September 8th, 2014 by Elma Jane
One of the greatest mistake any merchants can do is deciding to lease or rent a credit card terminal rather than getting one for FREE. While the practice of leasing has declined in recent years in the US it is all they are doing in Canada whether the merchant is renting from a bank or leasing from a sales rep. In both the US and Canada some sales reps will still strive and persuade you that leasing is the perfect choice for you. You’re not obliged to pay any cash up front, or You’re assured a substitute terminal if yours breaks. Those selling statements may sound decent, but they’re not. A terminal lease will end up costing you hundreds, if not thousands of dollars more than what it’s worth. With the fees you’ll end up disbursing to lease a terminal, you could buy that same terminal in a matter of months. If you lease a terminal you could also be forced to buy equipment insurance, which is an additional expense. You may even have to give back the terminal at the end of your lease!
Why Purchasing a Credit Card Terminal is a Good Choice
A terminal lease brings with it a 48 month lease contract. That is a lengthy time to be giving for a terminal that doesn’t cost more than $300 today. Why not just buy one entirely? The cost of the purchase is absolutely tax deductible. Even if you can’t come up with the money to pay cash for your terminal, you can just put it on a business credit card. The interest given is still tax deductible, and let’s says you have a 19 percent credit card rate, if you pay the same amount of $/month toward your credit card balance that you would have paid toward your lease, you’ll have the terminal paid off in less than a year. That’s a savings that can be better channelled into budding and growing your company.
FREE Credit Card Terminal
For those of you, who feels that because of the ever changing technology, they do not want to continue buying new terminals, there are FREE Terminals offers all across Canada. So, with your FREE terminals, there is no out of pocket set up expense and your current processing rate can be the same or reduced significantly. If your terminal breaks or if there is a better technology that develops, the company automatically ships to you at no charge an upgraded terminal. So, if you can’t buy one, see if your credit card processor will give you one for FREE.
If you’re stuck in a lease, you most likely won’t able to end the contract. A lease term is usually 48 months, so you’ll have to look up when that term terminates before you can leave without a consequence. As an alternative, do your own research and analyze the total expense of leasing vs. purchasing. Better yet, strongly consider the benefits of not having to worry about anything, at one point is that FREE terminal usually has $25 minimum expense to the merchant. Mom taught you there was no free lunch didn’t she? If you decide to return the FREE terminal, you may find a RETURN EQUIPMENT FEE or an EARLY RETURN FEE of that FREE EQUIPMENT.
Posted in Best Practices for Merchants, Credit Card Reader Terminal Tagged with: bank, card, cash, credit, credit card processor, credit card terminal, credit-card, fees, Merchant's, processor, tax, terminal
September 4th, 2014 by Elma Jane
EMV, which stands for Europay, MasterCard and Visa, and is slated to be mandated across the United States starting in October 2015 and automated fuel dispensers have until October 2017 to comply. Unlike magnetic swipe cards, EMV chip cards encrypt data and authenticate communication between the card and card reader. Additionally, chip card user is prompted for a PIN for authentication.
Why are those dates important? Companies lose $5.33 billion to fraud today, with card issuers and merchants incurring 63 and 37 percent of these losses, respectively. Under the EMV mandate, merchants who do not process chip cards will bear the burden of the issuer loss. By accepting chip card transactions, merchants and issuers should see a reduction in fraud.
Overcoming Barriers to EMV Adoption
Given the significant barriers to EMV adoption, it may be tempting for merchants to meet minimum requirements for accepting EMV payments. However, medium to large retailers should also consider the bigger picture of customer security and peace of mind.
Some key critical success factors for a payment initiative of this size include:
Business Continuity Architecture: As with all payment systems, it is imperative to have the EMV system running at all times. The solution should preferably have Active-Active architecture across multiple data centers and have a low Recovery Point Objective (the point in time to which the systems and data must be recovered after an outage).
Cost Benefit Analysis: Take a top down approach and decide accordingly on the scope of the analysis. This will ensure that decisions on scope are made on basis of quantitative data and not just qualitative arguments.
Phased Approach: To overcome time or cost overage in a project of this scope and complexity, retailers should try using an iterative approach for development. The rollout can be divided into multiple releases of six to seven months, which will provide the opportunity to review, capture lessons learnt, and improve subsequent releases.
Proactive Monitoring Alerts: Considering the criticality of business function carried out by EMV, tokenization and payment gateway, a vigorous supervising environment must be defined to perform proactive and reactive monitoring. It should take into consideration the monitoring targets, tools, scope and methods. This will provide advance visibility to the failure points and better ensuring maximum system availability.
Resilience Testing: Typically in a software project, the testing is limited to the unit, integration, performance and user acceptance. However, due to the critical nature of the applications and systems involved, robust resiliency testing is vital. This will ensure that there are no single points of failure and the system remains available when running in error conditions.
Stakeholder Identification: This is a key step to ensure that you have varied perspectives from all departments and their support. It will keep your organization from being blindsided and reduce the risk of disagreements in later stages of the program. Key stakeholders should include Store Operations, Card Accounting, Loss Prevention, Contact Center and IT & Data Security.
Organizations should adopt a five step approach to implement a secure, robust and industry-leading payment solution:
Encryption – Point to point encryption will ensure card data is secure and encrypted from the point of capture to the processor. Usually, merchants use data encryption that is not point to point, rendering their organization vulnerable to data breaches. Software encryption is the most common form of encryption, as it is easily installed and quires little or no hardware upgrades; however, it is less secure, may expose encryption keys, and is prone to memory scanning attacks. Hardware encryption is considered more secure but requires more costly terminal upgrades. Hardware encryption is designed to self-destruct the keys if tampered, but is not well-defined as very limited headway has been made in this space.
Tokenization – Build a Card Data Environment (CDE) that will host a centralized card data storage solution. Only limited applications with firewall access and capability to mutually authenticate via certificates can access CDE and receive card data. The rest of the applications will have tokens which are random numbers. This architecture will ease the merchant’s burden with existing and emerging PCI Data Security Standards.
Payment Gateway – Perform a risk assessment on the current payment gateway and identify gaps in functionality, manageability, compliance, scalability, speed to market and best practices. Determine the alternatives to mitigate the risks. Some of the important aspects of a leading payment gateway solution are support for all forms of credit, debit, gift cards and check transactions. Its ability to work with any acquirer, in-built encryption abilities, support for settlement and reconciliation must also be kept into consideration.
Settlement, Funding and Reconciliation – A workflow-based system to handle chargebacks and the automation of chargeback processing will greatly reduce labor-intensive work and enhance the quality of data used for settlement and reconciliation. Upgrades to the existing receipt retrieval system may be needed.
Card fraud is on the rise in the U.S., and merchants are the primary target for stealing information. With the EMV deadline just over a year away, the responsible retailer must take steps to prepare now. Although EMV implementation might seem overwhelming to merchants, they should start their journey to secure payments rather than wait for a looming deadline. Solutions such as data encryption and tokenization should be used in combination with EMV to implement a robust payment solution to better protect merchants against fraud. By proactively adopting EMV payment solutions, merchants can stay ahead of the regulatory curve and better protect their customers from fraud.
Posted in Best Practices for Merchants, Credit Card Security, EMV EuroPay MasterCard Visa, Payment Card Industry PCI Security, Visa MasterCard American Express Tagged with: authentication, automation, card, card data, Card Data Environment, card fraud, card issuers, card transactions, CDE, chargeback, chargeback processing, check, check transactions, chip, chip cards, credit, customer, customer security, data, data breaches, data encryption, data security, debit, EMV, emv chip cards, EuroPay, fraud, gateway, Gift Cards, host, integration, magnetic swipe cards, MasterCard, Merchant's, payment, payment gateway, payment solution, payment systems, PCI, PCI Data Security Standards, PIN, processor, retailers, Security, software, swipe, terminal, tokenization, tools, visa
June 5th, 2014 by Elma Jane
The days of salespeople peddling point of sale terminals by simply pulling hardware out of a box are numbered. That model is being replaced by integrated payments from software developers who add payment capabilities to applications that run at the point of sale, in the back office or on mobile devices.
Integrated payments are becoming common in the restaurant industry, where systems are developed to combine payment acceptance with the ability to manage orders, tables and food delivery. As integrated payments become more common, companies working in the payments industry will seek ways to offer marketing analytics. You tie that type of data to the payment mechanism and you can learn more about your business and your customers.
There is a place in the ecosystem for traditional payment acceptance, but today, when a retailer shops for a point of sale terminal or other business solutions, they expect payments to be part of the integrated bundle. Many of these systems are now delivered in a software-as-a-service model or through tablets, making them cost-effective for businesses of any size.
Integrated commerce includes mobile acceptance, offers, coupons and loyalty. It enables a merchant to buy a point of sale system for the physical store, website and mobile environment at the same time. Then the merchant can send out offers and begin running a loyalty program, while accepting NFC transactions all at once. Merchants can also review transactions from all channels directly from their offices to monitor against data breaches. With those integrated services becoming more readily available for merchants, it is not surprising that the topic comes up when executives discuss their company’s goals.
Relationships with merchants through integrated payments tend to be sticky because it is an embedded solution. You tend to get better pricing because it’s not necessarily an acquiring decision but a POS software/hardware decision and acquiring is part of that package. Payments as a service will be an important global product, selling a terminal now means selling data security, warranty and service, and numerous merchant tools.
Posted in Best Practices for Merchants, Credit Card Reader Terminal, Point of Sale Tagged with: breaches, coupons and loyalty, data, data breaches, data security, global product, integrated bundle, Integrated commerce, integrated payments, integrated services, loyalty program, marketing analytics, merchant, merchant tools, mobile, Mobile Devices, NFC transactions, payment, payment mechanism, payments industry, point of sale, POS software/hardware, Security, tablets, terminal, terminals, traditional payment, warranty and service, website and mobile environment
May 7th, 2014 by Elma Jane
NTC’s New Approach On Payment Processing brings Client Satisfaction
About NTC (National Transaction Corporation)
NTC is a credit card processing company that was built uniquely. Combining leading edge technology with passion for customer service, as well as service to help customers maximize the value of their merchant service program. NTC provides sales agents, financial institutions and merchants with benefits not available from other providers, such as next day funding with a late cut-off time and unparallel graphical and web-based reporting.
To learn more visit http://www.nationaltransaction.com or call 888-996-2273.
Marking a 65% increase over 2012 NTC now serves approximately 15,000 businesses.
This rapid growth was driven by the many unique benefits that NTC offers its merchants and sales partners, ranging from best technology to superior customer service.
The major differentiators made possible by NTC’s proprietary back-end processing system is the Next Day Funding Service. Because NTC connects directly to the following: Amex, Discover, MasterCard and VISA. This way sales partners and merchants are able to avoid the middleman and go straight to the source of all their processing needs. This also means that the merchants can batch out their terminal POS with one of the latest cut-off times in the industry by as late as 11:00 pm Eastern.
NTC’s another appealing factor to new sales partners and merchants is its merchant connect online reporting system. It provides 24/7 access to graphical account information through a system that is fast easy and secure. Merchants are now able to clearly see and understand their payment processing costs. ISO’s have access to sugar CRM to make notes and see Merchant Marketing Data. Card Numbers are secure on the banks server so our faculty has credentials to access the bank servers.
Independent sales organizations (ISOs) and Merchant sales professionals continue to choose NTC as their payment processing partner to obtain these unique benefits. In addition to industry-leading technology, NTC offers its merchants and sales partners a level of personalized support that is not easily found among other credit card processing companies. They get round the clock account and terminal support. Collective hard work and determination helped NTC grow faster in the industry, resulted in more loyal ISO sales partners who are submitting more applications. Looking forward for continued success for NTC, its sales partners and merchants.
Posted in Credit card Processing, EMV EuroPay MasterCard Visa, Financial Services, Merchant Account Services News Articles, nationaltransaction.com, Point of Sale, Visa MasterCard American Express Tagged with: amex, back-end processing, bank, bank servers, card, card numbers, credit card processing, credit-card, customer service, Discover, financial institutions, marketing data, MasterCard, merchant, merchant connect, merchant service, next day funding, payment processing, POS, provider's, sales agents, sales partners, sugar CRM, terminal, visa, web-based
December 2nd, 2013 by Elma Jane
Europay, Mastercard, and Visa (EMV) standards. Considered safer and widely used across Europe and other nations, the chip-based cards require insertion of the card into a terminal for the duration of a transaction, a break here from our traditional swipe-and-buy behavior. That’s just one way in which EMV changes things here… but it’s not the only way, nor is it the most important way. By way of reminder, October 2015 is the date by which all restaurants and other merchants are due to have implemented these standards, or potentially be liable for counterfeit fraud, which primarily reflects a shift from magnetic-stripe credit cards to chip cards.
The main driver in the EMV migration is card-related financial fraud. As an example, and traditionally, card fraud in the United Kingdom has always been considerably higher than here in the States, primarily because the U.K. previously used offline card authorization as opposed to the online card methodology used here. As losses due to fraud rose steadily in Europe, despite the best efforts of global law enforcement agencies to reduce it, the pressure to find a solution built around some alternative authentication strategy mounted. From this concern, EMV was born.
Is it working? Recent statistics from the European Central Bank (ECB) revealed that, despite growing card usage, fraud in the Single Euro Payments Area (SEPA) – a mature EMV territory that includes all 28 members of the European Union, Finland, Iceland , Liechenstein, Monaco and Norway, – fell 7.6% between 2007 and 2011. This decline is underpinned by a slowdown in the growth of ATM fraud as well as a 24% drop in fraud carried out at point of sale terminals. The 2008 Canadian roll-out of Chip and PIN had a dramatic impact on fraud there. Card Skimming had accounted for losses totaling $142 million, but that figure dropped to $38.5 million in 2009, according to figures provided by the Interac Association. Some critics point to the fact that most of this decrease comes in the form of face-to-face card fraud, and that criminals merely shift their focus onto some other area that is less anti-fraud focused. Still, there are positive gains and as technologies improve, more successes are sure to follow.
Part of the reason why the U.S. not embraced EMV sooner is because our fraud problem, while significant, has typically been among the lowest rates in the world among highly developed economically mature countries. Much of that is due to the online authentication methods at work here. Here at home, our online authentication methodology permits authorizations to be done in real-time, thus thwarting a significant percentage of the fraudulent attempts at the point-of-sale, the best place to stop fraud. Our online authentication methods also incorporate multiple fraud and risk parameters as well as advanced neural networks that are ‘built-in’ to the approval process. It’s been a highly effective system that works well, when compared to most alternatives. The effectiveness of our authentication processes has helped fuel the resistance to full EMV adoption here. However, the EMV migration has gained momentum to the point where it is only a matter of time. The truth is that, despite the gains in preventing credit card fraud, and despite the best efforts of EMV’s backers to push acceptance through, global adoption of the EMV standard is still considerably less than 100%.
In England’s old offline authentication method, credit card transactions were gathered together at specific times- typically, at the end of the business day- and then batched over to the card issuers for authorization. It’s a method that gave those committing fraud a significant time lag between the transaction and the authorization, and this time lag contributed greatly to the higher levels of fraudulent activities in England. However, for Europe and for much of the rest of the world, adoption of the EMV technologies changes things dramatically, at least in terms of authentication protocols for both online and offline purchases. During an offline transaction using the EMV chip card, the payment terminal communicates with the integrated circuit chip (ICC), embedded in the payment card. This is a break from the old method which involved using telecommunications to connect with the issuing bank. The ICC / terminal connection enables real-time card authentication, cardholder verification, and payment authorization offline. Alternatively, in an online EMV transaction, the chip generates a cryptogram that is authenticated by the card issuer in real time.
Posted in Electronic Payments, EMV EuroPay MasterCard Visa, Financial Services, Near Field Communication, Payment Card Industry PCI Security, Visa MasterCard American Express Tagged with: authentication, batched, card, card authorization, card-related, chip cards, chip-based, credit cards, cryptogram, EMV, EuroPay, financial, fraud, fraudulent, icc, insertion, integrated, magnetic stripe, MasterCard, Merchant's, networks, online, payment, restaurants, Skimming, standards, swipe-and-buy, terminal, transaction, verification, visa
November 7th, 2013 by Elma Jane
Android 4.4 introduces an additional method of card emulation that does not involve a secure element, called host-based card emulation. This allows any Android application to emulate a card and talk directly to the NFC reader. This document describes how host-based card emulation (HCE) works on Android and how you can develop an app that emulates an NFC card using this technique.
Many Android-powered devices that offer NFC functionality already support NFC card emulation. In most cases, the card is emulated by a separate chip in the device, called a secure element. Many SIM cards provided by wireless carriers also contain a secure element.
Card Emulation with a Secure Element
The secure element itself performs the communication with the NFC terminal, and no Android application is involved in the transaction at all. After the transaction is complete, an Android application can query the secure element directly for the transaction status and notify the user.
When NFC card emulation is provided using a secure element, the card to be emulated is provisioned into the secure element on the device through an Android application. Then, when the user holds the device over an NFC terminal, the NFC controller in the device routes all data from the reader directly to the secure element.
Host-based Card Emulation
The NFC standards offer support for many different protocols, and there are different types of cards that can be emulated. When an NFC card is emulated using host-based card emulation, the data is routed to the host CPU on which Android applications are running directly, instead of routing the NFC protocol frames to a secure element.
Android 4.4 supports several protocols that are common in the market today. Many existing contactless cards are already based on these protocols, such as contactless payment cards. These protocols are also supported by many NFC readers in the market today, including Android NFC devices functioning as readers themselves. This allows you to build and deploy an end-to-end NFC solution around HCE using only Android-powered devices.
Posted in Electronic Payments, Mobile Payments, Near Field Communication, Smartphone Tagged with: 4.4, Android, app, card, cards, communication, contactless, controller, cpu, data, emulation, HCE, host, nfc, notify, payments, protocols, query, reader, routes, secure element, sim, status, terminal
October 28th, 2013 by Elma Jane
With banks and shops starting to let customers pay by tapping their smart phones on terminals in stores, the future of plastic credit cards is looking shaky.
MasterCard, which has teamed with Coles and CommBank on these ventures, yesterday said Australians were rapidly embracing contactless payments using PayPass and rival Visa’s payWave. At Coles, six out of 10 MasterCard and Visa payments were contactless.
MasterCard head of market development and innovation for Australasia said three out of 10 MasterCard terminal payments were contactless and there were now more than 175,000 terminals nationwide that could accept them. More than 10 million MasterCards in Australia could make contactless payments.
An EMV (Europay, MasterCard and Visa) standard meant all terminals were capable of handling different brands of contactless payments.
The first stage of the contactless payments or “tap and go” revolution began with Visa payWave and MasterCard PayPass in Australia and the first institution to make contactless payments available locally was the Commonwealth Bank in 2006.
The next stage is to use smartphones rather than just plastic cards for contactless payments. Customers still use their Visa and MasterCard accounts, but the transaction is effected using a Near Field Communication sticker placed on the back of the phone, or an embedded, secure NFC element inside modern Android smartphones.
In Europe, NFC-enabled watches, wristbands, key rings and fobs also were being used for contactless payments and there was no reason this couldn’t happen here.
Visa said it had made a “significant investment” in a mobile NFC ecosystem.
“Visa is working closely with partners like Samsung, Vodafone and Optus on a range of mobile payment solutions that use the secure element and prepaid SIM models.”
CommBank, which previously enabled contactless payments from an iPhone housed in a special case, last week said it would let customers pay directly from their Apple phone using an NFC sticker, and from newer Android phones with embedded secure NFC technology.
The new facility, to be rolled out in the current financial year, is part of a revamp of the bank’s smartphones apps.
Coles said contactless payments had increased in the past year by more than 70 per cent while CommBank’s volume of contactless payments had increased six fold in 12 months. Westpac said it was piloting an Android mobile contactless payment application and was also investigating smartwatch payments.
“We also believe that the next big trend after the rise of mobiles and NFC in Australia will be mobile checkouts, where shoppers purchase products and have them delivered within two or three clicks,” a spokeswoman said, and the moves were “as big a market shift as we’ve ever seen”.
Coles also announced a trial of its own contactless payments technology using NFC stickers. Funds would be drawn from Coles Rewards MasterCards. Some 5000 mobile phone tags would be issued in a trial.
ANZ said it was continuing its trial of a mobile wallet for Android phones begun last year, ahead of making the solution available to customers.
“Our NFC pilot with Samsung and Optus is tracking well and we’re also investigating other payment options such as QR codes,” an ANZ spokesman said.
“Given the fragmentation of the market, we will continue to monitor developments before finalising how we will bring a viable mobile wallet solution for our customers to market.”
St George Bank chief information officer said his bank planned to have a contactless phone payments solution in the market “sometime in 2014”.
The bank has previously been reported to be looking at payments via the Pebble and Samsung smart watches.
National Australia Bank, which unveiled its peer-to-peer payments app, NAB Flik, last month, said it was watching how the contactless payments market developed with “less focus on being first to market and more focus on being best in market.”
The Australian reported last month that Apple and PayPal were exploring an alternative to NFC-enabled contactless payments called iBeacons. When you pass close to a store in a shopping centre, a beacon will detect your phone’s presence and automatically alert you to signature items for sale and specials, or offer other information to lure you inside, and process payments.
CommBank last week told The Australian it was looking at iBeacons technology.
Posted in Credit card Processing, Electronic Payments, EMV EuroPay MasterCard Visa, Near Field Communication, Visa MasterCard American Express Tagged with: accounts, Android, banks, checkouts, contactless, embedded, EMV, EuroPay, fobs, Iphone, MasterCard, mobile, mobile wallet, Near Field Communication, nfc, optus, payments, paypass, paywave, phone, plastic credit cards, prepaid, process payments, qr codes, Samsung, secure, shops, sim, smart phones, Smartphones, smartwatch, sticker, store's, Tags, tap and go, tapping, terminal, terminals, transaction, visa's, vodafone
October 21st, 2013 by Elma Jane
Good time for merchants to start noting how their provider is handling card company fee changes as well as any future rate and fee changes, especially if your contract will expire in 2014.
October 2013 Rate and Fee Increase Notices
Visa, MasterCard, and Discover Credit card companies generally make rate and fee changes in the April and October time frame, although they have also made changes at other times of the year. Inevitably, some banks and merchant account providers seem to take advantage of the card company changes by increasing or adding their own mark-ups and by pointing too much of the blame at the card companies for the increases. This time around isn’t much different than others and merchants have sent me some rate and fee increase notices that go well beyond any card company changes.
In understanding how your provider is handling the latest card company changes, keep in mind that there are two important changes for October 2013:
Discover introduced a .25 cent increase to all transactions.
MasterCard introduced a .25 cent increase to certain transactions.
Below are two examples of recent notices on the October changes. Understanding the above .25 cent changes, how would you rate these providers?
Notice 1: 0.02 Percent + $0.02 Increase
“MasterCard, Visa and Discover typically evaluate the Interchange rates and fees twice per year most often in April and October. Based on recent changes as well as analysis from other network providers and vendors, the following changes to your merchant account are being implemented and will be reflected in your merchant statements for transactions processed beginning in October:
Interchange Plus Merchants: Percentage charged in excess of Interchange will increase by 2/100ths of a percent; and
Transactions Fees for all authorized transactions will increase by $0.02/transaction.”
Tiered Pricing Merchants: Qualified Rate for Visa, MasterCard and Discover will increase 2/100th of a percent;
Notice 2: 0.40 Percent Increase
“Effective October 1, 2013, the discount rates charged for your Visa, MasterCard, and Discover (as applicable) credit card and non-PIN (signature) debit card transactions will increase by 0.400%. We have increased these charges based on a variety of factors, including recent Card Organization changes and our own pricing considerations. This change will appear beginning with your October month-end statement you will receive in November.”
Your Statements Now go back to the statements you received in August and September or any notices you received via mail and read the notice your provider posted for these changes. Did the provider announce the actual change or did it state something quite differently? If it’s the latter, make sure it adjusts pricing accordingly. Also, make sure you monitor your rates, fees, and notices going forward to determine the best long-term course of action. If the provider needs you to extend your contract to correct its overcharges, then there are probably bigger pricing issues and more assertive action required by you to investigate your overall processing cost.
EMV Capable Terminals
To reduce fraud in the U.S., the card companies are introducing cards that have a chip as well as the current magnetic strip. Chip cards are prevalent outside the U.S. and EMV — Europay, MasterCard, and Visa — established the technical standards for processing them.
Brick-and-mortar merchants should understand about EMV.
Brick-and-mortar merchants should have equipment capable of processing EMV chip card transactions by October 2015 as certain fraud liability will shift from the bank that issued the card to the merchant. The equipment may be a terminal or a chip card reader attached to the terminal or POS system.
Certain credit card transactions will require a PIN number instead of a signature similar to PIN debit transactions today. Also, like the current PIN debit devices, each chip reader will need to be encrypted and the encryption code is processor specific. Therefore, if a merchant has an encrypted device, changing processors may be more costly as the encryption cannot simply be downloaded over the phone or Internet as is done with terminal reprogramming now. Instead, the encrypted device will need to go back to the provider for encryption or swapped with an encrypted device or a new encrypted device may be needed.
“EMV capable” can mean very little. In fact, if you have purchased or leased an “EMV capable” terminal it may simply mean that it has the slot or contactless connection to place the chip card and the terminal may have the capability to eventually be encrypted to actually process chip cards. However, the cost and time required to do so could be prohibited.
However, merchants should be planning to have equipment capable of processing chip card by October 2015. In fact, they should be planning to have the equipment capable of processing chip cards well ahead of the October 2015 — perhaps as early as late 2014, to ensure receiving it in time.
If a merchant’s existing terminal fails or is no longer supported, the merchant should inquire about EMV terminals as a replacement. However, ask if it comes fully encrypted and capable of actually processing an EMV transaction or if it will need the encryption later. Right now, the answer is likely that the terminal will need encryption later. If so, the merchant should obtain the time frame, process, and cost for enabling the terminal to actually process chip cards. This should be in writing. Remember, new terminals cost the provider around $150 to $250 and the encryption may be an extra $25 to $50.
Make sure you are comfortable with your provider and have negotiated the best processing cost before changing to encrypted EMV equipment.
Merchants do not need EMV terminals today and very few providers actually have terminals that can process an EMV chip card transaction right now.
Posted in Credit card Processing, Electronic Payments, EMV EuroPay MasterCard Visa, Visa MasterCard American Express Tagged with: authorized, banks, chip card, contactless, cost, credit-card, debit, devices, Discover, EMV, encrypted, fee, increase, interchange, MasterCard, merchant account providers, network, overcharges, percent, percentage, PIN, POS, pricing, processor, prohibited, rate, rate and fee, statements, terminal, transactions, visa
October 15th, 2013 by Elma Jane
What is an electronic check?
Electronic Check also known as Echeck – is an electronic version of a Paper Check. Electronic Checks allow merchants to convert paper check payments made by customers to electronic payments that are processed through the (ACH) Automated Clearing House Network. It’s a fast, efficient, and secure way to process check payments.
Because of the many benefits and increased security methods that electronic checks offer, this method of payment is quickly growing in popularity. In 2007, electronic check conversion increased by 30%, with more than 3.1 billion paper checks converted to echecks through in-store transactions. Familiarizing yourself with how electronic checks work, the benefits and security features they offer, and how you can get started with electronic check conversion will save you time and money and help you provide greater protection for your business and your customers.
How it works:
Electronic check conversion is a simple method of processing payments, and the changes to how you do business are minimal. One of this method’s greatest advantages is that you can electronically submit checks instead of having to physically take them to the bank, saving you time and increasing employee efficiency.
When you receive a paper check payment from your customer, you will run the check through an electronic scanner system supplied by your merchant service provider like National Transaction Corporation (NTC). This virtual terminal captures the customer’s banking information and payment amount written on the check. The information is transferred electronically via the Federal Reserve Bank’s ACH Network, which takes the funds from your customer’s account and deposits them to yours.
Once the echeck has been processed and approved, the virtual terminal will instantly print a receipt for the customer to sign and keep. Employees should mark the paper check as “void” and return it to the customer. Your merchant transactions will be available online for viewing with customized detailed reporting, which may vary in features depending on the merchant service provider you choose.
Using electronic check conversion to process your customers’ payments holds many benefits over paper checks:
Benefits:
1. Received Funds Sooner. Businesses that use electronic check conversion have funds deposited almost twice as fast as those using the traditional check processing method, with billing companies often receiving payments within one day.
2. Reduced Fraud and Fewer Errors. Echecks are processed using an automated system, which cuts down the number of people who must handle the check, reducing the potential for error and fraud. Merchant service providers (NTC) also maintain, monitor, and check files against negative account databases that store information about individuals or companies that have past records of fraud to help decrease fraudulent activity.
3. Reduced Processing Costs. In general, the cost to process an echeck is substantially less than that of paper check processing or credit card transactions. Echecks require less manpower to process and eliminate incidental costs such as deposit and transaction fees that accompany paper checks. With Echecks, you can save up to 60% in processing fees.
4. Sales Increase. If your business didn’t accept paper checks in the past, you can expand the payment options available to your customers and increase sales by offering echecks. If you are converting from accepting paper checks to echecks, you can still expand your customer base by being able to accept international and
out-of-state checks without the worry of fraud. Echecks require account validation and customer authentication processes that identify bad checks within seconds.
5. Safe, Simple and Smart. Electronic check conversion is easy to set up and relies on the ACH Network for processing, the same reliable and trusted funds transfer system that handles Direct Deposit and Direct Payment. Plus, echecks are a smart choice for the environment, helping to reduce more than 67.4 million gallons of fuel used and 3.6 million tons of greenhouse gas emissions created by transporting paper checks.
Increase security with electronic checks – Electronic check conversion leverages the latest information protection features such as encryption and message authentication. Because of this, many retail merchants, merchant service providers, and financial institutions consider it to be one of the most secure payment methods in the electronic payment processing industry.
Authentication – Merchants must verify that the person providing the checking account information has the authority to use that checking account. There are a number of authentication services and products available to merchants, including:
Digital Signatures or Digital Certificates are a way of Encrypting information that gives the receiver a more reliable indication that the information was sent by the claimed sender. They are used by programs on the Internet to confirm the identity of a customer to concerned third parties, serving a similar purpose as a handwritten signature. Digital Signatures cannot be easily tampered with or imitated and are easily transportable, thereby making them a reliable method for verifying identity when implemented correctly. Digital Signatures are often used to implement Electronic Signatures, a broader term that refers to any Electronic Data that carries the intent of a signature.
Duplicate Detection and prevention is another way to reduce fraudulent activities. Financial institutions have software and operational controls in place to prevent duplication of the scanned electronic representations of customer checks.
Encryption The ACH Network automatically encrypts messages using 128-bit encryption and a secure sockets layer (SSL).
Public Key Cryptography is an Encryption/Decryption Security Method that uses one key to Encrypt a sent message and another to Decrypt it. With Electronic Check Conversion, the Private Key is a secret mathematical calculation used to create the digital signature on the Echeck, and the Public Key is the corresponding key given to anyone who needs to verify that the sender signed the echeck and that the electronic transfer has not been tampered with. Public Key Cryptography is another way to ensure authenticity of the Electronic Transfer of Funds.
What is the (ACH) Automated Clearing House Network?
The Automated Clearing House (ACH) Network is a funds distribution system that moves funds electronically from one entity to another. This highly reliable and efficient nationwide electronic network is governed by the rules established by the National Automated Clearing House Association (NACHA) and the Federal Reserve (Fed). The ACH payment system also handles debit card transactions; direct deposits of payroll, Social Security, and other government benefits; direct debit payments; and business-to-business payments.
How to get started with Echeck:
Useful advice to help make the implementation of electronic check conversion at your business run smoothly:
Choose a processing company that is well established in the market. While a competitive pricing package may also be of importance, having a processor that is reliable with a good reputation is essential.
Look for a processor that enables you to easily align your current business processes with your new electronic processing system. Ensure that you can easily export customer data and smoothly integrate the electronic payment processing system with your business management software.
Notify your customers that your business will begin using electronic check conversion to process payments. Federal rules require you to post a notification about this change in practice as well as to give your customers a takeaway copy of the notification. You must also provide customers a telephone number to request more information about electronic check conversion.
Posted in Electronic Check Services, Electronic Payments, Financial Services Tagged with: ach, authentication, automated clearing house, bank, check, checks, conversion, deposited, digital, echeck, electronic, electronically, encryption, fees, in-store, market, merchant, merchant service provider, money, online, payments, process, Processing, reporting, scanner, Security, signature, submit, terminal, transactions, virtual
October 3rd, 2013 by Elma Jane
Here’s how typical credit card transaction works:
When a consumer pays with a credit card, the merchant sends the details of the transaction along with the credit card information to the merchant’s bank. The merchant’s bank forwards the information to the cardholder’s bank for approval. If approved, the cardholder’s bank sends the required amount to the merchant’s bank, minus the merchant discount rate. The credit card companies don’t receive any revenue directly from interchange rates. Instead they make their money by charging the banks fees for networks, transactions and other kinds of services.
Up until April 2008, interchange rates were simple and inflexible. At that point, the company decided to move to a more dynamic system.
Interchange rates now vary from card to card, depending on the types of services and incentives offered. Typically, premium cards, which come with rewards for things like travel, cost merchants more to process. The rates also vary by type of transaction, and even by type of retailer. At times, the card companies have, for example, set special rates for grocery and gas retailers in a bid to boost credit-card use in locations where cash and debit traditionally dominated. The card companies have also introduced a growing number of premium and even super-premium cards that cost merchants more to process. The cards appeal to consumers because they contain a number of attractive incentives, such as travel and other rewards. The changes in the rate structure followed a change in the credit card companies’ business model in the mid 2000s.
Visa and MasterCard evolved from private associations owned mainly by the banks they serviced to publicly traded, profit-driven entities beholden to a wide range of shareholders. Merchants say the fees they pay to accept credit cards are rising as a result and have become increasingly unpredictable. Critics of the credit card companies say the merchant is a powerless middleman in a system that entices consumers to use their cards and banks to reap the benefits.
The credit card companies say the system benefits everyone, including merchants, by providing a rapid, secure form of payment.
Every time you use your credit card to make a purchase, the merchant pays what is called the “merchant discount fee.” The merchant discount fee is calculated as a percentage of the good or service purchased. It can range from 1.5 per cent to 3 per cent. On a $100 item, for example, the merchant could pay a fee of between $1.50 and $3.The merchant discount fee covers a number of things, such as terminal rentals, fraud protection and transaction slips. But the biggest component of it is based on the interchange rate, which is set by the credit card companies.
In a complicated twist, the credit card companies don’t make any money from the interchange rate. The banks do. The interchange rate is what makes the credit card system work. This rate ensures the banks have a financial incentive to issue and accept credit cards.
Posted in Credit card Processing, Electronic Payments, Merchant Services Account, Visa MasterCard American Express Tagged with: associations, bank, card, cardholder, charging, credit, credit-card, discount rate, dynamic, fees, financial, fraud, interchange, merchant, Merchant's, networks, payment, process, protection, Rates, rentals, secure, services, terminal, transaction, travel
