Sunday, July 15, 2012

MasterCard's Excessive Chargeback Program

At UniBul we can work with high-chargeback businesses, but here I will explain exactly what that term refers to. MasterCard considers a chargeback level to be excessive if in each of two consecutive calendar months (the "trigger months"), the merchant has a minimum chargeback-to-transaction ratio (CTR) of 100 basis points and at least 50 chargebacks in each month. This designation is maintained until the merchant's CTR is below 100 basis points for two consecutive months. The CTR is defined as the number of chargebacks received by the credit card merchant processor for a merchant in a calendar month divided by the number of the merchant’s sales transactions in the preceding month acquired by that processor. (A CTR of 1% equals 100 basis points.)

Credit card processing companies are responsible for monitoring their merchants' chargeback levels, calculating the CTR for each calendar month and reporting to MasterCard any merchant that is a Chargeback-Monitored Merchant (CMM) or an Excessive Chargeback Merchant (ECM). In addition, credit card payment processing service providers must submit separate reports for each of their Chargeback-Monitored Merchants (CMM). A merchant qualifies as a CMM if it has a CTR in excess of 50 basis points and at least 50 chargebacks in a calendar month.

Within 30 days of the end of the second trigger month, and on a monthly basis thereafter, the credit card processing service provider must submit a separate ECM report for each of its ECMs (in lieu of a CMM report) until that ECM’s CTR is below 100 basis points for two consecutive months. The acquirer also must provide a copy of the ECM report and these ECP Standards to the specific ECM merchant. MasterCard will assess the acquirer a reporting fee of $300 for each ECM report submitted.

In addition to any applicable assessments for CMM reports, ECM reports, or late report submissions, MasterCard may assess the merchant account processor for issuer reimbursement fees and violation assessments for excessive chargebacks arising from an ECM. The issuer reimbursement fees and assessments are applied in each calendar month that the ECM exceeds a CTR of 100 basis points, including the two trigger months. The reimbursement fees are calculated as the number of chargebacks that account for the CTR above 100 basis points are multiplied by $25. The violation assessment is calculated as the issuer reimbursement fees are multiplied by the CTR (expressed as basis points) and divided by 100.

It is clear that merchant account service providers have a powerful incentive to rigorously monitor their merchants' chargeback levels. Typically, if your chargeback levels exceed a CTR rate of 100 basis points for more than two consecutive months, your small business merchant account will be suspended.

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Sunday, July 8, 2012

Billing Descriptor

The way your company's name appears on your customer's credit card statement is called a billing descriptor. In order to qualify for the lower interchange rate offered to merchants operating in a card-not-present credit card payment processing environment (Visa: CPS; MasterCard: Merit 1), the company name and a customer service number must appear in this field. If your company offers a single product or service this descriptor would be sufficient. For example:

ABC SERVICES 800-111-2345.

This is the default billing descriptor. Your small business merchant accounts provider will set it up for you. There is also the soft billing descriptor which allows the description field in the cardholder’s statement to be modified to include a more detailed description of the transaction. The merchant’s name is usually truncated to three letters plus an asterisk followed by a short description of the service or product that your company provides. Keep in mind that this field is usually limited to 25 characters plus the phone number. Be sure to check with your credit card merchant processor to see if they support this feature and for their format requirements. For example:

ABC* Instant Oil Change 800-111-2345.

The importance of using the correct billing descriptor in your merchant account processing activity cannot be overstated. If your customer does not recognize your company's name on his or her credit card statement, the transaction may be disputed and lead to a chargeback. Consult with your credit card processing account provider on the most appropriate way to set it up.

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Sunday, July 1, 2012

Are merchants responsible for fraudulent orders placed with them?

Unfortunately, in the case of a fraudulent transaction, the merchant it was placed with bears certain financial responsibility (this is an especially big problem for certain industries). The merchant is just as much a victim as the cardholder whose card information was used to place the order is, yet there are certain transaction fees that have been incurred in processing the payment.

When you set up a small business merchant account, you agree to pay certain credit card payment processing fees and charges on every transaction that you accept. It is important to understand that payments are not actually at your processor until you submit your daily batch at the end of your day. The reason it is important is that it gives you some extra time to try and verify the validity of every payment that you accepted that day. Your credit card processing company will provide you with a set of tools to help you fight fraud. They have a financial incentive to minimize fraud, just as you do. If you employ these tools, along with CVV2 and AVS verification services, you will be sure to reduce and possibly, eliminate fraud.

It is a good idea that you establish a set of credit card transaction processing best practices to fight fraud. Make it a point of always using AVS but try not to use voice authorizations because they bypass the credit card merchant processor’s system and cannot be used as supporting evidence in chargeback representments. Also, personally check a new customer's payment details and make sure there is nothing suspicious. Often, common sense is your most effective fraud protection asset.

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Sunday, June 24, 2012

Is a business checking account required in opening a merchant account?

When applying for small business merchant accounts with UniBul, applicants are asked for a checking account. Credit card processing companies need a bank account so that they can deposit the funds into it. It does not make a difference whether it is a business or a personal checking account, the money will go in either way.

So from a credit card processing perspective, there is no need to open a business account. You still might want to consider doing so, however, in order to separate your personal from your business finances. A separate account will allow you to easily keep track on your merchant services credit card processing activity and, come tax return time, to quickly find the information that you need. Moreover, using a check with the name of your business on it will give you a more professional look.

Although opening a business bank account is optional, there are compelling reasons to do it. Unless it is more a hobby than a business, your company will benefit from it.

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Thursday, June 21, 2012

Can I open a US merchant account if I live abroad?

In order to open a US-based small business merchant account, your company has to have legal presence in the United States. You don't have to live in the States but your business has to have at least a subsidiary, that is incorporated in any one of 50 the states. You will also need a physical address and a domestic bank account into which your funds will be deposited.

So as you see, if a foreign business wants to open a merchant services credit card processing account in the US, it will have to be prepared to invest a certain amount to cover the legal and procedural expenses. It also will need a locally-based officer to represent the company before the US authorities.

Clearly, it is a good idea that a foreign business should consider all available credit card payment processing options before deciding to open a US merchant account. Other possibilities are a third party credit card merchant processor, such as PayPal, and an offshore credit card processing account. Both alternatives have their advantages and disadvantages and may be suitable under certain conditions.

Third party processors offer credit card processing service accounts that are easy to establish and maintain. If your card volumes are going to be low, this is probably your best choice. The processing rates that these accounts offer, however, are substantially higher than a direct merchant account's. After the break-even point, the cost of establishing a domestic account will be offset by the savings that will come with the lower credit card processing rates.

Offshore credit card processing companies provide the convenience of a direct merchant account processing solution, without the hassle of dealing with the US legal and procedural requirements. The downside, however is a substantial rate premium that you will be charged, much bigger than the premium, charged by third-party processors. Processing rates, charged by offshore companies, are more than twice higher than the ones that domestic processors charge.

UniBul can help you set up a merchant account in the U.S.

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Sunday, June 17, 2012

UniBul Merchant Services Launches New Payment Processing Program

Press Release

June,04, 2008 - UniBul Merchant Services announced today the planned launch on June, 23 of a new small business merchant accounts program for eCommerce merchants.

Evaluation of the processing statements of fifty web-based merchants showed that, as a whole, the group was excessively overcharged by their credit card processing companies. Two thirds of all merchant services credit card processing rates were higher than 2.45% per transactions. Today the same merchants should easily get rates lower than 2.20%. In addition to that, 55% of them were paying various service charges, like a monthly minimum processing fee or a customer service fee, in the range $10 - $25. Such fees should not be charged at all. The biggest issue, however, was found in the large volumes of non-qualified transactions. Non-qualified is a transaction that is processed in accordance with the rules established in the Payment Processing Agreement, signed by the merchant and the processor, but does not meet the highest standards for credit card payment processing and/or complies with some applicable security requirements, but not enough in order to be classified as qualified. The average surcharge for non-qualified transactions was 1.10% over the qualified rate. The average volume of non-qualified transactions was 55%.

To address the issue, UniBul Merchant Services has created a unique payment processing program. The eCommerce will be segmented into multiple categories and merchants will be classified into the most appropriate one. Small support teams will be created that will specialize in working with just one of these groups to ensure that they become intimately familiar with each group's characteristics. UniBul Merchant Services' new Payment Card Acceptance Best Practices Guide is developed as a manual for the support staff and the merchants they work with in implementing a set of payment acceptance procedures into the sales process. These procedures will ensure that transactions are processed in a way that is in compliance with Visa and MasterCard regulations and significantly reduce or even eliminate the resulting non-qualified surcharges. Implementing these best practices will also reduce the high levels of chargebacks to which eCommerce merchants are particularly vulnerable. There is a provision for manual credit card processing merchants as well.

The first program to be launched is designed to accommodate the specific needs of online groceries. Later this summer several other platforms will be released for a wide range of different eCommerce merchant types, including auto part dealers, flower shops, airline ticket vendors, etc.

By launching this program, UniBul Merchant Services is seeking to bring eCommerce credit card processing costs down to acceptable levels and to contribute to a sharper focus on the processes and practices that are necessary to ensure that merchants get the best out of their credit card payment processing.


UniBul Merchant Services LLC

617-861-6101, ext. 1170 - phone - email - web - blog

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Friday, June 15, 2012

What are the benefits of having a merchant account?

Small business merchant accounts require a certain effort to apply for and set up and then they have a certain maintenance cost, in the form of a monthly statement fee and, in some cases, other credit card payment processing fees and charges. Moreover, merchant services credit card processing contracts are usually for two or three years (although UniBul offers month-to-month services). So it is a legitimate question to ask what benefits you get from your credit card processing service and is it worth the investment of time to set one up.

Well, the answer is that yes, it is worth it and you should consider establishing one as soon as your processing volumes grow large enough to justify it. By that I mean that there is a break even point, different for every business, beyond which the lower processing rates, associated with credit card processing accounts, fully offset the fixed monthly fees, which are absent with third party solutions. The main benefits of having your very own retail, direct marketing or PC based credit card processing are:
  • Professional image. Every type of processing capabilities, including manual credit card processing is perceived as a sign that the business is of a certain size and it is committed to providing a complete shopping service. Actually, taking into account the strict requirements that credit card processing companies demand that applicants meet, it is true that a merchant card processing account comes with a certain level of commitment.

  • Lower processing cost. The difference in processing rates that a direct merchant account provides over a third party credit card merchant processor is significant and cannot be overstated. A comparison between an eCommerce merchant account and PayPal shows that the difference can be as high as 0.8% + $0.05 per transaction for merchants that process less than $3,000 per month.

  • Control over your account. With a third party solution, your processor has a complete control over your card payment processing activity. They can hold on to your money and even freeze your account if a suspicious activity is thought to have occurred. The direct solution gives you complete control over your account. CVV and address verification fraud prevention services help you decide whether or not a transaction is legitimate.

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Wednesday, June 13, 2012

What documents are required when applying for a merchant account?

Different credit card processing companies may ask for different documents from their applicants (UniBul is different from others as well). Yet, all merchant services credit card processing providers are registered with Visa and MasterCard and have to follow their regulations. There are certain requirements that are mandatory and I have listed them below.
  • You will need to have an incorporated business or at least a DBA-registered sole proprietorship. You can obtain a Tax ID (which is free) for your corporation or sole proprietorship but it is not required by payment processing providers. If you don't have one, you will use your SSN as a substitute.

  • A completed Merchant Application. You will need to enter your business and personal information, including SSN and to sign it. Please note that even if you have a Tax ID, you will still need to provide your SSN in the personal information section of the application.

  • A personal guarantee. Small business merchant accounts providers ask for a personal guarantee as an additional insurance against potential losses.

  • Financial statements. Unless you are a new business entity, you will have to provide your financial statements for the last three years.

  • Tax returns. Small business owners are required to provide their tax returns for the last two years.

  • A voided check. Credit card payment processing providers need your checking account information for funding purposes. This will be the account you will be getting your money deposited into.

  • Business license. If your business requires some type of permit or certificate, you will need to provide it.

  • Processing statements. If you are switching credit card processing providers, you will need to provide your payment processing services statements from the last 2 months.

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Tuesday, June 12, 2012

Assessments for Noncompliance in Account Data Compromise Events

If an account compromise was a result of a violation of MasterCard Standards regarding disclosure and securing of cardholder account and transaction data, the member bank may be subject to noncompliance assessments. MasterCard may assess up to $100,000 for each violation, with a maximum aggregate assessment of $500,000 for additional or continuing violations during any consecutive 12-month period.

If the member bank fails to comply with the procedures required in data compromise events, MasterCard may impose an additional assessment of up to $25,000 each day until the it achieves compliance. Continued, extended, or repeated noncompliance may lead to the suspension or termination of the member bank's participation in the MasterCard payment system.

In addition to the assessments listed above, MasterCard may assess all investigation and other related costs against the acquiring bank. With regard to accounts identified as potentially compromised, MasterCard may require the acquirer to reimburse affected card issuers.
  • Potential exemption from noncompliance assessments. MasterCard may exempt an acquiring bank from noncompliance assessments and investigative costs, and other related costs; and MasterCard may grant up to a 100% reduction from the card issuer reimbursement costs. MasterCard will base any exemption that may be afforded on the the circumstances, including compliance with the Payment Card Industry Data Security Standard. The factors that MasterCard will consider are the following:
    • Verification that the merchant or TPP associated with the account data compromise event was registered in accordance with MasterCard's Registration Program.
    • Proof of compliance with the Payment Card Industry Data Security Standard by the merchant or TPP associated with the account data compromise event.
    • Demonstration by the acquiring bank that the entity associated with the account data compromise event was compliant with the Payment Card Industry Data Security Standard and applicable MasterCard SDP Program requirements at the time of the applicable account data compromise event.
    • Notification to and cooperation with MasterCard and, as appropriate, law enforcement authorities.
    • Verification that the forensics examination was initiated within 72 hours of the account data compromise event and completed as soon as practical.
    • Timely receipt by MasterCard of the forensics examination findings.
    • Evidence that the account data compromise event was not foreseeable or preventable by commercially reasonable means and that, on a continuing basis, security practices were applied.

    MasterCard generally will not grant a full or partial exemption for an internal compromise, which is a compromise facilitated by persons authorized to have access to the system or process compromised.

Saturday, June 9, 2012

Is it difficult to get a merchant account?

In order to set up their credit card processing service, businesses need to go through a strict application process (we try to make it as simple as possible, but we can only go so far). Sometimes it may seam as if the credit card processing companies are being excessively demanding but they have to follow certain regulations, introduced by the Credit Card Associations (Visa and MasterCard) and their member banks. Establishing a business merchant account is not necessarily a difficult process but it may be delayed by every small omission in the application form. You will be asked to produce the following documents:
  • Sole proprietors - your tax returns for the last two years.
  • Corporations - your financial statements for the last two years.
  • A voided check for the bank account where you want your funds to be deposited.
  • If you are switching credit card payment processing providers you will have to submit your processing statements for the last three months.

In addition you will have to submit your personal information, including your SSN, and to personally guarantee your credit card processing account. Small business merchant accounts come in many shapes and forms and you may be asked for additional paperwork as well.

Be advised that if your business falls into a high-risk category, you will need a high-risk merchant account provider as not every processor will be willing to work with you. There are however certain business categories for which no US bank will underwrite a merchant account processing service. Prime examples are adult-oriented websites, third-party collection agencies, online gambling sites, etc. If you operate such a business, you will need to look for an offshore solution or a third-party processor.

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Friday, June 8, 2012

Selecting a Merchant Account Provider

There are many credit card processing companies out there and selecting the one that will offer the best solution to your needs can be challenging, to say the least. There are several factors to consider when choosing a small business merchant accounts provider, whether you are looking for a virtual, physical or a manual credit card processing solution. First and foremost, you want to be sure that you don't get overcharged. The payment processing cost consists of several components and you need to know exactly how much you will be paying for each one of them:
  • Discount rate - the amount a merchant is charged by his acquirer for processing the merchant’s transactions. It consists of a percentage fee (e.g. 2.25%) and a fixed, per transaction, charge (e.g. $0.25). For an internet or direct marketing account it should be no more than 2.20% + $0.25 per transaction. For Retail accounts it should be no more than 1.70% + $0.25 per transaction.

  • Authorization fee - another "per-transaction" fee. You should not pay more than $0.12 for any type.

  • Application and set up fee - one-time fees to apply for and set up your credit card processing service. You should NOT pay ANY set up or application fees!

  • Monthly maintenance fee - as the name suggests, it is charged monthly to keep your account on file. You should not be paying more than $10.

  • Support fee - another monthly charged for customer service. You should not pay any such fees.

  • Payment gateway fee - specific to the eCommerce industry. An eCommerce payment gateway is the service that connects your website with your processing bank and transmits transaction information between them. You will only need it if you want to let customers pay you over the web and it should not cost you more than $15 per month.
If you see any other charges for your merchant services credit card processing account, you will be well advised to look elsewhere. Also, when evaluating a new credit card processing service proposal, your prospective processors should provide you with comparison tables to make your choice a better informed one.

Other important factors you need to consider when selecting a merchant services provider are:
  • Experience - this can be a double-edged sword. On the one hand, you want to be sure that your processor will have the expertise to get the job done. On the other hand, many well established card processing companies offer substantially higher rates, justifying it exactly with their long record and the piece of mine that it brings you. You should not be overpaying just because they've been in business for a while.

  • Customer support - you will want to make sure that you will be getting knowledgeable support when you need it, because you will need it.

  • Chargeback management - chargebacks result when customers dispute transactions and can be costly and time consuming. In extreme cases, you may even lose your business merchant account. You will want to make sure that your merchant account provider has the expertise to help you reduce the level of chargeback-generating disputes. We have developed our Payment Card Acceptance Best Practices Guide to do just that.
There are other factors as well and you will need to do you complete due diligence, as selecting the right merchant payment services company will reduce your processing costs and help grow your business.

You can review our latest pricing here.

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Thursday, June 7, 2012

Regular Merchant Account vs Third-Party Processors

There are many things to consider when evaluating your payment card processing options. There are no universal solutions that would be perfect for everyone. When it comes to a choice between a direct merchant account and a third-party processor, there are several factors that come into play.

First of all, one thing should be made clear - third-party payment processing rates are substantially higher than a direct merchant account's. So the question is, if that is the case, why would anyone want to subscribe for a third-party solution? Usually the answer is very simple - because a merchant account is not an option. This is the case when any one of the following is true:
  • Your credit is exceptionally bad. A bankruptcy less than 7 years prior to the application is a good example.

  • You don't have a registered business. A direct merchant account cannot be opened under a personal name.

  • You have been blacklisted by the Associations (Visa and MasterCard). If you have been included in the Terminated Merchants list, you will never be able to open a merchant account service again.

  • Your business operates in a very high-risk area. Some businesses tend to generate higher levels of chargebacks (disputed transactions) and process credit cards at higher rates. There are several groups that are so high risk that US banks will not underwrite their payment processing accounts. Prime examples are adult-oriented websites, online gambling establishments, third-party collection agencies, etc.

  • You process low credit card volumes. Card payment processing services come with certain fixed costs which are due whether you use the account or not. You will be paying a monthly statement fee (or an equivalent) and an eCommerce gateway fee and maybe other fees as well. These fees are not usually associated with third-party processing services where you simply pay as you go. So if you will only process one or two small volume transactions per day, you will need to do the math and see if a dedicated card processing account is the way to go or you should outsource the service.

There are of course a few other factors to consider but these are the main ones. If you process sufficiently large volumes and meet the other criteria, your best option is your own business merchant account. It gives you complete control over your card payment processing and a more professional image.

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How can you accept payments outside of your office?

Today's technology allows payments to be accepted at your customer's location or anywhere else outside of your office through a wireless merchant account. There are two types of wireless service - long- and short-range. The long-range solution relies on network connectivity and is ideal for those of you who will be processing credit card transactions at different locations outside of your office, but on your premises. The short-range service comes with a main terminal, which is connected to a phone line, but the wireless device can be operated within a radius of a few hundred feet. With both solutions transactions will be processed quickly and securely. What you need to make sure is that you have network connectivity in the area where you will be using the device and that is actually the biggest issue with wireless credit card processing. These devices use the same technology that cell phones use to transmit information and are affected by the same limitations.

Another potential issue is cost. Mobile credit card processing devices are pricier than regular terminals and you will need to account for that premium when considering the service. On the other hand, using a wireless merchant account will reduce your processing costs. Because you will accept credit card payments in person and the card will be swiped through a terminal, you will be eligible for receiving the lowest processing rates, reserved for face-to-face merchants. If you have to key in the transaction information afterwards, you will pay the higher rates.

On balance, a wireless credit card processing account is the best solution for businesses that routinely accept credit card orders in a mobile environment. If such payments are more of an exception, you might be better off using the old-fashioned payment slips for now.

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Do merchant account providers check applicants' personal credit?

Yes, merchant account providers check every applicant’s personal credit history, however, your bad credit should not prevent you from getting processing services.

First of all, let me strongly advise you against adding a co-owner exclusively for the purpose of using his or her credit history during the application process. It will create more problems than it will solve. The first issue has to do with trust and for most people adding a relative or a close friend takes care of that. But what happens if something goes wrong? Unfortunately, in business things can and do go wrong more often than not and a co-owner is fully responsible for everything that happens. The potential of harming your relationship with a trusted friend/relative is enormous.

My advice is to apply for a merchant account and provide all required information. Unless you’ve had a bankruptcy during the last seven years, you should be able to obtain payment processing services. Keep in mind that, with the right processing provider, your bad credit will not affect your rates. As long as you get approved, you should get the same rates anyone else gets. The difference in your case is that you may be required to keep a reserve. Reserve is a portion of the monthly revenue from a merchant’s payment card transactions that a merchant account provider may request to hold in an escrow account as an insurance against possible loss from chargebacks and other sources. Used mainly with high-risk merchants, upon satisfactory completion of a predetermined period, reserves are returned to the merchants. In the case of a rolling reserve, a reserve is held every month for a certain period (usually six months). On the following month the first month’s reserve is released to the merchant, and then the second month’s reserve and so on until there is no longer a reserve.

To conclude, your situation is by no means desperate and does not call for desperate measures. Go ahead with the application and it might turn out that it is much easier than you feared.

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What questions should I ask when calling about a MO/TO merchant account?

There are many things you need to know when selecting a payment processing services provider. The most important issue is the payment processing costs - you certainly don't want to be overcharged. The costs are comprised of various fees and charges and I have given you a breakdown below.
  • Discount rate - the amount a merchant is charged by his acquirer for processing the merchant’s transactions. It consists of a percentage fee (e.g. 2.19%) and a fixed, per transaction, fee (e.g. $0.25). You should not agree to anything higher than 2.19% + $0.25.

  • Authorization fee - another "per-transaction" fee. You should not pay more than $0.12.

  • Application and set up fee - one-time fees to apply for and set up your merchant account. You should NOT pay ANY set up or application fees!

  • Monthly maintenance fee - as the name suggests, it is charged monthly to keep your account on file. You should not be paying more than $10.

  • Support fee - another monthly charged for customer service. You should NOT pay ANY such fees.

  • Virtual terminal fee - a virtual terminal is the application that you will open in your browser and enter the payment information as you are taking it over the phone or getting it from a form you got in the mail. It should be provided for free.

  • Payment gateway fee - an eCommerce payment gateway is the service that connects your website with your processing bank and transmits transaction information between them. You will only need it if you want to let customers pay you over the web and it should not cost you more than $15 per month.

As you can see, there are many rates to consider and this is just the beginning. Merchant account rates are only as good as your ability to process transactions in a way that is compliant with Visa and MasterCard regulations. If they are not, transactions are downgraded to "non-qualified" and processed at a substantially higher rate (on average about a full 1% higher). It is your merchant account provider's responsibility to help you get a grasp of these regulations and ensure compliance.

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Is a merchant's license required to sell over the internet from your own website?

Requirements vary by state and the best thing to do is to check with your secretary of state. Different states may or may not require a license for a particular type of business. A great resource is the U.S. Small Business Administration website. It has a lot of useful information different laws and regulations, as well as opportunities. For licenses and permits you can check here: Just scroll down and locate your state. It even allows you to search by ZIP code.

How can an international charity accept credit card payments?

To accept payments online in the US, for both commercial and non-profit entities, you will need either your own merchant account or a third-party payment processor.

Having your own merchant account will provide the lowest payment acceptance rates - currently no more than 2.19% + $0.25 per transaction. In order to set up your own merchant account in the US, you will need your organization to have a legal presence here. In other words you will need at least a subsidiary to be registered in the US and to have a bank account and address here.

If that is not an option, you can open an offshore merchant account, which will allow you to accept payments in the US, but at substantially higher rates - 5% - 6% or more per transaction. The upside is that you can set it up without having to incorporate in the US. To locate offshore merchant account providers, simply Google "offshore merchant account providers".

The third option is a third-party provider like PayPal and they will not be cheap either. You can visit their pricing page and see if you can find your rate. It might be lower than an offshore merchant account but the downside is that they tend to overprotect and freeze accounts for no good reason.

Why are some businesses more high-risk than others?

In the world of payment processing, the Credit Card Associations of Visa and MasterCard make all the rules. Banks have to be members of the Card Associations in order to issue credit cards or acquire card transactions.

When it comes to risk assessment, Visa and MasterCard rely mostly on historical data. The biggest component of their risk evaluation toolkit is the probability of generating chargebacks. A chargeback results when a cardholder disputes the validity of a transaction, posted on his or her statement. The dispute sets in motion a validation process, which is illustrated in our diagram and involves all of the participants. The cardholder has to file an official dispute with his or her card issuing bank, who then returns the transaction to the merchant bank, through the Card Associations. At this point the merchant bank can either resolve the dispute, or, if they need additional information, they will contact their merchant and ask for a proof that the transaction is valid (a receipt would answer just fine). The merchant will then provide (represent) that proof, if available, and the representation will find its way through the chain back to the card issuer and their cardholder, thus resolving the dispute. Now, whether the dispute is valid or not, it generates a certain amount of expenses that the Associations will have to incur. That is the main reason for the premium high-risk businesses have to pay on their processing rates.

Naturally, businesses that transact in a non face-to-face environment, tend to generate higher levels of chargebacks. Web-based and direct marketing merchants are automatically included. Higher average tickets add an additional amount of risk, due to the larger amounts that are moved around and the resulting higher transaction fees that are generated. New merchants too add to the risk, due to their limited processing experience. There are other factors as well which can lead to some businesses being completely unacceptable to US-based merchant services providers. For example gambling websites are extremely risky, simply because cardholders may feel like victims and dispute a charge, even if the gambling site played by the rules. Adult-oriented websites, on the other hand, are prone to generating higher levels of chargebacks, because customers may be uncomfortable to admit using their services, even if they have.

The Associations require payment processors to closely monitor their merchants' chargeback levels. Processors get penalized if their merchants' chargeback levels exceed certain limits and, in extreme cases, merchant accounts can be suspended.

UniBul Merchant Services Launches New Website

UniBul Merchant Services posted a new press release today. Text below.

UniBul Merchant Services Launches New Website

UniBul Merchant Services, a provider of credit card processing services to US-based businesses, announces the launch of its new website.

Boston, MA – UniBul Merchant Services announced today the launch of its completely redesigned website - Its main goal is to help educate US-based merchants on the basics of credit card processing, explain what payment processing costs consist of and offer concrete, customized payment solutions.

The visually pleasing design features an embedded Flash introduction video, which can only be played if the visitor elects to. A conscious effort has been made to stay away from flashy signs and oversize action buttons to ensure a relaxed experience for all visitors.

New merchants looking for payment acceptance capabilities and established businesses in search for better alternatives to the solution they currently have, will find it very easy to locate the information they are looking for. From the home page they can easily navigate to review the card processing basics, processing rates, fraud protection tools, chargeback management solutions, gift card programs and frequently asked questions.

A special emphasis has been given to the educational side of the website. At the Card Processing Basics page, visitors will find a detailed description of the stages every card transaction goes through. A diagram has been added for better understanding. Merchants can clearly see all parties involved in the process and how and when they transact with one another. At the Chargeback Management page, visitors will find a diagram, representing the chargeback cycle, a description of the process and an explanation of the causes and potential remedies that can be implemented. A list of manuals and available tools for chargeback management is included as an additional resource.

One of the most important additions to the website is the new Payment Card Acceptance Best Practices Guide. It is developed to help online merchants process transactions in a way that is compliant with the latest industry regulations for protecting cardholders’ personal information and verification of the validity of transactions. It includes a thorough examination of the new MasterCard and Visa regulations on gathering, storing and managing sensitive personal information when processing credit and debit card payments. It offers concrete steps businesses need to take to be in compliance and to ensure lowest transaction costs as a result.

Included in the sidebar of the website is a link to UniBul Merchant Services’ new Facebook page. All visitors are encouraged to visit and share their experiences as customers, make suggestions, give advice or just hang out.

The newly redesigned website is a big step forward for the young payment processing provider. The fresh look and professional touch are sure to attract positive feedback and, as the management hopes, more new customers.

UniBul Merchant Services is a Boston, MA-based Independent Sales Organization (ISO), registered with Visa and MasterCard as a provider of payment processing services for US businesses.

UniBul Merchant Services

What are the effects of credit card debt on your credit history?

I recently had to answer this question and here is my answer.

That is really a very broad question, so I will focus only on the effects that bad credit card debt has on your credit file and some of the potential consequences. By bad debt I mean the outstanding account balance on which even the minimum payments have not been made.

There are stages in the delinquency of credit card debt. If even the minimum payment has not been made for up to 90 days, the account will be still at the card issuing bank. It will be reported in your credit file simply as a late payment and it will be specified how late (30, 60 or 90 days). Your credit worthiness is slightly damaged and your credit score will drop a little bit.

If no payments have been made for more than 90 days, the account will be "charged-off". This refers to a debt, declared to be uncollectible and removed from the bank's balance sheet. Once charged-off, the account is sent to a collection agency and reported to the credit bureaus as a charged-off account. This is a lot more damaging than being late on a payment and your score will drop substantially.

The collection agency usually has the account for no longer than 60-90 days and their settlement parameters are very rigid. Typically they will not accept a settlement for an amount smaller than 80%-90% of the outstanding balance (including interest and other financial charges).

After 60-90 days, the bank will recall the account from the collection agency, place it in a pool of charged-off accounts, that have already gone through the same cycle, and sell it to a debt buyer. A typical bank sells such accounts quarterly.

Once a debt buyer gets the account, they become the new creditor and can report the account again to the credit bureaus. So 1 account can generate several derogatory notes in your credit file, each one further damaging your score.

If it remains unpaid, the debt buyer can and will sell the account to another debt buyer and the story will repeat itself.

The earlier in this cycle the account is paid, the better for the credit history. It will be updated as a "paid collection" account, which is a great deal better than showing as a collection account. Yet, it will take time for the credit score to get back to where it was before the delinquency.

How has credit card debt affected your own credit score? How did you deal with it?

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Payment Card Acceptance Best Practices Guide

I've just posted our Payment Card Acceptance Best Practices Guide on Squidoo, please take a look at it and tell me what you think. Here is an excerpt:

Payment Card Acceptance Best Practices Guide

UniBul Merchant Services' Payment Card Acceptance Best Practices Guide was developed to help merchants process transactions in a way that is compliant with the latest industry regulations for protecting cardholders' personal information and verification of the validity of transactions. Complying with these rules will ensure that merchants increase their profitability by:

- Getting the lowest possible processing rates.
- Minimizing fraudulent transactions.
- Reducing chargebacks.

1. Presentment Requirements
Certain content or features should be clearly displayed on your website. These elements are intended to promote ease of use for your customers and reduce potential disputes and chargebacks.

1.1 Customer service contact information.
Customer service telephone number as well as email address should be clearly displayed on every page of the website, on shipping materials and on monthly statements. If customers cannot contact you, they will contact their card issuer which may result in a chargeback.

1.2 Policies.
Return, refund, cancellation and delivery policies should be available to online customers through clearly visible links on your home page. You should also provide "click-through" confirmation for important elements of the policy. For example, when purchasing tickets for a sporting event, customers should be able to click on a button - Accept or I Agree - to acknowledge that they understand the tickets are non-returnable unless the event is postponed or canceled. This will help your processor fight chargebacks and win representments. Any restrictions on delivery should be clearly posted on the website.

1.3 Order and refund confirmations.
Send email confirmations and summaries within one business day of processing orders and refunds. State time frames for refunds and indicate that a full billing cycle may be needed for the issuer to apply the credit to the cardholder's account.

1.4 Billing descriptor.
It identifies you on the customer's credit card statement. For example:

ABC SERVICES 800-111-2345.

Your customer must be able to easily understand which purchase the billing descriptor refers to. Otherwise he or she might contact their issuer and possibly initiate a chargeback. Also you need to be sure, and confirm regularly, that the phone number is listed correctly, so if the cardholder needs to call you to verify the charge, he or she can do so.

For more:

Chargeback Reason Code 74: Late Presentment

Definition. Chargeback Reason Code 74 is issued when card issuers receive a transaction after the 30-day time frame, within which a transaction needs to be deposited, and the account number is blocked or closed. Time frames exist to ensure that transactions are deposited in a manner that will allow for timely payment processing and billing to the cardholders' accounts. It is easy to imagine how a transaction, deposited a month after it was generated, will not be remembered by the cardholder and will prompt him or her to file a dispute a initiate a chargeback. There are no remedies for chargebacks on payments deposited more than 181 days after the transaction date.

Most Common Causes. As the definition suggests, a Reason Code 74 is issued when the merchant does not deposit the sales receipt with its merchant account provider within the time frame specified in its merchant processing agreement.

Merchant Actions.
  • Back-Office Staff.

    • Sales Receipt Deposited on Time. If the sales receipt was deposited within the 30-day time frame, you should provide your merchant services provider with a copy of the sales receipt to be represented to the card issuer.

    • Sales Receipt Deposited Late - Account Closed. If the sales receipt was not deposited within 30 to 180 days of the transaction date and the cardholder account has been closed, there is no remedy and you should accept the chargeback.

    • Sales Receipt Older than 181 Days. If the sales receipt was deposited more than 181 days after the transaction date, even if the card account is not closed, there is no remedy and you should accept the chargeback.

    • Deposit Timing Guidelines. Your back-office staff is responsible for the timely deposit of sales receipts with your merchant account processor and they should do so as soon as possible, preferably on the date of the transaction and not past the time-frame, specified in the merchant processing agreement.
  • Owner/Manager.

    • Manual Deposit of Paper Sales Receipts. It is the responsibility of your organization's senior management to train the back-office personnel to deposit sales receipts on time. If your business deposits paper receipts, which take more time to handle, make sure that they are deposited within the time frame specified in your merchant account processing agreement.

    • Transaction Data Capture Terminals. Transaction data capture systems can be set up to automatically deposit your daily transaction batches, saving you time and substantially reducing, possibly eliminating, the probability of a chargeback Reason Code 74.

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What is the lowest eCommerce merchant account rate?

Every now and again I would see this question posted in a forum or discussed in a blog. Probably there is a definite answer and, if one could go through the pricing pages of all small business merchant accounts providers, it could be found. I have seen adds for 1.59% eCommerce merchant account rates and probably this is the lowest one I've encountered. Now, in order to make an informative decision, it is important that you are able to understand exactly what is being offered at the advertised rate.

Usually, when you see a credit card payment processing rate that is conspicuously lower than the rest, you will be well advised to read the fine print notes that are likely to accompany the add. In the above example, a 1.59% processing rate will apply to debit card transactions which make up a small percentage of the overall card volume. What you really need to know is what the credit card transaction processing rate is. Here the rate will be above 2% and I am yet to see one lower than 2.13%. You will need to make sure that your credit card merchant processor does provide separate rates for debit and credit cards, in order to take advantage of the lower debit card acceptance cost.

Be advised that the credit card processing rate is just one component of the processing cost, although the most important one. There are a number of other fees and charges and you will need to be aware what all of them are and make sure that the low card rates are not offset by high charges elsewhere. We have developed a tool to help you estimate the overall cost of credit card processing for business. You will simply enter the pricing components that you have received in your proposals and it will give you the total amount that you will be charged by your prospective processor.

Find our latest rates here.

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How Credit Card Processing Companies Handle Ticket Retrievals

How Credit Card Processing Companies Handle Ticket RetrievalsEvery now and then we at UniBul will get a request from one of its cardholders or directly from the card issuer for supporting data relating to some card transaction or other that was made at one of their merchants. The card issuer will particularly request documentation (what is known as a "Ticket Retrieval") from the merchant that pertains to the transaction at issue. When the request is received, the merchant is required to submit to its acquirer, who will then send it on to the issuer, a copy of the sales receipt or a refund invoice within 20 business days of the date of the request.

The merchant and its acquirer need to submit the requested paperwork by mail, e-mail or fax. If the credit card processing company does not respond sufficiently to a ticket retrieval request during the stated period, the issuer will most likely return the transaction to the merchant in what is called a chargeback. The supporting paperwork, or a copy of it, obtained by the issuer has to be legible enough for submission to the cardholder for examination or for the verification of the card account number.

In response to a ticket retrieval request showing the cardholder's signature, the merchant can submit a legible copy made with the electronic signature capture technology. To be in compliance with ticket retrieval requests for certain types of transactions, the credit card processing company may submit a substitute transaction receipt, as requested to comply with applicable requirements. In such instances, however, the issuer may subsequently initiate a dispute if any of the requested data elements stated below are missing:
  • 16-digit card number.
  • Customer name.
  • Card's date of expiration.
  • Entire transaction amount, including tips and taxes.
  • Date of the transaction.
  • 6-digit transaction authorization code.
  • Retailer's name and location.
  • Description of the product or services.
For mail order or telephone order (MO / TO) payments:
  • The delivery address.
For transactions completed at cardholder activated terminals (CATs):
  • The CAT's locations number or city and state.
For transactions made at an automated fuel dispenser machine:
  • The service station ID number.
  • The invoice number.
Still, under certain circumstances the issuer can return a formerly paid credit card sale to the payment processing provider, which will then send it to the retailer for repayment. These returned sales are called "Chargebacks." If a cardholder claims that a billing error has been made in regards to a card transaction, or if he or she contacts their issuer and complains about the quality of the items or services bought with the card at a merchant's establishment, the retailer is mandated to act in good faith to try to resolve the problem with their customer. If the customer refuses to pay the issuing bank for items or services as a result of a quality dispute, the issuer may then initiate a chargeback for the whole sales amount or the disputed portion of it, as applicable.

Wednesday, June 6, 2012

Non-profit Credit Card Processing Basics for the Internet

Non-profit Credit Card Processing Basics for the InternetThe following article will overview some of the most important steps for managing non-profit credit card processing risk in online transactions. These processes can be identified as the basic structure for the bigger world of e-commerce merchant account best practices.

Setting Up the Non-Profit Credit Card Processing Structure

An organization's exposure to online non-profit credit card processing risk is dependent on its concrete business practices, operational procedures, fraud detection and prevention set-up, information security controls, as well as the kind of products or services being sold. The organization's entire staff will need to achieve a detailed understanding of the risks present in any online transaction and will have to be proficient in their specific risk control approach.

If the non-profit has not yet opened up an e-commerce website, it will have to contract with a non-profit credit card processing bank that can provide efficient risk management support and, just as importantly, a complete understanding of online payment acceptance fraud risk and liability. Each entity will also have to closely evaluate each merchant services provider prior to finalizing an agreement. What has to be clearly understood is whether or not the payment processor has the capabilities and expertise to keep the account information safe and minimize fraud losses.

Designing the Non-Profit Credit Card Processing Website

When developing a website for accepting donations, the non-profit have to always keep first in mind operational procedures and risk factors. They should carefully evaluate privacy concerns, service reliability, credit and refund policies, as well as donor support access.

The non-profit's donation processing function can allow it to efficiently and safely address a host of risk issues. The organization can collect necessary payment card and donor details through such processes as indicating required checkout information fields and verifying bank card and donor data that is collected over the internet.

Fraud-screening procedures can help non-profits limit fraud for big-item sale amounts and for high-risk transaction items. By screening such online credit card transactions intelligently, the organization can avoid fraud sales before they result in a loss.

Using sophisticated computer systems and other high-tech hardware, fraudsters can achieve access to the non-profit's shopping cart and payment gateway systems, attacking insufficiently well protected e-commerce non-profit credit card processing merchant accounts, and processing fraudulent transactions. By taking efficient proactive measures, the organization can quickly minimize the risks associated with this kind of attack.

To limit their exposure to online risk, the non-profit will need to select and institute the right combination of fraud prevention and detection services. There are any number of options available now to help non-profits do that.

(Read more.)

How to Accept Credit Cards Online the Right Way

How to Accept Credit Cards Online the Right WayThere are certain fraud-prevention policies, procedures, guidelines, and solutions for merchants that accept credit cards online. Implementing these tools will assist retailers protect their business from fraud-related issues and chargebacks. E-commerce merchants need to carefully consider designing internal fraud management policies and offering adequate training for their employees.

Authorization Guidelines

Transaction authorization is mandatory every time you accept credit cards online. E-commerce transactions are all zero-floor-limit ones. Authorization approval needs to be obtained prior to any merchandise being shipped or service delivered.

Card Expiration Date

Any time it is possible, e-commerce merchant account holders need to ask their customers for their card's expiration, or "Good Through," date and enter it in their authorization requests.

Entering the date helps issuers to validate that the card and payment are both legitimate. A mail order or e-commerce order featuring an invalid expiration date or lacking one can indicate fraudulent or otherwise unauthorized use.

Card Security Code

Card security code is a three-digit number printed on the back of bank cards (four-digit numbers on front of American Express cards) to help verify that a consumer is in physical possession of a valid card during an order.

Researches have showed that retailers that use security code verification in their authorization requests for non-face-to-face transactions can limit their fraud-related losses and chargebacks.

Address Verification Service (AVS)

The Address Verification Service (AVS) is an strong fraud prevention solution that allows merchants that accept credit cards online and otherwise non-face-to-face to verify a customer's billing address together with the electronic authorization procedure. Reports have showed that fraudsters often do not have any knowledge of the correct billing address for the particular account they are trying to infiltrate. Authenticating the address can, in turn, provide retailers with yet another, and very powerful, key indicator for whether or not a payment is legitimate.

To use AVS, retailers should simply ask card-not-present consumers for their billing address, at the checkout, as it is shown on their monthly credit card statement. This response is then sent, together with the other payment data, for electronic authorization to the issuer. Address verification, as well as security code validation and authorization, are processed simultaneously - in a span of a seconds or two - and the retailer will get an AVS response code with the authorization and security code responses.

Merchants should examine the AVS response code and take adequate action, taking into account all payment characteristics and any other validation information obtained with the authorization response (expiration date, security code, etc.).

(Learn more.)

How Processing Credit Cards Works

How Processing Credit Cards WorksBesides the merchant and their customers, several other entities are involved in processing credit cards. The following information will assist you and your sales personnel to better understand who does what in the acceptance of payments.

Who Takes Part in Processing Credit Cards

The following entities take part in the cycle of processing credit cards:
  • Cardholder is an authorized user of bank cards or other types of payment products.
  • Merchant is any business or non-profit entity that is authorized to take credit cards and other types of bank cards for the payment of products and services.
  • Processor is a bank or other financial institution that contracts with merchants to accept bank cards for the payment of products and services. A processor may also contract with third party entities to enable merchants to be processing credit cards.
  • Card issuer is a financial institution that owns the cardholder relationship. It issues bank cards and contracts with its cardholders for the billing and payment of transactions.
  • The Associations of Visa and MasterCard are publicly-traded entities that work with banks that issue cards branded with their logos and / or sign up merchants to accept bank cards. The Associations offer card products, promotes their brands, and set the rules and regulations governing the participation in their programs. They also operate the world's two largest electronic payments network for processing credit cards to facilitate the flow of transactions between acquirers and issuers.
Visa and MasterCard provide a collection of systems that includes:
  • An authorization process through which the card issuers can approve or reject individual bank card transactions.
  • A clearing and settlement platform that enables processing credit cards electronically between acquirers and issuers to ensure that:
    • Transaction data moves from acquirers to issuers for posting to the cardholder's accounts.
    • Payment for transactions is routed from the issuers to acquirers to be then credited to the retailers' accounts.

Rules for Processing Credit Cards

Merchants are required to follow certain basic rules for processing credit cards. The consistent adherence to these rules will help you to improve customer satisfaction and manage your business more efficiently.
  • Include all taxes in the total sale's amount. Any tax that the retailer is required to collect from the customer must be added to the total amount and should never be collected separately.
  • Accept all types of valid bank cards belonging to the brands listed in your merchant agreement.
  • Check with your processor on the minimum sale's amount that you are allowed to charge.
  • Comply with any maximum transaction amounts that may be established by federal rules.
(For more.)

E-Commerce Credit Card Processing Fraud Prevention

E-Commerce Credit Card Processing Fraud PreventionToday's e-commerce credit card processing user has a lot of options for detecting and preventing bank card fraud. To keep your organization save, you need to build a solid risk management system. Visa and MasterCard continue to build on their web-based fraud prevention tools to expand on their own internal efforts.

MasterCard SecureCode and Verified by Visa

These two e-commerce credit card processing fraud prevention services provide cardholder authentication for online transactions. Designed on the 3-D Secure protocol, the two authentication service validate the authenticity of cardholders to participating merchants. They allow consumers to choose a password with their card's issuer, and then to use it to validate themselves in a transaction. This helps retailers ensure that the card number cannot be used fraudulently on their e-commerce website.

E-commerce credit card processing users offering MCSC and VbV to their customers need to initially incorporate a software module called a Merchant Plug-In (MPI) on their web hosting server. Merchants who elect to implement MCSC and VbV have to use PCI compliant providers and merchant account processors.

Keep in mind that an MCSC and VbV merchant that is identified by the Merchant Fraud Performance (MFP) program could be subjected to a particular type of chargeback: Reason Code 93: Merchant Fraud Performance Program.

E-Commerce Fraud Screening

Today, a great many fraud screening systems and practices are available to enable e-commerce credit card processing users in assessing the risk of a given payment and, in some cases, suspend its processing if certain pre-determined high-risk characteristics are found. Merchants are encouraged to devise their own internal fraud screening procedures or use a third party screening service.

A strong fraud screening system will suspend a payment if information:
  • Matches data stored in the merchant's internal negative files.
  • Exceeds pre-defined velocity limits and controls.
  • Detects an AVS or security code mismatch or no match.
  • Match other high-risk signs. For example, payments placed with anonymous e-mail addresses, high-risk shipping addresses or foreign-issued cards.
The merchant need to also design cost efficient and timely evaluation procedures for calculating high-risk transactions. More to the point, such fraud screening procedures need to help retailers avoid manual review of payments in which potential fraud loss would be less than the aggregate costs of screening and evaluation.

Separate Low Risk Transactions

For many e-commerce credit card processing users, getting third party fraud scores for each transaction may not always be cost-effective. The merchant can reduce costs by separating low risk or low-value orders, where the potential losses are lower than the cost of the scoring procedure itself, thus taking them out of the scoring process.

(For more click here.)

How Merchant Credit Card Account Users Should Identify Fraud Signs

How Merchant Credit Card Account Users Should Identify Fraud SignsMerchant credit card account users that process payments in a card-absent environment should develop in-house policies and processes for managing atypical or suspicious transactions and offer sufficient training for their sales staff. Being capable of identifying dubious orders are even more important for card acceptors involved in e-commerce and mail order and telephone order (MO / TO) sales, and personnel should be provided with specific instructions on the actions they need to take to verify these orders.

Everyone of the sales staff of a merchant credit card account user needs to be on high alert for any of the indicators of suspicious customer behavior that are listed below:
  • Rush transactions: Urgent request for a fast or overnight delivery - the type of customer who "wants it yesterday" - have to be red flagged for possible fraud. While often completely legitimate, such orders are one of the most often seen signs of "hit and run" - kind of fraud schemes that are targeted at obtaining merchandise for quick resale, or "flipping" it.
  • Random transactions: Watch out also for customers who do not appear to care much if a particular item is out of stock - "You don't have it in green? What other colors do you have?" - or who buy randomly - "I'll take one of everything!" Again, orders of this kind may be intended for a subsequent resale, instead of for personal use.
  • High-risk delivery address: Evaluate and red flag any transaction with a shipping address that is not identical with the billing address on the consumer's credit card account:
    • Demands to deliver merchandise to P.O. boxes or an office address are quite often linked to fraud.
    • Maintain a list of ZIP codes where high rates of fraud are prevalent and verify any transaction that has a shipping address in these areas.
  • Hesitation: Watch out for consumers who hesitate or are not certain when giving you their personal card information, such as a ZIP code or the spelling of their own family or street name. This is again quite often an indicator that the customer is using a false identity.
In examining what looks like an atypical order, merchant credit card account users that accept credit cards over the phone or online should bear in mind that, as always, if a sale sounds too good to be true, it almost surely is.

There are plenty of solutions that use customizable filters and systems that enable small retailers to better identify and prevent suspicious transactions and you should take advantage of them.

(For more.)

American Credit Card Processing PIN-less Procedures

American Credit Card Processing PIN-less ProceduresIt's up to MasterCard and Visa's member banks to assist American credit card processing businesses in the understanding and implementing payment acceptance rules governing a PIN-less payment option for some debit cards. To achieve that, payment processing companies are usually willing provide training to merchants and their third-party service providers to make sure that the following best practices are properly adopted before the PIN-less point-of-sale terminal system is implemented.

Three Steps to Processing PIN-less Debit

Here is how PIN-less debit should be processed by American credit card processing merchants:
  1. Offer the consumer a clear payment choice. Confusion can often occur if customers think that they are paying with one payment brand, but the transaction is in reality processed on another brand. For example, a cardholder who chooses payment by American Express should always have her selection honored. Choices such as "Debit" and "Credit" may be confusing, as they often have different meanings depending on the consumer's own understanding. The choice of a payment brand offers a clear selection to the customer. This is why it is best for American credit card processing companies to offer their customers with a menu of supported brands.
    • For e-commerce merchants, offering a menu or radio button that lists all of the supported payment brand options and enabling the customer to make a well informed choice.
    • For mail order and telephone order (MO / TO) businesses that instruct consumers to select their favorite payment method using a Voice Response Unit (VRU) or customer support agent, it allows identifying specific payment brand choices, rather than generic and confusing terms such as credit, debit, and ATM.
  2. Honor the customer's selection. If the consumer indicates that she wants to pay with a Discover card, the American credit card processing merchant must make certain that her choice is honored. A retailer is allowed to advertise to the customer other types of payment, but it cannot confuse or mislead the consumer or withhold important information in the process. To put it simply, the choice ultimately belongs to the consumer. A payment can only be processed as anything other than Discover (in our example) if the consumer has chosen another method of payment.
  3. Confirm the selection. To eliminate any kind of confusion about the consumer's choice of payment, retailers should provide a confirmation page or voice confirmation that states the chosen payment option (for example, Discover, Visa, MasterCard, American Express, etc).
(Learn more here.)

Novus Credit Card Processing Dispute Resolution

Novus Credit Card Processing Dispute ResolutionA card issuer may initiate Discover / Novus credit card processing disputes on its own behalf or on behalf of its customers. The issuer starting a dispute needs to forward all relevant documentation in support of the dispute to Novus / Discover at the time it is initiated. Discover receives, collects and compiles data and paperwork regarding any disputes from issuers and then sends dispute notices to merchant banks and retailers notifying them of the disputes. Upon receipt of all required or available evidence relevant to the dispute and the transaction, Discover resolves it and informs the parties of its decision.

Depending on the kind of dispute and the response from the payment processing bank or retailer, Discover investigates and resolves the dispute, following receipt of the processor's or retailer's response.

Discover / Novus will not contact a customer directly to obtain data or documentation in support of a particular dispute. If, during the investigation process, it determines that any paperwork provided by the Novus credit card processing acquirer or retailer requires review by the customer, it will forward the documentation to the issuer who will then provide to its cardholder.

Issuers are required to use the Discover System to initiate all disputes, either on their own behalf or on behalf of their cardholders. Consumers cannot do it themselves and an issuer cannot advise a cardholder to contact Discover directly regarding a claim. The issuer must obtain information regarding the dispute, including all relevant documentation, from the customer. They are also responsible for forwarding to their customers all Novus credit card processing acquirer and retailer responses. If no accurate and complete information is obtained from the consumer, the result may be that Discover resolves the dispute against the issuer.

Similarly, unless it is required by law, Discover / Novus will not contact an Novus credit card processing acquirer's merchant directly regarding a dispute. If a processor or retailer wants to review the supporting paperwork submitted by an issuer, they will need to request it from Discover. In addition, Discover may initiate a dispute if the acquirer or retailer fail to comply with their obligations.

Discover will notify the parties involved in a dispute of its decision within five business days of receiving the complete documentation from the Issuer and from the processor or card acceptor, in each case, as required under its rules. If the losing party protests the resolution of the dispute, it can appeal the decision by initiating a dispute arbitration request.

(Read more here)

Merchant Bank Account Requirements for Compromised Entities

Merchant Bank Account Requirements for Compromised EntitiesMerchant bank account entities that have suffered a suspected or an actually confirmed data security breach must take immediate action to help prevent further exposure of sensitive data and achieve compliance with the Payment Card Industry (PCI) Data Security Standard (DSS), PCI Payment Application Data Security Standard (PA-DSS), and the PCI PIN Security Standards.

Merchant Bank Account Requirements for Compromised Entities

Here is a list of concrete actions you should take if a breach is confirmed or suspected:
  1. Immediately contain and minimize the exposure. Limit data loss. Prevent the additional loss of information by conducting a complete investigation of the compromise of information. Compromised organizations need to consult with their own incident response team. To save evidence and facilitate the investigation:
    • Never access or change a compromised payment processing system (that is, don't log in at all to the compromised system and change passwords; don't log in as ROOT).
    • Do not shut the compromised system off. Instead you should isolate all compromised systems from the rest of the network (that is, unplug the network cable).
    • Store evidence and logs (that is, evidence, security events, internet, database, firewall, etc.)
    • Note all actions you take.
    • If yours is a wireless network, replace the Service Set Identifier (SSID) on the access point (WAP) and all other systems that may be on this connection (excluding any systems that are believed to be compromised).
    • Remain on alert and keep an eye on the traffic on all systems storing customer data.
  2. Inform all involved parties immediately, including:
    • Your internal incident response and information security teams.
    • Your merchant bank account acquirer.
    • The appropriate law enforcement agency.
    • Your legal department to establish whether notification laws are applicable.
  3. Provide all compromised account data to your processor or to the Associations within ten business days. All possibly compromised accounts must be identified and transmitted as instructed by the processing bank. The Association will then distribute the compromised card account numbers to the affected card issuers.
  4. Within three business days of the confirmed or suspected compromise, send an incident report to the merchant bank account acquirer or to MasterCard and Visa.
To contain the impact of a consumer data security breach, the Associations have established an Incident Response Team to help card acceptors in forensic investigations. In the event of a confirmed compromise, the Associations will quickly send a team of forensic specialists to the site to help identify security issues and control exposure. The forensic data gathered by the team is then used as evidence to prosecute fraudsters.

Visit our website for more.