Tuesday, September 18, 2012

Digital Wallets & Alternative Payment Systems

I'm beginning to generally read about "alternative payment systems" and digital wallets. The first step is some definitions:

conventional payment systems: cash, checks, credit cards, wire transfer, debit cards, gift cards
alternative payment systems: everything else including paypal and mobile phone payments.

Which category does a credit card count in if it doesn't get swiped? I dunno.

What is an e-Wallet? Let me quote an investment report from UBS which in its write-up of Apple's Iphone 5 Announcement, included a paragraph on the question of whether it is an e-Wallet.

Passbook is the first step to using the phone for significant
transactions. iPhone 5 does not have near-field communications (NFC) though.
Phil Schiller, SVP of Marketing, said afterwards that it’s not clear NFC is the
solution to any current problem. We think Apple’s recent acquisition of
AuthenTec, known for its innovations in fingerprint identification technology
(FPID), could pave the way for another transformative technology leap.
Integrating fingerprint ID technology into mobile and computing hardware is
likely to (1) enable secure financial transaction security, and (2) improve user
convenience by obviating the need for usernames and passwords.

Sunday, September 16, 2012

Dunkins mobile app for automated payment

Mobile Phone Payment Dunkin Donuts
America Runs on Dunkin.

Although I have a fondness for a no foam grand latte, I go back much further with Dunkin.  It's funny how aware I am of my internal conflict over which of these brands I feel most loyal to.

Be that as it may, this mobile app automated payment announcement caught my eye the other day.  Another new way to pay!

I'd like to think that there will be a single payment system for all stores, not a separate app for each one. Only time will tell.

Remember this other mobile payment system for parking that I ran across earlier?

Thursday, September 13, 2012

Credit CARD Act of 2009 & Credit Approval Problems

President Obama signed the Credit CARD Act of 2009 into law May 22, 2009, following passage days earlier in the Senate and the House.This law either changes the way the system works or is the excuse for things that are changing and so we're trying to understand it. 

While I can find plenty of discussions of the new credit card law for consumers, I can't seem to find any info on how it changes things for those of us  who accept credit cards. Help?

In particular, it is being used as the excuse for an ongoing problem with Mastercard debit and gift cards that we are having with automatic processing. We are getting ~75 calls per week from consumers who report:
- their card works fine on Ebay & elsewhere online in an automated fashio
- it's getting refused by us. We keep speaking to our ISO who says, many different things, most of which consist of he doesn't know about or what to do about the problem.....

We do monthly billing and these people, after a few months, are pretty sick of calling for verbal approvals. I hate to think about all the customers that we are losing who don't even bother to call for approval.

Monday, May 21, 2012

Website and Convention about Card Not Present

I found the motherload of information about the merchant account business as it relates to us small online businesses.  (excuse the  marketing hype, I'm just cutting and pasting their stuff in)

2012 CNP Expo May 20-22

The CNP industry is trending and now there’s an event worthy of it. The CNP Expo—like CardNotPresent.com, the publication that spawned it—lives at the crossroads of e-commerce, software, mobile, retail and payments.
This show is unique. It’s the place where all concerned can converge in an environment that encourages open discourse between all parties.  . The significant cross-industry support we’re seeing has made it possible to offer pricing to exhibit or attend that makes the CNP Expo the most inclusive event on the CNP calendar.

I've also joined two LinkedIn groups on this topic:

Merchant Services - Payment cards industry

If you have other central sites for interaction and information, please tell me (comments!). Or, if you find them useful, leave a comment too. thanks.

Thursday, April 26, 2012

Credit Card Processing Costs

We process in the millions of dollars a  year of online credit card  for educational services.  We've been in business for eight years, very low chargeback rate. It's all intangible goods, card not present.

We do some businesses entirely through PayPal. They charge, all in, an even 2.5%. It's primarily Paypal Merchant account services so the customers only know that they are paying by credit card. (We have their highest advertised level of service. Are there higher levels?)

We do one business entirely through a classic ISO/Bank arrangement with all sorts of complexity of fees being charged and credited back by Visa/Mastercard, the merchant account bank, and the ISO.  But, it looks to me to be about 4% which I think is crazy high. However, with a switching cost of training and programming and testing, I estimate our costs are $50-$100K to switch. And it will be a major pain for my little company.  So, there is a business case (strong ROI) to switch but I just don't want to go through the hassle.

Any thoughts?

Tuesday, April 24, 2012

Merchant Account Disaster Protection

I’m trying to figure out what the contractual issues are in terms of us switching from our current merchant account credit card vendor. My reason is both planning for disaster recovery and a way to switch vendors if the costs don't get under control.

 Is there a standard structure and terms and methods for this?  This post is a continuation of my discussion of it last month.  

For instance, is our ISO obliged to help us move our customer credit card records to another place if we ask?  Are our credit card customer records kept at his site considered our data?  What happens if he goes out of business?  Since we work with an ISO, I’m trying to figure out what the contractual relationships really are. Since we set this up eight years ago, the contracts are now a little hard to find and probably dated. Aren’t they supposed to be renewed periodically?

The only annual review is from the bank which asks us some basic financial info as it raises the amount of credit card billing that we can do.

There was a valuable comment on the last post that I'll repeat here:
Jestep said: 

Use a 3rd party gateway and storage vault, which will segment your data from your processor. It may be difficult to find, but there's a variety of gateways that can use most processor front-ends.

Realistically, even a small ISO, has multiple levels of failure prevention. Their processor (Global, FDR, Chase, etc...) and acquiring bank are virtually insolvent-proof so disruption of service would be extremely unlikely. With that being said, good luck getting anything out those organizations no matter the circumstances.

Monday, April 16, 2012

Credit card info

My business set up its credit card billing process a number of years ago. To keep it simple, we have the credit cards kept exclusively at our vendor who bills them monthly.  Now that we are a large firm, we are trying to plan for disaster recovery and identify points of failure.  A clear single point of failure is the small company that is our ISO who has all the credit card data.  How do we address the risk of them failing, failing to perform, or doing something corrupt for which we will be billed?

Frankly, the realistic risk is that they might go out of business and our credit card billing which is nearly half a million a month (over $30K daily!) fails to get processed and we have no method for recovering the card data and moving them elsewhere.

One of my goals this quarter is to consider the legal and practical issues in this situation and try to address them.  Any info or experience from anyone else who has faced this situation would be appreciated!