Payment Processing Advice
SnapTags: The New Player in Mobile Payment Processing
As QR Codes slowly gain traction in North America, their reach is being threatened by a new sleek and sexy form of image codes known as SnapTags. These new displays allow for companies to create scannable images with their logos prominently featured that facilitate communication between advertisers and consumers, and as of last month, even trigger payment mechanisms.
QR Code technology, which was created by a subsidiary of Toyota in 1994, had a long road to application from factories and into the toolbox of marketers. Enthusiasts will cite the fervent use of QR Codes in Japan as a testament to their undeniable future application worldwide, but the fact of the matter is QR Code excitement has become relatively stagnant in America over the last couple years. Unfortunately for these black and white squares, they have an Achilles ’ heel — only 1/3 of Americans have smartphones capable of installing QR Code reading Apps, limiting both their scope and potential.
Conversely, a major advantage SnapTags possess over the clunky matrix bar codes is that they can be processed by any phone with a built-in camera, allowing retrieval of the information through either the SnapTags App or via SMS. As such, SnapTags have recently caught the attention of major advertisers, boasting relationships with Coke Zero, Wrigley’s, Office Depot and even the U.S. Marine Corps, to name a few. More…
Cash Back Popular Choice for Reward Credit Cards
A survey conducted mid-January found that 45% of all offers for reward credit cards in 2011 were of the cash back variety. It’s no surprise that cash back is a very popular option for reward cards — everyone can use cash. Other popular reward cards are for gas savings, airline points, and amusement park dollars, but those are more niche markets where cash is universal.
The survey took a look at 19 different credit card issuers with 50 different cash back reward cards. It was reported that the most common percentage of cash back awarded is at about 1%. However, rates can vary from card to card and offer to offer from less then half a percent upwards to 6%. Most of the card cash back offers have a tiered cash back program, with purchases at supermarkets and grocery stores giving back a higher percent, most often about 3%. Gasoline purchases also generally qualify for a higher cash back percent, falling in around 2%. Travel purchase rewards also tend to be a bit higher then the average percent for the cash back on each card. More…
What Hurts More, Cash or Credit?
Ever plop down a handful of $100 bills on something you’d saved up for months to purchase only to experience a guilty feeling as soon as you got the receipt? “Pain of payment,” commonly referred to as “buyer’s remorse,” is a very real physiological reaction that can create anxiety or strong regret for the shopper.
Credit Card Processing via Photographing a Credit Card
There are many hardware swipers available these days to turn your cell phone or iPad into a mobile credit card processing machine – but Card.io have developed a “visual swipe” technology that lets users take a photo of a credit card to process a payment. In June, Card.io launched and allowed developers to accept payments with a photo of the customer’s credit card. Recent updates to the technology will allow consumers to send and receive payments from a credit card photo and deposit funds directly into their checking, savings or PayPal accounts.
Between the June launch date and January 2012, Card.io has over 160 developers using the visual swipe technology app. A user enters the total amount of money they need to charge their customer, and then takes a photograph of their customer’s credit card with their cell phone camera. The Card.io app sends the encrypted card date via 128-bit SSL encryption out for processing, and the credit card image itself is not saved, nor is More…
Consumers Reverting to Cash for Small Purchases
According to research done by Javelin Strategy & Research, consumers are reverting back to cash for small purchases, despite aggressive incentivization by credit card companies to charge.
The research shows that 79 percent of consumers utilized paper money in the last week. In contrast, only 65 percent used a debit or credit card.
This comes as a relief for vendors that specialize in small purchase items like coffee shops that have weathered the unintended consequences of the Durbin Amendment to the Dodd-Frank Act, which capped debit swipe fees at 21 cents. Previously, merchants would pay a small percentage of the total cost in swipe fees where a $1 cup of coffee would incur a transaction fee of a few cents. But after the Durbin Amendment took effect, banks decided to charge the entire 21 cents for any transaction, including that $1 cup of coffee, which ate into profits.
Since merchant are not allowed to pass swipe fees onto the consumer nor can they require minimum purchases, many have been biting the bullet on small purchases, though many More…
San Francisco Taxi Drivers Upset About Processing Fees
If you thought your credit card processing fees were high, be thankful you’re not a taxi driver in San Francisco — they’re currently paying 5 percent which is taken out of their profits.
Under a 2010 city ordinance, taxi drivers are required to accept debit and credit cards in their vehicles, which isn’t necessarily a game-changing requirement. Their grievance arises from a new policy allowing the taxi companies to pass off the processing fee on the driver instead of covering it as they had in the past.
This has some taxi drivers telling riders that they don’t accept cards or the machine is broken, even offering to stop at an ATM so they can pay in cash if the riders don’t have any.
Taxi drivers already pay out relatively large sums of money to actually do their job — paying an average of $92 a shift just to use the vehicle and an estimated $60 in gas, plus optional tips for dispatchers — adding 5 percent on all credit card transactions has them outraged, taking away from their approximate earnings of $120 per 10 hour shift. More…
ProPay vs. PayPal for Credit Card Processing
Being a business owner, you want to be able to cash in on the credit market, but accepting credit cards comes with responsibilities and fees. Protecting customer’s information to avoid credit theft and fraud is a major responsibility and keeping fees in check to maintain profitability is important. That’s why choosing a reputable credit card processing company with affordable fees is vital. Two of the major processing companies for small business owners are ProPay (www.propay.com) and PayPal (www.paypal.com).
ProPay
Probably the lesser known of these two options, ProPay caters to small business owners for all of their credit card processing needs. Business owners can visit their website at propay.com and do a side by side comparison of the accounts offered. Signing up for an account is done quickly and easily online. ProPay uses encryption and tokenization to secure customers information and uses ProtectPay to remove customer data upon storage, thus keeping information secure.
Formed in 1997, Propay has been recognized as a leader in online credit card processing. They are a Better Business Bureau member, a partner and member of the Direct Selling Association (DSA), and a member of the Electronic Transactions Association (ETA). ProPay has been awarded the DSA partner of the year award, and the ETA Independent Sales Organization of the year award. They are Trust-e certified and More…
Antitrust Litigation May Result in Lower Credit Card Transaction Fees
The large antitrust litigation being brought against Visa, MasterCard and a slew of large banks on the behalf of millions of merchants may end in a settlement that one analyst is projecting could also cause a reduction in credit card processing fees by as much as 33 percent for up to one year.
Jason Kupferberg of Jefferies Group Inc. is expecting a settlement before the case is to be taken before the U.S. District Court for the Eastern District of New York later September of this year. Kepferberg estimates the settlement to be between $5 billion to $15 billion of which Visa will be responsible for 67 percent and MasterCard the remaining 33 percent.
The litigation is being drawn on the behalf of larger retailers including Kroger Co. and Safeway, Inc. among many others for alleged price fixing on transaction fees between the two processing giants.
Visa has already set aside $4.3 billion in litigation escrow, $2.7 billion of which is an “uncommitted balance” according to the Securities and Exchange Commission. More…
Antitrust Litigation Brought Against Visa, MasterCard for Alleged Price Fixing
Visa, MasterCard and a plethora of large banks are the subject of a new antitrust litigation drawn on the behalf of five million retailers in the country, with potential settlement costs in the tens of billions of dollars.
Central to the lawsuit are claims that these institutions have been setting prices on credit card transactions that fall outside of what would be expected in a truly open and competitive market.
Average interchange fees incurred by credit card transactions hover around 2 percent, but could be dropped as low as half of a percent, which would result is losses projected also in the billions annually.
The Durbin Amendment of the Dodd-Frank Act effectively capped debit card swipe fees as 24 cents per transaction, which caused banks to increase credit card transaction costs to recoup their losses. More…
Chip and PIN Credit Card Processing
Chip and PIN credit cards are common in Canada and Europe, but has not yet become popular in the United States due to the technology and expense required to switch from magnetic stripe readers to Chip and PIN credit card processing equipment. Chip and PIN credit cards are considered more difficult for thieves to steal credit card numbers through skimming and forgery crimes.
Foreign Travelers
People living in the United States who travel frequently overseas have found it difficult to use their regular credit cards once they arrive at their destination. Many Canadian and European merchants no longer have equipment to process credit cards via the magnetic strip found on all US credit cards. For frequent travelers out of the United States, it is recommended that individuals obtain Chip and PIN based credit cards. Chase Bank is among a handful of issuers of US credit cards that also feature Chip and PIN features that can be used overseas.
What is Chip and PIN?
Instead of information being stored on a magnetic strip plastered across the back of a credit card, Chip and PIN cards store information on a More…
Retailers Taking Legal Action Against Federal Reserve over Durbin Amendment
The Durbin Amendment was created to “protect” retailers and gave the Federal Reserve the power to set interchange fees for debit card transaction processing. The idea is lower debit card fees would improve economic growth, since retailers could lower prices on items when they pay lower fees to banks for accepting debit cards, and lower prices would result in more consumers buying. The debit card transaction fee was 44 cents per transaction before the amendment, and has been capped at 21 cents as a result of the Durbin Amendment.
Plaintiffs Arguing Against the Durbin Amendment
The following are among the plantiffs in the legal action against the Federal Reserve over the failings of the Durbin Amendment:
- National Retail Federation
- National Association of Convenience Stores (NACS)
- Boscov’s Department Stores
- Miller Oil Co
- Food Marketing Institute
Their argument is that the interchange fees for debit cards do not More…
Interview with Alexander from Dashboard Insight
Dashboard technologies allow businesses to take in large amounts of data and rearrange the points in many different ways to help them get a clearer overall picture. Data related to your business is all around you, and using dashboard technology will allow you to take advantage of a relatively unknown resource that many of your competitors most likely don’t know about nor know how to utilize.
Alexander Chiang, the Research Director at Dashboard Insight, was kind enough to let us ask him some questions on the future of the business intelligence and dashboard industry, and how we can further take advantage of such an early industry that will be exponentially useful the sooner small businesses begin using it ahead of their competitors…
CreditCardProcessing.net: What sort of progress has dashboard software made in the past couple of years?
Alexander: Vendors that provide dashboard software are able to handle larger sets of data now. They are also making it easier for less tech-savvy users to develop their own dashboards. It’s better known in the industry as self-service BI. In addition, some vendors are beginning to More…
Durbin Amendment has Unintended Consequences for Some Businesses
Though debit card swipe fees were capped at 21 cents on Oct. 1 per the Durbin amendment of the Frank-Dodd act, some business owners conducting small transactions are experiencing an increase in costs from Visa and MasterCard.
Before the new law, businesses were being charged approximately six to seven cents for a $1 transaction on say, a cup of coffee. But now, in an effort to recoup substantial losses from capping larger transactions, Visa and MasterCard are charging the full 21 cents on that same cup of Joe, which has business owners scrambling to recoup their own losses through incentivizing cash purchases through discounts, raising prices or backing off debit transactions all together and installing ATMs.
Estimated losses for banks hovers around $6 billion annually, while repercussions for businesses that frequently conduct small transactions goes largely unaccounted for. Some banks initially attempted to charge a monthly debit card fee for consumers which resulted in public outcry and a mass exodus from large banks to local credit unions, known as Bank Transfer Day. More…
Interview with InetSoft – Business Intelligence Software
The market research industry is booming as exampled by one of the top market research firms, Nielsen Company, taking in $5.1 billion in revenue last year. Much of the information gathered and turned into reports by market research firms is purchased by other industry-specific firms to help gain an advantage over the competition.
A large amount of data is generated by small businesses when they process transactions with customers, get visitors to their websites, and can even be found by a simple web search. Thanks to computer integration in the workplace, small businesses now have to opportunity to conduct their own market research by utilizing software that is customizable to each business’ specific needs.
One such firm that offers these insights is InetSoft whose business intelligence (BI) tools and Dashboard Software provide small businesses with performance metrics in an easy-to-understand format. Mark Flaherty, the Chief Marketing Officer at InetSoft, was kind enough to answer a few questions for CreditCardProcessing.net about their software… More…
Online Credit Card Usage on the Rise
According to Javelin Strategy & Research’s Nov. 2011 report entitled “Online Retail Payments Forecast,” ecommerce credit card usage is on the rise, up 16 percent in 2011 to $309 billion and projected to rise to $444 billion by 2016.
Many consumers are taking advantage of various rewards programs that credit card issuers are using to incentivize charging in the wake of the Durbin amendment to the Frank-Dodd act that capped debt card transactions at 21 cents, costing the banking industry billions.
“After several years of declining use, credit cards are poised for resurgence,” Director of Payments Research at Javelin Beth Robertson said. “Despite the nation’s very rocky economic recovery, consumers appear to have halted their belt-tightening and bank incentives to use credit cards rather than debit are gaining appeal.” More…
