Category Archives: managing costs

managing the cost of credit card processing for merchants

How to add freight cost after credit card preauthorization

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A preauthorization, or authorization hold, is a temporary hold on a customer’s credit card until final settlement. In this B2B transaction scenario, such as for distributors and manufacturers, the customer buys an item online, for example via Woocommerce or Shopify; the customer does not save their card on file or use a saved card on file, in which case different rules apply. Compliance with credit card processing rules improves authorization approvals, mitigates risk and reduces merchant fees.

On the merchant side for ecommerce sale described: request for authorization goes out and the issuer responds with an approval code if all goes well. By also using 3-D Secure, the merchant shifts fraud liability to the issuer, reduces chargeback risk and can potentially qualify for reduced merchant fees. An additional authorization is not required if the final settlement amount is not more than 15% of the original authorization. Note, this is based upon scenario described! However, depending on the card type, the qualified interchange rate may downgrade to the worst rate possible due to authorization and settlement mismatch; The same applies if the final settlement on the original authorization is less.

Some, but not all payment gateways and API’s have solutions to help merchants resolve the mismatch problem.

How can merchant maximize profits on this type of transaction? Here are some requirements:

  1. Settlement date must be within 2 days of the transaction date.
  2. Settlement date must be within 7 days of initial authorization for purchasing cards (non-gov)
  3. Obtain and pass 1 valid electronic authorization. Authorization and
    settlement MCC must match. One authorization reversal is allowed.
  4. Transaction date must equal shipping date and that date is no more than 7 days after authorization.
  5. Transaction must include order number and either customer service phone number, URL or email.
  6. Must have secured E-Commerce indicator of “5” or “6”. The POS Condition Code must be “59”. Must perform Cardholder Authentication Verification Value (CAVV) and AVS4 (zip code, except goverment cards).
  7. Must Pass Level II and Level III Data.

Failure to meet all requirements can increase merchant fees more to an additional 1% or more of the transaction amount.

References:

Visa Product and Services Rules, section 5.8.3.1

Visa Stored Credential Mandate Overview

Christine Speedy, Founder 3D Merchant Services, is a credit card processing expert with specialized expertise in card not present and omnichannel technology. Christine is an authorized reseller for Elavon and CenPOS products and services, in addition to other solutions. Call Christine for payment gateway, cloud technology, merchant services and check processing needs.

Phone vs text express checkout: Covid-19 customer pick up solutions

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Businesses are changing the way they interact with customers to reduce both employee and customer exposure due to the Covid-19 coronavirus crisis. Accepting payment over the phone and delivering to cars is growing. However, there are risks and costs associated with this that can be avoided. A combination of text, chat, and artificial intelligence can dramatically improve customer engagement and satisfaction while driving down costs and increasing revenue. We put this all together with express pay checkout for a ready-to-go solution to transform operational efficiency and drive profitability virtually overnight.

FAST HELP NOW: Stop taking cards over the phone and start getting paid remotely with a one-way text or email. You’ll use the platform to send a simple request for payment or you can optionally upload an invoice. I just fixed your Covid-19 pay over the phone problem to instantly save you time and money, while improving security.

MANPOWER PROBLEMS: Working with fewer employees, whether to save money due to declining sales resulting from Covid-19 economics, or to adjust for family needs and illness, can lead to customer service issues. Longer hold times leads to even more phone calls, messages and emails as customers desperately search for answers. Takeaway: Studies show a 48% decrease in customer care costs with our recommended automation solutions. It takes just a few seconds to change customer status to ‘ready for pick up’, generating an automated text that will collect payment. That’s way faster than getting card data over the phone.

CREDIT CARD PROCESSING FEES: If your business traditionally accepts cards in person, then the merchant account is set up for RETAIL. When the acquirer does not receive EMV or swipe card data, the transaction is downgraded to the worst rate possible. Timing couldn’t be worse with new higher rates imminent. Small Business credit transactions failing to qualify for Custom Payment Service (CPS) will be assessed the Non-Qualified interchange rate of 3.15% + $0.20 effective April 18, 2020. That’s cost plus there are other fees on top of that. Regulated debit will still be .05% regardless of payment acceptance method. The Fix: Our recommended solution improves credit card rate qualification; merchants can qualify for lower rate using our express checkout vs over the phone, and fraud liability for ” it wasn’t me, I didn’t authorize” shifts to the issuer.

CUSTOMER SATISFACTION: As time goes on, people holed up at home are bound to get more anxious and testy. Nobody likes giving their card number over the phone so now you’ve got an unhappy customer regardless of what you do. They’re on their phones texting all day, and calling to sit on hold with you is annoying. Employees often resort to using their own phone devices with no oversight, creating potential liability problems. The Fix: Converse with them the way they want and customer satisfaction is proven to soar. Use a cloud platform from any device so all data is secure and compliance is managed automatically. Our recommended solution ensures texting compliance and creates on-demand searchable records. Additionally, the one click yes or no end of service satisfaction survey enables management to instantly identify problems and address them accordingly.

HOW IT WORKS FOR MANAGEMENT OVERVIEW: Add users, assign users to roles, modify existing automated message templates (or make new ones), set up hours of business, set up alerts; users can login via computer, tablet or phone app. Add a promotion and one question survey if desired. Let the automation begin!

SECURITY AND COMPLIANCE: The last thing I’d want any business to do is have employees taking card data over the phone and then key enter it into something else. There are too many things that could go wrong. One mistake and a data breach or disgruntled employee could put you out of business. The Fix: Our recommended solutions remove employee access from cardholder data and customer self-checkout is proven to be far more secure. Compliance with the latest credit card processing rules is automated. This is not the case with all remote payment solutions, many of which have not kept up with the onslaught of new card processing rules (not the same as PCI compliance), especially for storing and using stored cards. I don’t care how big they are or how recognizable their name is, many solutions are not compliant today.

DRIVE THROUGH PICK UP: A parent pays for their kids car repair. A friend wants to pick up a pet for their elderly neighbor. No problem. During checkout, your customer can designate things like a pick up time, name of pick-up person, and even add details about the car that will be picking up.

BEST USE CASES: Veterinarians, car service, truck service, anything where something is dropped off and then needs to be picked up later. Animal hospitals can deliver instructions, photos, results etc and reduce or even eliminate phone time. Restaurants may have specialized software that meets needs so I would look there first. We focus on businesses with sales are over $1M annually.

FAQ: Can I use my same merchant account? Yes. Do you offer low cost merchant accounts? Yes, submit your statements for a comparison. How do you reduce my fees if I keep the same merchant account? Proprietary patented technology dynamically optimizes every transaction to mitigate risk and qualify for the lowest fees. What payment types are supported? Paypal, Visa, MasterCard, Discover, American Express, ACH/echeck and more. Is it HIPAA compliant? Yes. What if my customer insists on paying in person? No problem. Just mark as paid when they come in. How long does it take to get set up? Usually one business day turnaround once we receive your paperwork, though it can vary. How easy is it to use? We like both our users and customers to have an ‘Apple-like’ experience; just login an go; self-serve and assisted remote training is available. How much does it cost? We have two price plans depending on your business type. Most customers are more profitable using our system so any fees are entirely offset by credit card fee savings, labor savings, and increased revenues. How long is the contract? Month to month; if you don’t like it, just cancel. We’ve never had a customer say they didn’t like it and cancel.

GET STARTED: Christine Speedy, 954-942-0483. For a fast, free checkup on your merchant account or to implement our express checkout system, contact us today.

3 Things Accountants Must Advise B2B Clients in 2020

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Credit card processing may be a big part of the revenue stream or a small part. It doesn’t matter. B2B companies all suffer from the same issues that impact EBITDA and risk. Compliance, cost and security. It’s fair to say, most businesses have no idea what the hot buttons or repercussions are.

Three things every B2B company needs to know about credit card processing right now:

  1. If you store credit cards, you must be compliant with Visa Stored Credential Framework. I posted this in 2017. Guess what? Most payment gateways (if you accept payments online from an invoice or any other source, a payment gateway is involved) are still not compliant! There are significant financial and risk consequences for non-compliance, including penalty fees, fines, and issuer generated chargebacks.
  2. Failure to settle transactions with a proper authorization will be even more expensive starting in April 2020. For example, many Visa credit card rates will go to 3.15%, reflecting upwards of 0.75% increase in some cases; that’s strictly interchange fees, nothing more. Instead of assuming you’re already settling properly, go to your merchant statement and look for DATA RATE I (instead of Data Rate III), STD/Standard, and EIRF. Do you have any of these? See also https://3dmerchant.com/blog/merchant-processing-services/credit-card-transaction-fees-checkup
  3. It’s a Visa rules violation to request the card security code on a paper credit card authorization form, or any digital form where the business can decrypt and view it. It can’t be stored, period. Not by the merchant nor service provider, including payment gateway. Yet even the AICPA

Why these 3 things? Because 100% of B2B companies I talk to will fail on at least one, and usually two or three. That includes CPA firms. Among the American Institute of Certified Public Accountants missions is to provide “the most relevant knowledge, resources” etc. Yet as of this writing, AICPA affinity credit card processing partners include a long list of technology solutions that are not compliant with all three of the above.

86% of all data breaches in 2016 were from level 4 merchants, defined as “Any merchant processing fewer than 20,000 Visa e-commerce transactions per year, and all other merchants — regardless of acceptance channel — processing up to 1M Visa transactions per year.” By complying with the three items on my list, B2B companies will harden their systems and increase profits. The latter occurs because compliance with rules reduces fees. 

If your current acquirer could truly fix all the problems above, why haven’t they taken the initiative to help you in the past? By the way, if someone ever says they help you qualify for level 2 rates, run! All B2B companies should have the right technology to qualify for level 3 rates. Why pay more?

Christine Speedy, 954-942-0483. For a fast, free checkup on your merchant account, contact us today for a secure, cloud-based solution optimizing acceptance for all payment types across multiple channels without disrupting banking relationships.

Chargeback Reason Code 4837 – prevent and win

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What is Mastercard chargeback reason code 4837, no cardholder authorization, and how can you win it? Don’t waste time defending chargebacks, make your company more profitable by preventing them. Combine card acceptance rules compliance with the latest technology to shift fraud liability is the number one method to prevent chargebacks.

What is Mastercard chargeback reason code 4837, no cardholder authorization?

The cardholder did not authorize the transaction.

What are some reasons why this happens when there is an existing relationship with the customer?

  • The card issuer can initiate a chargeback for invalid authorization; for example, a card present authorization was not settled within 24 hours
  • The merchant has a stored card on file, but did not follow proper protocols for storing and using stored cards.

Key Examples To Shifting Fraud Liability

  • Card present, support EMV chip and pin debit
  • Ecommerce, use cardholder authentication with 3D Secure which shifts liability for this type of situation back to the issuer.
  • Phone orders- comply with card not present authorization rules, including settlement time frames

While the steps above may seem simple, most developers, consultants and merchants are unaware of the nuances for authorization compliance. The assumption is that the payment gateway supports all merchant needs, but that is not the case. As rules complexities continue to increase, many payment gateways, regardless of size, have failed to keep up. This creates new risk for merchants who are unaware, and nobody is informing them otherwise.

Want a 3DSecure v2.2.0 compliant payment gateway for your business? Call Christine Speedy, 954-942-0483, 9-5 ET.

D365 Finance & Operations Questions To Ask Before Choosing Credit Card Processing Solution

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Upgrading to D365 from Microsoft AX? Engaging a payment processing professional can save boatloads of development time while opening up new ways to engage with customers. Additionally, payment gateway selection directly impacts EBITDA project objectives. What three key questions must be asked when choosing a credit card processing solution for your business to business operation?

I’ll save merchants and consultants reading this a lot of time. Ask the 3 questions and then pretty much disregard the answers. You’re unlikely to find anyone who will be able to answer all three questions adequately so on that basis alone, it’s best to contact a subject matter expert like Christine Speedy, here at 3Dmerchant.com.

  1. Does the payment gateway support Unschedule Credential On File? Virtually every business to business operation stores at least a few credit cards for the occasional customer on file need, which is a good thing because if you’re one of those that require customers to call in each time, that’s negative friction impacting cash flow, profits, and satisfaction. What most businesses don’t know is that the rules and technical specifications for storing cards and processing transactions with stored cards changed tremendously in October 2017. Virtually no payment gateway has upgraded to get compliant, leaving businesses exposed to multiple financial penalty risks. Note, this is not just ‘tokenization’, which most gateways support, but rather a specific set of new card acceptance rules. Everyone in the payment ecosystem has some responsibility to make changes for compliance- issuer, acquirer, merchant and payment gateway. No one can ‘automatically’ get merchants compliant with new UCOF rules; if any vendor says they have, call 3Dmerchant to review why it’s not.
  2. If the initial authorization and final settlement amount are not the same, what happens? This is a common scenario for distributors, manufacturing and ecommerce, but if there’s a mismatch, an or an open authorization is not reversed, merchants pay an expensive processing penalty fees. For example, MasterCard Data Rate 1 might appear on merchant statements for interchange rate qualification, which is nearly 100 basis points higher than if settled optimally.
  3. Is there any difference between the type transaction transmitted to the acquirer when a customer self-pays an invoice such as through a payment portal vs when an employee key enters the cardholder data? The answer must be yes. One is submitted as a phone order (MOTO) and one is submitted as an ecommerce order.
  4. BONUS: What’s the process for renewing an expired authorization? Preauthorizations are common in manufacturing and ecommerce. While an expired authorization is usually approved for final settlement within 30 days, there are financial penalties and risk associated with using expired authorizations. Merchants should automate this process as much as possible, removing decisions from employees, which is always fraught with risk.
  5. BONUS 2: Can I process EMV chip transactions with level 3 processing in F&O? Due to October 2019 licensing changes, some merchants may find it more profitable to skip the retail license add-on.

Call Christine Speedy, PCI Council QIR certified, for all your Microsoft Dynamics AX and D365 payment processing needs from ACH to credit cards and more. Get a new or keep existing merchant account at 954-942-0483, 9-5 ET.