MASTERCARD ANNOUNCES REVISED STANDARDS FOR POS TERMINAL/ATM RECEIPT REQUIREMENTS
MasterCard has announced that the standards for POS terminal and ATM terminal receipts will become effective on October 1, 2008. Following are the revised requirements:
Cardholder receipts generated by an electronic point-of-sale (POS) terminal (attended or unattended) or by an ATM must:
Include only the last four digits of the primary account number (PAN), replacing all preceding digits with fill characters that are neither blank spaces nor numeric characters, such as “x”, or “*”, or “#”, and exclude the card expiration date.
Check the receipts that you are currently printing out. What kind of numbers do you see? If it appears as though that both the customer and your copy, are not compliant with the mandate coming in October, you need to get it fixed. In most cases, all that will need to be done is to have your current terminal reprogrammed. Contact your processor's help desk for assistance.
Merchant receipts must exclude the card expiration date. Additionally, MasterCard strongly recommends that merchant receipts reflect only the last four digits of the PAN.
Credit card fraud and mishandling of card-holder information is increasingly becoming a major problem. You, as a merchant, want to take all the steps you possibly can to protect both you and your customers.
If, in the event, you need to recall a specific transaction, to issue a refund, let's say, you will be able to retrieve the necessary information from your processor's customer service desk. Simply provide them with the transaction number from the receipt.
Continue to increase your understanding of how the credit card processing industry works and begin saving more money on these necessary services. Visit us at:
Wednesday, January 30, 2008
Sunday, January 20, 2008
On-Line and Off-Line Debit Suggestions
As I'm sure you're aware, there are two ways to process debit transactions (on-line and off-line). Each would come with it's own specific rate structure. Here is an explanation of the differences and a suggestion on how you may capture more at the best rates possible.
Online/PINed Debit
PINed Debit transactions, facilitated primarily by ATM cards, require the use of a personal identification number (PIN). Once the card has been swiped through the POS terminal, the cardholder will be prompted to enter their PIN prior to completing the transaction. The transaction is then routed through the appropriate regional or national EFT network for validation, including availability of funds, and processing of the payment and the appropriate transaction fee for that network is charged to the merchant. No signature is required from the merchant and the funds are deducted from the cardholder’s account immediately. PINed Debit transactions are considered more secure and a lower risk for the merchant because they require PIN entry for authorization.
Offline/Signature Debit
Signature Debit transactions require that the cardholder sign a receipt. Signature Debit transactions are processed using the Visa or MasterCard networks and are subject to the interchange fees associated with these networks. Availability of funds is not verified for offline debit transactions. The purchase amount is deducted from the cardholder’s checking account and is reflected on the cardholder’s account statement from their Financial Institution.
Now, let's take a look at some average pricing differences between how they could be routed. We'll use a $50 transaction since at this level, and below, there is a high incidence of debit cards being used at POS nationwide.
Offline Swiped on 4 Tier Pricing at 1.49% + $.25 = $1.00
Offline Swiped on 3 Tier Pricing at 1.79% + $.25 = $1.15
Online Swiped utilizing PIN thru NYCE network
Current Rates are $0.1375 + 0.65% = $.17 + (processor fee of approx $.15) = $.61
NYCE has a CAP Maximum of $.6875
Online Swiped utilizing PIN thru STAR network
Current Rates are $0.1925 + 0.75% = $.23 + (processor fee of approx #.15) = $.72
STAR has a CAP Maximum of $.6925
NOTE: Keep in mind the above maximums relate only to the Network fees and do not
include the processor fee. So, in the example for the STAR network, on this $50 sale, their fees would be $50.00 x 0.75% + $.1925 = $.5675 or $.57
So, you can see from the above example, it would be a cost savings to capture as many Online Pinned debits as possible. Here's the error I see most merchants and their employees make. If they ask the customer at all, it tends to go like this...."credit or debit?". You're giving the customer the option but hey, whose paying the fees anyway, you or them? When a customer hands you their debit card, they know full well there is enough money in their account to accomodate the sale. Just because most all debit cards have a Visa or MC logo on them does not, and never will, mean that it is a credit card. IT IS A DEBIT CARD! The only questions that remains is if the customer actually knows their pin number, and most do.
Many banks that have issued branded (Visa/MC) debit cards have encouraged their cardholders to "just use them like a credit card". In other words, they are telling them that they don't need to use their pin number. Why do you suppose they are doing that? More fees for them, of course. You see, when the customer doesn't use their pin number, the bank (as the issuer) earns interchange (currently Visa @ 1.03% + $.15 or $.67 and MC @ 1.05% + $.15 or $.68). So, if you capture the pin number, you save on fees and the banks earn ZERO. Don't you feel bad for them now? When the pin number is used, the appropriate EFT Network (STAR, NYCE, Pulse, etc) earn the fees.
Here's a suggestion for you to possibly enable you to capture more pinned based debits and save on fees. Every debit card will say on it "debit", "check card", "money card" or something similar. When you, or your employee, takes a card from the customer, simply look at the face of card. If it has any of the words indicated previously, simply say, "I'm going to need you to enter your pin number in a second". Then pause a second and if they don't object or say they don't know their pin number (which is rare), select "Debit" on your terminal, and the PinPad will beep at them and prompt them to enter their number (of course you need a PinPad or a terminal with built in PinPad to accomodate this transaction).
Typically, customers don't know that there is a cost difference to you, the merchant, in how you process their cards. In fact, many customers don't know it cost you anything at all for accepting their credit or debit cards. Because of the continuing increase in processing fees, some of my merchants have put up signs such as: "for your protection and for reduced processing fees to us, when using your debit card, we appreciate the input of your pin number", or something of that nature.
Hopefully, this has been helpful in furthering your understanding of debit card processing and the associated fees. To further your education in the credit card and debit card processing world, please visit my website at: http://www.creditcardprocessingknowledge.com/
Online/PINed Debit
PINed Debit transactions, facilitated primarily by ATM cards, require the use of a personal identification number (PIN). Once the card has been swiped through the POS terminal, the cardholder will be prompted to enter their PIN prior to completing the transaction. The transaction is then routed through the appropriate regional or national EFT network for validation, including availability of funds, and processing of the payment and the appropriate transaction fee for that network is charged to the merchant. No signature is required from the merchant and the funds are deducted from the cardholder’s account immediately. PINed Debit transactions are considered more secure and a lower risk for the merchant because they require PIN entry for authorization.
Offline/Signature Debit
Signature Debit transactions require that the cardholder sign a receipt. Signature Debit transactions are processed using the Visa or MasterCard networks and are subject to the interchange fees associated with these networks. Availability of funds is not verified for offline debit transactions. The purchase amount is deducted from the cardholder’s checking account and is reflected on the cardholder’s account statement from their Financial Institution.
Now, let's take a look at some average pricing differences between how they could be routed. We'll use a $50 transaction since at this level, and below, there is a high incidence of debit cards being used at POS nationwide.
Offline Swiped on 4 Tier Pricing at 1.49% + $.25 = $1.00
Offline Swiped on 3 Tier Pricing at 1.79% + $.25 = $1.15
Online Swiped utilizing PIN thru NYCE network
Current Rates are $0.1375 + 0.65% = $.17 + (processor fee of approx $.15) = $.61
NYCE has a CAP Maximum of $.6875
Online Swiped utilizing PIN thru STAR network
Current Rates are $0.1925 + 0.75% = $.23 + (processor fee of approx #.15) = $.72
STAR has a CAP Maximum of $.6925
NOTE: Keep in mind the above maximums relate only to the Network fees and do not
include the processor fee. So, in the example for the STAR network, on this $50 sale, their fees would be $50.00 x 0.75% + $.1925 = $.5675 or $.57
So, you can see from the above example, it would be a cost savings to capture as many Online Pinned debits as possible. Here's the error I see most merchants and their employees make. If they ask the customer at all, it tends to go like this...."credit or debit?". You're giving the customer the option but hey, whose paying the fees anyway, you or them? When a customer hands you their debit card, they know full well there is enough money in their account to accomodate the sale. Just because most all debit cards have a Visa or MC logo on them does not, and never will, mean that it is a credit card. IT IS A DEBIT CARD! The only questions that remains is if the customer actually knows their pin number, and most do.
Many banks that have issued branded (Visa/MC) debit cards have encouraged their cardholders to "just use them like a credit card". In other words, they are telling them that they don't need to use their pin number. Why do you suppose they are doing that? More fees for them, of course. You see, when the customer doesn't use their pin number, the bank (as the issuer) earns interchange (currently Visa @ 1.03% + $.15 or $.67 and MC @ 1.05% + $.15 or $.68). So, if you capture the pin number, you save on fees and the banks earn ZERO. Don't you feel bad for them now? When the pin number is used, the appropriate EFT Network (STAR, NYCE, Pulse, etc) earn the fees.
Here's a suggestion for you to possibly enable you to capture more pinned based debits and save on fees. Every debit card will say on it "debit", "check card", "money card" or something similar. When you, or your employee, takes a card from the customer, simply look at the face of card. If it has any of the words indicated previously, simply say, "I'm going to need you to enter your pin number in a second". Then pause a second and if they don't object or say they don't know their pin number (which is rare), select "Debit" on your terminal, and the PinPad will beep at them and prompt them to enter their number (of course you need a PinPad or a terminal with built in PinPad to accomodate this transaction).
Typically, customers don't know that there is a cost difference to you, the merchant, in how you process their cards. In fact, many customers don't know it cost you anything at all for accepting their credit or debit cards. Because of the continuing increase in processing fees, some of my merchants have put up signs such as: "for your protection and for reduced processing fees to us, when using your debit card, we appreciate the input of your pin number", or something of that nature.
Hopefully, this has been helpful in furthering your understanding of debit card processing and the associated fees. To further your education in the credit card and debit card processing world, please visit my website at: http://www.creditcardprocessingknowledge.com/
Friday, January 18, 2008
Important Questions to ask about your Credit Card Processing Service
If you're in business, you know that you must accept credit and debit cards for payment. The numbers by industry sources for 2007 have indicated that "payment for goods and services utilizing credit/debit cards, has exceeded that of cash and checks". Like most merchants, you are most likely solicited by phone, fax, email or in person, several times a month. So how do you make a wise choice regarding which provider to go with. The best advice I can give you is to ask lots of questions. Get a feel for the person presenting to you with their knowledge and willingness to openly discuss everything with you. Don't be focused only on the quoted rate that the provider seems to be focusing on. It's not a simple task to weed thru all the hype and nuances of this service but, with proper education, you'll be successful in making a wise choice.
First, let's talk about rate a little bit. Here's the things to know up front and these are the kinds of things the provider should be asking you:
1. What is your average monthly volume
The larger the volume, the better the rate should be
2. What is your average transaction size
This helps to determine if you should have bundled or unbundled rates
Also, if you have a lower average ticket (say under $50), you should be considering 4 Tier pricing in order to take advantage of lower signature debit card rates.
In addition to lower signature debit card rates, consider a pin-pad for pinned based debit transactions that could cost you even less. Many debit networks have CAP maximums.
3. How do you transact business (card present or card not present). Merchants that process 80% of their transactions card present will get most favorable processing rates.
Here's some crucial questions you need answered. Ask the rep what your rate will be for:
* Card-not-present or hand-keyed transactions
* Rewards Cards (there are Visa Rewards 1 and Visa Rewards 2....ask for both)
* Commercial Cards or Business T & E cards
* World cards (especially important if you're in a tourist type area
This is an area that is crucial for you to understand because these cards are charged
a higher interchange rate and if you don't ask the questions up-front, the provider won't
likely volunteer the information because this is where they can really get in your pocket.
4. Retail businesses are pretty straight forward when it comes to rates. However, certain industries can be provided with preferred pricing. Some of these would be, restaurants, grocery stores, petroleum dealers, service industries, utilities, etc. Ask if there are any special concessions for your type business.
5. A good way to get a handle on your current "real" rates is to determine what your
Net Effective Rate. Do this by taking your total fees for the month and divide it by the
total monthly (Visa/MC, do not include Discover and AMEX) volume you processed.
Don't forget to add in any annual fees that you may pay. For example, if you pay $120 in annual fees, add in $10 to your monthly total in order to get an accurate NER.
6. If you're allowing a new provider to quote you numbers based on your current statement,
make certain they are doing a line-by-line comparison. This way you can properly compare
your current NER with what they say their's will be.
Okay, now that you've been able to zero in on rates more effectively, it's time to ask some other questions that often get overlooked by merchants.
* Are there any monthly minimums and if, so, how much are they?
* Are there any annual fees?
* How about any set-up, application or programming fees?
* How long is the contract term (typical is 3 years)
* If I decide to terminate early, what is the early termination fee?
* Are there any batch total fees? If so, how much are they?
* Is there a statement fee?
* How much for the occasional Address Verification Fee?
* What do they charge for Chargeback Handling should they arise?
* How about Voice Authorization and referral fees?
* If you're utilizing Pin-based debit, is there a monthly debit network access fee?
* Are supplies FREE or available for a nominal charge?
* What about terminal replacement? Do they have a plan for that?
There may be other questions that I haven't addressed here. Consider your own experience
with merchant providers. Were there any charges or fees in the past that caught you off guard? Ask about them as well.
The bottom line is simply this...you need to accept debit and credit card transactions in your business. You want to do it as smoothly and efficiently as possible and do so with the most reasonable rates you can negotiate. All providers operate from the exact same cost basis which is referred to as Interchange. So, what dictates rates is simply, how much they feel they need to make off of you or how much they can take advantage of you.
I hope this article has been helpful. However, to further expand your knowledge and total understanding of this industry, check out my informative website. I promise, I'm not just another provider trying to solicit your business. Thanks for reading. Here's my site.
First, let's talk about rate a little bit. Here's the things to know up front and these are the kinds of things the provider should be asking you:
1. What is your average monthly volume
The larger the volume, the better the rate should be
2. What is your average transaction size
This helps to determine if you should have bundled or unbundled rates
Also, if you have a lower average ticket (say under $50), you should be considering 4 Tier pricing in order to take advantage of lower signature debit card rates.
In addition to lower signature debit card rates, consider a pin-pad for pinned based debit transactions that could cost you even less. Many debit networks have CAP maximums.
3. How do you transact business (card present or card not present). Merchants that process 80% of their transactions card present will get most favorable processing rates.
Here's some crucial questions you need answered. Ask the rep what your rate will be for:
* Card-not-present or hand-keyed transactions
* Rewards Cards (there are Visa Rewards 1 and Visa Rewards 2....ask for both)
* Commercial Cards or Business T & E cards
* World cards (especially important if you're in a tourist type area
This is an area that is crucial for you to understand because these cards are charged
a higher interchange rate and if you don't ask the questions up-front, the provider won't
likely volunteer the information because this is where they can really get in your pocket.
4. Retail businesses are pretty straight forward when it comes to rates. However, certain industries can be provided with preferred pricing. Some of these would be, restaurants, grocery stores, petroleum dealers, service industries, utilities, etc. Ask if there are any special concessions for your type business.
5. A good way to get a handle on your current "real" rates is to determine what your
Net Effective Rate. Do this by taking your total fees for the month and divide it by the
total monthly (Visa/MC, do not include Discover and AMEX) volume you processed.
Don't forget to add in any annual fees that you may pay. For example, if you pay $120 in annual fees, add in $10 to your monthly total in order to get an accurate NER.
6. If you're allowing a new provider to quote you numbers based on your current statement,
make certain they are doing a line-by-line comparison. This way you can properly compare
your current NER with what they say their's will be.
Okay, now that you've been able to zero in on rates more effectively, it's time to ask some other questions that often get overlooked by merchants.
* Are there any monthly minimums and if, so, how much are they?
* Are there any annual fees?
* How about any set-up, application or programming fees?
* How long is the contract term (typical is 3 years)
* If I decide to terminate early, what is the early termination fee?
* Are there any batch total fees? If so, how much are they?
* Is there a statement fee?
* How much for the occasional Address Verification Fee?
* What do they charge for Chargeback Handling should they arise?
* How about Voice Authorization and referral fees?
* If you're utilizing Pin-based debit, is there a monthly debit network access fee?
* Are supplies FREE or available for a nominal charge?
* What about terminal replacement? Do they have a plan for that?
There may be other questions that I haven't addressed here. Consider your own experience
with merchant providers. Were there any charges or fees in the past that caught you off guard? Ask about them as well.
The bottom line is simply this...you need to accept debit and credit card transactions in your business. You want to do it as smoothly and efficiently as possible and do so with the most reasonable rates you can negotiate. All providers operate from the exact same cost basis which is referred to as Interchange. So, what dictates rates is simply, how much they feel they need to make off of you or how much they can take advantage of you.
I hope this article has been helpful. However, to further expand your knowledge and total understanding of this industry, check out my informative website. I promise, I'm not just another provider trying to solicit your business. Thanks for reading. Here's my site.
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