February 2014

iPhone Credit Card Processing: What You Need to Know

Using iPhone processing of credit cards as a point of sale terminal for your small business is simple and intuitive; there are, however, dozens of companies vying for your service and each one has its own benefits and drawbacks. Much like a good buffet, it’s important to grab the right combination of flavors so that your iPhone service complements your business.

The most popular combination for iPhone processing is the app-and-reader-combo. This combination has the advantage of being the easiest to use; you simply sign up for the merchant account, download the app, and you’re ready to go. Most of these services provide a free reader that plugs in through the headphone jack on your phone. There are a wealth of companies offering this sort of combination and selecting the right one is simply a matter of deciding what features and fee structures work best for your business.

For a more robust platform, the app and terminal combination may appeal. They offer a similar portability to app-and-readers, but have additional features that are usually only found on a POS terminal system, such as bar code scanning, PIN entry, and receipt printers. These are more expensive than app-and-reader. Some even offers an iPhone case that integrates a bar code scanner, card reader and PIN entry pad. Again, however, this option is by far the most expensive means by which the iPhone can be leveraged for payments, and can cost over $500 just to get set up, depending on the company you choose for iPhone processing. Still, it is also the most fully-featured and most expansive option.

Finally, for businesses that are exceptionally cost-sensitive, there is a free option for iPhone processing. Apps do exist that allow manual entry of credit card information (no swiping) with no monthly fee and no per transaction charge. Apps of this nature are generally ad-supported, which may be undesirable to the business and/or customers; however, this sort of thing is part of the cost of doing business, when the dollar cost is nill. These sorts of services operate on a principle similar to PayPal or Google Wallet – customers keep their information in an app, which the business user can leverage to accept payments. The LevelUp app, for example, allows customers to pay using a QR code to the company’s LevelUp app. PayPal-to-PayPal transactions would be another similar idea; merchants that accept PayPal payments can receive money from any customer who has a PayPal service.

In the end, when you choose to use the functionality of your iPhone to accept credit card payments, it’s important to decide which set of features you need, and choose the right combination of value and features to suit your business.

iPhone Credit Card Readers

When you are ready to move your small business to the next level, taking credit cards is the obvious necessity. It will obviously boost sales as it offers a more flexible option for customers to pay, and if you take card payments on a mobile device, sales can be increased even further as it doesn’t tie you to a single location. For those small business owners who use an iPhone, merchant service options are wide and varied.

So what should you look for when it comes to an iPhone merchant service? There are several important factors in choosing the right card reader for your iPhone, as available services vary widely. The first thing to take into account is the pricing structure of the reader you are considering. More goes into the cost of a reader than a per transaction fee. Some services require setup fees, monthly service charges, and may even charge for the reader itself. Almost every service will have a per-transaction fee which will depend on a base rate, combined with a processing rate that depends on the input. For example, swiping the card is considered less risky from a security standpoint, so the per transaction fee for this will be lower than inputting numbers manually.

The next thing you’ll want to consider is the hardware’s compatibility with a range of mobile devices. You’ll want one that not only works with your iPhone, but with an iPad and perhaps even Android and Blackberry devices, in case you have employees that use these other platforms. You should also strongly consider a physical card reader as opposed to just using an app on your phone, which as mentioned earlier, will lower your transaction fees.

The savvy iPhone merchant will also want to pay attention to the features offered by the mobile card reader service. Anything that can improve convenience and security, as well as providing a user-friendly interface, will improve your business. Many card reader services incorporate a function that allows the capturing of a customer’s signature, apply sales tax and tips, and email receipts directly to customers. In addition, you’ll want a processor that uses the latest SSL encryption to protect the privacy and security of your customers’ information. Another important feature to consider is whether your app is password protected to avoid fraud, should the mobile device be lost or stolen. Finally, you want to be sure that the app does not ever store information, an important security feature to stop hackers from stealing data.

Using your iPhone to accept credit card transactions can greatly improve and increase your business, and has many conveniences over the traditional point of sale system. As with any big step in business, however, you’ll want to make sure you do your research and ensure that you’re getting a device that has the right pricing structure, hardware, compatibility, and features for your business.

What Will Twitter Ecommerce be Like?

As retail giants like Amazon and eBay are exploring new means by which to use ecommerce solutions to bolster their own businesses and partner businesses, and as PayPal is stretching its own wings to further expand its status as the giant among internet credit card processing services, there are now rumors flying that a new and somewhat unexpected service may be getting into the game. Twitter, it is rumored, is considering a new platform that will allow its millions of users to actually purchase items through direct links embedded in tweets.

Twitter, however, has made a business out of short, sweet bursts of information. How would such a service work? What would it look like?  A new Web mockup shows not only how a Twitter internet credit card processing service might look, but how it might work, and indicates that it may be closer to reality than we realize.

The mockup website discovered by Recode appears to demonstrate a means by which users will be able to make purchases within tweets, which would carry a Twitter Commerce label. When the user clicks the tweet, a “Buy With” button would initiate the transaction and provide options for making the purchase, including entering credit card numbers and other relevant forms of payment.

The mockup website, posted by online commerce site Fancy.com, isn’t clear whether the user would have to enter payment information with each transaction, or if Twitter would offer a means by which the information could be stored for future use. It’s important to note that chairman and co-founder of Twitter Jack Dorsey is on the board of Fancy.com, which further lends credence to the validity of the mockup. Neither Twitter nor Fancy are commenting on the site, however.

Recode speculates that any Twitter commerce system will be powered by Stripe, an online payment and internet credit card processing company that recently reported $80 million in funding and has been rumored for at least a month to be partnered with Twitter.

Why is the potential for Twitter commerce so important? The service, which is wildly popular across all sectors of society—private, public, entertainment and professional—has yet, even after all these years, to become a truly profitable platform for its owners.  As it draws near to its first ever quarterly reporting, and with stock prices on the rise, it’s certain that both analysts and investors alike will be interested in any ideas the company has to boost revenue and move further towards major profitability.

Such an initiative, if the mockup website proves in any way accurate or true, would certainly change the entire focus of Twitter—once the potential for direct sales enters the picture, it nearly always, if it proves profitable, results in a shift towards commerce as a main goal of the service. It still remains to be seen if Twitter will adopt this model, one similar to it, another sales model for internet credit card processing transactions altogether, or if these are unfounded rumors, but it is an intriguing idea.

Amazon to offer Kindle Checkout to Brick and Mortar

In many sectors there is a perceived war between online retailers and physical, brick and mortar stores. Many have predicted the death of the physical store in the wake of the online shopping revolution that began in the late 90s and only continues to grow and evolve. As companies like eBay and Amazon continue to offer patrons anything they want at the click of a button, without the hassle of dealing with crowds and the headaches that come with shopping, physical retailers have suffered. However, many of these doom predictions are unfounded and uninformed; over 90% of commerce is still handled through physical retail outlets and not online.

Now, an online retail giant is taking moves that may further bolster physical stores while also padding its own numbers. Amazon has long been a leader in providing online shopping and entertainment services, and now, they plan to bring physical, brick and mortar stores into the ecommerce credit card processing fold.

As early as this summer, Amazon is planning to offer to physical retailers, a service that uses Kindle tablets for processing credit card transactions. While details of the new service are as yet unclear, a couple of potential models have been discussed. In what is perhaps the most likely, the online retailer would give Kindles to physical retailer partners along with the credit card processing software, credit card readers, and back end required. Amazon may also offer to these vendors services such as website development and data analysis for their new ecommerce credit card processing services.

Of course, no project this huge happens in a vacuum, and Amazon has outsourced as well as hired in some services to make it happen. Among those new partners in the project is GoPago, a subsidiary of DoubleBeam, Inc, and a company with a long history of expertise as a credit card transaction service provider. This is probably a smart move on Amazon’s part, as the field of play for these types of services is already quite crowded, with VeriFone Systems, NCR Corp., and Square, Inc. already all offering credit card transaction services, the latter already working through smartphones. EBay is also testing its own credit card swiping devices to expand its own e-payment presence in the realm of physical retail outlets, as is Apple looking to provide such services through the iPad and iPhone.

Amazon’s strategy, then, is to focus on smaller and startup businesses for ecommerce credit card processing. Such companies will not have the huge, complicated credit card processing systems that bigger businesses do and so won’t be as loathe to make the sheer infrastructure change that would be involved with larger retailers. The online retail giant is considering partnering with small businesses to allow them to offer deals and promotions through Amazon, which would greatly increase the visibility of the small business.

Whether or not the strategy will work remains to be seen, but the drive for Amazon to actively support small business physical retail outlets by offering them ecommerce credit card processing services is an interesting move that, if successful, could even further cement Amazon as the giant among online retailers.

Avoid Being the Next Target for Payment Malware

For millions of Americans since November, the idea of credit card transactions processing is a source of stress and fear. It started with Target, who announced that thousands upon thousands of shoppers were in danger of having their credit card numbers stolen and sold on the Internet after their system was hacked. Not two months later, an announcement came down the pike that Neiman Marcus and Michaels had been hit with the same virus. The FBI has announced that this may be only the beginning of a wave of retailer hacks that will hit over the next year; the virus is insidious and as yet hasn’t been cracked, though teams of experts are working to pull it apart.

Point of sale (POS) systems are particularly vulnerable to attack and are a prime target for malware because they are a regular source for credit card transactions processing and tend to carry a wealth of valuable information through each swipe of a magnetic strip. They also, by their nature, tend to be far less secure than traditional computer systems. Many solutions have been put forth, including replacing current systems with Internet-based mobile wallet systems, or current mag-strip cards with more advanced cards that use smart chips to store data. These fixes, unfortunately, are a long way off, and for many retailers and shoppers, the immediate future looks scary and bleak. However, there are steps a retailer can take to reduce vulnerability against these sorts of malware attacks and help to protect shoppers until more permanent defenses are available.

The first thing retailers should do is work with their system vendor to make sure that the most current software is running on their point of sale system, including any patches or software upgrades. Make sure that your contract specifies that the vendor must test and confirm the functionality of any updates as soon as they become available.

Secondly, ensure that your software is certified to the Payment Application Data Security Standard and that it is properly set up.

Next, and one of the most basic pieces of security advice, is to use multiple layers of protection against viruses and malware. If at all possible, install protection directly onto the terminal used to swipe cards, the point of connection between the network and the Internet, on workstations, servers, anywhere that there could feasibly be a vulnerability. Change passwords regularly, especially when reports of a new attack come in, and use different usernames and passwords for different points in the software processing chain. Have your IT department set up automated alerts that will notify you and them whenever there is any sort of suspicious activity on the network.  File integrity monitoring software exists that can fulfill this function, and should be leveraged as an important technology moving forward.

Finally, there is absolutely no substitute for training and education. Train your staff to be vigilant about how these sorts of malware work, to watch out for phishing scams that are often an entry point for malware, and what to do when they see suspicious activity; this will be your first and most important line of defense in keeping your credit card transactions processing system safe.

Small Business 101: What You May Not Know About Your Credit Card Processor

The industry of credit card processors is a vital component for the viability of any business, be it a giant corporate entity, or a small startup, but is perhaps the most important and dangerous for small businesses. Almost 50% of the total working population in the United States is comprised of small businesses. As of two years ago, these businesses generated nearly a trillion dollars in total revenues annually. The small business is of major importance to local economies and communities, and is a vital part of our national economy. This importance has created and is in turn driven by a common entrepreneurial spirit that has been part and parcel of American culture since the days of the Founding Fathers.

The American Dream is one of owning and running one’s own business. There are roughly 8 million businesses of this type in operation across the United States, and the one thing almost all of them have in common is that they accept credit card and debit card transactions. In an increasingly plastic-based economy, credit card processors allow small businesses to remain competitive in the face of giant, corporate entities.

Unfortunately, as important as these systems and providers are to small businesses, there are many processors out there who take advantage of the lack of protections that small businesses have in terms of accounting teams. They misrepresent rates, hide and inflate fees, and the costs for a small business can quickly spiral out of control. Strategies used by companies to mask and inflate fees include inflating interchange fees to hide fee markups; charging for valueless “security fees” which are, despite the processor’s claims, not mandated; charging arbitrary fees which are misleading and unnecessary; and charging thousands of dollars to change phone numbers upon a change of processing company—in essence, charging retailers thousands to protect themselves from scams.

Credit card payment systems are intricate and complex, and credit card processors act as a sort of intermediary between the business and the card issuer. It’s important for the small business to understand how these systems work in order to avoid the many pitfalls involved in dealing with credit card processors.

The most important thing to understand is the interchange fee, paid by the merchant and received primarily by the card issuer, with a secondary cost issued by Visa, MasterCard, or other networks. Finally, a tertiary charge goes to the payment processor, who as previously mentioned acts as the intermediary between the various parties.  While contracts vary wildly, approaching an agreement on an “interchange-plus” basis can provide greater transparency by separating out the various fees charged. This can enable merchants to spot unethical or even illegal charges and avoid them.

As with any complex system, education is the most important and first line of defense for retailers to avoid predatory companies. Do your research and homework, and be vigilant against predatory companies, and the small business owner can hook up with credit card processors who will put the client before the almighty dollar.

Retailers Scramble to Avoid Another Target Scandal Incident

Credit card processing systems are part and parcel of our increasingly plastic based commerce system. Our economy is so rooted in credit that when the bank industry bailout happened around 2008 and banks stopped lending money, it partially led into what is now known as the Great Recession. The stock market relies on speculation about credit, a representation of value. The debt ceiling and the potential reduction of the United States’ credit rating on the world stage is a near-constant source of news.

So, when it was reported that in November of 2013, Target stores saw their credit card processing systems hacked by an advanced computer virus, a near-panic swept through the nation. What happened? Did Target do something wrong? What were they doing to make sure this never happened again? Could anything, in fact, be done?

Then, in January 2014 it was reported that Neiman Marcus was also hit by the same computer virus that hacked Target. There have also been reports that up to a dozen other major retail outlets were hit, all by a group of highly organized cyberthieves believed to be based out of Russia. The FBI has experts working furiously to decode the virus so that they can stop further incursions, but at this time have warned retailers that the virus is popping up everywhere.

In the wake of all of this, the Retail Industry Leaders Association (RILA) has responded with their own initiative to hopefully guard against future attacks. “Retailers place extremely high priority on data security and invest tremendous resources to prevent attacks, but cybercriminals are persistent and their methods of attack are increasingly sophisticated,” said RILA President Sandy Kennedy. “By working together with public-private sector stakeholders, our ability to develop innovative solutions and anticipate threats will grow, enhancing our collective security and giving customers the service and peace of mind they deserve.”

While some experts are claiming there’s little to no chance of protecting the payment ecosystem and some others even going so far as to predict the doom of the internet-connected credit card processing systems, RILA is not acquiescing so easily. The organization is launching a three-pronged attack on cybercrime.

  1. RILA is forming a leaders council which will share information about potential threats across the industry and will discuss possible solutions and counterattacks, as well as lobbying Washington to create a “national baseline” for security breach notifications in the future.
  2. The organization is lobbying to eliminate Mag-Stripe technology and replace it with higher tech smart cards and PIN security. Officials say, “In the event of a successful cybersecurity breach, the dynamic security features of such technology effectively prevent the use of stolen data.” In addition, tighter relationships are needed with other elements in the infrastructure such as banks and the companies behind current credit card processing systems, both to develop and to implement this technology.
  3. Education is vital. If consumers can be better educated how their data is used, they can better leverage their own knowledge to protect the security of their data and help avoid any risk to their own private information.

It’s important to note, however, that the floodgates have been opened; in the future, management of cyber theft will be the key, not avoiding it entirely, which may be impossible.

Online Credit Card Processing: Setting up Your Own Store

For many small retailers, selling on the Internet via a website can be a boon; ecommerce can permit and encourage growth and sustainability for small businesses in an era when brick and mortar stores are suffering. For these businesses, credit card processing merchant services are even more important than physical-only retailers. It is vital to these retailers to find an affordable and efficient service to handle your transactions.

These days, many third-party sites such as Etsy exist to handle the mechanics and management of small business’ services, but these services, in the end, cost you money as they take a fee for every transaction, and often it’s a rather sizable percentage. They also limit your storefront design to their own templates. There’s no reason, in this market, to not manage your own sales, and doing so can provide many benefits such as tracking consumer demographics and trends, as well as offering special discounts and promotions directly and at a steeper benefit to your customers since you will significantly lower costs by removing yourself from the fee structures imposed by established vendors.

This isn’t to say there will be no fees; even PayPal, a leader among credit card processing merchant services, charges fees. However, consider that when using, for example, an eBay store, you are subject not only to fees for accepting PayPal, but eBay’s fee structure for merchants as well. Having your own storefront removes the secondary fee structure from the mix.

Once you are equipped with a store and shopping cart system, finding a provider is fairly simple. There are many options for setting up a storefront, such as Volusion, Shopify, or even Google’s Base product search. Once you find a storefront and shopping cart system, hooking up with a credit card processing service is fairly easy, though it can take some research. Nikhil Roychowdhury, owner of The Simple Leaf Tea, spent months researching before choosing online credit card processing, but says, “Before went live with them, it was pretty straightforward to set up. And you know it’s working almost immediately, because funds go into your account within 48 or 72 hours.”

Vision Payment Solutions can help you choose the right option for your business, including authorize.net, PayTrace and more.

What about PayPal? This service has a generally higher fee structure than others, but is still a great choice for a small vendor, because most web users are familiar and comfortable with it, and as such it allows for a broadening customer base. It is also extremely easy to set up and use. For a startup, it can be a good choice, and as the business grows, other, less expensive services can be brought in. It is also reliable and has second-to-none protection services for transactions.

In the end, when choosing credit card processing merchant services for your business, do your research and choose an option that will allow you to maximize profit and customer service, and in turn allow you to free yourself from the restrictions and high fee structures by third-party store services.