Before I go on, I would first like to explain what I mean when I say EMV and chip card technology. EMV stands for Europay International, MasterCard, and Visa and is a set of standards for how chip cards interact with POS terminals and devices. EMV cards are often referred to as smart cards or chip cards and are essentially credit or debit cards with an embedded microchip.

This chip generates a unique code called a cryptogram with each and every transaction. This code is then used to verify that the purchase is being made with a legitimate card and is what makes it virtually impossible for criminals to counterfeit EMV cards.

For quite some time people have been asking when chip cards will become popular in the United States. After all, we had been hearing about EMV for years, but the rollout was extremely slow because of the high cost to issue chip cards and merchants were slow to install new POS devices with chip card readers.

October 2015 was long seen as a key milestone because of the liability shift associated with that date. You see, after that date, merchants without EMV capability in their POS system will hold the liability for transactions with counterfeit cards. However, as you well know, it takes time – and a lot of money – to replace magnetic stripe cards with EMV cards. That’s why many financial institutions use expiration cycles to issue new cards, and this simply takes time.

Sure last year’s Target breach helped expedite the roll out of EMV in the United States, but expert forecasts vary widely on when EMV will become commonplace in the U.S. I’ve seen estimates from experts in the field of credit card processing that estimate that in the U.S. anywhere from 270 million to 650 million smart cards will be issued by the end of 2015. This means that anywhere from 23%-54% of cards in the U.S. will have EMV capability. Either way, we will definitely see a significant jump in the number of EMV cards in the U.S. in 2015.

So what does this mean for your financial institution’s merchant services program? If you have a lot of small “mom and pop” customers, there’s a good chance that they won’t have many customers who want to use EMV cards at their businesses, but this will increase over time. If your merchants are thinking about upgrading their POS equipment, they should make sure that their new devices have a chip card reader, which is a slot where consumers can insert their card.

The good news for merchants is that by upgrading their terminal they will also be able to support Apple Pay, providing they choose a terminal that has a contactless card reader. Being able to accept two new forms of payment will go a long way for the merchant in terms of increasing customer satisfaction by offering added convenience and security to their customers.

What impact has EMV had on your financial institution’s merchant services program? Have your merchants been asking about EMV and chip card technology? If so, we can help you educate them on the ins and outs of EMV and chip card technology on a special page on our website. We even have a white paper that can be downloaded free of charge.

The post Is the Time Right for EMV and Chip Card Technology? appeared first on FIs Blog.

How does Apple Pay work?

Apple Pay will use Near Field Communication (NFC) to send a payment token to the merchant’s point-of-sale system. However, in order for merchants to accept payments via Apple Pay, it means that credit card terminals and POS systems must have a contactless reader in order to accept NFC payments.

Do you have any tips for merchants looking to upgrade their terminal or POS system?

For merchants looking to upgrade their terminal or POS system, now is a good time to look into those devices that also support EMV cards, or smart cards. The leading device manufacturers have several models of NFC terminals to choose from, even though adoption to date has been slow.

Will all payment processing companies support Apple Pay?

Eventually most, if not all, payment processing companies will support Apple Pay. However, it does not mean that they do at this very moment. First, these companies must offer terminals and POS systems that support NFC. Processors also must support the new tokenization standards of the payment networks.

Is there a cost to merchants who wish to accept Apple Pay?

Merchants will not have to pay to accept Apple Pay. The transactions will very closely resemble Visa, MasterCard, and American Express transactions, and as far as the merchant’s processing rates, their typical rates will most likely apply, however, the exact details will depend on how the payment processing companies formulate their policies around Apple Pay.

What interchange rates will apply to Apple Pay transactions?

Visa has issued guidance that Apple Pay transactions made via NFC will be treated as card present transactions. This means that their typical interchange rates will apply, which should make merchants happy. Visa also said that in-app purchases via Apple Pay will be treated as e-Commerce transactions.

Is there anything else merchants should be aware of?

While this is definitely major news, adoption and rollout of Apple Pay will take time because for starters, the iPhone 6 is not even available yet. Sure, I bet Apple will sell a ton of phones right out of the gate, but the iPhone 6 will only represent a small portion of the overall smartphone market, at least for the time being.

Then there’s the fact that Apple Pay will initially only be available at 220,000 stores. While this might sound like a big number, it’s really not when you consider that there are 8 million businesses in the United States that accept payment cards.

What else do merchants need to know?

Don’t get too excited just yet, and definitely do not panic. Apple Pay is major news, but it is likely to take some time to have a real impact in the market. First, consumers will need to buy the new iPhone 6 when it comes out. I’m sure Apple will sell millions of new phones, but that will still only represent a small percentage of the overall market.

More details will surely follow in the coming weeks, so we all have a lot to learn about the ins and outs of Apple Pay. So stay tuned. We’ll be sure to keep you informed as more information becomes available.

What do you think about Apple Pay? How do you think it will impact credit card processing services?

The post How Will Apple Pay Impact Credit Card Processing Services? appeared first on FIs Blog.

I have to admit that what I saw shocked me. I expected mobile payments to be commonplace, but I really didn’t see any more mobile payment systems that what I have seen in St. Louis. Out of the numerous businesses I visited, only three had tablet-based point-of-sale systems. I also saw very few people using their smartphone to make a payment. When I did see someone making a purchase with their phone, it was typically to pay for bus fare. There were many parking meters that accepted credit cards and mobile payments though, but Level Up and other mobile loyalty programs were no where to be found.

I realize that change takes time. In fact I recently saw research from Bain & Company that reported that 6.6% of consumers in the U.S. have used their smartphone for in-store purchases. Yes, mobile payments represent only a small fraction of in-store payments, but that number is definitely growing because that percentage increased by 103% between 2010 and 2013.

These numbers point out that even though adoption of mobile payments is slow, now is the time that banks need to start integrating them into their financial institution’s merchant services programs. Research shows that consumers trust banks with their data more than they trust retailers, technology companies, and alternative payment providers, so this presents a great opportunity for your financial institution to capture a share of this growing market.

Keep in mind that it’s important to provide your accountholders with choices. This way you can make sure that you will have a solution that best fits the needs of each customer, instead of trying to conform them to a one-size-fits-all approach.

Because there are numerous mobile payment systems in the market today, make sure you talk to your merchant services provider about which options are best for your customers. Keep in mind that consumers want programs that deliver extra value, such as better loyalty rewards and ways to help manage their money. And it goes without saying that whatever system you choose must be secure and easy to use. But by discussing your needs with your merchant services provider you’ll be able to pick the solutions that are right for your market.

What role do mobile payment systems play in your long-term digital strategies? Share your thoughts with our readers by leaving a comment below.

The post Integrating Mobile Payments Into Your Digital Strategy appeared first on FIs Blog.

The Payment Card Industry Security Standards Council, which introduced PCI security standards, continuously updates their requirements to improve security, keep up with technology and stay one step ahead of fraud. This includes requiring that payment devices such as terminals and PIN pads keep up with new standards, as well as setting timelines for when manufacturers must stop making and selling older terminals because they can no longer meet these standards.

For devices that accept PINs, there are different versions of PCI requirements. The council has dictated that after April 30, devices using version one cannot be manufactured or sold. After April 30, devices must certify to version four, but devices that were already certified to version two can be manufactured and sold through April 2017.

Because of these requirements, certain terminals and PIN pads will not be able to be purchased after April 30, 2014, including:

• Equinox T4205
• Equinox T4210
• Equinox M4230
• Equinox T4220
• Equinox P1300 and S9 PIN Pads
• VeriFone Vx510 and 510LE
• VeriFone Vx570
• VeriFone Vx610
• VeriFone Vx670

Merchants will still be able to use these terminals, but new ones will not be able to be sold, nor will merchants be able to perform new PIN injections on the old terminals.

For more information on the new requirements or on credit card security in general, visit the PCI Security Standards Council’s website.

Has the Target breach influenced the perceptions of your merchants? Have they seemed more willing to update their terminals? Have they been more open to EMV terminals and pin pads?

The post New Credit Card Security Requirements For Terminals And PINs appeared first on FIs Blog.

The scope of this breach is a wake up call for both the retail and payments industries. Not only does it create enormous amounts of work for the retailers and consumers involved, but also as a financial institution, I’m sure you know all too well just how costly it is to alert customers to the breach and then reissue cards.

In addition to raising questions about the impact this breach will have on the adoption of EMV, many are also talking about the PCI data security standard and are wondering about the merchant’s role in protecting the payments system.

Of course this all boils down to good old-fashioned finger pointing, but there is no denying the fact that now is the perfect time to talk to your merchants about the importance of the PCI compliance process.

In fact, the type of PCI compliance program that you have in place can be a major differentiator for your financial institution’s merchant services program. We hear all the time about merchants that are frustrated because they’re paying highly monthly or annual PCI compliance fees and are not getting a lot in return.

This begs the question, how does your merchant services provider handle this important topic? Merchants need a fast and easy way to complete their PCI questionnaire, and more importantly, it’s critical that they are given actionable information so that they can help protect their business and their customers from the harmful and costly effects of a breach.

Then of course there’s the subject of fees. Most merchant services providers claim to support merchants through a variety of security-related services, but how many put their money where their mouth is and don’t charge them an arm and a leg? I suggest that you carefully examine all of the costs your merchants are paying for data security-related services, and see if your processor has a program where your merchants can avoid costly PCI compliance fees.

It’s important to remember that we all play an important role in the security of the payments value chain. Whether you are a merchant, a financial institution, or a merchant services provider, it’s important that we all work together to help stand up to card fraud and make sure that we continually educate merchants and customers on this important topic.

I’m curious to know how your merchant services provider handles the PCI compliance process. Has it been a positive experience for you and your merchants?

Related Resources

If you would like additional information to help protect your merchants, the card associations have published a lot of great resources about best practices for cardholder security. Below are descriptions and links to several Visa resources that you can share with your merchants.

Reducing Counterfeit Fraud Through Acceptance Best Practices
This guide provides card-present merchants with best practices they can use at the point-of-sale to reduce their exposure to counterfeit transactions.

Global Visa Card-Absent Merchant Guide to Greater Fraud Control
Geared towards merchants who process card-not-present transactions, this guide provides detailed information about PCI compliance and Visa’s security tools.

Card Acceptance Guide for Visa Merchants
This guide is applicable to all merchants that accept Visa transactions in the card-present and card-absent environment and provides up-to-date information and best practices for processing Visa transactions while minimizing risk of loss from fraud.

Visa e-Commerce Merchants’ Guide to Risk Management
Designed for e-Commerce merchants, this guide offers an in-depth look into the tools and best practices needed to build a secure Internet business.

The post How Data Breaches Impact the PCI Compliance Process appeared first on FIs Blog.

There are two big obstacles blocking EMV’s growth. The first is getting the new cards into consumers’ wallets. Banks have been sending out EMV credit cards slowly, mainly to customers who are frequent international travelers. This is not all that surprising, given that issuing new cards is expensive. A recent statistic showed that only 1% of U.S cards are EMV cards.

The other obstacle is the reluctance of merchants to upgrade their point-of-sale systems so that they’re EMV friendly. Most merchants replace their POS terminal only once every five or six years. They simply don’t want to pay to upgrade unless they absolutely have to. For merchants in big cities who get a lot of business from international travelers, it may be necessary for them to upgrade to EMV-friendly systems. But for merchants in rural areas, it may be hard for them to see the benefits of doing so.

So, what do you tell your customers if they ask whether they should upgrade their equipment? We recommend that you tell them that if a new POS device can increase their revenue, decrease costs and save time, then it may be a good investment.

You should also make your commercial accountholders aware of the fact that many merchant processing companies are exaggerating the need for merchants to upgrade their terminals. Not all companies are exaggerating in this way. But you should be aware of this sales tactic so you know how to respond to questions about it.

October 1, 2015 is the deadline when the liability will shift to the party responsible for a non-EMV counterfeit transaction. And although this date is still some time away, as it gets closer we should see more EMV cards being issued and more POS systems being upgraded.

Do you have any questions about EMV? When do you think EMV will become widespread in the U.S.? Let me know with a comment below.

The post When Will EMV Catch on for Merchant Services? appeared first on FIs Blog.

• MasterCard launched a new interchange program for charities (MCC 8398) and added new procedures for when it doesn’t apply card interchange fees for charities that offer disaster relief.

• Discover increased their amount tolerance for car rentals and lodging to 20%, and it also added a new amount tolerance of 15% for mail/telephone order transactions. These changes are designed to give merchants more flexibility to change their transaction amounts without having to do incremental authorizations and authorization reversals.

• Discover also made several other additions, including:
  • a Network Authorization Fee of $0.0025 per authorization
  • Interchange programs for commercial debit card transactions
  • Interchange programs for regulated debit and prepaid card transactions (0.05% + $0.21) and regulated cards with the fraud adjustment (0.05% + $0.22)

The fact that these changes were made didn’t catch anyone by surprise. The card associations make adjustments regularly, usually twice a year. But what was surprising was the large rate increases we’ve seen from companies that offer merchant processing services.

We know that adjusting to the changes takes hard work, and sometimes the rates need to be tweaked. We simply want to advise you to be mindful of these things when you review your profitability and consider whether to change processing companies.

Not only can mark ups on card brand changes affect your profitability, they can also negatively impact banks’ merchant services programs. Owners of small businesses are so busy that they usually don’t pay attention to credit card processing costs. But when they see them rise, it can be a different story.

Conversely, you can also view these changes as an opportunity to grow your financial institution’s merchant services program. With these changes shaking things up, merchants who were once reluctant to hear you out about your merchant processing services may be more willing to listen, which could bring new business opportunities.

What effects have you seen from these changes? Leave us a comment and let us know.

The post The Impact Of New Card Interchange Fees appeared first on FIs Blog.

Now the question remains how do you build loyalty and grow customer engagement? After all, we all know that the more products and services your customers turn to you for, the more likely they are to become profitable, life-long assets to your financial institution.

In addition to offering the best small business credit card processing service, you should also offer mobile marketing solutions that can help your commercial accountholders connect with their customers. Marketing solutions and loyalty programs, along with mobile payments – of course, are definitely the hot topics in the industry today, and can help drive your profitability.

There are many new marketing programs on the market, ranging from virtual punch cards to charitable giving programs. Our personal favorite is Reward4Schools, which is a unique, community-based loyalty marketing program for small businesses.

When a consumer uses a Reward4Schools Community Reward Card to make a purchase at a participating business, it automatically triggers a donation from the business to the consumer’s designated school or charity. Schools then promote the program to the parents of their students and encourage them to visit these participating businesses, which support them through donations.

This creates a virtuous cycle, benefitting everyone that’s part of the program – from the merchant, to the cardholder, to the school or charitable organization.

Reward4Schools makes it easy for small businesses to give back to their local communities. Plus it gives financial institutions another lead in when talking to prospective customers about their merchant services program, other than the old standby of rates.

If you are looking to round out your small business credit card processing service, consider adding a loyalty program that integrates payment processing, coupons and offers, and also email and mobile marketing.

When you do, make sure you work with your credit card processor to thoroughly train all of your front-line personnel. Sometimes these employees are not comfortable talking about all of the products and services you offer, but I bet you’ll find that a little bit of training goes a long way.

Has your financial institution ventured into loyalty and marketing programs? If you have questions about which type of program would be best for your financial institution, feel free to ask me a question by leaving a comment below.

The post Loyalty Programs and Your Merchant Services Program appeared first on FIs Blog.

New solutions are introduced to the payments world at a seemingly supersonic rate. Traditional terminals, and even virtual terminals, are familiar standbys, but mobile credit card processing, tablet-based POS systems and other computer-based POS systems are starting to make waves.

Many financial institutions have questions about these emerging technologies, so here are the topline details on the latest and greatest solutions designed to complement your credit card processing services.

Next Generation Credit Card Terminals

EMV is currently making headlines on the terminal front. In the U.S., many merchant credit card processors are questioning whether it will truly become commonplace, but terminal manufacturers are gearing up with plenty of options, and ensuring they’re ready when merchants decide it’s time for a new terminal. Processors are beginning to certify terminals to fully support chip cards for EMV, and new players are becoming prevalent in addition to the companies you may already be familiar with.

A few companies from outside the U.S. are making inroads include PAX and DejaVoo. Equinox also launched its first new terminal (called Apollo) since changing its name from Hypercom, and, not one to be left behind, Ingenico in the U.S. is also making a big push.

Mobile Credit Card Processing Services

New card readers for mobile devices are also becoming prevalent. MagTek and ID Tech are developing readers that can support EMV cards–two in fact: one with PIN verification and the other featuring signature confirmation. Additionally, Ingenico boasts a terminal that works in conjunction with a tablet POS application.

Tablet-Based POS Systems

At the 2013 ETA Annual Meeting & Expo hosted in New Orleans, tablet-based POS systems were popping up everywhere. Newer players like ShopKeep, GoPago, and Leaf were all developing solutions, as were more tenured companies like NCR.

These solutions appeal to a broad range of merchants because they offer many of the features and functions typically found in more costly POS systems–like those developed for conventional merchant locations, such as restaurants or retailers.

Cloud-Based POS Systems

Cloud-based systems have become popular for the same reason tablet-based systems have. These robust, data-driven systems are reasonably priced, they take the hassle and worry out of things like updates and upgrades, and they simplify data retention and disaster recovery. They allow merchants to focus on their core business instead of worrying about their credit card processing service, which is why they are quickly gaining traction at companies like retailcloud and Benseron.

Which technologies are you most interested in, and what do you want to see from your merchant services provider? Leave a comment or contact us on your thoughts regarding the methods discussed above.

The post Credit Card Processing Services at the Point-of-Sale: Exploring New Options appeared first on FIs Blog.

You can thank Square for much of this. With its trendy card reader, Square has made a splash, not only causing a buzz among merchants, but among the general public as well.

However, recently many of our bank partners have asked us if they could offer other mobile payment solutions to their customers. And the answer is yes.

Companies like eProcessing Network, MagTek, TSYS and Verifone are all solid alternatives to Square. In fact, many of them have been around longer than Square. And while Square certainly has many benefits to offer to merchants, these other mobile payment systems offer the following advantages of their own:

Increasingly Competitive Pricing

Square heavily promotes its 2.75% fixed pricing, but larger merchants can get even better rates if they turn to other mobile payment companies.

Plus, other companies are catching up with Square in terms of convenience as well. With its free card reader and lack of monthly fixed fees, Square has wooed merchants with its ease and simplicity. However, other companies are now rolling out an array of different pricing options (including up front costs, monthly costs and transaction-based fees) so that they can meet the needs and preferences of all types of merchants.

More Control Over Deposits

Although Square dropped its initial deposit limit, it still reserves the right to hold deposits or create a reserve for those merchants that is deems risky or who have an excessive amount of returns or chargebacks. This means that some merchants who process with Square could have less control and certainty over deposits in comparison to mobile payments with a merchant account.

Better Customer Support

When you have an issue with a Square transaction, you won’t be able to talk to live support reps. Square only offers customer support through email, forums, videos and its Twitter feed. This is acceptable in some circumstances, but when a customer has a pressing problem, the last thing you probably want to have to do is search through those channels for the answer to your question.

Multiple POS Options

Some mobile payment systems can be used with traditional credit card terminals and virtual terminals. Square is more one-dimensional and doesn’t offer this kind of flexibility to merchants.

Have your customers asked you about Square or other mobile payment systems? What alternatives to Square do you like? Leave us a comment below to ask a question about mobile payments or any other payment processing topic.

The post Beyond Square: Advantages Of Other Mobile Payment Solutions appeared first on FIs Blog.

I’d like to offer three quick tips for you to help you have a great day today. Before I begin, I’ll start with the most important tip. Breathe! Yes, please pause and take a nice, deep breath. Things are going to be OK!

Tip #1. It’s a liability shift – not a mandate.

As a reminder, October 1 marks the day the so-called “liability shift” begins. Technically, merchants are not required to support EMV, so merchants can keep using their magnetic stripe terminals as long as they want. However, they now are subject to the liability shift of the payment networks.

The liability shift means that if a fraudulent chip card is used at a merchant that doesn’t have an EMV certified terminal then the merchant will be responsible for the chargeback on that transaction. Each merchant must assess how large this risk is for their business, and their tolerance for that risk.

Tip #2. Clearent has EMV solutions available today.

Clearent offers multiple EMV ready point-of-sale solutions, including Ingenico and VeriFone terminals that are fully EMV certified. We also offer solutions with EMV ready devices that still need to complete their certification, including Dejavoo terminals and SwipeSimple mobile card readers.

Tip #3. The EMV migration will take a long time.

It’s easy to get anxious about important dates like October 1. However, the reality is that the payments industry is in the early stages of the migration to EMV cards. Most consumers still don’t have chip cards in their wallets. MasterCard reported that only 19% of its U.S. cards were chip-enabled as of July 2015.

Similarly, only a minority of merchants can accept EMV cards today. The Strawhecker Group estimates that 27% of merchants will be EMV ready in October. Further, they project that just 49% of merchants will be ready for EMV as of June 2016.

Why is it taking so long? One key reason is the lengthy process to certify POS devices for EMV. The entire industry – including POS providers, terminal manufacturers, card reader manufacturers, gateways and processors – is working feverishly to create and certify their EMV solutions. From what I’ve seen, the system is clogged and everyone is behind schedule.

No doubt, today is an important milestone in the transition toward EMV. But it’s just that – one day in the transition period.

Also keep in mind that we offer several free EMV resources to help make sure you and your merchants understand all of the details related to the liability shift. You can learn more by visiting the special EMV resource page on our website. There you will find four different content pieces that you can download and share with your merchants.

• Key Facts About EMV – Learn the key components and benefits of EMV
• 5 Myths About EMV – Debunks the five most common myths about EMV
• How to Process EMV Transactions – Lists step-by-step instructions for merchants and includes a special section for restaurants and hospitality merchants
• EMV Adoption Guide for Merchants – Helps merchants decide when to upgrade to EMV and includes tips for updating their equipment, training their staff, and educating their customers

I’m curious to hear how you are feeling about the transition, and how your merchants have been responding to the liability shift. Are you comfortable with the details surrounding EMV? How about your merchants? Have they opted to upgrade their equipment, or are they holding off, for a variety of reasons?

The post 3 Things to Know on EMV Day appeared first on ISOs Blog.

In case you’re not familiar with what a virtual terminal is, it’s basically a web-based version of a point-of-sale terminal. Virtual terminals can have a wide variety of features, and this blog post focuses on the most common ones. Additional features and functionality will be covered in future posts.

Here are some key questions to ask yourself when evaluating different virtual terminal solutions.

1. Can the virtual terminal be used on multiple devices?

In order to have the most value to merchants, the virtual terminal should be able to be used on both a computer with Internet access and on a mobile device, such as a tablet or smartphone. This will ensure that it appeals to merchants who operate out of an office, as opposed to a brick-and-mortal storefront, as well as those that need to accept payments on the go.

2. Is it easy to use?

This should be a given, but many virtual terminal solutions on the market are dated and take some time to figure out. The best solutions are those where you don’t have to download special software or apps, as that means that they will be easy for merchants to access, learn, and teach their staff how to use, beyond just entering basic transactions but also performing voids and refunds on prior transactions.

3. Does it have a simple, responsive design?

In case you’re not familiar with responsive design, this is where the size of the screen automatically adjusts – or optimizes – based on the screen size of the device being used. This means that instead of being forced to use the virtual terminal on a computer, merchants have the flexibility to use it on devices as small as a smartphone or tablet, in addition to a large computer display.

4. Does it support encrypted swiped transactions?

While many virtual terminals offer merchants the ability to plug a card reader into their computer and process transactions in a face-to-face environment, does your current solution also support swiped transactions on tablets and mobile phones? Doing so gives merchants even more flexibility so they can process transactions where and when it makes the most sense for their business. In addition, by using encrypted card reader merchants can protect sensitive card information while it is transmitted from the device to the processor’s secure PCI-compliant platform.

5. Does it have the ability to print and email receipts?

These days many consumers are looking to reduce the amount of clutter in their lives, and paper receipts are a big part of that. Make sure your solution gives merchants the ability to print receipts as well as email them to customers. It should also allow receipts to be reprinted in case a customer has a question or needs a replacement or additional copy.

6. Does it allow for flexible batch management?

Because merchants have different operating hours, they need a virtual terminal that gives them the flexibility to batch out whenever it’s best for their business. This means that ideally they can choose if they want to batch at a designated time each day, or choose to manually close the batch at any time. They should also be able to easily check their batch totals from any device with Internet access.

7. How easy is it to manage different users?

Your virtual terminal should also make it easy to set up and manage the permission level for various users. That way merchants can give employees limited access to the system, which can help control fraud.

8. Can merchants process recurring payments?

Another valuable feature is having the ability to process recurring payments. This makes it easier for both the merchant and their customers when they need to process repeat payments.

Tell me about the virtual terminal solution that you have been promoting to your merchants. How does it stack up to the features outlined above?

The post Tips for Choosing a Virtual Terminal appeared first on ISOs Blog.

During a recent conversation with an independent sales agent, the topic moved to EMV. He was lamenting about the sales practices of some of the payment processing companies in his market. Basically he said that they were selling fear and not being honest with merchants.

Since the competition was using scare tactics and telling merchants that it was mandatory they convert their terminal and buy new equipment right away, I wondered how he was addressing common merchant questions.

He responded that he tried to be honest and explain the mandate clearly. I asked what he had done to be proactive and reach out to his merchants ahead of the fear mongers. He said, “I really haven’t done a lot. I tell them be very leery of people who call and say they have to do something right away. I tell them not to do anything until they talk to me. I also say that EMV is not mandatory, but other than that, I really don’t know what to say.”

This statement hit home to me. EMV has been discussed, used as a sales tactic, debated, and yet still remains confusing to many in the industry. In some cases, it even appears that some sales people are only being told what they need to know to sell it to a merchant.

The fault lies with how we, as payment processing companies, share the story of EMV and chip cards. It seems like we provide basic information, but oftentimes it is not usable information that can be shared with merchants. Luckily, this is something that can be corrected, and there is still time to do so.

The ideal approach is for your partner to provide you with clear, accurate, and objective information regarding EMV. This needs to be ongoing, and something that you can access as you need it. For example, at Clearent we have created a special EMV resource page on our website where merchants can download four different content pieces, ranging from a white paper titled Key Facts About EMV to a piece that dispels 5 Myths About EMV to pieces that specifically outline How to Process EMV Transactions and provide an EMV Adoption Guide for Merchants.

However, not all processors or ISOs have taken this approach. As such, the independent sales agent has to seek out this information. The challenge then becomes asking the right questions. There are some specific topics that you need answered so that you can provide your current customers and potential merchants with accurate information and make your services more valuable. To help, here are the questions that you should ask.

1. What is the actual mandate?

If you don’t clearly understand the mandated change, what is required, and what isn’t required, you won’t be able to address the fear a merchant hears constantly.

2. What is the impact of an EMV transaction on a restaurant?

There is a serious learning curve regarding accepting an EMV transaction and tip adjustments. Understanding this situation, how they can be in compliance with the mandate, and what changes they need to make in regards to processing is imperative. Otherwise, you may find you have very upset restaurant merchants.

3. Does my preferred equipment/POS have EMV capability?

Many POS systems don’t have an EMV solution today. You also may be using a terminal that won’t have an EMV application or the ability to process EMV transactions. This means that your favorite terminal could be approaching the end of its usable life.

4. How often should a merchant expect an EMV card?

This will be difficult to answer, but you still need to ask. Some areas will see more usage, whereas some may only occasionally have a chip card presented.

5. What are my merchants, and my potential merchants, hearing about EMV? Is it true?

This is a question that you, and only you, can answer. Until you know what your merchants are hearing you can’t be prepared to address their worries and concerns. Above all else, you won’t be able to set the record straight.

Start by asking your partner for any proactive information that you can share with merchants. And if they don’t have any information then they aren’t being proactive, which means you might need to seek out another partner.

What have you been hearing from merchants in your market about EMV? Is it on point or off base? How has your processing partner supported you in talking to merchants about EMV, chip cards, and the upcoming liability shift?

The post 5 Questions to Help Make Sure You Are Ready for EMV appeared first on ISOs Blog.

As a Costco American Express cardholder, I have experienced first hand restaurants and stores telling me, “I’m sorry sir, but we don’t take American Express. Do you have a Visa or MasterCard?” It frustrates me because I prefer to use my Amex card, and it’s a hassle – albeit a small one – to dig back into my wallet for my MasterCard.

Why do some merchants refrain from accepting American Express? Here are the common perceptions that business owners have shared with Clearent:

• The rates for American Express are too high
• Not many of my customers use American Express
• Amex customers are wealthy, but my customers are regular people
• American Express comes in a separate deposit on a different day

The new OptBlue program offers a whole new way for businesses to take American Express, and it addresses each of these concerns.

With OptBlue, American Express acceptance works just like Visa, MasterCard, and Discover. Payment processing companies such as Clearent can now include American Express transactions in the same deposit as the other payment networks, so merchants now receive all proceeds in a single deposit. (Clearent merchants can benefit from next day funding for American Express along with the other card brands.)

In addition, we can now offer the same pricing structure for American Express as we do for Visa and MasterCard, which can significantly reduce the merchant’s cost of acceptance.

Finally, the ownership of American Express cards has grown significantly in recent years. There are now 50 million American Express Card Members in the U.S. While it’s still true that American Express customers tend to spend more money – which is a huge benefit to business owners – American Express now offers a wider range of products. For example, American Express offers a prepaid card called Serve and it offers Bluebird in partnership with Walmart. These new products target a more diverse demographic.

So, if you developed a certain view of American Express based on your experiences in the past, I encourage you to give it another look. I bet you will find that the OptBlue program makes you think about American Express in a whole new way.

What kind of feedback have you been hearing from your merchants about American Express? Has OptBlue made them more eager to accept American Express Cards?

The post The OptBlue Program Gives American Express a New Look appeared first on ISOs Blog.

On one hand, many payments experts are advising merchants to upgrade their POS to support chip cards by October 1 with the utmost urgency. Merchants hear claims such as:

• All businesses have to support EMV by October 1.
• If you don’t support EMV, you will be hit with fraud and chargebacks after October 1.
• By the end of 2015, the majority of cards in the U.S. will be EMV enabled.
• If you don’t support EMV, your customers will lose faith in your business because they want to use their new chip cards.

Hearing such claims, many business owners feel compelled to act now.

On the other hand, some experts and merchants downplay the urgency, saying things such as:

• EMV is not a mandate, so it’s optional.
• I don’t get any chargebacks now, so I’m not worried about EMV.
• EMV doesn’t matter for restaurants because they rarely get chargebacks.
• Until the big chains support EMV, why should small businesses do so?

Hearing these strong but opposing claims creates anxiety and indecision among many small businesses. Personally, I’ve taken a pragmatic approach to date. For the sake of clarity, the October 1 deadline is not a true mandate, but rather when the “liability shift” will take effect.

The liability shift means that merchants who do not have EMV-enabled POS equipment face a higher likelihood of chargebacks on counterfeit transactions. It’s difficult to predict how often this will happen, but I expect the numbers to be relatively low until EMV becomes more widespread. Eventually, criminals will prey on vulnerable merchants who do not have EMV-enabled equipment, but that could take a long time.

Recently I heard a few large chains share their views on EMV, and their take may surprise you: they don’t have any immediate plans to support EMV. I attended R2 | Retail Reinvention 2015, a new conference hosted by PYMNTS.com. R2 featured speakers from many national chains. On the topic of EMV, Nordstrom and Walgreens stated that they haven’t implemented support for EMV yet, and it’s not in the works. Nordstrom went as far as to call EMV “a distraction.” Garden Fresh Restaurants shared a similar view.

If I was a small business owner, I would wonder why I should bother spending money on chip cards if the likes of Nordstrom and Walgreens aren’t doing it. I can’t say I blame them. Certainly, the cost of upgrading POS systems is exponentially higher for national retailers with hundreds or thousands of POS devices. Therefore it’s somewhat understandable that they are thinking twice before spending millions of dollars. It’s a much different equation for a specialty retailer who only has one store with one credit card terminal. For this merchant, upgrading to EMV may only cost a few hundred dollars.

To me, another key issue is the change in consumer behavior. It takes time for people to change their habits. This means that consumers will get accustomed to inserting chip cards only after repeated use. The best way to increase frequency is if the places they shop the most make them do it – in other words, the big chain stores and restaurants.

If the major chains don’t adopt EMV, then it will be difficult for consumers to develop the habit. And that means that SMBs are less likely to have their customers expect EMV.

So, what does this all mean for small- and medium-sized businesses? I think it’s up to each owner to make an informed decision. If they only have one or two credit card terminals that are already a few years old, they might as well upgrade to benefit from EMV, Apple Pay, and faster transaction processing. Otherwise, they can choose to wait and see if they get hit with increased chargebacks after October 1. The size of that risk will vary for each business. For example, jewelry store owners will generally have more to lose than sandwich shops.

Because there is so much confusion surrounding EMV, we created a series of educational resources to help ISOs, agents, and merchants understand the ins and outs of EMV and how it will impact their business. Visit our special EMV page to learn more about and download these valuable resources:

• Key Facts About EMV – Learn the key components of EMV, the difference between EMV technology and contactless payments, and what all of this means for merchants

• 5 Myths About EMV – Debunks the five most common myths about EMV

• How to Process EMV Transactions – Lists step-by-step instructions for merchants and includes a special section for restaurants and hospitality merchants

• EMV Adoption Guide for Merchants – Helps merchants decide when to upgrade to EMV and includes tips for updating their equipment, training their staff, and educating their customers

I’m curious to know your merchants’ reaction to EMV. Are they up to speed on how it will effect their business? What types of questions have you been hearing in the field?

The post The EMV Riddle for Small Business Owners appeared first on ISOs Blog.

In some cases, it’s true – the salesperson or processor can easily accommodate the merchant’s request. However, sometimes the request may take more work behind the scenes, or it’s possible that a complementary product or solution may be what the merchant really needs. That’s why it’s important to ask the merchant a few questions to dig deeper and make sure you understand what they are really looking for, and what could very well be a pain point with their current processor.

Let’s say that the merchant is asking for special software or a certain report. Even if you have a solution, start your response with a simple question such as, “Can you give me an example how that will be used or is used today?” This will help you determine if the want is truly the need. You see, oftentimes the want may only be a symptom of a bigger problem, one that perhaps can be easily solved through another solution.

Or perhaps you’re talking to a merchant and they ask if your merchant services program can send confirmations of batches and deposits. Instead of saying that you can, ask them how they use this information today. Maybe they have had a problem with funds being held, or maybe it’s that their funds aren’t deposited in a timely manner. Each situation creates a different response. It’s important to note that in both cases receiving these reports would not address the major issue they are facing.

Instead, the issue may be that they need to better understand what causes funds to be held, which is really a training issue. Or maybe next day funding would be a solution to their need. However, without asking and trying to get to the root of the merchant’s problem the actual issue would not have been addressed.

Once you have identified the underlying issue you need to be confident that you have a solution that will solve the merchant’s real need. If you are even the least bit unsure it is better to advise the merchant that you believe you have a solution but first want to confirm with your processing partner before you make any promises. If the latter is the case, you need to tell the merchant when to expect a response.

If you have no solution for their issue, be honest and say so. You may find that there is no answer to what they need. If so, don’t be afraid to tell them. Honesty is more appreciated than false hope.

If you dig deeper and avoid immediately saying “I can do that” you will find you are able to address your merchants’ true, underlying wants and needs and aren’t being forced to sell solely on price. You will also differentiate yourself from your competition because I can guarantee you that the merchant frequently encounters salespeople who eagerly say “I can do that” just to close the deal and then get stuck in the situation of over-promising and under-delivering because they didn’t take the time to learn about the merchant’s business and what they really need.

Tell our readers about your experiences. What type of questions have worked best for you when you were trying to get to know a merchant and learn more about their needs? How did it affect the outcome of the sale and your merchant services program?

The post Dig Deeper to Understand a Merchant’s Real Needs appeared first on ISOs Blog.

It’s easy to see that credibility with merchant services programs has fallen, both at a global level and a micro level. In the past 18 months, the credibility of many independent sales agents has taken a hit, but it’s important to note that this is not completely their fault. Some agents have seen their ISO partners raise merchants’ rates as many as three times during this 18 month period. In other words, merchants have discovered that areas defined as “pass through” costs are actually marked up over true costs, hence making their rates artificially high.

In addition to these internal pressures, credibility has been under attack externally by competitive sales practices. Some merchant processing companies use less than credible approaches to educate merchants about EMV, such as using fear tactics that pressure merchants to buy potentially unneeded and often over-priced equipment. Or worse, merchants may discover after the fact that their new processing partner has both higher rates and a more strident contract.

The combination of both external and internal pressures has caused significant damage to many agents’ credibility. Unless addressed at the first indication that it may be in question the impact of this loss could be felt for months, or even years.

When discussing credibility the ISA or MLS has to first understand its importance, how to obtain it, and how to retain it. The importance of credibility is often just given lip service. What is typically forgotten is that being credible first comes with a level of trust. If you are known as being credible both by reputation and your actions, merchants will likely trust what you say.

Merchants must be able to trust their processing partner as they literally manage their flow of funds. If you are not deemed credible, there is no trust. Without trust, merchants will lose faith in your ability to deliver on your promises. The end result will be a lost sale. In essence, credibility has a direct correlation to your monetary gain, or loss.

That’s why obtaining credibility should be considered a key component to your success. However, credibility is not something that can be gained easily or quickly.

Initially, your credibility will be closely tied to the merchant processing companies that you work with. Your choice of a processing partner is based on many factors, ranging from potential revenue to support. It should also be based on how they are perceived in the marketplace. If your partner is credible, you can leverage that credibility. But if your partner has credibility issues, or has done things that could be perceived negatively, it will be very difficult to present yourself as credible.

While leveraging your partner’s credibility you should also strengthen your own knowledge base. No, you don’t need to know everything about a given topic, but you need to have confidence in what you do know, and in what you don’t know. Confidence in your knowledge presents you as a credible partner, as does having the confidence to admit what you don’t know. Many people respect someone when they have the courage to say, “I don’t know, but let me find out.”

As merchants come to trust you and your knowledge, you will gain personal credibility. Once gained you need to work hard to retain that credibility. It needs to be protected as you would protect one of your most valuable possessions.

The key is diligence. Damage to your credibility is rarely a sudden event. Events will cause erosion, and if not stopped, will lead to the collapse of your hard earned credibility. Therefore, you must keep a watchful eye on this asset.

Stay in constant communication with your merchant base, and listen to what they have to say, especially if they have a complaint. Make sure their concerns are addressed quickly and that they know that you care about them.

Also make sure your partner remains trustworthy and transparent. If they lack either of these qualities it may be time to find another partner.

Above all, avoid arrogance and that “know it all” attitude that sometimes creeps in when talking with prospective merchants. Even if you do know it all, inappropriately sharing this fact creates a lack of respect. Ask yourself, “Do you trust anyone you don’t respect?”

Remain credible to your client base and you will find that demand for your merchant services program grows by word of mouth. People will seek you out. Just remember building and retaining credibility is a long term, constant practice. Stay diligent and you will remain credible.

What other tips do you have for maintaining credibility? Let us know by leaving a comment below.

The post The Importance of Building & Maintaining Credibility appeared first on ISOs Blog.

The most common complaints we’ve heard about the FANF are that the formula is confusing, the fixed fees are too high for small merchants, and that payment facilitators (aggregators) receive an unfair advantage. The good news is that Visa is introducing changes to eliminate the perceived advantage for payment facilitators, and to reduce the burden for merchants with low sales volumes. The bad news is that Visa’s changes not only fail to simplify FANF, but actually make it more complicated.

As part of these changes, payment facilitators will no longer be permitted to aggregate taxpayer IDs and volume, which means that each taxpayer must be reported and billed individually, whether the business has its own merchant account or a sub-account through a payment facilitator. In addition, Visa either reduced or eliminated FANF rates for merchants with very low sales volume. As a reminder, the FANF fee for each business depends on its merchant category code (MCC), the mix of card present and card not present volume, and the number of locations the business operates.

Here are the details of the changes, along with some general information to refresh your memory about how the FANF is calculated. (You can find the complete, updated FANF tables on the Visa FANF resource page on our website.)

Most card present merchants are assessed using Table 1b. Merchants with one or two locations will continue to be assessed $2.00 per location per month. However, Visa will introduce two new rates for Table 1b:

• If monthly volume is less than $200, FANF = $0.00.
• If monthly volume is between $200 and $1,250, FANF = 0.15% of volume.

The same changes will apply to Table 1a, which applies to “high volume MCCs” such as auto rental, lodging, supermarkets, auto dealers, and others.

Merchants with card not present volume are assessed FANF using Table 2. Table 2 is also used for fast food restaurants (MCC 5814). Visa modified the rates for this table, mainly for lower volumes. The minimum fee used to be $2.00 per month, but certain merchants will no longer be billed for FANF.

• If monthly volume is less than $200, FANF = $0.00.
• If monthly volume is between $200 and $1,250, FANF = 0.15% of volume.
• If monthly volume is between $1,250 and $4,000, FANF = $7.00.

So, all in all, these changes can be advantageous for some merchants because the FANF used to be $2 per month per location regardless of volume, but now it can be free. It also means that brick and mortar merchants who do a little e-commerce volume and used to get penalized for having even a small amount of card not present volume now won’t have to pay as much, thanks to the changes in Table 2.

Because this can be a confusing topic, it might be helpful to share an example. Let’s say we have a pizza parlor with one location that processes $8,000 a month in card present volume and only $100 in card not present volume. To determine the FANF we would first look at Table 1b, Tier 1, which shows a FANF of $2.00. The card not present volume is then based on Table 2, Tier 1, which is for merchants with less than $200 in monthly gross volume. Previously this merchant would have had to pay an extra $2.90 for the $100 in card not present volume each month, whereas now they pay nothing for the $100 worth of card not present volume.

Want to know more about the Visa FANF? Be to sure visit the Visa FANF resource page on our website and feel free to leave us a comment below. We’d be more than happy to provide any additional information you may need and answer any questions.

The post Visa FANF Changes for 2015 appeared first on ISOs Blog.

This disruption impacts merchant processing companies as well, and makes doing business harder for ISOs and agents who primarily sell face-to-face. After all, it’s hard to make sales calls when you have to dig your car out of the snow.

Each year I get calls and questions about what merchant level salespeople can do to help propel their business forward when it’s hard to get out of their house. In some cases they will ask how they can begin telemarketing, figuring since they are office/home bound, they might as well give it a try.

Since the success rate of telemarketing is much different than face-to-face sales, many tend to view their efforts as fruitless. When the area thaws, they go back to what has worked in the past, which is face-to-face sales.

If your goal is to become one of the best credit card processors in your area, what can you do, other than wait out the storm? How can the payments professional move the needle, even when the temperature is dropping? Here are five key steps that can help.

1. Call your merchants.

This may not seem like selling, but even if the conversation is short just checking in with your customers and asking about their situation puts you indirectly in front of them. They will remember your concern the next time a competitor talks with them. Be sure to ask for a referral at the end of the call as well.

2. Update your toolbox.

Use your time to gain knowledge about different POS solutions, cloud-based products, and new terminals. Look for solutions that fit your market and the types of merchants you serve. At the same time, update your knowledge on EMV, NFC, and any other terms merchants seem to be hearing about today. In fact, practice your response to the question, “What is EMV (or NFC), and why should I care?”

3. Practice your 30-second commercial.

Face a mirror and deliver your commercial. At the same time, watch your facial expressions. It’s easy to do something by memory, but be careful to not sound rehearsed. Remember, people hear visually too, so it’s not only what you say but how you say it.

While practicing, tweak your commercial to touch upon new opportunities. Remember, your commercial isn’t for selling products and services. It’s to get the merchant interested and get them to ask questions. Be sure to time your commercial as well. Even though it’s known as a 30-second commercial, remember that less is more so pare it down wherever you can.

4. Inventory your sales presentation.

Twice a year you should perform an inventory of your sales presentation by asking yourself these questions:

• Am I talking more than listening?
• Am I too anxious to answer questions, and not allowing the merchant to clarify?
• Have I shown a willingness to walk away?

5. Review your competitors’ sales approach.

You should also use this time to think about the sales approach that your competitors are using. By that I mean are other merchant processing companies talking about price too early, or are they leading with price? Do they ask for a statement at the beginning of the sales call? You will find that if you live by the mantra, “If others are doing something I will stop doing it,” your uniqueness will garner more interest.

Just remember that if you use your time wisely, the weather will not hinder your growth or your success for the year. So even if you aren’t telemarketing, there are things you can do to help improve your skills and ultimately drive your success so you can become one of the best credit card processors.

Do you have any other tips that have helped you trudge through the winter months? Feel free to share them by leaving a comment below.

The post Don’t Let the Winter Weather Get You Down appeared first on ISOs Blog.

Over the next few months it seems like there’s a trade show opportunity every week, with more shows being added each year. And each year I am asked the same question, “Is there value in attending a trade show?”

My answer hasn’t changed since I attended my first show many years ago. My answer is always, “It depends.” I know people are looking for a yes or no answer, but that isn’t possible. That’s because the value of a show depends not on the show itself, but on the attendee and his or her goals and objectives. Perhaps my answer should be a little longer, “It depends on what value you are seeking, and how you plan to find it.” In other words, to find value you must first do your homework and really dig into which credit card processing companies will be at the show and what types of sessions will be available.

There are three distinct areas that you must consider before deciding to attend a particular show.

1. What is your budget?

Attending a trade show can be expensive. Your budget will help you define which, if any, show you should attend. A national show, like TRANSACT, oftentimes costs more because of the higher registration fee and the additional travel expenses you will incur as opposed to being able to take a day trip to a regional show. By calculating your budget you will be able to either include, or eliminate, various shows.

2. What are your goals?

You must have a purpose for attending a trade show. This purpose is your goal, and contrary to the thoughts of many, that goal cannot be a desire just to see what the show entails.

This goal must be a personal goal, and it must help you grow your business. Establishing this goal requires that you examine your market and answer the question, “Is my market evolving, and if so, where am I lacking in knowledge, product, or support to address their needs?”

For example, maybe you’ve noticed more tablet-based POS solutions in your area. Or perhaps you’ve noticed that your competition is offering unique products, like next day funding merchant services, and you need a new solution to help you compete. Maybe there is a demand for big data and analytics, or perhaps mobile solutions are growing in usage and demand. All these products require an increase in knowledge, and a tradeshow may just be the place where you can identify products and services that can help round out your toolbox, and the best part is that you will most likely be able to touch and feel these solutions at the show.

The most important thing to realize is that if you can’t clearly define your goal for attending the show, then there is a good chance that it will not be of value to you.

3. Have you looked at the agenda?

Take a close look at the agenda and evaluate how it will help you meet your goals. In addition to exhibitors you would like to meet with and test their wares, are there sessions on the agenda that will directly help you meet your goals?

After all, trade shows are about more than who will be in the exhibit hall. Yes, they are a great place to meet representatives from various solution providers and credit card processing companies like I just mentioned, but shows are also a great source of industry information.

Examine the agenda closely and highlight any sessions that speak directly to your goals. These sessions need to be a priority. This doesn’t mean that the other sessions won’t have value, but when one speaks directly to your goals, you shouldn’t miss it.

While reviewing the agenda, take a close look at the exhibitors. If you are looking to better understand the cloud, identify those exhibitors with cloud-based solutions and make an effort to speak to them. Try not to get distracted with flashy new products and services until you can honestly say that you have addressed your goals.

By evaluating these three areas, you will be able to determine which shows will help your grow your credit card processing business and your bottom line.

Have a question about any of the upcoming payments shows this year? Clearent will be at all of the regional shows, and of course TRANSACT, so let us know if you plan to attend.

The post Making the Most Out of Credit Card Processing Shows appeared first on ISOs Blog.