Information on Merchant Accounts,
Ecommerce and Credit Card Processing

June 25th, 2008 by Jamie Estep

Fixed fees destroy low rates

Filed in: Merchant Accounts |

I hate seeing yearly and other fixed fees with merchant accounts. As if its not enough that a business is being charged for every transaction processed, some companies feel the need to charge yearly, monthly, daily, peak-season, miscellaneous, PCI compliance, and other fees just for using their service.

Fixed Fees

These fees make short work of any great deal that you were supposed to get. Personally, I recommend avoiding providers with high fixed fees unless there is some extenuating circumstance where you can only get approved with a processor that has them.

Let’s take a look at how fixed fees affect overall processing costs:

Let’s say your end of month cost for $8,000 is sales is $150, of effectively 1.88%.

With a $20 fixed fee, this effective rate jumps to 2.13% which is an increase of almost 15%. Add a few more in and the additional cost can easily make up 50% of you bill.

More than just fixed fees can be factored into this equation. If your transaction fee ends up costing $20 more per month with one service provider, it has the same affect as a fixed fee. When you’re looking to get setup processing, it’s important to understand how certain types of fees and the way they are presented will affect your monthly cost. My recommendation is to work backwards. Start by ignoring the discount rate and look at everything else you will be paying.

June 18th, 2008 by Jamie Estep

Hypercom’s New Terminal Line

Filed in: Credit Card Equipment | 4 comments

Hypercom recently introduced the Optimum T4210 and the Optimum T4220 terminals. These terminals are the first of new standardized line of terminals from Hypercom.

Hypercom Optimum 42** Series

Unlike Verifone and many other manufacturers, Hypercom realized that by making a single terminal with several versions, they can reduce their production costs, and make a superior product. Hypercom’s T42** and M42** line of terminals are exactly that, all the same terminal in form and operation, but with subtle hardware differences.

Hypercom’s T4210 is the most basic of the series and uses a standard dial connection. Stepping up, the T4220 is an Ethernet based terminal. Third in line, the T4230, is a retail (counter-top) based cellular terminal operating on AT&T’s wireless network. The M4230 is the same cellular terminal as the T4230 except it has a battery making it completely mobile. Last in the line, the Bluetooth enabled M4240, is battery powered and designed for hand-over processing such as pay-at-the-table.

This line of terminals is set to make a very strong stand against anything out there. They come in with a low price tag, and are high in features and usability. All include thermal printers, smart card capability, and internal PINpads. These are designed to be extremely easy to use, and all are identical to operate. This is a good thing, because businesses that want to upgrade within the terminal line, don’t have to learn any new operating procedures. Input ports are color coded, the printer cover opens with the push of a button, and there’s even a cable organizer to reduce cable clutter.

Hypercom thought these terminals through very well, and I think that they are going to be very popular once they are a little better certified. If you’re in the market for a new terminal because yours is going out or you need an upgrade, I highly recommend checking these out.

May 29th, 2008 by Jamie Estep

Paymentech is going away

Filed in: Industry News | 1 comment

The owners of Paymentech, JPMorgan Chase and First Data have decided to dissolve Paymentech into their own operations. JPMorgan will take 51% and the remainder will be merged into First Data.

Both companies have committed to a no-disruption transition so existing Paymentech customers (1Million+) should not see any major change in their processing service.

May 15th, 2008 by Jamie Estep

How Visa Operates

Filed in: Industry News |

In a move to become more transparent from increased scrutiny over interchange, Visa has made their operating regulations available. Regulations are available for all regions of the world. The US has two volumes of regulations, for a total of about a thousand pages.

May 6th, 2008 by Jamie Estep

Forcing Software for PCI Compliance

Filed in: Fraud, Merchant Accounts | 42 comments

Lately I’ve been hearing reports of processors that are starting to charge their customers $19.95 per month for not being PCI compliant. To fix this problem, these processors are requiring their customers to install some PC based scanning software that is supposed to magically make the business PCI compliant, thereby allowing them to avoid the monthly charge.

Let me start out by saying: This is a bunch of crap!

There is nothing that you can just put on your PC that will make your business PCI compliant. This is so far off course that it hardly can be related to PCI. PCI compliance is in reference to networks, computers, hardware and software that play a part in the processing, storage, or transfer of a credit card transaction.

It is now required that every business be PCI compliant, but let me assure you that there is no simple computer program that will do this for any business. Even if only a single computer is used to enter card data, it is unlikely that it is the only piece of the puzzle, and even more unlikely that a single piece of software can guarantee PCI compliance.

Steps to get compliant:

  1. Determine whether you need to be PCI compliant. (If you accept credit cards, or play any part in the processing of a credit card, you need to be PCI compliant.)
  2. Determine which Level of compliance is required for your business.
    • Level 1: Greater than 6 million credit card transactions per year or any business that has suffered a hack or data breach, or any business deemed Level 1 by card associations.
    • Level 2: 1 to 6 Million credit card transactions per year.
    • Level 3: 20K to 1 Million credit card transactions per year.
    • Level 4: Less than 20K ecommerce, or 1 Million total transactions per year.
  3. Fill out the self assessment questionaire (SAQ).
  4. Fix every area that you answered ‘NO’ to on the SAQ.
  5. Hire an approved scanning vendor (ASV) to perform quarterly scans of any external networks. – All Levels
  6. Fix and maintain any failed area of the scan.
  7. Level 1 Only: Complete an annual on-site audit by a Qualified Security Assessor (QSA).
  8. ** Continue to maintain security of networks and card information! **

Once you complete all of those requirements, and maintain a secure network and business environment, you are PCI compliant. Most of the details of PCI compliance can be found in the SAQ, and on the PCI Security Standards website.

If you’re trying to determine whether PCI compliance is worth it to you, consider this: A security breach will result in a business requiring Level 1 compliance. The cost for level 2, 3, and 4 compliance can be as low as a few hundred dollars per year. The cost of Level 1 compliance can easily reach into the 6 and 7 figures per year.

Some Good PCI Resources:
PCI Answers Blog
PCI Security Standards website
Visa Cardholder Information Security Program
MasterCard SDP Program

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.