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.

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.