Credit Card Processing Blog

2018 has not been an easy year for Facebook. Between data breaches and information coming to light that the platform was potentially used to influence the latest US presidential election, it seems like every week brings a new set of challenges for the company. Although they’ve been hitting plenty of speed bumps, it has not stopped the giant social network from moving forward.

Over the last few years, one of the areas where Facebook has invested a lot of capital and resources is into virtual reality technology. While VR may still have a very bright future, all of their work has failed as of yet to move the needle in a truly meaningful way. On the other hand, there are some other initiatives that Facebook has pursued which may be less cutting-edge but have already shown a return on their bottom line.

Payment is the perfect example of that type of initiative. This is not only an area that the company already understands but one where they continue to push hard to take market share from some of the other big players. To get a better understanding of how Facebook is approaching payments, let’s take a closer look at their latest initiative:

A Dedicated Payment Platform

When Facebook first dipped their toes into the payment waters, it was through their own site. Then with the acquisition of WhatsApp, they were able to experiment with some new payment features. And over the last six months or so, they’ve been doing the same type of thing with Instagram.

Although each of those pursuits has achieved varying levels of success, it seems that Facebook is setting their sights even higher. The reason is multiple sources say they are working on an independent payments platform. As of now, some reports have said that instead of P2P payments, this app would enable peer to merchant payments.

If you’re wondering how Facebook is suddenly going to roll out this type of app into the competitive US market, the answer is they’re not. Instead, they plan to launch it in India. There are several reasons why debuting this app in that country makes a lot of sense.

The first is the sheer size of India. Even though the country is still going through a lot of development, it is home to more than two billion people. The next is Facebook hasn’t experienced nearly as much negative PR in India as the United States. And because India is a very mobile-first market, Facebook is likely hoping to nail a very contained shopping experience.

As far as what this may mean for US merchants, that ultimately comes down to the success of the app. If Facebook is able to get its users engaged, there’s a very good chance they will put a lot of resources behind rolling out the platform in the United States.

Even if Facebook isn’t able to completely disrupt payments, it’s safe to say they will continue influencing how consumers move money online. If you want to be sure that it’s always easy for your customers to pay online, choosing a great processing company is the best way to make that happen.

In a perfect world, every new business would keep perfect books from Day 1. But in the real world, plenty of businesses view accounting as a lower priority when they’re just trying to start up and survive. However, as a business does start to grow, the importance of accounting becomes much more apparent.

A common misconception by new business owners is that accounting is mainly to keep track of their tax obligations. While this is one component of good accounting practices, the true impact of accounting goes far beyond. Once you get past the very early stages of a business where it’s possible to keep a tally of everything in your head, proper accounting is the only way to really understand the true financial health of your business.

It’s far more common than many people realize for a business to consistently grow its revenue while failing to increase profit. The worst situations are when growing revenue actually causes a business to lose more money. Since the goal of most small businesses is to maximize net profit each year, we’re going to cover the four most relevant accounting topics:

1. Cash Flow

Out of all small businesses that fail, the majority do so because they run out of cash. Unlike VC funded companies that can afford to burn huge amounts of cash between raising rounds, most small businesses can only extend themselves so far before disaster strikes.

The good news is you can avoid this type of crunch by staying on top of your accounting. Having everything calculated means you won’t have to guess about how much cash is flowing in or out. Instead, you’ll have clear numbers that can guide your decisions.

2. Unexpected Expenses

Recurring expenses don’t tend to cause problems for businesses. Instead, issues usually arise when a large unexpected expense comes up and there isn’t a cushion to absorb it. Keeping up to date with accounting can help you build up the necessary buffer to avoid a major hit.

3. Taxes

New businesses or those that undergo sudden growth are often caught off guard by how much they owe in taxes. By staying on top of your accounting numbers, you can be sure that enough money is consistently being set aside to avoid feeling a big strain when your tax bill comes due.

4. Payroll Management

Hiring employees is an exciting milestone for any business. It’s also one that can come with some challenges. Since it can be hard to mentally calculate the full cost of new employees, having these numbers laid out in front of you will prevent your business from accidentally hiring someone it can’t actually afford.

Making accounting a priority will allow you to take far more control over the financial health of your business. If these new insights lead you to realize that bringing down your costs are a must, one place to look is your payment processor.

Not only do the rates charged by processing companies vary a lot, but so does the support and features they provide. To see what’s being offered by industry leaders, take a look at our list of the top payment processors.

It seems like not a week goes by without Amazon making some kind of significant announcement. Most recently, the company surpassed the already high expectations Wall Street had for them. Because Amazon continues to grow and evolve at such a rapid pace, no one in retail or technology can afford to ignore them. That even includes the biggest players like Walmart.

Over the last few years, Walmart has made some very significant investments and acquisitions. The majority of those moves have appeared to be in response to things Amazon is doing. The same is true for their most recent move, which is believed to be a massive investment in Flipkart.

More Information About Flipkart and Walmart’s Proposed Investment

If this is your first time hearing about Flipkart, you’re not alone. But even though the brand isn’t that well known in the United States, it’s one the largest e-commerce companies in India. As of this month, the company has a valuation of $20 billion. Last year, Flipkart did $3 billion in revenue.

While e-commerce in India still has a lot of room to grow before it reaches any type of maturity, Flipkart has already built a very strong brand over the last decade. What’s interesting is both of the founders actually worked for Amazon before leaving to form their own company.

Last year, eBay did a significant deal with Flipkart by giving the company a $500 million investment, along with selling the Indian portion of their business. Then in August of last year, Softbank’s Vision Fund pumped an additional $2.5 billion into the company.

Given how much money the company has already raised and its current valuation, it’s not surprising that Walmart’s bid for a majority stake is quite large. Although the figure hasn’t been publicly disclosed, it’s believed to be in the $12 billion range. This would give Walmart key access to an emerging market with over 1.3 billion potential consumers. And given the dominance Alibaba has established in China, India is believed to be the next largest market that’s still available to Western companies.

Amazon Isn’t Relenting

It’s no secret that there’s a lot of competition between Amazon and Walmart. But after news came out about Walmart’s proposed offer, the level of competition became even more clear when Amazon submitted their own bid.

While the offer is believed to be around the same amount as Walmart, industry experts believe that Amazon will not be selected by Flipkart. One key reason is Walmart is committed to retaining Flipkart’s current structure. The other reason is a deal with Amazon would require Flipkart’s founders to sign a non-compete deal.

What This Means for Your Business

If the deal goes through, the main impact it may have on any US business that sells products is eventually providing easier access to the more than 1 billion consumers in India. We’ll keep you updated on this deal as it progresses, along with any other big marketplace news. In the meantime, if you want to serve as many customers as possible through your own website, be sure that your credit card processor is up to the task.

Since its launch in 2007, Fitbit has grown to own more than 20% of the wearable technology market. While huge companies like Apple and Google have created their own devices for this space, Fitbit has been able to remain the leading choice for tens of millions of loyal consumers.

What makes Fitbit’s devices so appealing is they’re able to monitor everything from heart rate during the day to sleep patterns at night. As a result of all this useful data collection, most users wear their devices around the clock. That can include times like exercising when they may not have anything else on them.

So let’s say someone wears their Fitbit when they go out on a run and then remembers that they need to pick up a few items from the grocery store. This is one of many examples when it would be very convenient for payment technology to be built into the device. And that’s exactly what this device maker is planning to do.

Fitbit’s Plan for Payments

The idea of adding payment technology to a wearable device is by no means new. It’s something we’ve covered in detail, including the Apple Watch. While Apple’s wearable device didn’t debut with as much consumer resonance as many of the company’s other offerings, it is a category that has continued to grow for Apple. As of mid-2018, more than thirty million Apple Watches have been sold.

Because Apple has already paved the way for adding payments into wearable devices, Fitbit may be in an ideal position to piggyback on that success. With Fitbit Pay, there’s no need for someone to sign up for a new payment account. Instead, a user simply chooses the debit or credit card they want to connect.

Once a card is synced with a device, checking out is as easy as hitting a few buttons. The technology that makes this type of contactless transaction possible is near-field communication (NFC). Not only is NFC very convenient, but it’s also proven to be quite secure.

Limitations of Fitbit Pay

While Fitbit is in a great position to get a lot out of integrating payments, there are still a few challenges they will need to overcome. The first is to add support to all of their devices. Currently, Fitbit Pay is only supported by a select number of devices like the Versa and Ionic.

Another challenge is educating consumers. Since Fitbit has a lower price point than the Apple Watch, many of their users may not be as familiar with certain types of technology. However, the good news is there aren’t any proprietary compatibility issues. As long as a terminal supports contactless payments, it will work with devices made by Fitbit, Apple, and other companies.

That’s also good news for merchants, as a single terminal can support multiple types of transactions. If you want to utilize this type of terminal and ensure that you always have great support for it, be sure to take a look at our comprehensive list of the leading payment processors.

Last October, we shared seven different tips for National Cyber Security Awareness Month. One of the tips was to utilize encryption. We explained that point-to-point encryption is the current standard for ensuring that credit card data is fully encrypted all the way from submission through payment processor receipt.

Because strong encryption is absolutely essential for protecting online payment data, a mandatory upgrade is being rolled out in the coming weeks. This upgrade is being handled by the Payment Card Industry Security Standards Council. The new encryption standard they’re implementing is known as Transport Layer Security 1.2.

More Details About This Encryption Update

The existing standard that many e-commerce platforms and providers have been using is Transport Layer Security 1.0. This standard has been around since 1999, which means hackers have had plenty of time to study and exploit it. In fact, there were a number of vulnerabilities discovered that allowed attackers to fully decrypt network traffic protected by TLS 1.0 back in 2014. These vulnerabilities revolve around fundamental protocol design issues, which is why upgrading instead of simply trying to patch the problem is so important.

As far as exactly why businesses need to comply with this update, the biggest reason is it’s the best way to protect all of their own data, as well as the data of their customers. Not following through with this upgrade can create a huge liability for any business that transacts online. Another reason is as different services drop support for TLS 1.0, not upgrading to a newer version means different parts of a website or online software that a business is using will break.

What Does This Online Encryption Change Mean for Your Business

Although June 30th is the official date of this change, the good news is it’s unlikely to cause any significant problems for online merchants or consumers. The main reason is this transition has been taking place for some time. For example, Stripe already dropped support for both TLS 1.0 and 1.1 earlier this month. And for any affected merchant, all that needed to be done was a simple OpenSSL upgrade by their tech team or hosting provider.

If you have any specific questions about how your business may be affected by this change, contacting your payment processor is the best way to get an answer. In the event they aren’t able to answer your question in a timely manner, it’s a strong indication that your business will greatly benefit from choosing a new payment processing company.