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Revolution Money Company up for grabs
Posted by: Curtis Stevens on November 21st, 2009

Steve Case’s Revolution Money company is being purchased by Amex and I find this to be interesting on several levels.  The company was founded by Steve Case, who co-founded American Online.  The company’s entire core business philosophy has always been about eliminating Interchange and creating a new, lower cost pin-based transaction network.  They were successful at it and it does save the merchant a lot of money on credit card processing expenses since their pin-debit costs is a fraction of Interchange. However, acceptance hasn’t been widespread. You also must remember that Visa & MasterCard have been around for decades and it has taken them years to become the size they are now. I do not believe they are worried or ever were about this company’s product. If it ever became of size, then I think they would take a second look. The ironic thing is that Amex is buying the company. Amex handles the entire process. The are not only the issuer of their cards, but they are the acquirer and merchant account provider. So now, you have a company that has been charging Interchange fees, which has ironically always been higher than V/MC, purchase a company who’s product has been against Interchange and created something at a fraction of the price. Amex is the last company I would ever expect to buy them out.

Lowering credit card processing fees may hurt consumers
Posted by: Curtis Stevens on November 21st, 2009

Many merchants want the government to get involved by forcing Visa/MC to reduce their credit card processing fees or Interchange cost in other words. However, a government watchdog said this could actually end up hurting consumers in the end. Merchants would save some money on their fees, but it is doubted that any consumers would see any drops in their cost of goods. You would also see banks adjust their programs when issuing cards, such as eliminate or reduce all the rewards programs currently available. The important thing to remember is card issuers use Interchange funds to cover the rewards programs they offer and cover cardholders who default. There has been another country that tried to govern Interchange and it turned out to backfire on them. I believe it was Canada or Australia, but do not recall exactly.  I also feel card usage would also decline and because of how consumers live beyond their means, merchants would actually have less sales because consumers would be charging less.  If you look at everything else the government has ever tried to intervene with, the consumer never comes out ahead.  It would have always been better if they simply stayed out.  Politics simply do not mix well.

How ecommerce merchants can improve site usability
Posted by: Curtis Stevens on November 21st, 2009

Would you like to improve your site’s usability to increase your conversion ratio?   Have a great organized web site is very important.  Lets pretend you walked into a retail store.  Would you shop there or stay long if there was clutter everywhere?  The isles were not lined up well, stuff on the floor, product mixed in with each other, etc?  Of course not!  This doesn’t change when consumers shop online!  The 8 second rule is something the industry refers to as when a visitor comes to your site, we all generally take about 8 seconds to decide if we are going to stay or not.  Feedback – you can obtain reviews from other people for as little as $1.  Amazon has a service called Mechanical Turk that includes thousands of people willing to do a review for you for cheap.  Another tool is Google website optimizer.  It lets you test various versions of your sites or particular pages to see which one performs better.  Once you make some improvements on your site, your sales volume could go up a lot.  The downside to that is you will have higher credit card processing fees, but the good part of that is it means you have more sales!

Boss Cart Review
Posted by: Curtis Stevens on November 21st, 2009

Here is a review on the Boss Cart shopping cart service.  The company is headquartered in the UK and has around 10K users.  Kevin, the CEO gave the Interview.  Boss Cart started off when the company used to develop a cart specifically designed for each merchant.  This would come with a steep cost.  Then a few years ago, they decided to create a off-the-shelf product they could sell in the masses that would work for any particular merchant.  The cart is license based and users have the freedom to modify the code as they see fit.  The cart is a little on the expensive end, at $330.  This does include unlimited fixes and support.

Kevin said some of its major strengths is the cart’s versatility, various marketing modules and SEO friendly design.  If the cart doesn’t already have a feature and if a enough customers request for it, they will develop it at no extra charge.  One big disadvantage is if you are a US merchant, you may find it difficult getting support since they are located in the UK.    There are some good news though.  They are compatible with most US credit card processing service providers. They are running a special at the moment, 15% off discount as a Christmas offer.

Falls county Courthouse adding another payment option
Posted by: Curtis Stevens on November 21st, 2009

Falls county has now introduced another form of payment customers can use to pay their taxes and that is with a credit card.  This is a new feature and are still working out some of the bugs.  They mentioned you can also pay your taxes on the Internet as well.   But you will need your office ID to be able to pay online.  The vendor charges a convenience fee to cover the credit card processing fees. Most merchants are not allowed to by Visa/MC rules, but government agencies are one of the few that can. The only thing that bugs me about this is many charge a higher % than what they actually pay. Or they may be with a provider that is charging them a lot but they do not care as they are simply passing the cost onto the customer.

Fall County residents can also now pay their vehicle registration fees online with a credit card as well. Like Fall County, many counties across the country are adding this capability to their service. Even if you pay online, you will still pay the famous mail-processing and service fees of a few bucks.

Business Scam Alert: Phone scam
Posted by: Curtis Stevens on November 21st, 2009

There is a recent scam going around that business owners should be aware of.  The way the scam works is someone calls the business saying they are with merchant services, the merchant’s credit card processing company and ask the person that answers the phone if they have ran any credit card transactions that day.  The employee may answer with two for example.  The caller then informs the employee that there has been a problem with one of the transactions and asks to confirm the information about the cards.  Such as the 6 digit authorization number, the amount and the name of the card holder.   The caller will ask about the last transaction and then inform the employee they already have that one, it is the other transaction.  The caller then asks for the customer’s phone number and the employee then became suspicious.  After refusing, the caller became frustrated and hung up.  The employee called the card holder and told them that someone actually called them saying they were calling from the store asking her the same information.  The way the caller found the customer’s information was that they had their phone number listed in the phone book.    The customer said when they called them, their caller ID said the name of the business.  The caller then asked them for the credit card number, but the customer refused saying they would come to the store.  This is simply one way thieves are trying to obtain customer’s credit card data.  If anything, consumers shouldn’t be alarmed as they are not responsible for a dime on any fraudulent transactions if they still have the physical card.  If they lose the card itself, then they are liable up to $50.

Credit card processing & batch fees
Posted by: Curtis Stevens on November 21st, 2009

I recently read an article by someone named Evan and I would like to evaluate a few things they said.  The whole article was about the batch fee credit card processors charge.  As he explained, a batch is simply a collection of credit card transactions that are submitted for settlement at the end of the end of the day.  It is true, that most providers charge a batch fee.  Honestly, this is a revenue source for providers, but they also have a cost as well.  When you submit the batch, you are accessing the network to submit the data.   It really doesn’t matter where a provider makes it’s profit, as long as the bottom line is profitable and reasonable. He talked about Elavon having some great rates with no batch fees.  I advise the merchant to simply look at the whole picture before making that decision about any particular company.  He did mention that the credit card processing rate merchants pay include taxes, which is simply not true. He also mentioned merchants pay 3 to 5%, which I think is a very high average. Interchange tops out at around 3%, so if merchant is paying 4 or 5%, then they obviously didn’t shop around much or haven’t done so in a very long time.

He also mentioned a few hundred dollars for an “online terminal”, which he is probably referring to an Internet gateway service. I believe this isn’t very reasonable as well. As I said, look at the whole picture before determining if a company is competitive. Lastly, he mentioned they fund him the same day, which simply isn’t true. No processor does same day funding. It technically takes about 48 business hours to move from the card issuer through the federal reserve to the merchant provider’s account. If you have 24 hour funding, you are essentially receiving the money before they do.

PCI Compliance, be ready
Posted by: Curtis Stevens on November 21st, 2009

Are you PCI compliance ready? Many merchants are not PCI DSS compliant and face stiff penalties and fines for not doing so. The good thing is almost all credit card processing companies are PCI compliant. Starting last October, PCI went from recommended to mandatory. If you process more than one million transactions a year, you must be using a certified PCI provider.

Acquiring banks are required to report any merchants that are not compliant to the card associations. Many merchants believe they only need to fill out the self-assessment questionnaire. This isn’t true if they collect the credit card data themselves instead of letting their payment gateway do the job. Merchants also need to have their networks scanned quarterly if they store, transmit or process the transactions. This is even true for MOTO merchants that use a virtual terminal. If they are keying in the information through a web site, they need to ensure their own personal computer is safe & secure. This would include running a firewall and anti-virus software. To help educate merchants and provide them with the tools necessary to tackle the job, most credit card processors charge a PCI compliance fee. Some pass along a monthly fee and others charge a yearly fee. Consult with your provider to see if they have one.

Wal-Mart didn’t get a bank charter, but it doesn’t seem to bother them
Posted by: Curtis Stevens on November 21st, 2009

It seems that Wal-Mart wasn’t able to obtain a bank charter and that doesn’t seem to be a problem.   Financial services is a small part of their business.  Since they have the largest credit card processing volume than any other company in the US, they tried to form a bank charter. The reason was they could become a sponsoring bank with Visa/MasterCard and save that profit that goes to their current sponsoring bank since all merchants must be sponsored one.

However, it doesn’t seem to have bothered them that much besides the miss opportunity of extra savings. Without one, they have been spending the past few years building a portfolio of financial services and have become a big competitor to traditional institutions, especially ones targeting low-income consumers. One of their major products are the pre-paid cards.

By not having a charter, they have also avoided a lot of attention from Washington on this issue. The issue being the separation of banking and commerce. Wal-Mart originally filed for a charter in Utah back in 2005, but withdrew two years before the Obama admin revealed reform that would eliminate specialty charters. Wal-Mart has also learned that just because you do not have a charter, doesn’t mean you cannot have your share of the financial industry. With over 2 million customers using their pre-paid product, they are on their way to becoming a big leader.

Will waiters & waitresses face credit cards fees
Posted by: Curtis Stevens on November 20th, 2009

Some employers have changed their practices when it comes to the credit card processing fees they pay. Laws were introduced early in 2009 that prevents restaurant owners from keeping customer tips. The rules state employers are no longer allowed to use the money they receive from tips as part of their minimum wage. However, it was also revealed that some owners are charging waitresses an admin fee for any tips they receive that are charged to a credit card. This is can totally understand, but the owner should NOT make any profit off of this. They should only charge an amount they had to pay to their merchant provider. The other controversy is how much you should tip. Oprah recently said on her show that 10% is adequate during these tough times. I think everyone’s opinion will be different. What I find crazy is how this industry over the years went from someone tipping someone because they did a good job to restaurants getting away with paying minimum wage and expect consumer’s tips to make up the difference. This has evolved over the years because most consumers tip when they receive good service. Restaurants have been able to get away with passing some of their cost to the consumers. I think it should go back to the way it was.



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