March 2014

PayPal Nearly Doubles Transactions in 2013

Mobile devices are a fact of life in today’s society. Many of us have grown dependent on our smart phones, tablets, and other portable platforms for the tasks of day to day life—even our employment has changed in an era where we are expected to be connected all the time. One of the biggest areas to see this change is in credit card transactions, and the largest service for online transactions is seeing a whopping increase on cell phones and tablets. PayPal credit card processing transactions in 2013 on mobile platforms saw an exponential increase, far beyond what even the online service predicted. The 93% increase means that 15% of all transactions through the PayPal service now come through the use of mobile devices.

PayPal has traditionally under-predicted their sales volume, and this year is no different, except perhaps in the sheer volume of increase the vendor saw. With a prediction of $20 billion, PayPal credit card processing transactions on mobile platforms outperformed that by a full $7 billion, nearly half-again the expected volume.

Of course, the company’s tight partnership with eBay accounts for the bulk of these transactions, but PayPal stands in the next quarter to see an additional potential revenue increase of roughly $1 billion from its recent acquisition of Braintree, a credit card processing service designed to help small businesses accept such transactions, which closed up shop in December and subsequently re-opened. The service still uses its own identity and website, but is now under the auspices of the Internet transaction giant. However, since the new subsidiary outsources most of its credit card transactions on the back end, PayPal likely won’t see these numbers directly as part of its future reports. It is unclear at this point whether PayPal intends to change Braintree’s model and begin handling these transactions itself, but even if they are scattered across varied outsourced services, the figures stand to bolster PayPal.

While this all seems like massive numbers, the numbers aren’t as big as they seem in the grand scheme of things. Not only are the figures a bit smaller than they appear on the outset, in 2013 the numbers are actually far down from previous years. In 2011 and 2012, by comparison, PayPal credit card processing transactions on mobile platforms saw increases of 567% and 250%, respectively, as opposed to this past year’s 93%.

However, PayPal isn’t concerned about the decline. Consider that in 2011 the idea of online transactions across varied mobile platforms was a relatively new idea, gathering a formerly nonexistent customer base and cementing a service model. Consider also that PayPal hasn’t been the fastest when it comes to adapting their platform for mobile devices. These two factors mean that before 2013, the company was gathering in a user base that had been hungry for such a service but hadn’t had access before. It is now making positive steps to maintain growth, such as the aforementioned purchase of Braintree and the similar acquisition of StackMob in December. With steps like these, PayPal is definitely poised to remain at the top of the heap for online mobile transactions in the future.

What to Look For in a Mobile Credit Card Processing Service

Mobile Processing, or accepting credit card payments through a mobile device such as a smart phone or tablet, is a fast growing demographic in small business today. These services can greatly expand options for a small business, allowing not only an inexpensive means of processing cards, but the ability to conduct business anywhere, without being tied down to a complicated and bulky system. They can also add an additional level of security to credit card processing, which can help to avoid malware hacks like the Michaels, Target, and Neiman-Marcus attacks.

As any small business knows, in order to obtain growth and sustainability, it’s vital to accept credit card payments, and since mobile services allow such flexibility and are so cost-effective, implementing one into your business is really a no brainer. The real question for vendors, then, is not whether you should use a credit card processing service, but which service should you use? Top services will offer a wide variety of service choices to small businesses.

The best service providers will include a great deal of experience in electronic payments and offer services for mobile processing which cover all forms of payment, card brands, and merchant services. The vendor should have the option track consumer trends by viewing past transactions.

Intuitive design is also important, which allows easy management of settings and can even help to set up a product list. Basic features you should look for include single-screen entry and electronic signature capturing, as well as state-of-the-art high-end SSL encryption which meets current Pa-DSS standards, as well as password protection and credit card verification. The best mobile processing solution will be serviceable across a wide range of platforms, so that whether your system of choice is iOS, Android, or Blackberry, you can still use the service.

Swiping cards is often considered more secure than keypad entry, and is certainly more convenient and faster. The option for a credit card reader is a must as well, be it one that works with ROAMpay, PAYware, or QwickPAY.

This might not be something that immediately comes to mind, but you also might do well to consider a service that also offers traditional point-of-sale (POS) terminals, pin pads, and the like. While this equipment is often quite expensive for a new or small business, a merchant services provider that offers traditional equipment is more likely to have the knowledge and experience to back up their mobile app, and also offers the convenience of an easy upgrade should you grow your physical business to a stage where a more robust point of sale system is desired.

 

4 Credit Card Processing Contract Terms That Are Almost Always Hidden in the Fine Print

Selecting a merchant credit card processing service can be the most important decision a small business makes—while contracting with the right firm, who puts their client first, can result in a long-term relationship that promotes success and growth, there are many predatory services out there who not only put their own profit first, but who use unethical and sometimes illegal tactics to profit off of their clients.

Many of these companies hide predatory terms in the fine print of contracts. Since contracts tend to be so complicated and filled with legalese, many small business owners who don’t have the savvy of large corporate law firms to help them navigate the murky waters. This is dangerous because once you agree by signing, you may be trapped. Here are four dangerous clauses that a merchant credit card processing service might hide in the fine print of a contract.

  1. Early termination fees. Most people are familiar these days with the concept of an early termination fee. This sort of clause locks you into a set contracted term with the provider, charging sometimes exorbitant fees if you try to cancel the service early. Providers often hide these fees by presenting the contract in two separate documents: the “merchant application” and “contract terms,” or similarly titled papers, which will be cross-referenced and buried.
  2. Liquidated damages clause. Similar to an early termination fee, this clause is often hidden in the “Termination” section of the contract, and stipulates that the business owner will remit, upon early termination, an amount of money equal to the average monthly payment for each month left in the contract. In essence, this says that you’re required to pay out the entire contract even if you end it early. This sort of clause can be even more damaging than an early termination fee. In general, if a contract includes a liquidated damages clause, it’s inadvisable to sign the contract, or any clause that includes fees designated as “whichever is greater.”
  3. Automatic contract renewal. In this trap, the contract specifies that unless the merchant specifically cancels the contract within 90 days of the contract’s end date, it will automatically renew for another period of time, be it a year, 36 months, or similar. This cancellation process can often be complicated and arcane, so make sure you understand the details of how it has to be done, or better, find a merchant credit card processing service that doesn’t have these kinds of tricky stipulations.
  4. Reserve Account Policies. This allows the merchant credit card processing service provider to withhold any amount of money it chooses in a reserve account, ostensibly to guard against fraudulent payments. Unfortunately, the “at the provider’s discretion” part means that they can take any amount they desire, and can sometimes directly attach portions of your sales or even out of your bank account. These clauses can be fatal to a small business. While most providers have this sort of clause, be sure to read it in detail to understand their policies so far as informing you and limiting the amount and means by which they agree to withhold.

Mobile Payment App: Transforming the Way Small Businesses Work

Low cost credit card processing is almost a necessity for small businesses. In our current economic environment, it is nigh impossible to run a business on cash alone. But accepting credit card payments can be prohibitively expensive, leading to many small businesses to try and go it on cash transactions alone, or to put a limit on credit card transactions, requiring a minimum purchase if customers wish to pay with their card.

As technology increases, however, more and less expensive options are available to small businesses needing to leverage the convenience of credit card processing without paying the exorbitant fees that many companies charge to get such services set up and maintained. Among these are mobile payment apps available on many platforms.

With mobile payments, customers can use their smart phones to pay for goods and services instead of a physical credit card. The service is sometimes referred to as mobile money, mobile wallet, or mobile money transfer, and refers to any financially regulated transfer of funds through a mobile device. These services are a massive boon to businesses who need to leverage low cost credit card processing for transactions to save significant amounts of money.

This sort of transfer does away completely with expensive software and equipment setups and requires relatively little in the way of service maintenance, which is usually outsourced by its nature to the service provider, be it a well-known service like PayPal or a newer startup service. The technology used is instantly familiar to most employees, who will be familiar with smartphone and internet mobile devices already, so they will be immediately comfortable with its use.

In addition, mobile payments permit businesses to automate their inventory tracking as well as enabling them to keep abreast of current trends in consumer purchasing and preferences, allowing them to move faster to meet the ever-changing demands of customers and clients. In many ways, this sort of low cost credit card processing increases parity between small businesses and their large corporate competitors.

Sheer convenience is another advantage of these types of services. With mobile wallet technology, consumers do not need to carry around a dozen physical cards which can be easily damaged, cloned, or stolen. Instead, their cards and accounts are all held on a secure server in cyberspace, ready to be accessed by the user whenever it is convenient.

Perhaps most importantly given recent events, the transactions used by mobile payment apps are far more secure than traditional credit card since they use PCI-compliant SSI encrypted software to protect the transfer of sensitive information like credit card numbers and users personal information.

In essence, the exceptional low-to-no cost setup for these services, combined with convenience, familiar technology, and the highly increased security as well as the ease of offering purchasing incentives and tracking of customer trends makes them an ideal solution for small businesses. Since our economy demands the use of credit cards, and the trend will only increase, it seems a natural fit for those small businesses who need to remain competitive in today’s market.