Ever see a monthly or big annual “PCI” fee show up on your merchant statement?  Ever wonder: What is PCI Compliance?  How do I become Compliant and what are the benefits?  How much should it cost?  Why am I paying for this added fee?  Is this a scam?  Is this just another way for my credit card processing company to make more profit? Read on to find answers to these questions.

1. What is this PCI Compliance I see everywhere?

First off, PCI stands for Payment Card Industry, and is often followed by DSS – Data Security Standards.  In a nutshell, Card Brands such as Visa and Mastercard have mandated that ALL MERCHANTS must comply with a standardized set of rules and standards (PCI DSS  www.pcisecuritystandards.com) in order to protect cardholder data from breach, fraud, and theft.  It is NOT A SCAM.  EVERY BUSINESS must be PCI Compliant.  That being said, some businesses do take advantage of merchants in order to make additional money off of them.  This is where they idea that PCI is a scam comes from.  To learn more about the REAL PCI COMPLIANCE, read on…Merchants are responsible for data theft, and even just a few stolen credit card numbers can cost merchants tens of thousands of dollars in fines, assessment, audit fees and other penalties! Some of you may have heard of the big cases on the news where tens of millions of credit card numbers were stolen from high end retailers such as: TJX, Barnes & Noble, Office Max and Sports Authority. What most of us don’t know is that those brands had to pay for the penalties and fraudulent charges. For many of the small business owners out there, that volume of funds doesn’t exist, and a large breach can cost your entire business.

Six main control objectives for PCI DSS compliance and validation are as follows:

• Build and Maintain a Secure Network
• Protect Cardholder Data
• Maintain a Vulnerability Management Program
• Implement Strong Access Control Measures
• Regularly Monitor and Test Networks (where credit card data is passed through)

2.  I heard PCI Compliance depends on how big my business is, How do I know what level I am at?

In order to be PCI DSS compliant, each card issuer has its own criteria for assigning a merchant level and validation compliance classification level for a merchant, third party or service provider.

The merchant level is based on transaction volume for the organization.  The validation compliance level is based on the merchant level, and includes the validation actions and who needs to carry out the validation actions, in order to be PCI DSS compliant.  For the majority of organizations, the standards set forth by Visa’s CISP program and MasterCard’s SDP program cover the qualifications for assigning both a merchant level and compliance level, along with incorporating PCI DSS.  American Express and Discover, at this time, do not have a stringent program in place like Visa or MasterCard, however both companies have a ‘best practices’ document, which coincides with the PCI DSS.  Currently, under PCI DSS 1.1, the emphasis of compliance is on the Level 1 and Level 2 merchants, service providers, vendors and payment applications.

The current Visa and MasterCard merchant levels and changes from PCI DSS 1.0 to PCI DSS 1.1 are as follows:

• Level 1-Visa U.S.A. and MasterCard World Wide transactions totaling 6 million and up, per year, and any merchants who experienced a data breach.
• Level 2-Visa and MasterCard transactions totaling 1 million to 6 million per year. (The new requirement expands the number of Level 2 merchants to include former Level 4 merchants.)
• Level 3-Visa and MasterCard e-commerce transactions totaling 20,000 to 1 million per year. (The new requirement expands Level 3 to include former Level 2 merchants who process fewer than 1 million e-commerce transactions per year.)
• Level 4-Visa and MasterCard e-commerce transactions totaling up to 20,000 per year. (The new requirement decreases the number of Level 4 merchants.), and all other merchants, regardless of acceptance channel, processing up to 1 million Visa or MasterCard transactions per year.

3. So, what are the requirements for PCI Compliance at my level?

The current Visa and MasterCard validation requirements are as follows:

• Level 1-Visa/MasterCard– Annual onsite review by merchant’s internal auditor or a Qualified Security Assessor (QSA) or Internal Audit if signed by Officer of the company, and a quarterly network security scan with an Approved Scanning Vendor (ASV).
• Level 2– Completion of PCI DSS Self Assessment Questionnaire annually, and quarterly network security scan with an approved ASV.
• Level 3– Completion of PCI DSS Self Assessment Questionnaire annually, and quarterly network security scan with an approved ASV.
• Level 4– Completion of PCI DSS Self Assessment Questionnaire annually, and quarterly network security scan with an approved ASV. Submit summary of PCI compliance plan, via acquirer, by July 30, 2007. If a breach has been reported, or found, Visa reserves the right to move the Level 4 merchant to a Level 1. If so, the Level 4 merchant must abide by the Level 1 validation requirements. (See Level 4 Merchant Compliance for more information)

4. So what is my risk of not being PCI Compliant and what are the benefits of PCI Compliance to your business?

For most small to medium businesses, the first step is to take the free online SAQ (Self-Assessment Questionnaire) were you get a PCI certificate and updated regulation information.  If you are a large business then we recommend you contact a Payline representative directly to discuss a compliance solution for your business. From here each ISO/Merchant Processor (such as Payline Data) will have different benefits.  Some take a wait and see approach and have not invested the time and resources to develop a solution for their merchants.  Meanwhile, many businesses have been assessed millions of dollars in fines and have lost customer confidence resulting from card data theft.    The payment brands may, at their discretion, fine an acquiring bank $5,000 to $100,000 per month for PCI compliance violations.   The banks will most likely pass this fine on downstream till it eventually hits the merchant.   Furthermore, the bank will also most likely either terminate your relationship or increase transaction fees.  Penalties are not openly discussed nor widely publicized, but they can catastrophic to a small business. It is important to be familiar with your merchant account agreement, which should outline your exposure.   The more involved Merchant Processor/ISOs have programs that give the merchant value, in addition to their certificate.   These things can include:

• Remote Scanning – Monthly or Quarterly website scans to check for vulnerability, includes support and remediation
• Access to your merchant data online: see your statements, transactions, chargebacks, returns and deposits.
• Data Theft Insurance – insurance covering your merchant account, and protecting you if fines are incurred due to a breach
• Knowledge – The most important and least discussed point. Simply the knowledge to avoid these issues.

5. How much does PCI Compliance cost?

All ISOs and Merchant Acquirers are required to inform and get their merchants compliant.  Prices for these services vary from less than $60/year to over $500/year.   Some are billed monthly, and others annually.   Many programs also vary in what is offered to the merchant.  Unfortunately, there is not good answer here but if you feel like you are paying too much, you either are or you may not know how to lower your fees.    Another downside is the ISOs and other “Resellers” of merchant accounts that will use PCI compliance as an opportunity to make an extra fee from their customers.   This practice is widely looked down upon but we see it every week where someone is paying more than they should.  A lot of merchants don’t even realize they are paying a PCI Compliance fee at all!

Our recommendation?

Do your research.  In fact, this is just a summary of all the information for PCI Compliance.  You can ready our full PCI DSS Compliance Guide here with details on all of the information above including changes between 1.0 and 1.1.  You can certify your PCI compliance directly with your ISO or at any 3rd party service of your choice.   There are some great programs out there and others that are not very beneficial and make sure you shop around as some are very expensive.  To learn more about this or find our about the Payline Data PCI compliance program, contact us directly.

Negative Option billing refers to a business practice where a merchant provides a free trial or sample of goods/services, requires a credit card upon sign up and then bills the customer in the future unless they proactively cancel with the merchant.

For many years now we have been moving more and more to a cashless society.  Merchants of all types have found that in order to stay in business they must be able to process credit cards.  However since late last year, E-Commerce merchants have found themselves under increasing scrutiny and perceived attack from the processors who now with the stoke of a pen (or key) can literally put them out of business completely.  Misunderstanding, confusion and fear abound as the dark clouds of change approach from all directions.

As we see company’s shut down and massive reserves being implemented on many others the questions of “Why is this happening?” and “What are we going to do?”   are being heard from all corners.

To better understand what is happening we need look no further than the closest US history book.

These books tell stories of the old west.  Of marauding bands of bandits and thieves on horseback, destroying lives and communities as they moved from town to town looting residents and robbing merchants of their ability to do business.

Of a broken south where carpet baggers and scallywags moved in to towns and set rules that sucked the life from merchants and consumers while filling their own coffers.

Get rich quick schemes hatched by disreputable types where common place.  Otherwise good people, tired of being kept down, thinking there no solution, got caught up in these schemes becoming part of the problem instead of the solution.

We read how the law would go out and capture or kill these scurrilous characters only to find them soon replaced with even worse types.

In most communities law and order were resorted only when rules and regulations were implemented and strictly enforced without exception.  The active participation of the entire community, merchants and townspeople alike, while gratefully accepted was not an essential requirement.

This analogy is many times used to describe the internet experience and e-commerce today.  Since the inception of internet based companies and the practice of receiving payments on-line, the issues of fraud, mis-representation, get rich quick schemes and outright theft from consumers has been growing almost unabated.  The issue of  “Chargebacks”,  their causes, and how they are to be dealt with, something almost unheard of 15 years ago, has become an ever-present albatross placed around the neck of  good e-commerce merchants everywhere.

The idea of rules and good stewardship of the internet have been mostly ignored or explained away by the scalawags and promoters that would have you believe that they have the  “keys”  to your success or the “secrets” to the internet that will protect you and allow you to do what ever you like without harm or repercussion.

Beware.   “The Law” is coming.  Is your Business ready?

Several years ago (okay, a LONG time ago in the internet world ) the FTC published recommendations and guidelines for merchants.  Anyone remember these?  Known as “The Dot Com Disclosures”,  They were a blueprint of how commerce should be conducted on the internet.  Laughed at and discounted by the big Promoters, these recommendations passed into seeming oblivion and were all but forgotten.

However, in response to tremendous increases in consumer disputes related to card-not-present and direct response products and services, both Visa and MasterCard are now actively taking direct action.

MasterCard has recently warned the Acquiring community that “Negative Option” enrollment  or “continuity programs” will be considered a “Brand Damaging” business practice and are issuing  heavy fines on merchants found to be engaging is such practices.  In some cases MasterCard will require immediate termination of merchants identified as using this business practice, along with any other practices considered “Brand Damaging”.

This follows recent policy changes from Visa regarding descriptor formats and disclosure of corporate entities related to Direct Response offers, with the intent to enforce all chargeback and transaction monitoring programs as defined by the associations.

Under the new guidelines, processors cannot accept merchant applications for products and/or services employing “Negative Option” enrollment, in addition to the following practices:

• Marketing models that employ “Free-Trial”, “Deferred Billing” and/or “Shipping Only”. Customers must be receiving a tangible good or contracted service in exchange for charging of payment cards. Incentivized discount offers are acceptable when the cardholder is receiving something in exchange for payment, however we will be unable to support accounts engaging in hidden or delayed charges and ‘free’ offers that are not truly free.
• “Cross-Selling” and “Up-selling” business practices. All sales should be directly between the business entities (merchant) processing the transaction and the cardholder, with cardholder authorization for all purchases.
• Per Payment Brand guidelines, the use of multiple merchant accounts, billing descriptors and merchant processors may be viewed as an attempt to avoid chargeback monitoring programs and is prohibited. Perceived non-compliance has led to termination of processing relationships. e-onlinedata will review the business consideration for opening multiple merchant accounts to ensure compliance with Payment Brand guidelines.
• Transactions generated from internet traffic and all other lead sources must be managed and monitored for potential fraud using an approved system. Third Party service engagement may be a requirement for account approval.

All of this is in line with the afore-mentioned FTC published guidelines.  Processors being directed to take a very aggressive position against merchants utilizing/employing these business practices.

Recommendations taken in part from the FTC’s website,  include but are not limited to:

• Material terms should be disclosed in a clear, concise manner. Unnecessarily long or inconsistent terms are viewed as an attempt to mislead the consumer.
• Terms should be disclosed in a conspicuous manner, clearly placed and labeled on websites in a location that indicates the importance and relevance to the transaction. Fonts and colors must be easy to view.
• Material terms must be disclosed prior to completion of the transaction and before a financial obligation is incurred by the consumer.
• Customers must provide affirmative consent to any offer, examples include a mandatory “I Agree…” statement checkbox, where the customer is acknowledging the Terms and Conditions of the offer and consents to be entered into continuity program as a result of completing the transaction. Pre-checked boxes do not qualify as affirmative consent.
• Merchants must not discourage or make difficult in any way the disclosed cancellation procedures and all cancellation requests must be honored in accordance with the stated terms of the transaction.

For some, the implementation of these guidelines will be viewed simply as further governmental interference in free commerce.   For others it will mean the end the complete loss of their business.  But for most it will herald a new beginning free of those who would drag us all down a road so restricted that none could survive.

As an e-commerce merchant, where do you stand? 

Has your Service provider reviewed your account in the past 6 months?

Are you properly prepared for the changes and regulations, those here now and those still to come? 

Are you ready to be a part of the solution? 

If your current provider is doing nothing, consider talking to a different provider.  

Acknowledgments:

Portions of this article were taken directly from  The FTC Website, the publication “Dot Com Disclosures” and Visa merchant Chargeback monitoring Program (MCMP).

Six people are accused of stealing bank information from patrons at Chicago restaurants and Wrigley Field, then running up more than $200,000 in purchases on phony cards.

Joseph Woods, 32, allegedly paid employees to skim credit card information by using a small credit card reader provided by Woods, according to the state attorney genereal’s office. The employees would swipe the cards and Woods would create counterfeit cards to charge up thousands of dollars in purchases, the office said.

Britain Woods, 33, Essence Houston, 28, Jenette Farrar, 34, and Kenyatta Davis, 31, worked at Wrigley Field, RL Restaurant, Taco Bell andMcDonald’s, officials said.

Alex Houston, 22, along with Joseph Woods, was charged with using the phony credit cards to make illegal purchases, officials said.

The suspects, all from Chicago, were each charged with one count of conspiracy to commit a financial crime, which carries a sentence from four to up to 15 years, officials said.

Joseph Woods, Essence Houston, Alex Houston and Davis also were charged with continuing a financial crimes enterprise. Joseph Woods, Alex Houston and Davis face an additional identity theft charge that carries a sentence of from three to seven years, officials said.

Officials said the bank accounts that were compromised include Chase, U.S. Bank, Citibank, Harris Bank, American Express, Bank of America and Fifth Third Bank.

What is giving? One way it has been defined Is:
“to present voluntarily — without expecting compensation.”

Giving, then, is a choice, an option with no obligatory strings. It extends its hand to help and not to take. Giving can be a selfless and sacrificial act and expressed in many ways. Its effects ripple through society and bring in waves of relief, comfort, and aid.   Business owners that elect to donate to non-profits is one prime example. 

Donations of all sizes make an impact on charities and affect what they are able to accomplish.  With a few extra dollars they can feed one more orphan or help one more wounded warrior or one more child with special needs. Giving multiplies the power of a dollar.  Plant the seed and the charities feed the multitudes.

But giving can be painful!  Ouch!  Don’t touch my wallet!  But what if it wasn’t painful?  What if you could donate to non-profits at no cost to you or them?  What if it was actually pain-free ?  If you could help a cause that speaks to your heart with no cost to you, would you lean in to hear more?  Would you share this find with your closest friends?

Of course! You may say,

“What? You know a way where I can give money to MY favorite charity, and I don’t have to write the check or reach for my wallet stuck in my back pocket? For real?”

It is for real and, to answer your next question, it is NOT too good to be true!  Payline enables your business to support your favorite charity at NO cost to you — you will likely even save money by using Payline’s services! For real. www.paylinedata.com/support/payline-giving

Even if you don’t use Payline to support non-profits, the Art of Giving comes from many efforts that have a small impact on your daily routine but a big change to the non-profit benefiting.  Just image if you gave up one cup of Starbucks in the morning?   That is about $5.  Even if you only did that one morning a week, you could be donating $20 a month to your charity.   This is small in impact to you (except your crabby butt that one day) but the benefits could be as great as feeding a child in a third world country for a week or more!

Hear what world changers have to say about giving:

Remember that the happiest people are not those getting more, but those giving more.
 - H. Jackson Brown, Jr.

We make a living by what we get, but we make a life by what we give.
 - Winston Churchill

Give back. Do something different.
 - Payline Data

Together we can change the world with four letters G. I. V. E.  Now that is art.

We want to hear from you!  Leave comments on what you are doing to give back to deserving non-profit organizations.   Are you a non-profit or do you know one that we should be giving to?  Let us know as well.

He had sent me his latest email, all of which are very well written, insightful and informative.   Sometimes I may not agree with everything he says (http://www.launch.co/blog/the-one-product-that-makes-apple-a-trillion-dollar-company-o.html - iPad will do this already, not payments) but I do agree with 99% of what he comes out with.    So I started to read “The Age of Excellence“, his latest post…

WOW!

Talk about inspiration!

This picture is what I pictured myself doing as I read his email.   Okay, so maybe that is a stretch, but I knew I was reading something that would change the way I think.   I almost thought that Jason was a motivational speaker more than a wise investor for a minute, then I realized that I could never work the same.   In fact, I can never look at my accomplishments the same or at my coworkers. Today’s customers are not “insta-buyers” which means they make their decision in about the first 10 seconds of checking you out.   This is so true when it comes to today’s tech savvy online shopper.

Jason has been right on the money with some topics in the past but this was a real eye opener.   I was just talking to one of my teacher friends last week and we got on the subject that her class is testing ipads for her students.   What is amazing is they don’t even have wifi in the classrooms yet!  The point is, Jason’s next Launch event is going to be Launch Education & Kids, June 12-13th, 2012.  http://www.launch.co/blog/launch-education-kids-june-12th-13th.html  I can’t wait to see what they show off at this event.   If they don’t launch what she is looking for, Jason better expect a call from me for some product development!

Make sure you check out Launch.co and follow his future blogs at www.launch.co

http://www.launch.co/blog/the-age-of-excellence.html

We have decided to take the list of top 10 questions that our customers submit about their merchant account and post them here so maybe a few of you might find your answers before you call us or email us… although we like the calls and emails… so keep those coming and we can talk about more important things like… the weather… sports… Jeff’s new haircut… Whatever floats your boat.    Okay, enough of that.  Here is the list in no particular order: hmm, Jake makes a good point.  We cheated and I guess you got our top 14 list as some of these are 2 for 1s… Isn’t it just your lucky day 

Q: How long does it take to set up a merchant account?

A: It normally takes about 24 hours for your application to be reviewed.  Most accounts with low risk and established paperwork will be approved in this period.   If you have slightly higher risk or there is a question on your paperwork, it could take up to 5 days for approvals.   If you don’t return our phone calls or submit the required information, it could take a LOT longer, so pick up your phones people.  okok, enough of that.   Once approved, your Payline representative will schedule the setup process as soon as possible.   We promise we will communicate the status to you the entire time.

Q: Are the transactions and funds secure?  What is PCI Compliance?

A: Yes, in fact, Payline is 100% secure.  We are also PCI compliant and can assist your business too, even for mobile processing on your phone or tablet.  Don’t know what PCI DSS  (Payment Card Industry Data Security Standards) means?  Then you may need to call a Payline rep today to find out, and not just if your online, everyone that accepts credit and debit cards has to be PCI compliant these days.   Like to read a lot first… Check out this page.  The framework of the PCI data security standards has existed in different forms for some time now and continues to evolve.  You may be more familiar with the payment brands’ programs that promote the implementation of the PCI DSS.

• MasterCard®: Site Data Protection (SDP) program – www.Mastercard.com/sdp
• Visa®: Cardholder Information Security Program (CISP) – www.Visa.com/cisp
• Discover® Network: Discover Information Security & Compliance (DISC) – www. Discovernetwork.com/fraudsecurity/disc.html
• American Express®: Data Security Operating Policy – www. AmericanExpress.com/datasecurity

Q: What are the requirements to open a merchant account?

A: To qualify for a merchant account, you must be a US resident and have a US business checking account, a Social Security Number or Federal Tax ID number and a business license (or other documentation from a third party verifying that you operate the named business at the given location).  We will help you fill out the app and make sure your documents are in a row so we can get this correct.   We may even require a photograph your business to verify it’s existence.   Our underwriters don’t mess around when it comes to fraud so we have to make sure you aren’t planning on committing any soon.

Q: Do I need a bank account to accept credit/debit cards and does it have to be a business checking  account?  Do I need to change my account or use your (Payline’s) bank?

A:  The banks are in business for a reason.   We would love to send cash in the mail but the US post office told us to stop doing that a long time ago.  So, You will need a bank account to receive funds from your customers’ credit card payments.  It does have to be a business account and your current business checking or savings account is the best option.  When the underwritters see an account with a balance and monthly cash flow that is similar to the processing limits you are listing on your application, it will make approving your account much easier.  You do notneed to change your bank to set up a Payline merchant account.    Anyone that tells you otherwise is just pulling the wool over your eyes.

Q: Can my credit status prevent me from establishing a merchant account to accept credit/debit card payments?

A:  Unfortunately, Yes!   However, it is usually only when you are currently going through a bankruptcy or if you have numerous tax liens.   If you do fall into this category, talk to a Payline representative first.  We can help you come up with a strategy to try to get your account approved.   Plus, your credit might not be as bad as you think.   We all know bad things happen to good people and as entreprenuers ourselves, we’ve been there.  Let us help you get approved so you can get back to making money again!   [/toggle]

Q:  I have a storefront and do retail purchase with (card present) swiped in a terminal.  Can I start doing (card not present) e-commerce and have the funds go into the same checking account ?

A:  So you heard about this thing called the internet too!?!  Great news.  The answer is YES by the way.  However, if you are currently a Payline customer and you want to make this change, you may need to open a new merchant account that complies with e-commerce requirements and rates.   If your switching to Payline, then make sure you let us know this during the application process.   Your Payline representative can help you figure this all out.   Give us a call now!

Q: What is a chargeback?  How do I avoid charge backs?

A:  More fees??  Yuck!!  A chargeback occurs when a customer receives their credit card statement and does not agree with the charges applied.   (very common if you ever used a third party service like PayPal.)  The customer can either call the merchant or get a return on their merchandise or they can call the number on the back of their card (the issuing bank) and issue a charge back against the transaction.  It’s always best practice for a merchant to do as much as possible to resolve any customer issues before the customer initiates a chargeback.   However, bad things happen to good people and often times these are mistakes and the customer doesn’t even realize they are costing you money!   In the worst case, Excessive chargebacks can cause termination or “freezing” of a merchant account.  Unfortunately, some industries just can’t avoid these and if you are a larger business, it is likely to happen (Newton’s law you know).   Lucky for you, Payline prides ourselves on helping clients understand and manage chargeback situations.    The first step to avoiding charge backs is using a business checking account. If you have a website, be sure your doing business as” DBA name is the name on the site as it is for your merchant account.   This will look more familiar to a customer when they see the transaction on their statement.   If you set it up right, your business telephone number can be placed on the statement next to the corresponding charge, so the customer will be more likely to call you instead of the bank and simply return the goods.

Q: What determines my rates?  How can I lower my rates?

A: Your rates are determined in many ways.   The best way to lower your rates is to thoroughly assess each component of your statement and consider the many other cost factors, because getting the lowest rates doesn’t necessarily mean that you’re getting the best deal.  Also, ensure You Have the Right Type of Merchant Account for Your Business.  There are different types of merchant accounts based on the way credit card transactions are accepted.   Generally, four major items determine your rates:

1. Brand and type of card the customer uses (Credit, Debit, Rewards, Corporate, etc.)
2. Type of business you run (Retail, restaurant, Gas Station, Hotel, e-Commerce, etc.)
3. Type of transaction that was made (swiped vs keyed vs online, etc.)
4. Information collected with transaction for verification (address verification, tax amount, etc.)

It is always cheaper to have the right merchant account type for your business.  Always work with a firm that can explain the differences between the different merchant account types and that teaches you to process credit card payments the best way for your business.  We highly recommend an Interchange Plus pricing strategy if you can get it.   This is the simplest and most transparent of the pricing structures.  Merchants should always look for the best overall pricing, while not neglecting the service they deserve.  Follow these guidelines and you can find a merchant service provider who will give you everything your business is looking for.    See how your rates compare with Payline at www.paylinedata.com/rates

Q:  What am I actually paying?  What is a “net effective rate”?

A: This replaces the “What are my current rates?” question.  Most people think they know what their current rates are but in reality they are usually miss-informed or reading the statements incorrectly.   There are multiple Pricing Strategies and multiple items that can affect your rates, as described in the question above.  However, finding your net effective rate really is pretty simple.  Look at your statement and find out what your NET credit card and debit card transaction volume was.  Then look for your total gross fees (Interchange plus transaction fees, plus all other fees).  This is the tricky part where many of our competitors will make it very difficult to find the total gross fees paid.   Once you figure the total fees, simply divide your gross fees by your NET sales for a given month and then multiply that number by 100. For example:

$305 in gross fees / $10,000 in NET sales volume * 100 = 3.05% net effective rate

It will often surprise merchants when they do this calculation right and they find a rate much higher than the “discount rate” they thought they were getting.  This is not uncommon and given any particular month the net effective rate can vary by +/- 0.5%.   This is where having a trained sales professional help analyze your past statements can really help you understand your current fees.   Bottom line, your net effective rate isn’t always a great way to know if you are getting a great deal or getting ripped off.  You have to factor in the specifics of your business, industry, features and especially the level of customer service that you receive.   Getting educated is half the battle though.  To learn more, check out our Credit Card Processing 101 section.

Q:  I want to switch my merchant account provider, what do I need?

A: Switching merchant accounts can seem overwhelming, especially if you are an online business with lots of customers information in a “vault” and no data portability.   So let’s make it easy.  If you are a brick and mortar store, all you need is your current statement (you can also just provide your monthly volume and transaction size), bank account (voided check) and the willingness to fill out a 5 minute application and save up to 40% on your fees!   Normally, you can reprogram your existing terminal, or get a new one for free.   If you have a POS (point of sale) system, just let your sales rep know the provider name and version you are running.  There are a few instances where you can’t switch without switching your POS out but normally your new provider will have an equivalent solution that makes the savings very much worth the switch.

If you have an online business, then you will need the same information (current statement/transaction info, bank account voided check and completed application.  The next challenge (and what keeps a LOT of merchants paying high fees) is to understand your gateway situation.  8 out of 10 times, you can use the same gateway and just switch your MID (Merchant ID) number once your new account is approved.  This alone can save you hundreds or even THOUSANDS of dollars a year in fees.   However, many of our “converts” are currently overpaying for their gateway or other related fees as well.  The most common culprit is Authorize.net.  Another one we have seen lately is braintreepaymentsolutions.  Check out this blog post from feefighters to see how bad it really can be!   No matter who your provider is, the “data portability” can be an issue.   Luckily, this usually can be overcome with a little manpower and the benefits of getting the latest technology (load balancing, auto-update for expiring credit cards, etc.) make this worth the effort.   The other concern may be integration.   This usually means updating your shopping cart.  However, most of the major shopping carts (that aren’t proprietary) already may be integrated with your new gateway.   Payline has literally thousands of options for shopping cart solutions with our gateway solutions so picking a provider with this flexibility is key.

All this being said, the switch process should be made easy for you.  This means having a representative and a tech support team that can answer your questions, give you real savings and assist in making sure that you can save money and spend your time focusing on what is most important to you, your business and your customers.

Didn’t find the question/answer you were looking for?  Check out our FAQ and Credit Card Processing 101 sections for more information.

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With the 2012 report quickly approaching, let’s revisit the 2011 report.  Here is some interesting data from the Giving USA report for 2011.

Giving in the U.S. in 2010 showed a modest uptick over adjusted numbers for 2009, according to Giving USA. The report, released this week by the Giving USA Foundation™ and its research partner, the Center on Philanthropy at Indiana University, showed that total charitable contributions from American individuals, corporations and foundations were an estimated $290.89 billion in 2010, up from a revised estimate of $280.30 billion for 2009. The 2010 estimate represents growth of 3.8 percent in current dollars and 2.1 percent in inflation-adjusted dollars.

You can also download and read the full executive summary report here: Giving USA 2011 Exec Summary Report (1), then sign up to the right to hear about this year’s report (for 2011 stats) which will be released on Tuesday June 19, 2012

The revised estimates for 2008 and 2009 show that 2008 and 2009 saw the largest drops in giving in more than 40 years as a result of the Great Recession, according to the Giving USA Foundation™, exceeding the impact on giving of previous recessions. View long-term giving trend chart.

The estimated $10 billion increase suggests that giving is beginning to recover as the economy slowly climbs out of the recession. Statistics over the past 40 years indicate that giving has closely tracked the economy. And while market swings over the past decade may have left some practitioners feeling like large fluctuations are the norm, fundraisers should understand that the longer-term trends show that slow growth is the norm, according to members of the Foundation Board.

Methodology and Giving Estimates

Individual giving rose an estimated 2.7 percent in 2010, to $211.77 billion (1.1 percent in inflation-adjusted dollars). In estimating individual giving for 2010, the model included a new variable for inflation-adjusted change from the previous year – personal consumption – as well as variables used in prior years.

As anticipated in reports beginning in early 2009, Giving USA shows that grant making by private, community and operating foundations was down slightly. Foundation giving was $41 billion in 2010, down 0.2 percent in current dollars and 1.8 percent in inflation-adjusted dollars.

Driven in part by disaster response in 2010, corporate giving rose to an estimated $15.29 billion, up 10.6 percent in current dollars (8.8 percent in inflation-adjusted dollars). The 2010 numbers for corporate giving also reflect gifts of in-kind donations on behalf of American companies, particularly in the pharmaceutical sector. We would like to see this raise even further with Payline Giving.

Changes in Giving

While giving remained steady or was up slightly for many sectors, giving to the arts, public-society benefit, and international affairs fared better than most. Giving to education saw an increase for the first time in three years.

Giving to education rose to an estimated $41.67 billion, an increase of 5.2 percent in current dollars (3.5 percent in inflation-adjusted dollars). This is the first year of an increase in giving after two years of declines. Educational organizations received an estimated 14 percent of the total.

Giving to public-society benefit organizations was an estimated $24.24 billion, an increase of 6.2 percent in current dollars (4.5 percent in inflation-adjusted dollars). This subsector, which includes certain types of donor-advised funds as well as umbrella organizations such as United Way, Combined Federal Campaign and United Jewish Appeal that collect donations and redistribute them to other charitable organizations, received 8 percent of the total. The increase in giving to this subsector can in part be attributed to growth in freestanding donor-advised funds. Fidelity® Charitable Gift Fund, for example, reported contributions above $1.6 billion in 2010, which was a 42 percent increase over 2009. It may also reflect special appeals through umbrella organizations in 2010 to respond to significantly increased demand for services to address poverty and homelessness.

Giving to arts, culture and humanities organizations rose an estimated 5.7 percent in current dollars (4.1 percent in inflation-adjusted dollars), to $13.28 billion. This subsector was 5 percent of the 2010 total. Because giving to the arts is driven generally by high-net worth donors, this increase suggests a recovery in giving tied to recovery of portfolio values among these donors.

Giving to international affairs – a relatively new sector making up 5 percent of the total giving pie – increased an estimated 15.3 percent in current dollars (13.5 percent in inflation-adjusted dollars) to $15.77 billion.

Giving to religion, at 35 percent of the total, remains the largest share of all contributions, with an estimated $100.63 billion. The estimated increase in 2010 was 0.8 percent in current dollars, with a small decline of the same amount, 0.8 percent, in inflation-adjusted dollars.

Giving to foundations rose slightly to $33 billion, an increase of 1.9 percent in current dollars (0.2 percent in inflation-adjusted dollars). The Foundation Center and the Center on Philanthropy jointly estimate contributions to this type of recipient. This includes private, community and operating foundations. This subsector received an estimated 11 percent of the total.

Giving to human services is estimated to be $26.49 billion, an increase of 0.1 percent in current dollars but a decrease of 1.5 percent in inflation-adjusted dollars. This subsector received an estimated 9 percent of the total. Human services includes the majority of the $1.43 billion donated to Haiti disaster relief. The Center on Philanthropy’s disaster giving research estimates that 75 percent ($1.07 billion) of those gifts were given to human services organizations. If giving to Haiti disaster relief were not included, giving to human services would have declined by 4 percent in current dollars. The other 25 percent of Haiti relief giving ($0.36 billion) was contributed to international relief organizations and is included in the international affairs subsector.

Giving to health also shows an estimated increase, to $22.83 billion (1.3 percent in current dollars or a decline of 0.3 percent in inflation-adjusted dollars). This subsector received 8 percent of the total.

Giving to environment/animal-related organizations declined 0.7 percent in current dollars (a decline of 2.3 percent in inflation-adjusted dollars), to an estimated $6.66 billion. This was 2 percent of the total.

Giving to individuals includes grants from foundations to benefit named individuals. Most often, these are gifts of medications to patients in need and are made by operating foundations created by pharmaceutical manufacturers. These gifts are estimated to have remained relatively steady in 2010, at $4.20 billion or 2 percent of the total.

Every year, Giving USA also calculates the unallocated piece of the giving “pie;” for 2010, it is estimated to be $2.12 billion, or 1 percent of all giving. These are dollars that cannot be attributed to any one particular sector.

Intro: Government Regulation Saves Merchants $$$ in Debit Fees

Remember the act Congress passed last Fall dubbed the Durbin Amendment?  It saved businesses a ton of money on debit processing fees.  This took an estimated $700M out the budgets of the card networks.  Card issuing banks retaliated by charging monthly fees to individuals with Debit accounts.  This led to public outrage, the media cried, and banks put a halt to that practice.  So, back to square one – the banks are suffering a major earnings shortfall estimated at $700M.

Among the bundle of fees paid by merchants for their privilege to accept electronic payments, includes a set of fees named, Card Association Fees.  During the months of April and October, the card networks make adjustments to these fees (most the time raising the fees, but lowering on occasion).  One of these fees is known as the Network Acquiring Processing Fee (Visa APF).  Historically, it represents a cost equal to $.0195 per swipe.

The Good

Effective April, 2012, Visa is lowering the Network Acquirer Processing Fee from $.0195 to $.0155 per swipe.  If that’s exciting news… let’s take a look at the other changes set to take place this upcoming April.

The Bad

Visa has made two other changes to the network fees it charges merchants… a per-transaction fee, and a monthly fee.  The transaction fee has been labeled a “Transaction Integrity Fee,” and its representative of a cost equal to $.10 per swipe.  This fee only applies to Visa Debit and Gift Card purchases, and it completely offsets the $.004 decrease in VISA’s APF fee.

The monthly fee Visa plans to charge is named the Fixed Acquirer Network Fee (FANF), and it will affect ALL merchants.  The FANF is set to vary between $2 – $85 per location per month.  WHAT?!?!

The Ugly

The amount of money merchants will now have to pay on a monthly basis, for the simple privilege to accept card payments is down right UGLY.  Not all details have yet been released, but here’s what we know so far:

Card Present Merchants (i.e. retail stores, restaurants, entertainment centers, etc.)

• Fee will be assessed per location, per month.
• Between 1-3 locations, the merchant will see a $2 fee per month, per location.  If 3 locations, the business owner will see a new monthly fee equal to $6.
• More than 4,000 locations: $85 per location, per month.  Now imagine you are McDonalds for a minute… that is a lot of fees.

 Unfortunately it gets worse…

Card Not Present (i.e. Online merchants, mail order/telephone order merchants, etc.) and Fast Food Merchants

• The fee is calculated monthly, and based solely on gross processing volume.
• If processing between $8,000-39,000 in monthly VISA card volume, the fee is going to be $15/month.
• if more than $5M in monthly VISA card volume, then the monthly fee is going to be $1,500/month

Okay, now for our shameless company plug… don’t worry there is a benefit to you too!

At Payline Data, we are a merchant acquiring company, and thus maintain no control over any of the Card Association Fees.  For the record, none of our competitors are able to eliminate these fees either.  However, there is a distinction between Payline and most the competition: We pass these fees onto the merchant –at cost.  Whereas other acquirers often impose surcharges on these fees to effectively raise their margins.  Give us a call for a full account review, courtesy of our friendly and knowledgeable staff.   No hassles nor obligations – I promise.

The theft was first reported by well-known computer security journalist Brian Krebs on his blog, KrebsonSecurity.com.   Krebs said the crime involves compromise of a credit card payment processor — a “middle man” that handles transactions between retailers and banks.
The name of that institution is unknown, but processors have long been a target of identity thieves because of the enormous amounts of data they control. In
2008, Princeton, N.J.,-based Heartland Systems was hacked, exposing tens of millions of credit card account numbers to theft.
Krebs reported that hackers had access to the unknown processor’s data from Jan. 21 through Feb. 25, and were able to siphon off enough data to
easily create counterfeit cards. His sources called the leak “massive.”

Visa, in a statement, also acknowledged the data theft but said its own systems were not hacked.
“Visa Inc. is aware of a potential data compromise incident at a third party entity affecting card account information from all major card brands,” the firm
said. “Visa has provided payment card issuers with the affected account numbers so they can take steps to protect consumers through independent fraud
monitoring and, if needed, reissuing cards.”
Gartner security expert Avivah Litan said she’s been told that the stolen data is already being used on the street by identity thieves.
“I’ve spoken with folks in the card business who are seeing signs of this breach mushroom. Looks like the hackers have started using the stolen card data
more recently,” she said.
She’s been told that investigators believe the data theft originated in New York City.
“From what I hear, the breach involves a taxi and parking garage company in the New York City area, so if you’ve paid a NYC cab in the last few months
with your credit or debit card — be sure to check your card statements for possible fraud,” Litan said in her blog post on the topic.
MasterCard said none of its computers were hacked as part of the incident.
“MasterCard is concerned whenever there is any possibility that cardholders could be inconvenienced and we continue to both monitor this event and take
steps to safeguard account information,” the association added in its statement. “If cardholders have any concerns about their individual accounts, they
should contact their issuing financial institution…. It is important to note that MasterCard’s own systems have not been compromised in any manner. “