Your credit card terminal goes down or your wireless unit can’t get a signal, but you’ve got customers lined up to buy. Is a pencil rubbing of the credit card or a photocopy of the credit card OK to defend against chargebacks?

No. The merchant must have an imprint of the card on a credit card voucher form that is fully completed and signed by the customer.

Below are excerpts of the relevant rule from Visa and the condition I most often see cited on merchant chargeback forms. (Other cards have similar language. Please note the Visa International Operations Guidelines book is over 1100 pages so too keep this brief, this is a very narrow look. Link t

Visa Chargeback Reason Code 81 Fraud Card-Present Environment

Chargeback Conditions – Reason Code 81
pg 825 One of the following:
1. Cardholder did not authorize or participate in a Card-Present Environment Transaction.

CHARGEBACK PREVENTION TIPS:

• A signature and imprint or magnetic stripe card data is required on all retail merchant accounts with a Terminal ID that is set up for retail  presentment. For most merchants, this means they need two merchant accounts- one for card present or retail, and another for card not present or MOTO if they have key entered transactions and the card is absent.
• To save time, merchants will only partially fill in the form, but this is not sufficient. All fields must be completed and the customer must sign.
• When a merchant account is opened merchants are issued a metal plate with their required merchant account identifying information to use with imprinting forms.  Don’t toss is into a drawer. Buy an imprinter (about $25 from most office supply stores) and some voucher forms, put your plate in and keep it secured but handy in case you need it.  If you don’t know where your plate is, call your processor and ask for a new one.

Editors note: Two merchant accounts will help mitigate risk because card absent aka card not present requirements differ from card present. For example, depending on the transaction method,  address verification and or security code may be required. Merchants with a single dial up terminal that has two merchant accounts my experience costly errors when the salesperson or cashier processes the transaction on the wrong account. It happens.  I see it all the time when I review statements and dig for downgrade reason codes. One solution is automated merchant account switching via Cenpos.

May brings the usual April interchange update. There are two noticeable bumps for MasterCard. An overall assessment increase to .012% for all transactions over $1000, and up to .04% more for WorldCard. Full article and link to 2011 Interchange Rates and Criteria.

BUSINESS CREDIT CARDS: The typical interchange rate to merchants for corporate cards is 2.2% or 2.4%.  The non-qualified rate is a whopping 3.17% on MasterCard, which can be avoided with proper interchange management. Depending on your business type, you may qualify for large ticket (minimum $1000) rates which can save you up to 1%. To manage these business card fees, check your merchant statement PENDING INTERCHANGE CHARGES to see what rates you’re hitting. If your eyes glaze over at the complexity of interchange fees, merchant discounts etc, read the 3D Merchant Services blog or email a request to be included in our next interchange insights webinar. TIP: With our payment platform you can automatically offer discounts to your customers if they use lower cost debit cards.

MOBILE PAYMENTS: We’ve officially launched our app for iphone, itouch and ipad. This enables you obtain swipe rates from the field, including signature capture or you can key enter. Receipts are emailed to customers. For service companies, you can swipe the card the first time, then re-bill via a secure token for subsequent charges. In both cases you qualify for the lowest rate, plus mitigate risk with the initial swipe. Droid is available for key entry only, with retail swipe coming by June 30.

Payment Card Industry (PCI) COMPLIANCE AND DATA SECURITY: The number of 2010 data breaches exploded in companies with 11 to 100 employees. A key commonality is simply the opportunity was there. Read the full 2011 Data Breach report which includes insider theft so you can identify your own weaknesses and take corrective action. Your company is not PCI Compliant and protected under Safe Harbor unless you can prove you’ve been compliant continually, not just when you completed an annual report. Trust me, all parties will look for ways for you to assume the full burden of costs associated with any data breach.  Every operation I visit or speak to has weaknesses so please put this on your priority list!. Need help? Call and lets discuss.

What’s in your merchant statements?  Multiple locations are now achieving over 90% pin debit penetration using our universal processing platform, CenPOS. Way to go!

If you use Costco’s credit card processing partner, Elavon, which acquired Nova in 2009, or another processor, then your price plan likely includes prices tiers such as qualified,  mid qualified, and non-qualified. This is where merchants have a difficult time comparing processor quotes and get upset when the bills come in.

We reported the latest 2011 rates in the Costco program with Elavon earlier this year. They offer a low Visa/MasterCard qualified rate. It’s an attention getter, no doubt. Here are some 2010 statistics about cards being used by consumers:

• Visa’s overall volume is 60% check cards, MasterCard 35% check cards.
• Only 10% of all card volume is traditional cards- no business or rewards.

Here are the Costco member Elavon published 2011 rates  again:

Visa/MasterCard Qualified (Traditional Credit & Signature Debit) 1.48% plus $0.20 (reduced)
Visa/MasterCard Qualified Rewards 2.20% plus $0.20 (increased)
Visa/MasterCard Partially Qualified 2.96% plus $0.33
Commercial Non-Qualified 2.96% plus $0.33
MasterCard Non-Qualified 3.80% plus $0.33

As previously reported in April 2010 Costco, Elavon, Nova and merchant rates, I’m still neutral for accounts processing under $100,000 annually. Qualified means retail card swiped in the above numbers. Why neutral? As I’ve said before, if you process $5000 or $10000, there’s not much difference in suppliers if you saved even .5% in fees.

At $20,000/mth, the difference in what you’re really paying- remember most cards are rewards related-on the Elavon plan vs a plan we can put you on can start making a difference.

3D Merchant Services specializes in mid-size businesses. As part of our  giving back to Help American Businesses Prosper program, we’re now accepting up to four small businesses per month into our partner portfolio. After all, we were a small business at one time too. Businesses will receive preferred partner credit card processing terms and education to make their businesses secure while controlling costs.

Phase 1 of Visa’s new chargeback rules are now in effect. Effective for fraud-related chargebacks processed on or after 16 April 2011, in lieu of a paper-based signed cardholder letter stating that the cardholder neither authorized nor participated in a transaction, issuers may submit information collected from the cardholder electronically.

Essentially, the dispute can now be completed elecronically instead of having to mail in a letter. The following reason codes are impacted by this rule change:
•     Reason Code 57 Fraudulent Multiple Transactions
•     Reason Code 62  Counterfeit Transactions
•     Reason Code 81  Fraud – Card-Present Environment
•     Reason Code 83  Fraud – Card-Absent Environment

Fraud-Activity Certifications
In April 2011, in lieu of a cardholder letter, card issuers will be required to certify through Visa Resolve Online (VROL) three fraud-activity  certification requirements to support their chargeback.  VROL is an innovative Visa back-office system used by all Visa members to process disputes. The three requirements are the following:
•     Card status at the time of transaction (lost, stolen, counterfeit)
•     Date fraud activity was reported through VisaNet
•     Date account number was listed on the Exception File
The fraud-activity certifications validate that the issuer closed the cardholder’s account, fraud reported the account number to Visa and statused the account either lost, stolen or counterfeit. The fraud-activity certifications will only be required if the issuer elects not to send a cardholder letter. In October 2011, Visa will mandate issuers to send the fraud-activity certifications with or without a cardholder letter.

What does this mean for merchants? The time that lapses between the customer initiated dispute to the time  merchant receives such notification shrinks.

Yes, merchants using our CenPOS switch technology can automatically create discounts to encourage customers to use their debit card. The subtotal, total, and discount appear on the receipt. Our switch technology empowers the merchant to enter amount to discount, what cards, and even time of day you want to make the offer.

• Cash or percentage discount?
• Offer extended based on card type- ie if MasterCard debit, offer 1% discount
• Schedule days and time of day to make offer. With our real time reporting, you can see when discounting will have the biggest impact and only make the offer during those times.

FAQ:

Do I need to switch credit card processors? No.

Do I need special equipment? In a retail environment, yes. You need an approved terminal conenected  to a computer with high speed internet. That could be a simple card reader or a signature capture terminal. For card not present, merchants must use our gateway.

According to a Federal Reserve report, Interlink, Star, Pulse, and NYCE have the largest the market share for PIN debit transactions. The shares are Interlink 37%, Star 29%, Pulse 11%, NYCE 8% and other 15%, as of 2007. The report calculations reference Nilson Report and other industry sources for the data.

This is good background information when looking at least cost routing.

This article on Virtual Terminal Solutions addresses credit card processing in a law firm or individual attorney practice. How can improve security, prevent fraud, improve PCI Compliance, and reduce time to collect payments from repeat clients?

Virtual terminals are accessed via a secure web page enabling merchants to key enter credit card or other payment information. I recently helped someone hire a specialized attorney. There was no need to meet the attorney in person, and as it turns out, the specialist wasn’t local anyway. Read this article and see if you find any similarities with your own legal practice.

SCENARIO:  Collecting payment with customer not present.
A prospective client contacts an attorney regarding a legal matter for a third party. The individual desires to pay the legal bills for the party needing the services. After a brief discussion, the attorney sends a questionnaire to be filled out. After reviewing the information, a conference call is to be scheduled. There is an initial consultation fee for research, review and conference call. If the client desires to move forward, additional payment(s) will apply.

The party paying the bill requested to supply credit card information immediately to avoid any future delays as the process moved forward.  The ‘regular staff’ wasn’t in due to the holidays and an assistant took the credit card information over the phone, including CVV security code, writing it down on paper.  The firm will charge the card on the conference call date. I know the assistant doesn’t normally handle this function, but how often does this scenario happen in your law firm?

AVOID HIGH RISK

Collecting and writing down CVV information is a risky practice, and is generally not acceptable for most PCI Compliance situations. Creating a policy for Storage of Credit Card Details both on and off your premises is an essential element of PCI Compliance. Your company should have a clear written policy and all employees with access to sensitive information should have at least an abbreviated version of the written policy and have had training.

See related article, “Should you require CVV or AVS for phone orders?”.

How can a virtual terminal improve data security?

The key to selecting the best virtual terminal for a law firm is understanding the entire process for how payments are made, knowing the differences in virtual terminals available, and understanding the steps to PCI Compliance.

CRITERIA FOR SELECTING CREDIT CARD PROCESSING VIRTUAL TERMINAL SOLUTION FOR A LAW FIRM

1. Must enable multiple users, each with their own login. This is so you can track who makes every transaction. (Risk Management)
2. Uniquely control user privileges- who can enter “sale”, “void”, “refund”. Each of these should be uniquely configurable. Most systems provide ALL privileges to all users, but to reduce risk, you shouldn’t provide refund capabilities to someone who is not normally involved in the billing process, as in the scenario above.
3. Token billing for variable amounts- if you want to re-bill a customer over and over again, require tokenization. There are two unique types of token billing. One is to charge a variable amount on demand; the other is to charge multiple payments of the same amount at specific intervals, also known as installment payments. The card data is key entered via a secure web page one time only. Most solutions have an installment option, but very few have a solution for variable amount, on-demand payments.

BONUS CRITERIA- these features are not required, but there are strong reasons to put them on your list.

1. Client/contract management. With this solution, the merchant can set up multiple contracts for the same client ID, and assign different billing periods, amounts etc.; enter the card data one time only. Each contract is given a unique token.
2. Least cost routing. This technology will automatically require AND pass all data elements needed to qualify for the lowest cost interchange for any given card type, on to your processor. Human error and specific technical knowledge are eliminated from the process. This feature can reduce costly downgrades; for example up to .70% extra on corporate credit cards. What’s unique about this?

• Not all virtual terminals collect the information needed.
• Not all virtual terminals REQUIRE the information needed so it’s easy to bypass.
• Not all virtual terminals pass on the data to the processor even if it’s collected; the merchant has no way of knowing what’s needed or what is passed on.
• Users are typically in control, rather than intelligent software.
• Most virtual terminals are simply gateways. There are input fields and data is passed forward. Our professional services virtual terminal solution is not just a gateway. It’s an intelligent switch that recognizes the card type and determines what is the least costly way to submit the transaction for processing. Then it collects and passes the necessary data.

3D MERCHANT SOLUTION- All of the above plus, these additional law firm friendly features:

Would you like data interaction between your credit card processing and your legal software? Via API or CSV Export, you can update your legal software application. You CANNOT export or see card data ever, but you can use last 4 digits, name, card type and other fields.

Executive Reporting: Who’s billing the most?  Eliminate wasted time creating reports and totaling data. Via the executive dashboard, you can see billing in real time, with up to 7 years data to pull from. Organize your reporting preferences by division, region, and or attorney.

See related article best virtual terminal for card not present for comparison.

FAQ for 3D Merchant recommended virtual terminal

How much does the virtual terminal cost?

The virtual terminal is very affordable. Pricing is based on volume, either dollars or transactions. Depending on your credit card processing fees now, it may even be net neutral. For a firm proposal, please submit at least 2 months merchant statements for review. (You can keep your processor or change, no difference in price.)

Are there computer requirements? High speed internet and updated browser with flash plugin. PC or MAC compatible.

How easy is it to use? After logging in and changing the temporary password, most users will figure out everything they need to know in about 5-10 minutes. There are dozens of short 15-30 second HELP video clips for instant answers.

What is the implementation time? Contract approval to account set up is usually 2-5 business days. If you’re switching processors, we’ll have everything ready for you to start accepting payments immediately. Just add users in a matter of minutes and you’re ready to go. You can even batch upload existing client data.

If you’re not switching processors, we’ll provide you with a form for your processor to complete so we can link to your existing merchant account.

I often hear from CFO’s that more credit card processing companies call on them than any other vendor. So with over 100-1000 calls per year, how do merchants sort through it all and choose your blog host? Tenacity is often cited, but that’s only part of the equation. My keys:

1. Education on pricing- I educate customers on the 4 core elements including which costs are negotiable, which are not, which can be influenced, and which ones may vary by vendor (some may have higher fixed costs than others).
2. Reporting- You must have completely transparent reports in order to identify the costs above, as well as to manage them. I show you what a transparent report looks like and help you understand it. How do you use data for reconciliation?
3. Interchange management. Once you have the right pricing and detailed reports, it’s time to attack interchange qualification. Most of your money, over 95% is paid in interchange fees. Many merchants think the processor gets the money, but that’s not the case. Ensuring you hit the lowest interchange for any given card presented is the next step.
This can be achieved through many different methods, and will never be completely transparent to the merchant because you simply cannot see everything that goes into why a transaction qualifies. With good reporting, you CAN find out why a transaction downgraded. But of course, you’d also have to know WHICH transactions downgraded and WHY in order to fix it. An expert is really needed for this step. Someone who will ‘watch your back’. That’s where I come in. I’ll do most of this behind the scenes and we’ll also have Webex conferences to review your account, including a statement review.
4. Continuing Education- Let’s face it we’re all busy people and sometimes don’t have time to get to anything new unless it’s forced upon us. I’m your force. If something must be done, like PCI Compliance, you’ll hear from me. If there’s new technology (from any vendor) you can implement that will make your job easier, I’ll call you. I’ll advise you of pros and cons, risks and rewards, and quantify it whenever possible so you can focus on what you do best.

* (If you were not aware of the above before, would you go back to your old processor and renegotiate, or would you say, they’ve earned the right to have my business? If you intend to go back to your processor don’t disappear, thank me by paying me a fee to help you renegotiate your contract.)