projecting several dollars above the $42 IPO price before the market was open. But, it immediately jumped above $60 when the market opened.


March 19th, 2008 by Jamie Estep

Do’s and Don’t of Accepting Credit Cards

Filed in: Merchant Accounts | 4 comments

Check out the Do’s and Dont’s of credit card processing if you need to get setup any time soon.

Please feel free to contact me if you know of something that should be on there.


March 18th, 2008 by Jamie Estep

Merchant account theft (pt 1 of 2) – Don’t get slammed!

Filed in: Fraud, Merchant Accounts, My Favorite Posts |

Slamming is a situation in the credit card processing industry where a sales agent or an ISO will steal a merchant account from another processor.

Terminal SlammingThis deceitful tactic has been observed in every area of credit card processing, from the retail to ecommerce. It is most common with smaller retail shops and restaurants, and seems to be especially prevalent in rural areas where business owners often have a first name relationship with their merchant account rep. Slamming has a negative impact of both the business that switched, the company whom they switched from, and the processing industry in general.

How slamming happens:
Picture this scenario. You own a clothing shop in a small town in Colorado. One day a person calls or walks into your business claiming he is with your credit card processing company and needs to update your terminal because of new security regulations. He tells you he works with your rep, Sam, who set up your merchant account initially. You know Sam and assume that he must have sent this person to correct your terminal. He has you sign some paperwork, he makes a few phone calls, messes around with your credit card terminal, thanks you and leaves… You’ve just been slammed!

At the end of the month, you get two bills for your credit card processing. One from the company you originally signed up with which is basically blank, and the other that has all of your transactions on it, but you don’t quite recognize the name on it.

What you didn’t realize when that person was reprogramming your terminal was that he worked for a different company, and he just switched you to his service. He knew your sales rep Sam’s name because most of the businesses in the area process through the same company and Sam is their rep. You may not have even signed an actual contract with him, but he got your signature and your terminal is programmed with his company. Although what he did was illegal, you now have two merchant accounts, and the second one is a complete mystery as to what you are actually paying, or who you are processing with. Unlike switching providers on your own, you didn’t need or want to switch, and you don’t know anything at all about the new company or what you’re going to get with them. Hopefully, they actually did setup you up with a real merchant account, but for all you know, this may have been some criminal that installed something to skim all of the credit card numbers that go through your terminal. Some ex-bankcard technician may be routing your money into their bank through a stolen merchant account. Just about anything is possible.

How slamming can hurt your business:

  • You are now processing through a deceptive company!
  • You almost always have extra fees, due to two accounts being open!
  • You will most certainly have a termination fee!
  • You can possibly be put on the TMF / Match file if you end your relationship with either company in a bad manner!
  • There is a now huge potential for fraud and credit card theft through your business!

Simply put, any company that would con a business into using their service is not someone you want to be doing business with. This company just doubled any fixed fees you had because you have two accounts open now, and you most certainly have has an early termination fee that you will be required to pay when you realize you just got scammed. They have a termination fee, because there is a good chance your going to dump them once you realize what just happened. Apart from that, who knows what your fees are, what this company’s reputation is, if they are even a legal business, if you are going to get all of your money, etc. This is just a bad position to be in for a business.

Of course this is illegal and you can take recourse against this deceptive company, but lawyers are expensive, and this could become an enormous burden to fight. Additionally, it may be hard to track down who is actually responsible for doing this to you. Many businesses do fight and they usually win, but it takes time and money, which is why slammed businesses often stay with the new company.

How this hurts the merchant services industry:
Reputable service providers spend a lot of money to gain your business, and they spend a lot of money on staff, training, and equipment to support your business. It takes months and sometimes years for a processor to regain the cost of establishing a single customer. When merchants are stolen, it has the same affect on a processor that shoplifting has on a retail businesses. Profit margin’s sink, and it becomes harder to keep prices and fees where they are. On an industry wide level, it ends up costing all businesses more, because the lost revenue has to be accounted for somewhere.

Companies that slam are scum!
Slamming exists because some providers and reps find it easier to steal hard earned customers from honest companies than to provide a service worthy of gaining their own customers. The people doing the slamming are criminals and should not be trusted on any level. Businesses have gone bankrupt, been put on the TMF, have been locked into horrible contracts and paid thousands of dollars because of thieves that do this. There is so much risk to a business that gets slammed, only a true criminal would put an honest business into a risky situation that could cost them their business.

What to do if you’re slammed:
First off, do some research to find out who did it to you and when it was done. Usually someone showed up and either switched out your terminal, or reprogrammed your terminal claiming to be with your processor. More than likely an outside agent slammed you and not the company they work for. Luckily, this is the best case scenario for your business, because you can easily bypass the agent and deal directly with the company you are now processing through. Additionally, a sales agent that is out slamming businesses is a huge liability for a processor so they will be more likely to sympathize with your situation. You need to make sure that if you close this new account, you will not be charged a termination fee, and you will not be put on any sort of TMF/Match list. Depending on what you actually signed, it’s possible that it was a complete application. Whatever the case, you are the victim of fraud, and you shouldn’t have to compromise, even a penny! You also need to figure out what you want the outcome of this to be. You can go back to your original company, you can find a new company, or you can stay with the current one. Based on how your relationship got started with this new company, it’s probably a good idea to go somewhere else out of principal. If you do decide to leave your original provider, make sure you know if you are required to pay any sort of termination fee. Most likely your account with them is still open, so going back to them should be simple and painless, maybe taking only a few minutes to get your terminal reprogrammed.

If a provider slammed you themselves, you are in a stickier situation. Going straight to the bank they are registered to, or to Visa and MasterCard may be the best resolution. If you find that the cost is significantly higher, you may need to consult a lawyer or file a report with your police department. If you do decide to call them, go up the chain of command as high as you can. Even if the company is responsible, it was still most likely a rogue sales person that carried out the slam. Filling reports with the BBB can go a long way to getting their attention and getting out of their grip. Ripoff Report is another company you can file a complaint with.

(My Ripoff Report Advice: Only file a Ripoff Report after all other options have been exhausted! You should be 100% certain that you are filing against the correct organization, there is no chance of an amicable resolution, and you do not expect anything positive to further come from the company. Unlike a BBB report, a Ripoff Report cannot be undone, even by you, and they can be so damaging that there is little chance the company will deal with you any more at all. If you commit libel or slander, you should be prepared for for the full legal wrath of the company you reported. Enough said!)

Prevent it!
Don’t let anyone reprogram your terminal unless you are certain that they are supposed to and that they work with your current processor. Whether it is over the phone or face-to-face, make sure you know who is changing your terminal, because you just can’t know what they may be changing on it. Your money and your business’s very existence could be at stake.


March 17th, 2008 by Jamie Estep

Visa IPO Tomorrow? Or maybe not…

Filed in: Industry News |

Visa’s IPO which was predicted to be going off tomorrow (Tuesday, March 18th), may be pushed back because of the Bear Stearns casualty.

According to The Disciplined Investor “Unless the lead underwriters – JP Morgan and Goldman Sachs – are completely deranged and masochistic, Tuesday is not going to be the best day to attempt to bring history’s largest IPO to market.”

Banks, especially JP Morgan have a lot riding on the success of this IPO, so it would be reasonable to assume that they will indeed push it back to a day that will be much less volatile than tomorrow is predicted to be.


February 29th, 2008 by Jamie Estep

Paypal buyers no longer need a Paypal account

Filed in: 3rd Party Processors, Industry News | 4 comments

Paypal issued a news release today stating that buyers no longer need to sign up for a paypal account in order to purchase from a Paypal accepting seller.

From a usability perspective this makes perfect sense, and has been one of the biggest hurdles for Paypal to overcome as a 3rd part processor.

However, I can foresee some major customer issues in regards to seller protection.

Right now, Paypal effectively removes traditional buyer and seller protection for credit card transactions by resolving disputes within the Paypalsystem instead of through the credit card chargeback system. This works explicitly because both the buyer and the seller are registered users of Paypal. Paypal has control over the entire transaction process, and has absolute power over both user’s accounts. Sellers currently have some piece of mind that their buyers have gone through a registration and verification process, albeit very limited. When the buyer is no longer required to maintain a Paypal account, a huge avenue for fraud opens up. The seller remains bound to Paypal’s dispute process, but the buyer is not. In this case the card issuing bank would take full control over the dispute, and unlike a traditional merchant account, the seller does not have a relationship with Visa or MasterCard. Paypal will become a liaison between the card issuing bank and the seller in the event of a chargeback, wherein the problem lies. Anyone who has tried to work with Paypal during an account hold or a dispute knows that yelling at a wall is more effective than trying to communicate with Paypal. Judging by Paypal’s already horrible customer service reputation, they are potentially adding an enormous workload on their plate in the form of chargeback handling. This could very well be a disaster in the making.

This is obviously an attempt to compete with more traditional Payment Gateways that have seamless API integration with websites (Authorize.net, Paypal’s Verisign, etc.). While this has the potential to improve Paypal conversions, I would be hesitant in enabling this feature in a Paypal account until more is disclosed about how non-account holder chargebacks will be handled.


February 27th, 2008 by Jamie Estep

Visa’s IPO could change everything

Filed in: Industry News | 1 comment

Visa has an upcoming IPO planned for this year. They still haven’t released a formal date but it looks like it is going to be mid to late march as predicted.

This IPO may have a far greater affect on the US economy than anyone originally imagined. Because of the current credit and mortgage crisis, banks don’t have a good financial outlook for the coming year, or any year in the near future. Fraudulent mortgages and foreclosures are going to continue taking their toll on the banking systems, and the huge rate of inflation isn’t going to help any. Visa’s IPO could really change all of this.

Visa is composed and run by member banks with a board of directors consisting of members from JP Morgan Chase, BOFA, Wachovia, US Bancorp, Wells Fargo, Providian, First National of Nebraska, Texas First Bank, NationalCity, and SunTrust. While Visa itself remains non-profit, the banks that issue Visa cards and run Visa are certainly for-profit companies. When Visa goes public, the member banks are going to get a lot of pre-IPO stock. If we base Visa’s potential success from MasterCard’s IPO last year, Visa’s stock value could go up by four times, soon after their initial offering. Even though the economy isn’t in the same shape as it was last year, Visa is a far stronger company than MasterCard was, and there is little doubt to Visa’s strength even in a poor market. Visa is more than double the size of MasterCard by transaction volume, and this IPO should prove to be the second largest in world history, largest in US history.

If Visa’s stock sells for the median predicted price of about $40 per share, the primary member banks are going to get some major relief. The pre-IPO value that member banks are expected to receive is: JPMorgan Chase about $1.1B, BOFA $545M, National City $380M, Citigroup US Bancorp and Wells Fargo about $240M each. This should immediately go up after the IPO, and like MasterCard could be four times higher in a few months.

This huge increase in capital for these banks will have a cascading effect on their own stock, which should dramatically increase. Banks are having a hard time maintaining their current value and Visa could create a surge of investment that could turn things around. There’s probably not anything that’s going to turn around the mortgage and credit crunch, but a $17 – $50 billion bump in bank stock should really help investors regain some trust.

Related Posts:
Where Visa is headed…
Visa is going public


February 21st, 2008 by Jamie Estep

When you ask your provider to change something, document it and follow up!

Filed in: Merchant Accounts | 1 comment

I come across horror stories all the time about people not getting money from their credit card transactions, or that they are being overcharged for long periods of time after something was supposed to have been canceled.

It’s a certainty that at some point most companies are going to need something changed with their merchant account. This could be a change of address, change of service, new equipment, and almost inevitably a bank account change. For some reason, bank account changes cause business owners more problems than any other action that affects their credit card processing. I recently heard a story from a business that had not been receiving their transaction deposits for nine months. Even more disturbing, that it isn’t the first time I have heard of this happening to a business. Personally, I don’t know how you could not notice your money was missing for nine months, but obviously this does happen.

As a business owner, if you change your bank account, or anything else that may affect your business’s ability to receive money, make sure you get your merchant account updated, and check to make sure it got updated. Additionally, every time that you call your provider, write down and archive exactly what the expected outcome is supposed to be and how long it’s supposed to take (Even if it’s just on a sticky note). Whether it’s your provider’s fault or not that something got messed up is irrelevant, it’s your money that is not getting to where it should be. Call them every day to check up on it if you have to, but don’t be that person who finds out six months later that you haven’t received a single deposit since you made the bank change request. Don’t be that person who finds out you were being charged $10 per month for something you canceled four years ago. Your provider needs to follow through with the changes, and it is irresponsible when they neglect to or just mess something up, but again it’s your money, make sure that it is going where it should be going.


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