Mastercard Problems over the Last six months

We had a terrible problem over the last six months with Master Cards being declined for no apparent reason. I"m writing about it here for two reasons.

1. I haven't been able to find any coverage of this anywhere online. In fact, I can't find a decent news source that covers payment processing issues. If you know of one, please tell me (by comment).

2. To help others that might have the same problem.

The problem is that we get customers calling up saying that there card is fine but we get it declined. When we asked, we were told by our ISO:

MasterCard says their cards have been getting converted at several million cards per day and that they

expect all of them to be fully converted by the end of Jan 2012. Their number on the cards

still not converted is less then 1%.

The conversion is to what they call "Secure Code" and cards that don't have it need to have it

or it cannot be used online.

There's nothing that can be done on the merchant, gateway or processor end and

it's all up to the card issuing Banks or Credit Unions to make the change. In the meantime they

said to ask customers who get a decline to call their issuer and ask them to add

the "Secure Code" to their card. This will allow them to use the card online without any problems.

　

Visa says their cards are pretty much all converted and there are very few getting declines

that shouldn't be. The few that are getting declined will have to be updated by the

customer's Bank and they're done with it.

Paypal as a merchant account - Yick!

For awhile, I was enthralled by the idea of Paypal as my merchant account vendor. In fact, two of my three businesses use Paypal in this way.  However, I'm over it.  They suck.   Just this week:

- On Oct 31, around 8:45pm EST, I transferred money to a new bank account.  They gave me the "this could take 3 days" message. Now, it's Nov 6th (albeit a Sunday), the money has been gone since Nov 1, and it hasn't shown up anywhere else.  Why can I pay my bills electronically and have money disappear and remove in a few minutes but they structure their withdrawals in such a way that it takes days.  My other merchant accounts move the money the same day!


-  I did get this email from Paypal today. On 11/1/2011, you linked your bank account (x-xx83) to your PayPal account. This email is just a reminder that you're not done yet.

Take a few moments to confirm your bank account. After you do, you can shop online and send money using your bank account.

PayPal has sent 2 small deposits to your bank account. Check your bank account in 3-5 days for the deposit amounts. Log in to your PayPal account, click Confirm Bank Account, and enter the amounts.

I've now logged into Paypal including being through their help menus, no way can I find a Confirm Bank Account link.  And while I can generate a code to a phone call (use this number and code in the next 60 minutes to talk to us), the phone lines report that they only work business hours, not 24/7 (which I expect of a real merchant vendor). This is particularly a problem since I can't tell if the original transaction was held up by a process of verification and I'm counting on having that money elsewhere. And there's nobody to speak to until Monday when I have a fully packed today.  Damn you Paypal.

- Paypal set up one of my accounts with a child account in response to questions about how to track revenues by product line.  They were clear that there were no fees involved. Two months later, $30/month fee starts appearing. We're in the process of trying to get it removed.

- The child account dumps into the parent account every night automatically. Not something that I asked for and, sicne they do this, they seem to reject every effort by us to refund money (We have a two week money-baek guarantee  that about 3% of the people use).

- I jsut learned that they are reserving 20% of our funds for 90 days.  They just aren't available. This is on the child account. Its amazingly weird. Not in any of the paperwork we signed, never notified. The support people's reaction is that this is how it has to be, there is NO chance of changing.

Yea right.  Goodbye Paypal. Despite the three weeks of programming and testing time to do the tight integration, this level of ongoing problem is just not worth it.

CVV2 Codes, PCI Compliance

There are two merchant account credit issues floating around today.


One, do we have to do any  PCI compliance testing?  I researched this in early 2009 and wrote that as a level 3, 20K-1M online transactions vendor, none stored, there was a level of testing required. I don't list my source for this info but I wrote it up here. I wonder if its still true: PCI Compliance for Level 3 Vendor.

I researched in the beginning of 2009 that I needed to get PCI compliance testing done.  But, I never have. 


As a side story, after I decided that we did need some PCI compliance testing, I tasked my  team to take care of it and that spoke to one vendor who talked us into a whole comarketing thing in which they guaranteed our site and put their bug all over it guaranteeing that it would improve our conversion rate. It didn't improve the rate at all. They made some changes. No improvement. We insisted on getting our money back. Eventually we did but only after a huge investment of time and energy. We were so turned off by the experience that we haven't looked at PCI compliance since then.  

The second question this week relates to CVV2 Codes.   We've found over the last few years that our decline rate on credit cards (and some fees) are creeping upwards.  Since our product is education, there is very little fraud so we have never required a CVV2 code.

Our processor says that if we get the CVV2 code, we'll get less declines and the fees will be a little lower. But we know that many of our customers use cash cards (ie gift cards) which don't seem to have CVV2 codes.  I'm now trying to redesign our sales page to handle this and I'm looking for an example or advice on how other people handle this.  Any input?

Paypal Reserves - Second Big Problem with Paypal

Let me start by saying that I'm generally thrilled with Paypal as my merchant account vendor. With a total expense rate of 2.7% and a high level of reliability, they are better than the other vendors that I use to process credit cards.  I give them high marks for low cost, high reliability, great technology, and great service.

I've previously had one big frustration with them in that their reporting sucks.  I have several product lines being sold (I'm in the hundreds of thousands of dollars of revenues in a year with the average payment way under $100) and Paypal isn't really able to help us track by product line.  Even when we have the payments come in under different emails, they can't sort them out. It turns out the solution is to open a child account. The process was cumbersome, basically, open a new account, get it approved, get it linked to the old one, drop out all the fees, and the child account can ONLY withdraw money up to the parent account. And it's an automatic process which happens nightly.  Which would be fine except we have some refunds (we do a money-back offer) and about 4% of our customers take the refund.  Paypal does an automatic withdrawal every night but on the days that there are refunds, they try to withdraw too much and it produces all sorts of emergency warnings and failure notes.

Second big problem I just realized. My account has reserves. In fact, they hold onto 20% of my funds for 90 days on a rolling basis. It's really not something that I can work with. Have any of you any experience with this?  I spoke to Paypal at some length last night and the agent said: "There's no way you can ever do anything about it.  Ever! This is just the way it is. I've spoken to my supervisor dude and you've got the 20% withholding on you forever. You've been approved this way and there's no way ever that you will ever get reviewed again or get it removed.  You might try setting up a new account and see if you get stuck with the same thing."  Heh thanks!

I read the Paypal rules and found this:

What are Reserves?

Question :

Answer :

Reserves are funds that belong to you but have been set aside. We hold money in reserve just in case you receive payment reversals or chargebacks and your PayPal balance isn't enough to cover them. Reserves are typically applied to merchants who handle:

·         large sums of money,

·         high dollar items, or

·         items in high-risk categories

Your reserve amount is listed on your Pending Balance page. From time to time, we may need to adjust your reserve amount. If that happens, we’ll email you about the changes.

There are two types of reserves, rolling reserves and minimum reserves.

Rolling reserves

With rolling reserves, a percentage of each transaction is held and then released after a certain amount of time. For example, your reserve may be set at 10% and held for a 90-day rolling period. This means that we’ll hold 10% of the payments you receive on the first day until day 91, 10% of your second day's payments until day 92, and so on.

Minimum reserves

A minimum reserve is a specific amount of money that you must keep in your PayPal balance. A percentage of the payments you receive will be held until the reserve is met. For example, if your minimum reserve is $5,000.00 we'll hold a certain percentage of each transaction until you reach $5,000.00.

Declines: CVV Code & FRISK

We've been taking credti cards online for years for recurring payment but recently noticed an increase in declines.

We studied our declines talking with our ISO and found that for international credit cards, the card companies are increasingly declining them unless the CVV code is given.  We have always NOT required a CVV code since fraud is our industry (online education K12) is nearly non-existent.  Looking forward, since we can't require a CVV code on transactions without forcing all of our monthly transactions to fail.  It might be possible to only require CVV on new credit cards via the ISO software. But the easiest thing seems to be to require CVV on our shopping cart and so for all new credit cards, we start getting it. This will prepare us for a future where credit card costs for non CVV coded transactions might go up or even get refused.

FRISK (Fraud & Risk Management) . Notes on three types of FRISK Credit Card declines.
- duplicate transactions
- AVS - address verification
- CVV2

3% back on gas puchases

I've been seeing a lot of affinity credit card ads on TV lately which promote a percentage rebate cash back on certain purchases. The most striking to me is the 3% back on ALL gas purchases. Can anyone explain to me how anyone makes money on these arrangements?

Paypal Lack of Convenience

So we now use PayPal as our merchant account on two out of our three subscription business lines.This means that they handle our credit card payments online as well as the "Paypal" payments:
But their lack of good reporting and analysis tools are driving us crazy.  Here's an internal discussion of the issues.

In regard to the new income account, I can do that in QB, however, is there any other way of sorting the payments in Paypal into the different account other than by the payto email address? Will there be certain dollar amounts for this income? In order to see the email that the payments were sent to, I would have to open up each payment to see the detail. If it will be certain dollar amounts, then I won't have to look at the detail. Let me know.  And opening up each payment will take forever.

Credit cards fees to merchants

Today's financial top story was about the merchants' victory over the credit card companies in setting limits on the fees that they could charge to merchants.

And I quote from a press release:

Following yesterday's vote to shutdown attempts to delay swipe fee reform, small business owners from across the country gather for press conference in front of U.S. Capitol

WASHINGTON, June 9, 2011 /PRNewswire-USNewswire/ -- More than 50 small business owners from across the country with Reform Swipe Fees NOW! rallied on Capitol Hill today to thank Congress for supporting Main Street and opposing the Tester-Corker Amendment that, if passed, would have undone critical swipe fee reforms that were part of last year's Dodd-Frank financial reform package.

QuickBooks Integrates with Paypal!

My company uses Quickbooks Online as the accounting system. It works great for us.  We have an offsite book-keeper who bills about 10 hours a  month. We see her about three times a year when we have her in discuss our overall accounting system, list of accounts, and methodology. Also control but that's another topic. We also have a CPA who oversees the whole thing and does our taxes but that too is another topic for another blog.

The key to our efficiency is that we try to make everything an automated download with memorized transactions so that once classified, it gets entered in the books the same every month. 

Our credit card transactions (expenses) all get downloaded and automatically entered. Our checks are written in Quickbooks and automatically entered. The one area where automation has been less than optimal has been our integration with PayPal.  We essentially download our monthly transactions as a .cvs file and then upload it. Kludgy, clunky, and annoying. 

Last week, when I entered into QuickBooks, I was thrilled to see the announcement that the integration is now complete between PayPal and QuickBooks. Thanks Payne Weber.  (An old inside joke).

One PayPal Account, many product lines

I have complained that there was no way to use a single PayPal account properly for different product lines. In fact, that statement is too broad:

I just noticed that I can pull a report inside PayPal based on which email the money was sent to. For instance, if I had two product lines that were connected to the same Paypal account, I met give on the name, paypal@businessA.com  and the other: paypal@businessB.com.

Inside PayPal, there is a pulldown for reports that allows you to pull by email address! So you have a fairly easy way to track payments by product line.   The other limitations are still there. For instance, if you take a customer through PayPal, you can't have the page customized for whichever division of your company or product line they are buying from.  So the Paypal landing page and receipt have to have on them: Thanks, from businessA and businessB.

Websites: From a Billboard to a Channel

Many small companies initially add a website thinking of it as a billboard, advertisement, or catalog for themselves.

 But pretty quickly, many companies wonder if they could perhaps use the website for customers to "self-serve" and to order on their own. 

 For an astounding number of products and services, the online approach to doing business turns out to be very efficient and effective. It changes an enormous number of aspects of how business is transacted. As part of this streamlining, many companies need to think of a new payment system. Setting up a credit card merchant account and handling online automated credit card payments turns out to be pretty simple. 

But, one of the first steps is an important one, the choice of a service to handle the credit card processing. North American Bancard offers great credit card processing services but before you decide to move ahead with any one provider it’s always a good move to weigh all your options thoroughly.

Paypal as a merchant account - update

I've been using Paypal as my merchant account on a business for over a year now. Overall, I'm very happy with paypal's service.

Overall, it's been reliable.  The basic service has been up 100% of the time so this is the main thing.  My experience with other merchant services is that they have one to five service interruptions during the year which has always been a major problem.

Secondly, fees. They really do charge just an even 2.5%. This is much better than I'm getting anywhere else. It's just much better. I have another business that runs in the millions of dollars of revenue each year where they charge an overall 3.8%.  The 1.3% difference on a million dollars is $13K per year, pure profit.

Thirdly, their reports and features, are not a source of strength.  Here, frankly, Paypal is not superior, not yet. I run a small company so I like to have lots of limits on what people can do, different reports that can be pulled, and enough safeguards in the system so I'm not worried about people stealing.  Paypal has some of what I want but not enough. For instance, to their credit, they added last year different logins with different permissions. But, there's no way to get an email notification sent to me if anyone spends money from the account without having an email sent to me everytime someone puts money in the account.  Another problem is that there's no reporting by different emails that people send the money to so there's no way to track by product line without lots of sorting.  And since you can only have one Paypal account per tax ID, this really limits the use of Paypal for companies with mulitple product lines or divisons.

Overall, if I set up a new business, I'd do it with Paypal.  

Everyone wants to process my credit card payments

I am amazed by how many companies have approache me recently to process my credit cards.

I use Quickbooks Online for our accounting system.  Intuit (the company behind them) are running a series of ads about how they want to process our credit cards. Interestingly enough, when I look at their ads, they fail to use the argument that I would like to hear them make which is that the record keeping and analytics will be more effective and more tightly integrated.

I use the Bank of America for my banking. They run ads for credit card processing at me constantly and sometimes, their local merchant processing lady makes a run at convincing me.

American Express, with whom I have a credit card, wants to do my credit card processing.  How weird is that? Do I have it right?

The mom of one my kids friend works for another bank. She really wants to do my credit card processing.

My landlord seems to have a sideline as an ISO - independent sales office - for some credit card processing solution. He's been around my office sniffing around with the usual promise that he can save me a thousand a year.

I do process my credit cards (some of them) through PayPal. Google has wanted me to use Google checkout but no longer has any real incentive to make their case.

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There's been someone calling recently with a pitch about being our wholesale broker and he's like to cut out the middle man. I particularly get annoyed at him since has such a sneaky pitch that he gets past the people whose job it is to protect me from sales calls. Once I even got confused and thought he was servicing our account.  Fortunately, after he had the meeting scheduled, he asked some question about our volume which signalled to me that he was prospecting and qualifying. I confronted him and found that I had been mislead. I hung up on him and am still angry.