Category Archives: managing costs

managing the cost of credit card processing for merchants

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.

7 Reasons Your B2B Business Should Accept American Express

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Many business to business merchants don’t accept American Express because of the real or perceived high cost of merchant fees and risk of dispute losses vs. the negative impact on profit margins. Here’s a fresh look at the reality of accepting American Express cards in 2019, including as compared to other card brands.

Top Reasons To Accept Accept American Express

  1. Average higher order. Your best customers are also using American Express for corporate purchasing. You may be losing business by not accepting the cards. For example, an actual merchant 1.7X higher average order than other cards.
  2. Higher annual spend. For example, an actual merchant has 3.0 X higher annual spend from American Express buyers than other cards.
  3. Merchants can completely offset the cost of acceptance, usually by surcharging as explained in this article Credit card surcharge rules and laws 2019.
  4. Amex SafeKey provides card not present fraud liability shift as do other card brands. If merchants support it for customer initiated payments, whether online pay portal, invoice click and pay, or ecommerce, they’re protected from friendly fraud ‘it wasn’t me, I didn’t authorize it’ chargeback losses. Rather than defend the chargeback, prevent it from happening and fighting to get your money back.
  5. Customers can take advantage of your early pay discounts and also use the The Pay Over Time option from American Express to extend their cash flow. You get paid on time to improve your cash flow, and customers extend their credit with someone else to manage their cash flow.
  6. Free business promotion. It depends on your business, but in some cases, especially small businesses, American Express does a lot to promote your business online and via other methods. How valuable is that?
  7. Rates may be lower than you think. Fees have broadened into more categories by card type over the years so it’s not just one rate for everything. You may be able to negotiate if you’re a very large business. The biggest expense for other card brands is interchange; if not managed properly, fees may be the same or higher than American Express depending on the card type.
  8. The Christine Speedy difference. Managing credit card fees is critical, and so is understanding the nuances of credit card processing that impacts all merchant fees. The reality is most players in the payments and consulting industries are not familiar with rules that impact your profit and risk. Call 954-942-0483, 9-5 ET for expert advice about all things credit card processing.