Information on Merchant Accounts,
Ecommerce and Credit Card Processing

May 16th, 2018 by J B

Clover Station 2018: A Solid Update!

Filed in: Monthly Newsletters |

New for this year is the Clover Station 2018. It is a redesigned version of the previous Clover station with many added benefits. Clover went back to the drawing board on the 2018 Station and improved just about every part of the system. Below we will dive into some details about the new Clover Station.

Completely New Hardware:

While the overall function of the device remains largely intact, it has gone through a major overhaul. The Station 2018 now houses a larger 14” screen with built-in finger print reader versus the former 11.6” screen while retaining its proprietary Clover swivel stand in a one-piece design.

Clover has also removed the brains of the device from the printer, which allows for other printer options. In the previous generation it was the printer that contained the heart of what a clover device is and if you had to replace a printer, you were essentially replacing the entire system. You are now able to get a Clover Station 2018 with a standard thermal printer, or with a similar printer with built-in customer facing screen. It also comes with an NFC for Apple Pay and Android Pay.
Since the Printer is no longer the central hub of the device, Clover opted to include a separate port hub to minimize the number of cables that you have to run from the screen stand itself. With this new device one cable runs from the hub to the Station’s screen, and one cord from the stations screen to the printer, see the image below. From there any cash drawers, Ethernet cables, or USB connection are connected to the hub. This allows you to stash away the hub and limit the wires that are exposed on the counter top.



You still get plenty of connection options on the 2018 including Ethernet and Wi-Fi for network connectivity. It also includes Bluetooth, 4 USB ports, and now 2 cash drawer ports. This is very similar to the previous generation; however, all have been moved to a hub that is easier to stash away and keep out of view.

The processing capabilities have been bumped for the new Station, the processor is twice as fast as the previous station and has plenty of RAM for a device of this kind. Speed was never an issue on the previous model but these enhancements all add up to a faster system that will continue to operate smoothly as time goes by.

Payment Acceptance:

The Clover Station 2018 has really improved on its predecessor by having not just a Magstripe reader but also including EMV (Chip Cards), and NFC (Apple Pay/Android Pay) built into its screen. Unfortunately, PIN Debit was not included as part of its built-in capabilities, but there are options. You can connect a FD40 or Clover Mini to act as customer facing payment devices and accept PIN Debit as well.

There are some things you should be aware of when looking to add a customer facing device to the 2018 Station especially if you accept EBT. First – EBT cannot be processed using the FD40, so if that’s a payment type you accept, you will have to use the Clover Mini as your customer facing device. Secondly, and probably less importantly, once you connect a customer facing the device, the Station 2018 will no longer accept payment inputs from its built-in payment readers. It will force all electronically read payments to originate from the FD40 or Clover Mini. If you do happen to try to dip a chip card on the station, it will remind you to use the customer facing device to complete the transaction.



While the PIN Debit structure isn’t ideal, it makes sense from a card holder stand point and is still a huge step up from the previous model. The older Clover Stations required a customer facing device to accept anything beyond magnetic card reads.

Backward Compatibility? Kind of…

The key to remember here is this is all new hardware and the ultimate brains of the device, at least from a deployment point of view has changed. Where the printer was the hub for the entire system the new Station has completely separated the printer from the connectivity hub.

What that means, is you can’t connect an old Station Screen or Printer to the a 2018. There just isn’t a way to do that since the original Station was setup to be paired. Having said that, the Station 2018 does work with most if not all the same peripherals. So, if you have an existing cash drawer, bar code scanner, USB label printer, etc., those should all work just fine.

Software:

The station 2018 now has access to Clovers Lite Register pricing tier that starts at $9.00 per month and the full Register tier at $39.00 per month. The Lite plan is a great starting point for most businesses and allows access to most of the basic features you would normally use. If you need more functionality, the Register Plan opens Clover devices up to their full potential, greatly expanding what you can do. See the breakdown here that shows what the different plans offer.

If there isn’t a feature that is already built into the system, the Clover Marketplace is stronger than ever offering more first and third-party apps than any other POS provider. Most of these apps are free or include free trails. For the apps that don’t offer such things, they are generally quite affordable and can be shut-off without a penalty at any time. The App Marketplace allows you to find the apps that best fit your business needs without having to pay for software that your business never uses.

How does Clover Station stack up?

The new station is quite an upgrade over its predecessor and definitely worth every penny. The price point has basically remained the same as the original Station, but has also fixed some small annoyances with the previous generation and really improved on what Clover has already been getting right.

Check out our past comparison of Clover and Square Register.

For many businesses the Clover Station 2018 is a good fit. The Clover Mini and Clover Mobile devices also remain well equipped which offer all if not more of the same benefits but with a smaller footprint and lower cost. For many businesses, they will enjoy the larger screen of the Clover Station.


May 16th, 2018 by J B

Signatureless Payments, Finally (Update)

Filed in: Monthly Newsletters |

This is a follow up to our past article The Future: Signature Less Payments.

Towards the end of 2017, beginning of 2018, the major card brands stated that they would drop most if not all of their signature requirements starting in April 2018. I don’t know about you, but the signature on the back of my card, if there is one, looks nothing like my signature on those small receipts. Even if it does, nobody checks the signature and very rarely even verify the name on the card matches the card holders ID. I wouldn’t say they were ever really securing anything. There was an article written years ago that perfectly outlined how woefully inadequate signatures are. If you have a few minutes check out that article, it worth taking a look at. In short, the card holder just started off trying to make his signature as different as it could be, by the end is signing his receipts are signed “I Stole This Card” and no one ever took notice.

Technology is definitely paving the way for a signature-less future. Bringing chip transactions to the US is a lot of it, but companies like Apple and Google have shown the industry other ways to secure their sales with cost effective technology. For example, MasterCard is doing a trial release on a new card with a built in finger print reader, that works with the existing EMV standards. That card is planned to have a full roll out later this year. In the next few years I expect we will see a move to bio-metric confirmation potentially even with online transactions, which would be a huge win for online retailers.

It’s nice to see the card brand making changes that will help businesses and consumers alike. These kinds of changes will increase transaction speed and ease by removing the slowest part of the transaction. It will also cut down on the amount of time and money business spending keeping up with transactions and fighting disputes. Over the next several months expect more and more retailers to skip requesting a signature, and just move forward to saying “Have a nice day!”


April 17th, 2018 by J B

Tired of paying credit card processing fees?

Filed in: Monthly Newsletters |

An old method to avoid them is growing in popularity

New Dogs, Old Tricks

Many businesses are off-setting their processing costs by using one of the oldest tricks in the book. While it may not be possible to fully implement for all businesses in this article you might find some ideas on how to offset at least some of your processing costs. With that said, keep an open mind and let’s dive into what a Cash Discount program is, how it works, and the different ways to implement one.

What is Cash Discounting?

Cash discounting is a method of giving a discount to customer who is paying with cash while increasing your revenue on purchases made with a credit card. Also note this discount can apply to more than cash, for example you could also do the same discount on gift cards, PIN debit, paper checks, etc.

There are three popular ways to setup a cash discount program to recoup some or all of you processing fees, and while not difficult to setup it must be done within regulations. You will need to have signage that clearly states your business’s pricing and discounting policy, and these will need to be placed prominently at specific areas of the business. The wording needs to be clear and stay within the rules of law and processing regulations. We provide all the required signage for any of our merchants choosing to cash discount and will instruct you on where to keep them posted.

You will also need a Point of Sale setup to properly display and report the discounts to the customer. The reporting will vary depending on how your organization handles its transactions, however we also provide the point of sale systems needed to make sure you are in line with the rules.

Not a Surcharge:

It is important to keep in mind this is not a surcharge being applied to credit card sales, which has its benefits and limitations. It’s a discount off the price of a sale for using cash. Surcharging for different payment types is illegal in several states, and otherwise heavily regulated, whereas discounting is not. I know that may sound a bit odd since you can effectively accomplish the same effect by doing either, but those are rules.

Also, surcharging comes with very strict requirement on the processing side. For example, Visa/MasterCard regulations state you are not allowed to profit from a surcharge, so your surcharge cannot be more than your processing fees. You also must be able to meet certain requirements concerning how the surcharge is displayed in store and on receipts. Surcharging is additionally prohibited on debit transactions. You may also be required to show historical reports on your surcharging to your processor at almost any time.

Discounting on the other hand is more flexible, however there are still signage and receipt information that needs to be clearly displayed in case a claim is made that you are surcharging.

Popular Cash Discount Options:

True Cash Discount

This is the cleanest way to handle cash discounting. It’s also the method used by gas stations and some large retailers. Let’s say your processing fees are costing you an average of 4% per dollar and you are looking to recoup 100% of those fees.

In this scenario you would reprice your products or services by an additional 4%. When a consumer brings their items to the register they would ring up at the already marked up price. If the customer pays with a credit card, you just run the card as usual. The sale is done, your customer didn’t get a discount and you have recouped your 4% and your processing fees are offset.

If a customer pays with cash you would apply a 4% discount on the register or point of sale device, and their receipt would clearly show all the items priced as advertised and as marked, as well as a line item showing a 4% discount.

Its that simple, you aren’t losing 4% on credit payments, and cash customers get the 4% lower price. This way allows your employees to engage customers with an additional discount on their entire purchase.

You still need to have the correct signage explaining your policy along with a point of sale device capable of discounting your cash sales and reporting that discount on the receipt. We can provide the point of sale device and signage you need to make sure you are doing it correctly. If this a method, you are thinking about using please contact us for more information about getting started.

Customer Service Fees

It seems like almost any event ticket has a service fee attached to it at checkout, why not apply one of your own? This is another option we are all familiar with, and while it will not work for many businesses, it a slam dunk choice for others.

Instead of re-pricing all products and services you would implement a customer service fee of 4%. This customer service fee would apply to every consumer regardless of payment type and would be clearly listed on the customers receipt from the point of sale device.

At the time of checkout when a customer pays with a credit card, they are paying the same 4% charged to everyone else.

When a customer pays with cash, you can apply a discount of 4% to offset the customer service fee.

In both cases above the customer’s receipt would show the customer service fee, but in the case of the cash payer their receipt would also show a 4% cash discount, offsetting their customer service fee.
You are not required to charge a percentage of the sale price. For example, you could just charge a flat $1.00 as your customer service fee and give a $1.00 discount for cash payers. At the same time, you also don’t need to call it a customer service fee, the name is flexible. Please use common sense when naming the discount, for example it would not be a good idea to call it “Non-Preferred Payment Fee” as it really starts to sound like a surcharge.

If either of these methods are something you would like to implement give us a call at 888-528-0058.

Advertised Cash Price

This is the easiest to implement by far but the legality behind it is shaky at best right now. I was not going to include it, but after seeing many businesses trying this, I felt it was important to touch on what it is, and why we feel there might be issues down the road.

What makes this so easy to implement is you don’t need change your posted prices at all. Again we will assume 4% processing fees. The claim is you simply need the proper signage around your business stating that all your posted prices are the cash price and that represents a 4% discount over the actual retail price. Then you just need a credit card terminal or point of sale device that can add an additional “discount reversal” during the sale and print it on the receipt.
So, from the merchants stand point nothing changes with their pricing, the credit card terminal or point of sale just adds 4% to the total automatically when a card is processed. This is where things are a bit shaky. When the merchants receipts show a 4% increase to the over all price, but calls it a “discount reversal”, could that be considered a surcharge?

A rose by any other name would smell as sweet?

Technically it’s a discount, because the signage tells customers about your pricing. But at the same time you are either charging more than the advertised price, or you are surcharging certain payment types. If you had to defend that position against a card issuer, they could very easily look at the credit card receipt from the card holder and call it a surcharge.

The industry is split over this method and there are people on both sides who have valid points as to why it is or is not a surcharge, but at the end of the day no one knows if it’s within the regulations.

Who knows maybe this way of discounting will be proven legal in the future, but right now we don’t know of any such precedent. My opinion, if it was not already clear, avoid this method until it the laws and processing requirements are absolutely clear that it’s an approved practice.

Can’t I just implement this on my own?

To some extent yes, but… It can only take one complaint to an issuer before a processor starts looking into your payment practices. If your processor is unaware that you have started cash discounting, and they get a report that you are improperly surcharging you will have some serious explaining to do, and still need to prove you are doing everything by the book.

You’re a lot better off working with a company who is helping you structure your cash discount program. So, both the processor and you know its being implemented correctly.

If a complaint does come in there will still be verification steps to make sure you are maintaining the program as it was designed, but the processor will already know what that design is.

Also, if your processor doesn’t want anything to do with surcharging or cash discounting, you could find that even if you were doing it properly your processor is now holding your funds or even worse have shut down your account.

There is also keeping up with proper signage and probably even more importantly proper receipts. Working with a processor who has a program designed specifically around cash discounting means your Point of Sale device will be running software that is up to date and reporting correctly.

Conclusion

Is cash discounting for every business? Probably not, but we have seen many businesses implement successful programs over the years with surprising success. It is well worth a quick conversation and brain storming session to see if it would work in your business. I would say most often we see smaller ticket businesses using our cash discount program. But recently many businesses with larger tickets are putting it to good use, and actually increasing cash and check transactions as their discount more than offsets rewards paid by issuers to the card holders.


March 8th, 2018 by J B

Spring Cleaning

Filed in: Monthly Newsletters |

Spring is here and your garden plants aren’t the only thing growing. Your credit card fees for processing will most likely be increasing because February and March is time for the industry interchange and assessment increases. Twice a year, in October and February, the credit card issuers and card brands roll out their increases that they will be collecting on every credit card transaction. For the issuers, these increases will be to the interchange rates and to the card brands these increases will be to assessments and various other regulatory fees.

These increases are passed on to the credit card processors like ourselves who in turn have no choice but to pass on these increases to the merchants who process through us. As the credit card processors or acquirer cost go up, they must pass on the cost to their customers as any business would do. But the fact is that many processors don’t simply pass on the increased cost, they will actually use the interchange increases as an excuse to raise the processor rates many times over this rising cost.

An interchange increases usually represent just a few basis points (1 basis point = 10 cents on $1,000 of processing volume) but many processors will increase the rates 10 – 15 and even 25 basis points on qualified and non-qualified transactions. Processors will also increase the transaction fee as well along with increasing the processing rate. So, for many merchants who aren’t watching closely, they will end up paying much larger increases. These increases will be usually communicated to the merchant on the February and March billing statements.

So, I want to tell you two ways to make sure you aren’t paying too much now.

The first way is to go to a cost-plus pricing system for your processing. A cost-plus program basically takes whatever interchange and assessments rates the card brands decide on and pass it on to you with a processing fee on top. The processing fee on top is usually between 15 and 30 basis points along with a 7 to 10 cent per transaction fee. The range is normally based on your processing volume and this is probably the fairest and safest way to set up your account. We have published articles before on this way of processing and you can look at them here.

So, when the card brands and issuers change the interchange costs, these increases are simply passed on to the merchant with no additional mark up. Once in a while you might see a processor trying to sneak in with an increase on the cost-plus merchant set up, but it really isn’t very often. It’s very important that you read your statement messages in order to catch any increases to your rates.

The second way of not paying too much for your processing cost is simply to have a rate check up every 2 to 3 years. This is especially important if you are on a 3, 4, or other tiered processing setup. What happens in this industry is twice a year these interchange increases happen and your processor or sales office increases your rates to cover this increase in cost.

You may end up with rates that are significantly out of touch with your initial quoted rate or the current rates being offered. Because these interchange increases are on specific interchange categories (e.g. such as a keyed in rewards card), the processor must make educated estimates on how this increase will affect their entire portfolio of customers.

This is very hard to estimate when you have thousands of different merchants. In the end, they will often increase everything across the board to make sure their costs are covered. This is why it is important more so if you are on a tiered system, to have your rates reviewed every 3 years. It’s very simple to do, just print out your latest statement and ask for a review from someone like ourselves.


January 30th, 2018 by Jamie Estep

Will Cryptocurrency and Blockchain Technology change our world?

Filed in: Monthly Newsletters |

Our industry is constantly evolving. Changing terminals, tablets, smaller swipers, and now you can even just take a picture of a credit card. The Merchant Store always tries to stay on top of or in front of the latest technologies. We were one of the first ISO’s to offer our MSM mobile setup and one of the first to be able to turn your laptop (before the tablet rage) into a point of sale using our MSI gateway.

Lately, Cryptocurrency has been all over the news. Especially Bitcoin, because after all, it’s the original and currently the most valued digital coin. If you look into Bitcoin and blockchain technologies, you will also find about 1000 other coins currently being traded. In this article I would like to discuss what they are, how they work, and the future that we as Merchants and Merchant service providers may be looking at.

Like I said, we have all heard of Bitcoin (BTC) and the concept of new money. Along with Bitcoin the current top coins are Ethereum (ETH) designed more for programming, Ripple (XRP) working on international transactions, and Litecoin (LTC), the silver to bitcoin’s gold, designed to be quicker and less expensive for everyday use. To use any of the coins you have to buy them through a cryptocurrency exchange market and either hold them as your would regular stock or send them to someone for payment. When you hold your coins, you do so in what is called a digital wallet. Most Exchanges offer an online wallet with your registration. You can also get a separate Digital wallet. It looks a lot like a usb drive but it holds your coins offline so no one can access them.

Let’s say you owe someone for a 10.00 lunch, and like you, they have a bitcoin account. You can buy ten dollars in bitcoin and send it to them and they can either cash it out as normal currency (minus transaction costs), or hold it and hope it grows in value. The transaction costs are what sets the coins apart. Bitcoin being the original, is slower and costs more to move around. Currently it takes about 60 minutes to transact and roughly a 15 to 25% charge. This is a big reason why its being looked at as more of a savings account, whereas a lot of the newer coins are faster and cost less to send somewhere. So, let’s look at the above example on the ten dollar lunch. If the receiver cashes out right away not only did it take an hour to get the bitcoin, but he may only end up with 8.50 because of transaction costs. Whereas If they traded Litecoin, which takes 30 minutes and .12 cents to transact, he would have received 9.88 cents. Ripple is even quicker and less expensive. Ripple transacts immediately with only a .04 cent transaction fee. While we can still offer better transaction fees on merchant accounts, the coins are getting lower and lower.

All of these coins have two main components that tie them together. One, to use them you have to buy them with “regular” money. I’m not sure how they claim to be the “new” money when they only work with “old” money. This does set Ethereum apart since its main design is for programming and most new coins along with some programs are built on top of Ethereum. However, it is still is used for stock purposes and transferring funds. Now number two, is that all of these coins, no matter the main purpose, requires Blockchain technology.

Blockchain technology is the highway that all of these coins or digital assets travel on. This highway is getting bigger and faster. It still has not caught up to Visa’s network that can handle 72,000 transactions a second, but it’s getting there. It lives online and is protected and ran by Miners all over the world. Almost all of the coins require “mining”. Mining is when a computer is used to decipher codes and problems that only a computer can solve. Once the “problem” is solved it creates the coin and every coin has its own program for mining. Bitcoin takes the most computer power and time to create its coin while some of the newer coins can be done on everyday PC’s or run in the background on your browser. Your PC may even be part of the Blockchain and you don’t even realize it. Now, once the coin is created it goes onto the Blockchain. The blockchain codes the coin and imprints it on its online ledger, and it can never be duplicated or deleted. So far, It can not be hacked into or changed in anyway since the Blockchain is online and survives between many independent computers running these programs. Much like we can’t “turn off” the internet, we can’t “turn off” blockchain. It is security at its finest. Today, the credit card industry has implemented our EMV technology using chip cards. This is also very secure and all of our credit card terminals are programmed for these new cards. This is why Ripple is working with banks and money transfer companies including MoneyGram, Western Union, and American express to share in the blockchain technology using their xrapid (uses XRP for liquidity) and xcurrent software (does not require XRP, simply a transferring system). Mastercard is even building its own blockchain and even the federal Government has created a Cryptocurrency department to research the Technology. There is even some gossip of a possible future Fiat coin.

This brings us to the main reason for our article. At the end of the day, all coins move money around, so the battle may turn out to NOT be the new money, but who will prevail as the future of transferring money using blockchain? Like i said before, it can not be hacked or broken into or changed. Kodak, (remember them?) even has a coin coming out at the end of the month for photographers to protect their images from illegal reproductions. Mastercard, Amex, processing companies, and international transfer companies are all looking into blockchain. I really feel this is the way our industry is headed. The way I see it, it will still require backing from the coins value and Banks, and possibly using a coin such as Ripple’s coin, XRP. As a customer you will probably still use a credit card for payment on a merchants POS system, but now the system will automatically transfer the funds into a coin then quickly transfer the funds on the blockchain. From here the information is sent to the bank for approval then back across the blockchain to give the approval to the POS system. From here it goes back across the blockchain to the bank to move the funds. The transactions will happen so fast that the coin’s value goes for the most part unchanged and the transfer fees are much lower than the current slow and expensive bank to bank systems. This will add security to the transferring processes possibly stopping or at the least cutting down on breaches such as the past Target and Wendy’s breaches. This will also save the banks billions if not trillions per year. Hopefully the added savings will be passed down to the processing companies and to the merchant service providers all the way down to the merchants. Currently this credit card processing system currently does not exist, but I’m willing to bet it will before you know it, much like EMV.

I personally like the cryptocurrency market right now. It’s fun. It’s basically stock market 2.0. Only the prices are very, very, volatile, on every coin. It still has regulations that have to be met. For a coin creator or the “first miner” to sell on an exchange, they have to register and be granted a bit license. The exchanges will crack down on the coins if they believe there is insider trading. The SEC stopped a new coin from coming out recently because they were guaranteeing 100% yearly increases. Some people fear of a collapse or the government stopping the exchanges, but the feds are working with Ripple along with their own crypto agencies, so I don’t see this market going anywhere soon.

Now I’m not a financial guy nor am I trying to tell you what coin to invest in. If you do decide to invest, look into the coin closely. I try to understand what it does and its utility, usability, and of course, only buy what you can afford to lose. Personally I like Ripples XRP coin. They seem to have the most utility and usability for the real world. They created their company and coin to work with our current financial system and try and replace the current antiquated international system such as SWIFT. Currently they have over 100 banks using their xcurrent system because of its cost and speed and 2 money transfer companies using xrapid.


December 12th, 2017 by J B

Avoid The Holiday Season Grinch

Filed in: Monthly Newsletters |

Ways to protect your business against fraud through the holiday season.

The holiday season is a joyous occasion for businesses and consumers alike, however there is always someone out there looking to profit from the misfortune of others. It’s easy to get caught up in the in the spirit of the season and let your guard down, but this time of year it’s important to keep focus on defending your business from the Grinch’s trying to prey on you. In this article we are going to touch on a few different methods fraudsters use and how you might defend yourself.

Friendly Fraud

Unlike its name there is nothing friendly about friendly fraud. Friendly fraud is a broad term that encompasses fraud by legitimate customers who utilize chargebacks or other systems to steal merchandise or services or cash from a business. These types of fraud can be difficult to prevent and can be nearly impossible to recoup losses on.

Chargeback Fraud

Generally, chargeback fraud works when a person enters your business, or shops online, and legitimately purchases goods or services, and then disputes the charge with their card issuer.

Someone who knows what they are doing can easily dispute a transaction in such a way that the business owner will most likely not be able to fight it. Card issuers determine who wins chargeback, and they inherently favor card holders over merchants. There’s no question that the customer is stealing from you but police departments are reluctant to pursue friendly chargeback fraud cases, if they’ll even accept a report on them at all. Most of the time they will refer merchants to the civil court system which is time consuming, costly, and offers no guarantee of recourse even if the merchant wins in court.

The key to protecting yourself against chargeback fraud is to stop card holders from being able to claim they didn’t receive what they purchased, that it was defective or not as advertised, or that the charge was not authorized by the card holder. Unfortunately for online businesses, or situations where a card is keyed into a terminal or POS system, fighting this becomes very difficult, as proving the card holder made the purchase with the card in hand is all but impossible.

To prevent this method, you will want to swipe or dip (EMV Chip) as many transactions as possible. This can also prevent other forms of fraud such as duplicate card fraud. When you swipe or dip the card your customer gives you, it proves you were face to face with the customer, which aids in supporting your case that the card holder did make a purchase. Not everyone has the ability to swipe or dip cards, or even if they do they might also need to ship products to the consumer.

For ecommerce or mail/phone order businesses, the best thing you can do for yourself is to ship directly to the card holders billing address, and preferably ship everything with a signature required for delivery.

If you are shipping to an address different from the card holder’s address, you have no way of proving that they received the product. Not even a signed invoice with a photo ID attached will prove to the card issuer their customer actually made the purchase. Even with a delivery signature, the card issuer will usually side with the card holder. While it should go without saying, but if you’re not swiping or dipping the cards, you should be using address verification for both the street and the zip code to ensure the billing address provided by the card holder matches what the card issuer has on file. If you are not sure how to use address verification (AVS), contact your processor or payment gateway for more information.

AVS is not available in some countries or specialty cards like some gift cards, and it’s not uncommon for card holders to not know the exact address they are billed at, so it’s not by any means 100% fool proof. CVV is another mechanism that should be used on all non-present transactions. It at least verifies that the customer had the card in hand at some point as duplicated cards rarely store the verification code as well as the data on the magnetic stripe.

It’s a good practice to keep a clear return policy and always be willing to offer exchanges or refunds to you customers when appropriate. Many card holders will dispute a credit card charge instead of requesting a return if they feel it’s going to be a hassle, or they feel like the business won’t accept a return or exchange in a seemingly reasonable situation. Making these policies clear from the moment of the transaction can help decrease potential chargebacks.

Gift Card Fraud

This form of fraud is quite easy, has a low risk of being caught, and effects both the business and their legitimate gift card holders. Gift cards function very similarly to credit cards and therefore share some of the same risks. The data stored on the magnetic strip on a gift card can be copied and used to make cloned cards for a fraudster to use in stores. This is just one popular method of gift card fraud.


Many gift card providers offer the ability for card holders to set a PIN number on their cards to help prevent misuse, however not many card holders go through these steps. In the case of any card type, gift, debit, or credit, checking the physical number on the card against the number that a terminal or POS system electronically captures can tell you if the card is legitimate. This has become a more common practice by large retailers protecting themselves from duplicated card fraud. In the case where the numbers do not match, calling the police may be the best option, as there is a high likelihood the customer is trying to make purchases with a fake card.

Another risk that pertains primarily to gift cards is through credits or refunds. Crediting a gift card works differently than a credit or debit card as some cards will automatically receive the balance of a credit when it is run by a merchant. When this happens, the balance of the card is instantly increased by the amount returned to it. While that doesn’t sound like an issue, it gives you, the business owner, no time to identify accidental or fraudulent credits or make corrections.

Funding a gift card by mistake gives the card holder time to spend those funds before you can correct the mistake, or even settle your terminal, and can lead to the card issuer disputing your attempted correction later. There have also been cases where gift card holders attempt to distract a cashier so they can access the point of sale device and issue a return to their card. This is one situation where employee involvement puts a business in an impossible position to catch the fraud. The business is unlikely to notice a return has been processed until they settle out for the night, the fraudster is left with the rest of the day to make purchases on their newly acquired funds.

The best way to combat this and any other return or credit related fraud, is to have strict controls over the ability to refund and credit a customer’s card. All refunds should require manager approval and a refund should never be made to a card other than the one used to make a purchase. Terminals and POS devices should be in areas where customers do not have easy access to them and return and credit functions should be password protected at a minimum.

Return Fraud

Return fraud can be a huge problem for retail merchants, especially retailers who are large enough that employees do not have the ability to remember most of their customers, and ones who stock widely available products.

The most common form of return fraud is when a person returns goods that were purchased cheaper from another store or stolen goods for cash. A merchant, at the very least, pays the retail price for the product which causes any future sale to be unprofitable, and if the goods were stolen, there’s a chance that the police show up looking for the product. It’s also common that the person stole the product from the same store they are trying to return it to.

But, even in cases where goods aren’t stolen, merchants can suffer substantial loses from customers returning used or broken items, old items put in the box of a newer one, or items outside of a reasonable return window. Return fraud is one form of fraud that is frequently aided by employees who relax return policies or in more nefarious cases steal products themselves and have an acquaintance return them for a split of the cash refund.

Thieves are smart enough to target businesses during the busiest times of the year for returns which is typically immediately after the holidays when stores are extremely busy and often overlook or do not have the capacity to properly vet every return they are receiving. The NRF estimated that in 2015 alone, US retailers would lose over $2 billion dollars due to return fraud.

Combating return fraud can be difficult. Clear return and refund policies should be posted and strictly adhered to. Refunds should only be issued in the same form the payment was received, and in the case of electronic cards, should only be returned to the same card as the sale. Merchants should outright refuse refunds they are unable to determine are legitimate, refunds unaccompanied by a receipt, and refunds that contain obviously used or replaced products, unless they cover refunds on those products.

Merchant’s can employ proprietary or hidden tagging methods so that they can determine if a returned item actually originated from their store. In any case, if employees are helping defraud the business, it can be nearly impossible to prevent, so controls over who can accept returns and process refunds should be in place.

Also, it is worth noting that someone trying to defraud a business isn’t going to look obviously like a thief, they’re going to look just like a normal customer, and will usually have a believable story as to why they don’t have a receipt with their item. At the end of the day, a business will still lose the same amount of money regardless of whether it’s to someone who looks like a stereotypical cartoon thief or your favorite aunt, which is why policy adherence is so important.

General Good Practices

Require a positive AVS match and CVV match on all non-present transactions
Ship only to a customer’s billing address unless you feel comfortable shipping to another address, but know you will likely not be able to win a chargeback no matter what other verification you require
Restrict access to your terminal or POS system
Require owner or manager approval for all refunds and credits
Inspect all refunds for condition and verify the product is correct to the packaging
Do not issue a credit to any card other than the one used to make a purchase
Have and adhere to a refund policy without exception


November 2nd, 2017 by J B

The Future: Signature Less Payments

Filed in: Monthly Newsletters |

But first, let me take a selfie.

With the conversion to EMV (chip cards) payments, face to face credit card fraud is on the decline. That said other card payment methods are still struggling to become more secure. While banks and businesses want a more secure transaction process, businesses and especially consumers want faster, more efficient payments. The demand from all sides is pushing what could be significant changes to the payments industry.

Where we stand today:

Signatures are quickly becoming a thing of the past. Whether signing a receipt or signing a credit application, the signature means little anymore. No one is verifying your signature and many transactions or applications are processed in such away that signatures are impossible. With seemingly weekly data breaches and the pay or apply online world that we live in, identity theft will continue to be on the raise.

In the instance of a dispute an individual can claim identity or card theft rendering the signature invalid without additional proof to support it. This is proof that most businesses are not going to be capable of providing.

Big banks such as Bank of America, Citigroup, and Chase have been working on bio-metric systems to help protect themselves and their customers. The large institutions have the resources to deploy teams to work on these kinds of systems, but those won’t protect everyone. With companies like Apple, Samsung, and Google implementing bio-metrics into their new devices, smaller institutions and businesses are starting to take advantage of the increased security without having to invest in additional infrastructure.

Changes are coming:

Visa and MasterCard are both making changes to policies and investing in technology to take the systems in the marketplace today and use them to make our financial lives more efficient and secure.

MasterCard recently announced that effective April 13th, 2018, they will be dropping the rule requiring merchants to obtain signatures for transactions on both credit and debit in the US and Canada. MC has recognized the obsolescence of the signed receipt and are hoping this change will help lower costs for merchants retaining signed receipts as well as increase the speed and consistency during checkout. This is being made possible by improvements by the large banks, and services like ApplePay, and other payment securing technologies.

Visa will be releasing its new platform to allow banks, both large and small, to integrate biometric systems into credit card applications and payments. This might allow banks to use existing systems like fingerprint readers or cameras to verify a person’s identity. This could be a number of different ways, for example using a Smartphone’s fingerprint reader to verify the person. They may also require the applicant to submit a selfie and also take a picture of their driver’s license that their systems and compare against each other for confirmation.

This platform could also be used during the transaction process. Issuers could reach out to their customers when they see suspicious transaction activity and use TouchID to confirm they are attempting to make the purchase. This could also be done with a photo, or voice recognition. This system is being designed to allow each card holder to choose what their preferred biometric verification type.
Expect to see a lot of changes in financial security over the next couple years. As more and more systems and devices keep us connected, the payments industry will continue to use our connection as verification methods.

While that is a bit concerning to think about, so is not preventing fraud which has a direct impact on our lives, businesses, and overall cost.


September 14th, 2017 by J B

Website and eCommerce for All

Filed in: Monthly Newsletters |

Every business should have a beautiful website!

These days it’s important to have some sort of web presence even if it’s only so your customers can find your location and store hour information. For most business owners web design is not their specialty, so they get a site built by friends, family, or a professional. Then, when it comes time to update the company’s website they find themselves yet again looking for assistance. This leads to company websites becoming out of date, poor quality, or a continual administrative nuisance for many businesses.

That has led many small businesses dropping their website altogether or not even building one when they open their business. Some of those small businesses have started to favor using sites like Facebook because of the ease of setup. This allows them easy access to update their customers and company information. While this method works in at least getting your business visible on the internet you still don’t have a site of your own. This limits the control of your own business content and you are left to a third party who controls how your information is displayed and found within its system.

Where do you get your information?

When you are searching for a business or product online, do you immediately seek out information from a social media pages? Rarely…

While I think we would all agree that social media should be part of your web presence it’s not a replacement for a traditional website. I always prefer to find a company’s website, even if it’s just basic information about the store hours and location, it still adds an additional level of legitimacy and longevity.
Where are all the web pages?

It’s easier than ever for anyone to build and maintain a website. There are all kinds of sites that will allow you to point and click your way to a website and you won’t need any sort of technical knowledge. So why doesn’t every business have an amazing website?

One of the big hurdles for many businesses that just want a simple landing page is they feel the monthly costs of having that site hosted outweighs the benefits.

Another hurdle is for businesses who want a somewhat more robust site and find the standard hosting options don’t include the features they need.

Businesses who are looking to take their brick and mortar business into the world of Ecommerce often find that the prices and complexity of running such a website are even higher than before. Then there is the overhead of keeping their eCommerce shop up to date, which can be a full-time job.

So, what’s the solution?

There isn’t a one size fits all web solution, however there is a system that has three sizes which will fit most small businesses.

If you want to have a robust website that you can easily build and maintain, has completely free web hosting and is integrated with full Ecommerce Point of Sale system – Clover Online is what you need. Its interface is the easiest and quickest te building tool I have seen. In fact I tried it out and had a fully functional eCommerce website with products up and running in less than 10 minutes.

Clover Online

There is so much to Clover Online that it would be difficult to touch on everything here, so I am going to stick to the key points. Clover Online comes in 3 options.

Online Basic: Free

I really like this feature, completely free site design and web hosting.

It’s a simple single page website, that shows you’re the basic information about your business along with a map showing your business. It sets up in less than a minute.

The best part is the price. Free.

Just a couple clicks and you are up and running with single page site, that gives anyone looking for your business everything they need to reach out to you.

 

Online Plus: $14.95

This option gives you a complete, professional, website and the hosting is included. You get access to design templates and over 100,000 professional stock images. All of the templates are designed to function properly on mobile devices and have social media integration.

Once you have selected a template, you can change all the text and images on the website. You can choose from the 100,000+ stock images, or upload your own. You can also register your own domain name and link it to your hosted Online Plus site.

In 5 or 10 minutes, you point and click your way to a beautiful, fully functioning website.

Online Pro: $29.95

This is by far my favorite option.

Full Ecommerce at your fingertips, with none of the down side. This option is also great for restaurants as it populates their menu in real time.

It’s a flat $29.95 per month!

No additional transaction fees…
No SSL Certificates to buy and keep up with…
No maintaining servers and software…

You get the same power and beauty from the Plus option with the additional of full Ecommerce. Since Clover Online is fully integrated into Clover Point of Sale, your menu or inventory are always up to date on your website without any additional maintenance.

Attract more customers and reward existing ones with built-in discounts, coupons, and payments. If you have an old web store, Clover can even assist you in transitioning to their platform.

Since your inventory is synced across the entire Clover platform, the setup for this site is basically the same as the plus version. All of your products are already loaded into your online store, you just need to add product pictures, and turn off any items you don’t want listed online.

That’s it… Full Ecommerce. 10 minutes. Done.
If you are looking to just give your business a simple home on the internet, or are wanting to bring your storefront to world, Clover Online is a spectacular product.


July 25th, 2017 by J B

Big data for small businesses: Insights

Filed in: Monthly Newsletters |

Have you ever wanted to have access to some seriously big data?  First Data’s Clover Insights app allows you to use their massive amounts of credit card transaction data to benchmark your business against other similar businesses in your area.  First Data uses data from both sides of the house; processing and issuing. It uses this data to bring you information about your business, competitors, and customers so that you have real time information to help you build your business.

While Insights is integrated into Clover POS, it also works with many existing point of sale systems.  You can also take it for a test drive through the mobile apps for Android and IOS devices.  Whether on site or on the road you can access insights from just about any device.  If you are already a First Data customer you can login using your merchant ID to see Insights just based off your processing volume.

Just select a location and Clover will bring you real business data to help you see area trends.  You can even find other businesses serving similar customer which could be handy when strategizing about obtaining more customers.

What can it do?

Insights can give you a quick snapshot of your business showing you sales data from the last week, month, or year.  Several of which will let you drill down to get a quick view of more information or to jump to the details.

You can quickly find similar businesses to your own and see how your business is stacking up against the competition.  You can use that information to set goals for your business instead of just guessing.
It gives you the ability compare your revenue against your previous year, or even other similar business.  You will be able to view an extended timeline view (imaged below) or a day of week breakdown to better show peak sales days easily.

Heat maps are a good way to see where your customers live and shop to develop a better idea of where to market and to whom.  In addition, you can use the sales analysis to gain even more insights into your customer behaviors and buying habits.

You get charts and graphs on product specific sales data.  You can also link Clover Insights to your company’s social media pages to gain even more insight into you customers.  There are some helpful reports in Insights that can help you grow and fine tune your business and at $10.00 per month its cheap enough to try it out for a month to see what data might be valuable to your business.  There are also some third-party apps that use the Clover Insights data to give you even more powerful reporting if you so desire.


May 19th, 2017 by MSI Newsletters

Surcharging

Filed in: Monthly Newsletters |

Thinking about Payment Surcharging?

Many business owners have been considering surcharging their customers for paying with a credit card to help offset the cost of accepting those payments. One of the common views by these business owners is that the fees charged for accepting card payments are too high and are dramatically impacting the business’s bottom line. For the past several years, the card brands have allowed businesses to surcharge consumers. However, there are limitations and procedures that you must follow. Keep in mind that your business must not be in one of the states that prohibits surcharging all together. We understand that surcharging credit card transactions is an enticing idea, however it may or may not be the best plan for every company out there.

Why Surcharge?

It seems like every month there is some new interchange fee being handed down. It feels like we are all being nickeled and dimed to death with credit card fees. For businesses with tight margins, or small tickets sizes, the cost of processing a card payment can exceed the potential profit. Passing costs back to the card holder promotes the use of more cost-effective payment options, or at least covers the cost, and helps preserve the business’s bottom line. Also, some business owners believe it will help to keep interchange rates from increasing as the card holders will understand the costs are being generated by the issuer of their card and issuers. If their customer is the one paying these fees, it might influence the amount of purchases they make on a credit card.

What are the limitations and procedures of surcharging?

There are limitations for surcharging consumers that you need to be aware of if you are considering adding a surcharge at your business. This is not an exhaustive list; however, it will get you thinking about what you will need to do if you want to start surcharging. You will want to contact your payment processing provider for assistance so that you have the most up-to-date procedures.

Prohibition:

All of this only applies to true credit cards, as the Durbin Amendment made it federally illegal to surcharge debit cards and prepaid cards.

You will also want to review your state’s laws to see if you are prohibited from charging a surcharge to your customers. Below is a list of states that as of this writing, have a law on the books concerning the prohibition of surcharges on credit card transactions. If you’re located in one of these states, most likely surcharging is either completely prohibited or greatly restricted.

States that Prohibit surcharges:
California
Florida
Maine
Colorado
Georgia
MassachusettsConnecticut
Kansas
New York
Oklahoma
Puerto Rico
Texas

While Visa and MasterCard were forced to allow surcharges, you may have signed a merchant agreement where you agreed to not surcharge your customers. You will also want to review your merchant agreement, as it might have a clause that prohibits you from surcharging your consumers. With some processors this clause might be removable, but you would have to modify it with your processor. If not you still have the option to shop around for a processor who will allow it.

Rules and Limitations

There may be changes to make to your business before you start. You will need to post the proper signage at the entrance to your business and at the register. This would explain what the cardholder will be surcharged and that it doesn’t exceed your cost for the transaction. You must also have a point of sale system capable of surcharging appropriately. Your receipts will need to have a separate line item that shows the surcharge for the transaction and you will also need to keep up with how much you have surcharged. There are also limits to how much you can charge a consumer for using a credit card.

Merchants are only allowed to charge a customer no more than it costs them to accept the payment, up to 4%. So, if your per transaction costs exceed 4%, you are still going to be paying more than the customer. If your fees are exceeding 4% then it’s probably an appropriate time to shop around for other processing options.

You will need to provide your payment provider and the card brands with written notice, stating you will be surcharging customers. This must be done at least 30 days before you begin. It’s important to reach out to your payment processor and ask them what information needs to be on your notice and where that notice needs to be sent. It will also be important to follow up with them after you send written notice to confirm they have received it, and that there are not any issues with your notice.

Thoughts on surcharging:

Surcharging might be a good option for many businesses who want to recoup some or all of their processing costs. However, they should take some time to think about their business and your customers in regard to what impact a surcharge might have.
Your goal isn’t to alienate your customers, or prevent browsers from becoming customers. Depending on the industry, having an additional surcharge might really push away customers, and while you might be recouping processing fees you are driving your sales. Many consumers would rather see a slightly higher cost of goods, than a lower cost that comes with an additional fee. This is routinely observed in online sales, where higher price but lower shipping often sells better than lower price with additional shipping costs. Again, it’s going to depend on your customers and on your competition.

So, check out what the other businesses in your industry are doing, if it’s commonplace to have a surcharge, then the effect on customers will most likely be minimal. The same could apply if your product or service offerings are unique and consumer shopping for what you sell have very limited options.

You might also think about implementing an alternative method, where you increase the price of the products and services you are selling and offer a cash, or equivalent, discount to help entice more customers to pay in cash.

The potential of pushing customers away, and more importantly creating a limit to what those customers can spend, can make the decision to implement a surcharge very difficult. If the customer feels the surcharge is keeping them from buying with a credit card, then they are limited by the cash they have on hand.

So, it’s going to come down to what will work best for your business.

If you have any questions about surcharging, please don’t hesitate to email us or call at (888) 528-0058.