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!

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.

Cost reduction specialists choose 3D Merchant Services to partner with for credit card processing because we offer value added services just like they do.  Cost reduction specialists look for ways to reduce credit card processing costs and frequently are paid on a contingency basis. Merchants don’t switch processors just to save money though. They need a bigger reason than that.

Merchants hear from sales people every day “I can lower your costs.”  While some cost reductions are achieved with merchant discount changes, most long term savings are achieved through interchange management. There’s also improved efficiencies (save time) which can be huge. If the cost reduction specialist uses just the  ‘save money’ approach, they’ll lose more deals than ‘save money AND get more benefits’.

Our competitive advantage:

• PCI Compliance Certification Assistance.
• Fortune 100 Pricing Structure.
• Relationship Manager proactively helps you manage costs; regular account reviews.
• On demand access to transaction details and reports you really want.
• Tools and resources to prevent internal and external fraud.
• Hardware/software agnostic- compatible with most systems.

Our Top 5 vertical markets: ( not in order)

• Retail, especially durable goods, automotive, construction supplies and electronics.
• Non-profit
• Wholesale building supply; any Business to Business (B2B)
• Hotel and entertainment (golf, amusement)
• Ecommerce

Market niche comments:

• Card not present transactions have many potential cost and risk problems. We’re seeking B2B, insurance, medical billing and non-profits in particular.
• For retail stores processing more than $1 million per month, our CenPOS technology solution is frequently desirable and has benefits not available from other competitors.
• Our average merchant is processing a minimum of $1 million annually.

Service reliability- I hope that this is a non-issue in any organization. Downtime is non-existent in my experience.

Another worry for merchants is the process of changing.  We address this upfront with an implementation schedule. Both parties need to have all elements or questions answered completely before we start to ensure a smooth and flawless transition.

For the Cost Reduction Specialist to prove savings, and thus get paid, you’ll need reporting that shows not only costs, but the full detail of all costs. Merchant reports show full details so that you can discern non-negotiable cost increases (such as an interchange rate increase) that are out of anyone’s control.

Our services are not limited to just credit card processing. We offer services for all aspects of payment processing, including checks, loyalty cards and more.

We conduct account reviews, training, and other conference calls using Webex, a web based meeting program that allows us to exchange voice, data, pictures and video in real time with customers, and you, regardless of location.

Interchange and Merchant Discount fees can be illustrated by a typical 4-party transaction involving the purchase of an item using a typical VISA/MasterCard type general-purpose credit card issued by a bank. When a Cardholder purchases a $100 item from a Merchant using a typical VISA/MasterCard type credit card, the Merchant passes on the $100 charge to its Merchant/Acquiring Bank in exchange for $98.00, pursuant to the Merchant’s contract with the Merchant/Acquiring Bank. The Merchant/Acquiring Bank submits the $100 charge into the VISA/MasterCard system and receives $98.50 from the customer’s credit card Issuing Bank (less a small processing VISA/MasterCard fee) in accordance with the VISA/MasterCard rules. The Issuing Bank eventually receives $100 from the Cardholder when the credit card charge is paid. Under this scenario, the Merchant/Acquiring Bank keeps a net Merchant Discount fee of $.50 ($98.50 – $98.00), while the Issuing Bank receives an Interchange” fee of $1.50 ($100 – $98.50). These fees combined are sometimes referred to as a Merchant Discount fee. In some instances, the structure of the transaction changes slightly, but the ultimate economic effect is the same. In addition, the same entity may act as both the Issuing Bank and the Merchant/Acquiring Bank in the same transaction.

The above is the IRS description of the merchant fees process. I think it may be easier for some merchants to understand this explanation so thought I’d pass it on. In this scenario, 75% of the merchant fees paid end up with the card issuing bank. It’s higher than that for the size businesses I generally deal with, more like 95-98%, but you get the point. Merchants need to manage payment processing costs, by controlling the big chunk of money that ends up with the card issuing bank.

What is interchange management?

Link to IRS article at top. Information Document Request for Interchange and Merchant Discount Fees – Banks.

CenPOS released a video showing some of the main features and benefits for its payment processing platform for retailers. CenPOS reduces risk, improves efficiencies and enables merchants to manage interchange, the bulk of their payment processing costs.

CenPOS video
With the pin pad replacement programs in high speed to meet 2010 guidelines, mid-sze and larger merchants should see this video before choosing a solution.

Interchange management is the art of ensuring that every credit card or debit card transaction qualifies for the lowest rate possible for the type of card presented for payment. I call that watching your back.
If you get a great price plan, but you aren’t qualifying for the lowest interchange levels, you’re paying more than you need to.

A qualified professional understands what levels of interchange YOUR BUSINESS qualifies for when presented with different types of transactions and different types of credit cards (consumer, corporate, rewards, debit etc), and reviews your transactions to make sure you hit them.

For example, a credit card transaction at a real estate company that could qualify at 1.10% could just as easily qualify at 2.04%. This is not a transaction downgrade because the merchant made an error. This is the same transaction with two different processors. Both might be correct in their own way, but the merchant would certainly prefer 1.10%. Should I reveal how this happens so anyone can read it?
Sorry, not today. Please call for a personal merchant statement analysis at no charge, and if you are suffering from lack of interchange management, I’ll show you exactly where and discuss options to fix them.

BTW The extra money from different interchange qualification isn’t going to your salesperson or the processing company, but largely, if not all, to the card issuing bank. Salespeople are not compensated on interchange qualification since the company or division they work for does not profit or lose based on how you qualify. At least, I’ve never heard of one offering this type of compensation which would be a nightmare to track.