Running a small business in the US is amazing. The freedom, the profits, being your own boss are several reasons more people are choosing this route. Yet, Americans have so many challenges in running their own business from the government to customers, that the headaches can be insurmountable. Some would hope that accepting credit cards for your business would not be a problem but an benefit for you, but it can prove to be a gigantic hassle

Here are several reasons for and against the accepting credit cards for your business.

The advantages of accepting credit cards in your business.
Increase your customer base: Your chance of bringing in more customers increases as you expand how you are going to let your customers pay for their purchases. Statistically, only 23% of all customers use cash to make point-of-sale purchases.
Bigger total purchases: Several studies of consumer behavior have proven that they are likely to spend more dollars when they use a credit card vs cash. Cash is real, tangible, and psychologically harder to part with. A credit card is just plastic and does not let you see the spending damage until you receive your bill at the end of the month.

Ease of use: Easy to use for both the customer and the business owner. It is easier to carry one single card than a large amount of cash. And for the business owner taking credit cards streamlines your accounting, inventory and other metrics of your business so sales are easier to track.

Using cards is safer: Who wants to carry a large sum of cash in their wallet or pocket and have something happen where it gets lost or stolen. It is not insured, and 99% of the time you will not get it back. Credit cards are guaranteed by the issuer against loss or theft. They can be canceled and re-issued with-in days with no financial loss to you.

The negatives of accepting credit cards for your business

There is an expense: Of any drawback to accepting credit card payments, paying your merchant expenses can be their biggest detriment. Monthly statements, Interchange and other processing fees add up. You may also have to pay fees for monthly charge minimums. There are also charges from PCI compliance that will be passed on to you.

Chargebacks: Consumers are protected with their credit card purchases and have the legal right to dispute charges made to their account. You may get hit with chargebacks if a consumer is unhappy with a purchase or dissatisfied with your product. This can happen without warning and your account could be frozen.

Fraud: You may be held liable by your bank and issuer for different types of fraud that may occur on their system. If fraudsters make multiple charges with fake or stolen credit cards then you could be out more than just the product that was “stolen” from your business
The bank may look to you for reimbursement if too many fraudulent charges happen at your business. Also, your account could be terminated by your processor. If this happens, it will be very hard for you to get another processing account. You will be blacklisted, so in a case like this, your business can suffer greatly.

The choice is yours….
Should you or should you not? If you are doing lots of transactions and lots of business, credit card acceptance is an easy choice. If you are a merchant with lower volume and smaller dollar purchases, then you must weigh the options carefully and decide if the costs of taking credit cards outweighs benefits.

There are many unfamiliar merchant services industry terms you may have never heard of before. Here are a few of the most important for you to know.

Authorization Fee: There will be times when the customer or the card are not present for your transactions. If you want to get your best rate, you will have to verify the cardholder’s address. Your merchant processor will charge you a flat fee per transaction for this verification. This may be a listed fee on your invoice or bundled into your rate.

Card association: The credit card association is a network of the issuing and acquiring banks that process the transactions.
Chargebacks: A cardholder has the right to dispute a charge on his statement within 60 days of the charge. The complaint will go to the issuing bank. Then a retrieval request will be sent by your bank and you will be asked to pay $10-$50. Make sure that your response is timely or you could face more fees or lose the transaction completely. If you have to give a refund, then you will probably lose the interchange fee from the original transaction as well as the sale.

Downgrades: If one or more of your qualifying requirements are not met and because of this your exposure increases, you could face a downgrade. This could result in a higher risk rating for you, and you will pay more to the merchant service provider. Common reasons for receiving a downgrade include not settling with in the required 2 days of initial authorization, missing data, invalid data, corrupted date from the swipe process and the absence of address verification on any manually keyed transactions.
Interchange fees: There is a fee called an interchange fee for the processing of each transactions.

You are charged different fees depending on the type of merchant account you have and how the transaction is sent over. This fee will cover the costs of getting the funds to your merchant bank and all of your billing information to the issuing bank.
Issuing Bank: This is the business that extends the credit to the consumer and offers them a payment card.

Merchant Bank: This is the financial institution that offers you a merchant account. They handle all aspects of the transaction from payment to the credit card processing itself.

Merchant service provider: This is the business that makes sure your business is set up correctly to handle the credit card transactions on both the front and back ends. They also serve as a liaison in communications with the card associations, processors, and your bank.

These are some of the most popular terms that are used in the merchant processing business arena.

In 2015, Barclays noted, that the United States was responsible for 47% of the worlds credit card fraud worldwide.  This statistic despite the fact the United States only accounted for 24% of the entire worlds credit card volume.

In 2014 54% of data breaches were related to data were related to identity theft.  Conversely, identity theft fraud creating fake credit cards is higher in the United States than it has ever been.   Here are some examples of the most highly publicized data breeches in recent years.
• Home Depot: 109 million records accessed.1
• JP Morgan Chase: 83 million records accessed.1
• Michael’s Stores: 3 million records accessed.1
• Staples: 1.16 million records accessed.1
• Domino’s Pizza: 650,000 records accessed.1
• Sony Pictures Entertainment: 47,000 records accessed.1
• Target: 40 million credit card numbers and 70 million addresses accessed.2
• Niemen Marcus: 350,000 cardholders impacted.2

EBay: 145 million records accessed.

What does all of this mean?  Well chances are, if you have shopped at one of these places, that your information has been compromised.  What do you do?  First thing you do is change all of your passwords for all of your banking, financial, and log in sites.  Any place that may have your credit card information.  Second thing to do is to subscribe to a credit monitoring site.  Set up alerts for your personal and business accounts that will let you know if someone tries to access your credit.  There are numerous companies that will monitor your credit for free or a nominal monthly fee.

What do you do if you are breached?  First thing is to alert the credit agencies. Inform them in writing that you have been breached.  Cancel all of our credit cards and have them reissued.  You may have to go as far as to change banking accounts, and financial investment accounts.  This will be a painful process for you, but you have to keep focused with the credit reporting agencies and very vigilant.  In some cases, you may have to find legal representation to work your case.

Identity theft is the biggest threat to everyone in the world’s online presence.  You cannot stop security breaches at major companies as we have detailed.  But you can protect yourself by monitoring and paying attention to your credit and your bank accounts.

 

What does the term card –not –present mean?  The card-not-present transaction is a payment card transaction that does not involve the physical presentation of a card by the cardholder for the visual clarification and examination by the merchants. In such a transaction the Cardholder and the credit card need not be present at a point of sale. It is good to note that, the absence of the card is the main consideration in the definition since the card holder may transact at a merchant store after physical view of the goods. Mostly, the CNP transactions are done through mail order, online purchase, and order or through a telephone order.

Mail order- the merchant receives the order through fax (email) from the customer. To transact, the customer sends his/ her credit card details but not the signature or the PIN to the merchant to and the goes on with the transaction. Mostly the processing occurs after the goods delivery.

Telephone order- Merchants receives an order through a telephone call and then asks for the details of the buyer’s credit card.

Internet Sales- The sales are made online and the merchant provide secure payment details that take the customers card details that are sent to the PSP (payment service provider).

The fraud in the card-not-present transaction

The CNP are among the major routes for credit card fraud in the USA. The CNP frauds pose major challenges to the merchant since it is hard for the merchants to verify whether the transactions are made by the actual holder of the credit card. The authorization of the purchase does not require the presence of the cardholder nor does it require the PIN code or signature verification. Thus, the fraudster may steal credit card, or duplicate its information and transact using the credit card.  This is one reason why some people complain about wrong data in their credit report whereas their card information reflects in their transaction.

Who is reliable if the CNP fraud is reported?

When a fraudulent CNP transaction is noted and reported, the acquiring bank (issuing bank) hosting the merchant`s account takes the accountability of the of the transaction for accepting the money without keen verification of the card legitimacy. The high-risk rate for the CNP transaction is the reason why most of the card issuers in the USA charge high transaction fees to the merchant to cover the potential fraud cases.

Did the October 1st liability shift affect the CNP fraud liability?

In a short answer, I would say no.  The liability shift only applies to the credit card transaction that occurs at the point of sale where the transaction requires physical presentation of the credit card.

Therefore, merchants who make sales online in place of in-store purchase don’t have to worry about the liability shift that took effect on Oct 1st, 2015. The EMV chip technology is not applicable to online sales as it needs to be physically read by a payment terminal.

Note that the CNP has its control measure to prevent the frauds.

Now with the shift to the EMV chip-card, some customers may be wondering if they will be required to carry liquid cash to retailers` stores that have not yet adopted the EMV technology.  This is a major question disturbing most consumers since not all merchants are EMV- ready. The survey conducted by The Strawhecker Group reveals that though many large retailers, such as Target, Walmart, and Costco, have upgraded their POS terminals for chip card acceptance, still many U.S. retail stores are not EMV-ready. Only 37 percent of retail stores seem to be ready to process chip card payments. Well, I would like to confirm that you should not despair as long as the stores have a card reader.  You will still be in a position to transact since the EMV cards now are equipped with both chip and magnetic-stripe functions.  The magnetic -stripe and the chip ensure that consumer’s transactions and spending are not interrupted by the technology afforded by any retail store.  Merchants can adjust their card readers and serve both the credit card holders and the EMV chip-cards.

How convenient is the card reader regardless of the card the customer is using

Since not all of the USA stores have adjusted to the EMV technology, you may find yourself at a point-of-sale terminal when you walk into a store with no EMV technology.  After your bargain, you might get confused on whether to swipe or dip your card into the card reader. At such a point you will also be in fear of how secure your transactions will be.

When you get to such point, your terminal will drive. The card reader will direct you on what to do. For instance, if you insert the card into a chip reader that is not activated to transact EMV card, the reader will reflect an error. Since the modern cards are equipped with magnetic-stripe and chip functions, you will be required to swipe and get your transactions complete.

Vice-versa also happens when you swipe the card instead of insert. When not sure and you swipe the card an error will reflect, and you will be prompted to insert your card for the chip processing.  Hence, you should not be in fear of what transaction process you should use.

Well, what about the when you walk into merchant stores with no chip-card reader?

This should not worry you. The EMV card can effectively transact with a swipe just like any other magnetic-stripe card so you will still transact and pay for your goods or services.  With such transaction the only extra service you will miss is that extra level of security inserting the reader and only getting it back after the transaction is complete.

After deadline for the EMV adoption in the USA on Oct 1st, 2015, the in-store counterfeit fraud liability shifted to either the chip card issuing financial institution or to the merchants involved Quoting from what Carolyn Balfany, the safety and security expert at MasterCard said “The liability shift protects the entity who offers the greater level of security by holding the other entity with less secure systems responsible for fraud, “For example, if fraud occurs when a chip card is inserted into a terminal that hasn’t been upgraded, the merchant is responsible for the fraud.” The shifting served as a way of stressing on the sensitivity of the credit card company before any transaction is made. This is because the EMV cards require the verification of the legitimacy of the card before the transaction is processed.

Initially, the credit card issuers were accountable for covering fraud affecting purchaser accounts, compensating the cardholders for lost money. As from October 1, 2015, the financial institutions may still cover cardholders’ accounts, but in some cases, they may seek reimbursement from the business owners or the merchant acquirer after proof that the retailer was not ready to use or accept EMV payment technology.

As from October 1, 2015, the federal government initiated a law to protect the consumers by compelling the financial institutions to cover cardholders’ accounts as before in the case of fraud. In some cases, the institutions can now seek compensation from the merchants or the merchant acquirers (banks or company that processes the initiated payments on behalf of a merchant). This happens on proof that the retailer was not prepared to adjust to the EMV payment technology.

Does this mean that the merchants are to be blamed and responsible for covering all the frauds?

One might get the misconception that the merchants are responsible for all the EMV frauds especially if one fails to understand what Doug Johnson, president of American Bankers Association meant when he said:” Whoever has the lowest level of security essentially is now responsible for that unauthorized transaction.” This doesn’t mean that the merchants bear the brunt of all fraud charges. Take for instance the situation where both the merchant and the card issuing institution have upgraded security. At such situation, the environment remains precisely as it was before the Oct 1st. Then the bank will have the responsibility of reimbursing the customer.

Note that the liability shifts not apply to consumer payment card data stolen before October 1. Also, it’s imperative to note that the liability shift only applies to counterfeit fraud tied to EMV chip cards, not to the magnetic-stripe cards that still can be hijacked.

If you ask someone who is very conversant with how the credit card and the EMV operate you will bet that the traditional magnetic cards are very vulnerable to fraud than the new EMV chip-card.

The magnetic stripes on the traditional credit card or debit cards store static, unchanging data.  Therefore, anyone who accesses your cards data (bank account information) gains the sensitivity of your information and will be in a position to make any purchase using your card.  A fraudster can easily replicate the magnetic-stripe data over and over again at home since the information is static information.

Hackers also can also use card skimmers to access the card`s security information on the magnetic stripe. This is the reason why the FBI`s Criminal Investigative Division Financial Crime Section once confirmed that the increase and advancement in technology have led to significant increase in identity theft and data breaches just from computer intrusion. The fraudster can also swiftly penetrate to the retailers’ corporate information systems through the use of some advanced computer hacks software and copy card numbers. Such crimes have already been reported in Target, Neiman Marcus, Home Depot, and in some other small retail stores.

On the other hand, the EMV cards data is dynamic. The EMV chip-card is, therefore, a weapon to combat identity theft in the USA. Each time an EMV card is used to transact, the card chip—a microprocessor—validates the authenticity of that card and provides a unique security code that can only be used for one transaction. The EMV cards secure user/ card holder`s data on integrated circuits. To access and process the data the original chips must be physically inserted into a card reader for legitimacy verification.

The integrated circuits are practically impossible to duplicate hence providing an `added layer` of security that surpasses the magnetic-stripe technology that has been in use since 1960. Note that the EMV card is not a measure to prevent data breaches. But in case your EMV information get on the hacker hands from one specific point of sale (POS), the processing of such typical card duplication cannot work. The EMV technology hence makes identity crime much harder.  This is the reason why the EMV technology is much more efficient in combating crime since making crime penetration hard is one of the best strategies for managing crime. Crime investigative bureaus hold if something is extremely difficult, expensive or, time-consuming, the fraudsters shift to something else. This is the reason why identity fraud is much high in the USA than in Europe since Europe adopted The EMV technology much earlier. Therefore, until the EMV chip-card technology is fully implemented, identity theft will continue to be a plague for American financial and commercial institutions. Why should you survive at the mercy of fraudster while you have an option and chance to shift to the EMV technology?

Cater to your Customers

Cater to your Customers
Customers are your lifeblood and catering to their needs is the heart that pumps that blood. If you do not provide the best service for your customers and they are not happy, then you are not likely to retain them for very long.
A carefully executed social media plan will help boost a business and increase your sales. Here are 4 tips to reaching that goal.
1. Build honest relationships and customer loyalty. Building a solid customer service strategy using your social media. Connecting with your customers through social media offers a language and a deeper understanding of what your customers want and need.
2. Your business will grow through popular social media platforms like Facebook and Instagram. Interacting with your customers on their social accounts will only serve to cement your relationship with them in the long run.
3. Relating and corresponding with your customers via social media will cut your service costs by over 70% in some cases. Email interaction costs run 2.50 to 6.00 where a social interaction can cost less than 1.00.
4. Keep up with how people are paying. Mobile wallets, PayPal, chip enabled cards, find out what your customers want via social media and cater to them. They are likely to recommend your business more if they can pay the way they want to.

THE CREDIT CARD WARNING!

With the shift to EMV chip technology, the credit card processing news has been awash with details of the latest payment system technology. The directive by Credit Card companies warning that if merchants had not made the switch to EMV capable systems by October 1, 2015, they would be liable for any fraud that occurred, as a result, has plagued merchants who are yet to make the change. This directive left merchants scrambling as trying to either comply or take the risk of shouldering the burden of credit card fraud. Since accepting cash only is out of the question due the low volume of sales, merchants have been forced to use credit card processors to smooth the way in transitioning to EMV. Else, to perform a cost-benefit analysis in cases where the merchant has been unable to comply due to financial constraints. However, the latter has been rather unsuccessful because of lack of credit card fraud reports that are crucial in performing an analysis.

Most credit card processor agrees that merchants who do not make the move to EMV are more likely to attract fraudsters and should the merchant fall prey to fraud, they face millions in liability. Due to the expected decrease in card present fraud and anticipation in an increase in card not present fraud, the credit card processing news have also been dominated by news of online fraud preventative measures. As a merchant, choosing the best credit card processor is imperative in securing your business and giving customers a great user experience in their transactions. What defines a great credit card processor? The card processing company should be able to offer you customized solutions targeted specifically at your small, medium or large business’s needs. It should give you leeway in deciding how to accept credit card, fit your budget’s requirements and also provide support and fraud preventative measures and systems in case you decide to take your business online. This will enable you to gain from your credit card processor and learn how to protect your business from online and new identity fraud expected to see a rise. New identity fraud refers to fraud where the fraudster creates a fake account online by using real information about a customer.

Apart from informative news, the credit card processing industry has also experienced controversies. The latest bulls to lock horns are Walmart and Visa. Walmart filed a suit accusing Visa of requiring the retailer to accept signature verification rather than PIN. According to USA Today, the retailer says that the method is not only insecure but is also advocated by Visa as a way of making more money in its payment processing procedures. While chip-and-pin exists and offer more security, it is possible to verify through signatures and swiping in cases where a retailer does not have an EMV capable payment processing system.

Since many consumers nowadays prefer plastic cards to the cash processing services, credit cards have become a standard requirement for new businesses. However, some companies avoid establishing merchant processing services due to the lack of information. That’s why it’s important to inform the representatives of the companies about the value that the credit card processing brings to the business. Once they learn about the sales increase and ease of use of the credit cards, they opt for it, as a rule.

Provide the traders with brochures, sales sheets that describe the service and merchant processing services reviews.

Educate the merchant about how merchant processing services work, providing information on the application process, what happens when a card is swiped or entered online, what is the merchant account number, and how the merchant will receive cash from the sale.

Explain all the costs of the service, including transaction-based fees, chargeback fees, monthly statement and gateway fees. Give information about all the possible costs for the customer to know what to expect.

Ask your dealer about the estimated monthly sales volume, as it can make a difference when defining the fees to be paid.

Cite the merchant processing services reviews and statistics. Tell them about sales that a merchant can simply lose by failing to offer credit cards as a payment method. Ask the dealer how many times has he lost sales just because the client found out that credit cards were not accepted. (This may be a rhetorical question – the point is to make the trader realise that the opportunity was lost.)

Ask the dealer to complete your merchant processing services application. Explain how much time does the approval process take to move forward. Find out what type of terminal does the customer want to get and if he needs the credit card swipe.

Send the customer his new merchant account number, access codes and other account details via e-mail or regular mail.

Help the customer to configure the terminal (if necessary), log into the system, and input the merchant account number and the customer’s website, in case the account was created as a gateway for online payments.

There are many reasons for the merchants to accept credit cards in their businesses, and very few not to do so. Of course, it’s not free and there are costs to be paid to have the merchants processing service as a method of payment. But these costs are further compensated through new sales and higher profits. It is a real buying power that merchants can’t ignore. Providing the credit card payment opportunity to customers as an easy and convenient form of payment requires a much less cost than, actually, losing a sale because of the its absence.

In addition, customers who have credit cards tend to spend more than those who use checks or cash. And also, according to the merchant processing services reviews, they tend to buy more often.

When a customer takes a decision to purchase something, he’s much more likely to buy more products and services, once the credit card payment service is available.