Category Archives: managing costs

managing the cost of credit card processing for merchants

Dealership Post-Acquisition Standardization Cash Flow & Profits

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Car, truck, and ag equipment dealership acquisitions by mega dealers are on a torrid pace. Cash-flow and profits are directly linked to standardization among locales. The right payment processing technology creates instant receivables financial transparency at headquarters regardless of varying dealer management software. heavy duty equipment credit card processingCloud-based payment processing is critical to financial transparency. For example, credit card processing terminals batched out individually means management has to wait for reports. A cloud solution, including payment gateway, can provide real-time insights by dealer location or any other number of data points.

Key payment gateway differences for dealership evaluation:

  • Real-time dashboard with drill down vs export reports to view (additional payment types not shown)dashboard net sales payment gateway report
  • Compliance with complex rules for rentals, preauthorizations, retail and card not present. How many merchant accounts needed to comply?
  • Compliance with Visa October 2017 stored credentials mandates
  • Level 3 processing capabilities for commercial cards
  • EMV chip or EMV chip and pin
  • Push payment requests (collect remote payments before delivery) via text or email
  • Cardholder authentication (3-D Secure) for remote payments
  • Payment methods supported: cash, check, wire, credit card and other methods vs just credit cards provides significantly tighter controls and data insights

Dealers hesitant to replace desktop EMV chip terminals due to prior investments should bite the bullet. Better solutions to improve customer experience and back office efficiency will reduce ROI time for acquisitions.

ABOUT: Christine Speedy is a payment processing expert with deep experience in the multi-department needs of dealerships. Solutions empower CFO’s to achieve common customer satisfaction goals with tight financial controls, risk mitigation, and reduced PCI Compliance burden. Need standardization help? Call 954-942-0483 to learn more about solutions for your business that are quick and easy to adopt, increasing efficiency and growing profits virtually overnight.

 

SaaS Startups: Credit Card Customer Onboarding 2017

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Critical rules changes for credit card processing, especially recurring billing, will impact business profits and chargeback risk effective October 2017. Simply copying what other big SaaS businesses are doing successfully is not good enough. Everyone needs to make opt-in updates to comply, and EMV chip card acceptance is a good example of how even big companies can takes months or years to change.

payment gateway SaaS recurring

Critical SaaS recurring billing credit card processing rules past, present and future:

    • To validate a card and create a token for future purchases, perform a Zero Dollar Authorization. There’s a procedure, including using recurring indicator, and a transaction fee for this. If the solution you’re looking at suggests a $1 authorization, that’s because the payment gateway, and or the implementation, are out of date and don’t support current requirements. Run!
    • The sales receipt must include phrase “recurring transaction”, frequency of the charges, and the period of time agreed to.
    • Cardholder opt-in record. Rules may vary by each card brand; following Visa requirements is a good practice. For example, read Visa Stored Credential Transaction Mandates and also Visa Core Rules. One of the new requirements is specifying how the Cardholder will be notified of any changes to the agreement. The significance of new mandates is huge, and non-compliance will result in higher fees, penalties, reduced sale approvals and chargebacks.

Payment gateway selection directly impacts profits, risk, and your customer buying experience. Lots of developers integrate one or two of the oldest payment gateways because they’re “reliable” and familiar. True, but, this could cost your company it’s path to profitability and even existence. Any WordPress developer knows technology and implementation of technology changes. It’s constant. Before selecting a payment gateway for a SaaS startup, ask these questions:

  • How will it help with new Visa Stored Credential Mandates?
  • Does it support 3-D Secure cardholder authentication?
  • How will it help with account updating for expiration and replacement cards?
  • What type of digital record is created at the time of customer opt-in to agreement, how is it retrieved, and how long is it retained?
  • Does it support authorization reversals?
  • Does it level 3 processing for commercial cards (if applicable to business type)?
  • If I change banks or payment processors, how will it affect my customers? My business?

TIP: Most payment gateways are reliable; level 3 processing, and 3-D Secure support are starting points to reduce the list of options. Need help to get compliant? Contact Christine Speedy to learn more about solutions for your business that are quick and easy to adopt, increasing efficiency and growing profits virtually overnight.

Hotel credit card authorization form 2017 change

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Hotel and lodging industry must update best practices due to 2016 and 2017 changes in Visa and MasterCard rules. Cardholder authentication and multiple authorization indicators are two key components of change. Hotels that comply will maximize profits and security. Noncompliance will result in higher credit card acceptance fees due to penalties, increased declines, reduced profits, and new chargeback risk.hotel credit card authorization formFor those still using paper credit card authorization forms, few are in compliance with Visa Core Rules 5.4.2.5 Prohibition against Requiring Cardholder or Account Data – US Region.

“A US Merchant or its agent must not: Request the Card Verification Value 2 data on any paper Order Form.”

Authorization validity is front and center to the 2017 rules changes. Merchants used to get and authorization, and settle it later at checkout. Now merchants must send the correct transaction types and link them all together with a unique identifier:

  1. The ESTIMATE (Visa) or UNDEFINED (MasterCard) indicator is sent when the final settlement amount is unknown. The customer must be informed that it is an estimate as well.
  2. INCREMENTAL authorization is obtained when the original authorization expires or to increase the amount on hold.
  3. Final Authorization says this is the final transaction.

TIP: Merchants need 3-D Secure (Verified by Visa, MasterCard SecureCode), a global cardholder authentication standard for card absent transactions, to maximize profits and compliance for card not present transactions, which is only available with customer initiated transactions: hosted pay page, digital payment request, online booking. Paper forms don’t create a digital record tied to the credit card, and cardholder authentication is not possible, as defined by the card brands. It’s also not possible to comply with the rule by key entering data into any desktop terminal.

The unique transaction transaction identifier can be a point of breakdown in the process. For example, the events manager obtains a paper credit card authorization form. The first charge is a deposit; the second charge is at the end of the event; a third charge occurs after assessing damages to a room. In each case, the amount is key entered into the payment processing terminal. Since there is no transaction identifier tying them all together, the authorizations are invalid and the ISSUER is within their rights to chargeback for invalid authorization, example Visa reason code 72.

There are so many nuances to the rules, and changes needed in the payments ecosystem, hotels should not assume existing partners have completed the required updates to comply. Technology that can automatically manage the authorization and settlement process- not the old way, but with all the new rules changes- requires a sophisticated payment gateway. Like EMV, there will be vendors that struggle to adapt.

For compliant solutions that can be used standalone or integrated, improving your customer experience, contact Christine Speedy, 954-942-0483.

Reference materials:

  • MasterCard® Pre & Final Authorization Mandate by CyberSource, December 2016.
  • Visa Core Rules October 2016.
  • MasterCard Revises Standards for Processing Authorizations and Preauthorizations by Vantiv December 2016.
  • MasterCard Transaction Processing Rules, November 2016.

See merchant bulletins – downloads for links to many resources.

Visa Partial Authorization Service

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Visa merchant library update on December 13, 2016. Visa provides a Partial Authorization service that provides an alternative to declining a transaction when the card’s available balance is not sufficient to approve a transaction in full. This flyer provides information about the benefits realized, how to use the service, and answers to frequently asked questions.

PDF 326 KB Visa Partial Authorization Service – Improve the Customer Experience and Increase Sales

“Partial authorization improves the customer experience by preventing embarrassment from a decline at the point of sale and enabling a seamless checkout with split tender transaction using multiple payment methods.” Christine Speedy

To accept partial authorizations for your business, a few items are needed:

  • Technology that supports it. Payment gateways certify partial authorization for each acquirer. Not all gateways certify.  The receipt must also show each payment amount.
  • The merchant must enable it. For example, this could be a checkbox in the ERP or shopping cart software payments module, or it might be turned on at the gateway administration level. It’s possible a gateway is certified, but the related software using the gateway does not support it.

If partial authorization is not supported, and there’s a decline due to insufficient funds, there’s still an open authorization for the funds that were in the account. An authorization reversal should be completed to remove hold on any cardholder funds. If you don’t want screaming customers, this is a must! Intelligent technology can automate this process.

Compliance with credit card processing rules can be extremely complicated. Relying upon employee training is futile. To improve your customer experience and automate rules compliance, contact Christine today at 954-942-0483.