Merchant Account Blog & Credit Card Processing Blog

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Credit Ratings & Merchant Account Approval

People sometimes do not understand why their credit rating is a factor that underwriters look at when approving a new merchant account application. Many times credit card processors will “Decline” a merchant soley based on their credit score.

Why The Credit Factor Is Important

Business owners must realize that appling for a merchant account, is like appling for a credit line. The projected “Monthly Volume” stated on a new merchant account application, is the amount of “Risk” the merchant’s processor is willing to accept. If you are asking for $20,000 in Monthly Volume and your credit scores are “Very Poor”, you may be declined an approval on your merchant account.

Understanding The Risk - In Credit Card Processing

Understanding the “Risk” in credit card processing should be understood by every new merchant. Accepting credit cards is not like accepting cash, as every cardholder has the right to call their credit card company and potentially get a charge “Reversed” in a “Chargeback”.

The risk for the bank is that the merchant may not have those “Reversed Funds” immediately available to complete the chargeback process. In this case, the merchant bank must cover the chargeback and then come after the merchant for the “Money Owed”.

This is why the financial responsibility is so important !!!!!!!

In closing every merchant application is on a case-by-case basis, with many other factors that are considered. If you have “Poor Credit” and need help in getting a merchant account, please give me a call to discuss your options.

MARK SANDS
1st National Processing
http://www.usa-merchantaccount.com
1-866 828-8683

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American Express Confirms Trend In Spending

American Express reported their Q4 Earnings last Monday, confirming downward trend in consumer spending and decrease in credit card spending, repoted last week in the blog. Amex reported that their overall cardholder spending declined 10%, year over year. The 4th Quater was the worst with a 15% decline in average cardholder spending, in the last quarter of their fiscal year.

STABLE MERCHANT ACCOUNT RATES:

Company reports that merchant account rates for American Express remain stable, with the average merchant paying 2.53% in discount rates. Company did not mention any plans to increase the discount rates paid by business owners, who accept American Express.

American Express stock ( AXP ), was up sharply the past 2 days, approx 14% since the news.

MARK SANDS
1st National Processing
http://www.usa-merchantaccount.com
1-866 828-8683

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Heartland Payment Systems Inc Data Breach

More information has surfaced on the cardholder data breach that occurred at the Princeton NJ’s credit card processor, “Heartland Payments Systems, Inc”. President and Chief Financial Officer, Robert Baldwin, stated “As deeply regretful as we are, it is important to note that in most of the cases the information would be card number and expiration date only,” and that “The majority of the data breached did not have names or other personally identifiable information available to the bad guys. So there’s nothing our merchants need to worry about.”

Seems that only customer card numbers and expiration dates were compromised and that no personal information, such as names, addresses, social security numbers, were compromised in the theft. Still no information on any damages to cardholders have been released.

Merchant’s processing with Heartland Payment Systems, Inc will be held harmless, as the breach took place on the server-side of the card processor. Small business owners with a merchant account should be sure that they are PCI Compliant to avoid any credit card processing fines from Visa or Mastercard. Here is A GOOD VIDEO to help small merchants understand their risk and responsibilities in combating credit card fraud.

Company Cites Cyber Terorrism Attack

Baldwin said Heartland executives have been in discussion with the U.S. Department of Justice and the U.S. Secret Service and were informed that this breach was committed by an international organization that has also targeted other U.S. processors and financial institutions.

“I am finding it hard to believe that we are not responding to an obvious act of cyber terrorism aimed at trying to disrupt the payment system of the United States, and it just blows me away that nobody sees it,” Martaus said. “All of these intrusions are the work of one Russian Mafia gang. And 15 other processors apparently have been attacked and no one knows about it.”

Martaus suggested, however, that federal officials do know about these attacks but they’re not telling anybody. “This should be a national emergency, and the Pentagon, the National Security Agency, everybody should be involved in this,” he said. “This could absolutely destabilize the payments industry and bring it to its knees. A cyber terrorist attack, while not meant to destabilize the government or the economy, can do just that.”

MARK SANDS
1st National Processing
http://www.usa-merchantaccount.com
1-866 828-8683

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US Banks Report Lower Credit Card Spending

The large US Banks reported lower credit card spending in Q4-2008. According to CNN Money, the large issuing banks report consumer credit card spending was down in the 4th Quarter of 2008.

• Bank Of America: Down 17.2 % in Q4, over the same quarter.
• Citi Bank: Down 15 % year-over-year.
• JP Morgan Chase: 8 % decrease, year-over-year.

In the face of the worst economic cycle in decades, the consumer is pulling in the reins on credit card spending. With consumer confidence at the lowest levels since the “Great Depression” and the uncertainty on weather the new administration can actually put us on a path to recovery, the US Consumer is sitting on the sideline, waiting for the “Miracle Of Change”, promised last fall.

MARK SANDS
1st National Processing
http://www.usa-merchantaccount.com
1-866 828-8683

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Positive 4th Quarter 2008 Results !!!!

PayPal announced positive results for the company’s 4th Quarter in 2008.  Company posted $623 million in top-line revenue, an increase of 11% year over year. Company also reported stronger transaction volume for the quarter was $15.99 billion, an increase of 14% year over year.

This is a positive for online merchants, selling products over the Internet. Ecommerce continued to look strong  over the 2008 Holiday Buying Season. We hope this trend continues, as gas prices are down over 50% from their highs. We remain optimistic for a sooner that expected recovery in the economy, but we also fear the worst is not over yet, time will tell.

Stay tuned.

MARK SANDS
1st National Processing
http://www.usa-merchantaccount.com
1-866 828-8683

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Potential Largest Breach In History

Heartland announced this week that the company breached possibly over 600 Million credit card transactions, since May, 2008, as reported in the Ny Times. Seems hacker’s secretly installed a software program that captured the personal credit card numbers, of customers swiping their credit cards at merchant locations who process credit cards with Heartland.

Information seems limited and it’s not clear, as to the extent of damages.

Heartland Payment Systems, Princeton, N.J., works with about 175,000 small merchant accounts and processes about 100 million credit card processing transactions a month.

MARK SANDS
1st National Processing
http://www.usa-merchantaccount.com
1-866 828-8683

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Consumer Credit Line Cutting Has Begun !!!!!!

Starting last December, credit card companies have begun to cut credit card limits on consumer credit cards. The cut backs seem to be across the board for all consumers, as even cardholders with +700 credit ratings are feeling the pinch. In an effort to reduce their risk, credit card companies will put a strange on the average business owner, by not only cutting their credit lines, but reduce the buying power of consumers and other business owners, as well.

These actions are sure to increase the pain of the current recession, by snowballing the slowing spending on both the consumer side and the business investment side. As spending slow’s, more jobs will be cut, more mortgages in default, and more folks seeking the social safety nets of welfare.

We firmly believe that things will get worse, before they get better.

Today, we had a new President sworn in, as the 44th President of the United States. We’ve handed the reins to a social idealist, with many Anti-Capitalistic Idea’s in his heart.

Not sure if this is a time for social change, when financial growth is the crisis that will destroy the well-being of every American.

SOCIAL CHANGE ??????  FINANCIAL CRISIS ??????

God Bless America !!!!!!       DIGG THIS NOW !!!!!!

MARK SANDS
1st National Processing
http://www.usa-merchantaccount.com
1-866 828-8683

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Understanding Your Merchant Account Responsibities !!!!

If you are shopping for a new merchant account, you need to understand what you are getting into. Many times business owners are in a rush to set-up credit card processing for their business, they overlook the fact that they are entering into a contract that has many responsibilities and rules to abide by.

Many times merchants will find out the hard way, by being fined or getting their merchant account shut down. In some instances, merchants are “TMF’d” which means they lose their privilege to accept credit cards in the future. It surely make more sense to understand your responsibilities and model your business to conform with the rules set-forth by Visa and Mastercard.

Accepting Credit Cards - A Privilege:

Understand that being accepted to accept credit cards is a privilege, not your right !!!! Should you take this lightly, you could find yourself losing this privilege, permanently. That’s right, permanently !!!! You could personally be banned from ever accepting credit cards, for any business endeavor in the future. 

Unhappy Customers Can Destroy You:

An unhappy customer can create havoc on your business. Credit card holder’s have the right to call their credit card company and dispute a transaction on their credit card. These disputes have the potential of becoming a “Chargeback” to your business. A chargeback is simply a reversal of the charge, from your bank account, back to the customers card. These reversals come with very stiff fines to the business owner and could get your account terminated. Here some key points to avoiding chargebacks.

• Offer A Superior Product Or Service
• Quickly Resolve Customer Service Issues
• 100% Unconditional Return Policy
• Toll Free Customer Support
• Maintain Signatures + Shipping Records

Exceeding Volume Limit’s:

Every merchant account agreement has an “Average Monthly Volume” amount for Visa & Matercard. During your approval process, this amount is underwritten by the processor and is usually based on the credit scores of the merchant. If you are approved for that amount, you must process within the limit.

Should the limit become an issue, you must call in to ask that it be re-evaluated by the underwriting department. If your credit scores are too low, you may not get an increase.

If you simply ignore this limit, at some point your account will be shut-off.

Exceeding Ticket Limit’s:

Every merchant account agreement has an “Average Ticket” amount for Visa & Mastercard. Again, during the approval process, this amount is underwritten based on your credit scores. From an underwriting stand point, the higher the ticket, the higher the risk. If your account is approved for a certain ticket amount, you must process within that limit. Occasional “High Tickets” should be disclosed on the application, prior to underwriting. Contacting your “Risk Department”, prior to running high tickets is advised.

If you simply ignore this limit, your account could be terminated.

Honor All Cards:

Every merchant account agreement has a “Honor All Cards” Claus. This means as a Visa / Mastercard Merchant, you are bound to honor every credit card transaction presented to your business. That tiny sign at your local diner that states, “$10 Credit Card Minimum” is in direct violation of the terms of the merchant account agreement.

You cannot charge a “Surcharge” on credit card transactions either, this would also be in violation of the merchant agreemnet, as well.

Reserve Account:At any time, at the sole discretion of the bank, the bank has the right to place funds on hold in a non-interest barring reserve account. Reserve account is to protect the bank from future losses due to fines, chargebacks, ect that may come through your merchant account. Hold time-frame will be determined by the bank and is usually for long enough time period to cover future customer chargebacks.

In Conclusion:

As you can see, “Your Privilege” to accept Visa & Mastercard comes with many duties and responsibilities. Failure to comply, could prove to be very costly and cause your account to get “Terminated” and potentially lose your credit card processing privilege in future business endeavours. Play it safe, understand the rules and play by them.

If you have any questions, please feel free to give me a call.

MARK SANDS
1st National Processing
http://www.usa-merchantaccount.com
1-866 828-8683

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Understanding Different Merchant Account Types

Today we are going to discuss different types of merchant accounts for credit card processing. Their are different methoods of payments, such as face-to-face retail sales, telephone orders, fax orders, ecommerce orders, and wireless point-of-sale transactions. We will discuss each transaction type in detail below.

RETAIL - Face To Face / Swiped Card Transactions

We are all familiar with making a credit card purchase at a retail location, where our credit card is physically swiped through a credit card machine. Card information is transmitted via phone-line or tcp/ip internet connection. Card is authorized and the transaction is approved or declined. Customer signature is required and maintained by the merchant for future reference.

These transaction types receive the Best Rate for the merchant, as the card is present and signatures are verified at the point-of-sale.

KEYED - Telephone Order / Fax Order

A “Keyed” credit card merchant account is for businesses that take’s credit cards from customers who are not present to swipe through a credit card machine. Customers card information is manually keyed into a credit card machine, credit card processing software, or online virtual terminal. Card data is transmitted and verified, including customer address, zip code, and cvv2 information.

These transactions are of higher risk of fraud and typically cost slightly more in fee’s.

E-COMMERCE - Internet Sales / Order Entry

Ecommerce transactions are originated on the interent. Going to an online store, adding things to a shopping cart, and finally clicking “Check-Out”. The customer enter’s in the card information, address information, and the cvv2 code from the back of the card. Information is securely passed and authorized in real-time. Merchants as a rule, never see the customerrs card number for added security.

These transactions are of higher risk of fraud and typically cost slightly more in fee’s.

WIRELESS - Mobile Merchant / Off-Site Sales

Lastly we have a Wireless Merchant Account, where the merchant processes credit cards using a wireless point-of-sale device. Credit cards are swiped through the terminal and data is passed through a wireless signal, which is enqripted for security purposes. Transaction is approved or declined and a signature is required on the receipt. These devices are also becomming popular at restaurant settings, where the device is handed to the customer and the card never leaves the customers hand.

These transactions are considered “Retail”, as the card is present and swiped through a machine.

If you have any questions, please feel free to give me a call.

MARK SANDS
1st National Processing
http://www.usa-merchantaccount.com
1-866 828-8683

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Saving Money On Your Merchant Account Fee’s !!!!!!!!!!

Saving money on your merchant account & credit card processing fee’s has never been more simple. We have put together a program to save you hundreds, if not thousands of dollars in fees, depending on your current monthly volume. Perfect solution for any business owner looking to cut cost’s.

INTERCHANGE PLUS PRICING - Start Saving Today !!!!!

In the past, this program has been reserved for High Volume Chains, such as Wal-Mart or McDonalds. We have opened the flood gates for any business size to profit from the savings. For those of you who are not familiar with the term “Interchange”, interchange is the cost passed on by Visa & Mastercard which accounts for the majority of your transaction cost’s. Interchange consists of several hundred catagorys which any transaction could fall under. Here and links to the most recent Interchange Schedule’s for Visa and Mastercard, as you will see this is quite complicated.

To simplify matters, most merchant account’s are on a “Tiered System”, consisting of Qualified, Non-Qualified, and maybe Mid-Qualified rate. These tier’s cover any downgrades by Visa or Mastercard in which certain transactions may fall. This simplifies “Interchange”, but alway’s cost’s more in credit card processing fee’s to a merchant on the Tiered System.

BOTTOM LINE - SAVING MONEY LIKE THE BIG BOY’S !!!!!!

We are now offering “Interchange Plus Pricing” to merchants of any size. Previously reserved for large corporations, this pricing schedule will saving you money on your credit card processing fee’s and is available to any merchant account, regardless of size.

Call us immediately for a cost analysis and began saving like the big boy’s.

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