Categories
Credit Card Processing

How To Create A Cash Discount Program For Your Business

Have you ever pulled up to a gas station and see two prices for gas, one for card users and one for cash? I’m sure you have. Gas stations have been using cash discounting for almost ten years now. Finally, store owners and other types of merchants are catching on.

Cash Discounting is becoming more popular with business owners as they discover the benefits of passing credit card processing fees to customers who prefer the convenience of using their credit cards. They’re finding they keep more of their hard-earned money and are able to use reverse cash discounting to grow their businesses.

In addition, surveys have shown, merchants find the loss of some customers negligible. In fact, those surveys report that 99.2% of people asked didn’t mind at all. They understand the cost of using credit cards and accept that small cost for the convenience.

How do I create a cash discount program for my business?

Many naysayers will tell you the process is too complicated. They’re wrong.

The process is easy and, thanks to the Durbin Amendment to the 2010 Dodd-Frank Law, the guidelines are clear. You can read the full bill and amendments if you’d like but be warned, you should be in a place with a soft, pillow lined table or desk – you will fall asleep and fall face-first in a legalese daze.

That’s why you have a professional merchant services provider like 610 Merchant Services. We’re here to protect your beautiful profile and protect you from making costly mistakes with Uncle Sam.

There are a lot of details about posting prices, pricing regulations, and rules about profiting from this sort of program that your credit card processing representative can walk you through. Some of those rules are:

  • Posting cash discount signage at the entrance to your establishment and at the point of sale at the counter
  • Clearly representing the cash discount on your receipts (really bad photoshopped example below)
  • Ensuring your staff is alerting customers of the program verbally
  • Here’s the big kahuna – YOU CAN NOT PROFIT FROM CREDIT CARD FEES. ALL FEES MUST BE PASSED TO THE CREDIT CARD COMPANIES.

Merchant Receipt with and without Cash Discount - 610 Merchant Services

What it comes down to is you shouldn’t try to do this on your own. While the rules and regulations are pretty clear, it’s always best to have a professional merchant services company like 610 Merchant Services work with you.

Can’t I just add a surcharge?

No.

A surcharge is very different than a Cash Discount. A surcharge, which is legal in only ten states, is generally a fee that is added to the price of your product or service and is usually added to an existing tax. For instance, my mobile phone bill has 5 surcharges listed one of them being a State Telecommunications Excise Surcharge (yeah… I’m paying $0.16 for that per phone line!).

A Cash Discount is the elimination of a fee at check out.

Very different.

How do I apply the Cash Discount automatically?

Great question… You should have an up to date POS (Point Of Sale) System or, if you don’t have a POS System, your merchant services provider can have the discount programmed into your card payment machine on your counter.

What are the benefits of a Cash Discounting program?

There are lots of benefits to the merchant as well as the customer. The customer saves money on their purchases and avoids costly interest rates on their credit cards. The merchant avoids paying the processing fee and can reinvest into his or her company, purchase more stock for the shelves or even hire new employees. It’s a win win for everyone except the billion dollar credit card companies.

You’ve convinced me… How do I start?

Simple. Call your merchant services provider. The program should be available through them. Or you can give us a call at (540) 446-0826. We’d be glad to help!

Categories
Credit Card Processing

How Reverse Cash Discounting Can Help You Grow Your Business

How Reverse Cash Discounting Can Help You Grow Your Business

How did business owners get stuck paying the convenience fee for allowing customers to pay with their cards? Why are we paying for the customer’s convenience? It’s just not right!

Who thought up how credit card services were going to be paid for anyway? It sure as heck wasn’t a small business owner!

Being in business is hard enough without worrying about your bottom-line month after month.

The good news: it’s been fixed.

Yep. Reverse Cash Discount is liberating business owners from the incredible burden of large automatic withdrawals from their bank accounts every month. Now those business owners can use their new-found cash flow to invest in their business, get caught up on arrears, hire new employees and so much more.

I know, I know, you’re asking “But, is it legal?”

ABSOLUTELY! (say that in your best Rocky Balboa voice…lol!)

Let me show you how.

What is Reverse Cash Discount?

Great question! The simple way to put it is the reverse cash discount program passes the cost of accepting credit cards to the card holder instead of your business. This is how it should be, right?

Worry no longer about holding cash back for monthly withdrawals. Now the fee is passed on to your customer and all you have to pay for is your account on file fee and possibly some other minor monthly fees.

Here’s the shameless plug for today. 610 Merchant Services only charges $9.99/mo. with no other fees like most merchant services companies. Plus, we can set up your account where most, if not all of the monthly fee is taken care of as well.

Yes. You heard that correctly. 610 Merchant Services can provide, in most circumstances, a zero-fee account. If you’d like to know how, give us a call at (540) 446-0826.

Anyway, enough of the shameless plug… let’s get back to our blog.

How does Reverse Cash Discount Work?

It’s always easier to explain these things using an example. Let’s go back to the G.I. Joe with Kung Fu Grip example we used in an earlier blog about friendly payment card fraud.

Let’s say my husband is in an antique store and he finds his favorite childhood toy, the G.I. Joe with Kung Fu Grip, and it’s in mint condition. He just has to have it. He picks it up and finds it’s only 100 bucks, so he gleefully brings it to the counter and makes the purchase with his credit card.

Happy ending, right?

Well the story’s not over yet.

Stressing over monthly accounting - 610 Merchant ServicesNow the owner of the antique store has to save at least 4% of that purchase in his bank account because he knows that come the end of the month the credit card processing provider is going to take out their share of the sale. Yep. The credit card processor gets up to 4% or 4 bucks for doing nothing. Quite a racket huh?

It’s not really that simple but for the business owner who has to give away 4% of what he’s earned, it’s a lot and it’s annoying as hell. There’s got to be a better way.

There is.

Reverse cash discount solves this problem by charging the customer at the point of sale the 4% or whatever percentage the business owner has decided upon not to exceed 4%.

Here’s the new story with a better happy ending…

Let’s say my husband is in an antique store and he finds his favorite childhood toy, the G.I. Joe with Kung Fu Grip, and it’s in mint condition. He just has to have it. He picks it up and finds it’s only 100 bucks, so he gleefully brings it to the counter where the clerk rings up his purchase for $104.

My husband sees a sign that clearly states “There is a 4% Customer Service Fee applied to all sales. Pay with cash and save!”

He tells the clerk, “Does anyone actually carry cash anymore…? I’m paying with my card.” The clerk hits the appropriate button and the transaction goes through without a hiccup.

My husband is happy he found his favorite childhood toy, G.I. Joe is happy to have found a home, the credit card processing company is happy because they pull the 4% Customer Service Fee from the daily batch and the store owner is happy to have saved himself from the accounting nightmare of holding on to the $4 and he probably made a few extra cents to apply to his monthly merchant services fee.

That’s a happy ending!

Here’s the story with the best happy ending!

Let’s say my husband is in an antique store and he finds his favorite childhood toy, the G.I. Joe with Kung Fu Grip, and it’s in mint condition. He just has to have it. He picks it up and finds it’s only 100 bucks, so he gleefully brings it to the counter where the clerk rings up his purchase for $104.

My husband sees a sign that clearly states “There is a 4% Customer Service Fee applied to all sales. Pay with cash and save!”

He digs deep and he’s amazed to find I haven’t touched his wallet in a few weeks so he actually has the cash on hand. He tells the clerk, “Look at that! I have cash.” The clerk hits the appropriate button and the transaction amount reduces to $100 even.

My husband is happy he found his favorite childhood toy, G.I. Joe is happy to have found a home, and the store owner is happy to have all of his $100.

The best part… the credit card processing company isn’t happy in this scenario because they can’t pull the 4% Customer Service Fee from the daily batch. In other words, they don’t make money from the hard-working business owner or my husband.

Oh yeah, I forgot the happiest person in this whole scenario is me. Now my husband will hide in the basement playing with his favorite childhood toy all weekend instead of bothering me!

That’s the best ending!

How can I get started with Reverse Cash Discount?

Simple. Call your merchant services provider. The program should be available through all of them. But, if you’d like to see if there is a merchant services company out there that can help you bring your fees to zero every month, I may know someone… wink, wink.

With the money you’ll save month after month using reverse cash discounting, you can grow your business by investing back to your company, hire more staff, or buy more stock. The point is, business is hard enough without having to worry about saving money aside for billion dollar credit card companies when you don’t have to.

Categories
Credit Card Processing Security

4 Tips on How to Avoid Friendly Credit Card Fraud

Let’s face it, fraud sucks.

Can we say that out loud?

Fraudsters everywhere are making money hand over fist scamming business owners just like you. It’s a game to them. It’s fun. To them, you’re just another faceless small business owner with a fat bank account that can afford it. They don’t care or know if that’s actually true and they don’t give a rat’s nether region either.

Fraud sucks and the worse kind of fraud is friendly fraud.

Friendly Fraud?

Yep. Friendly fraud.

I know the term includes two words you never thought you’d hear in the same sentence, but it’s real. Friendly fraud is when a customer makes a claim that on it’s face seems like a viable claim to the credit card company. And, since the perpetrator of the fraud is a customer of the credit card company, the credit card company does everything in their power to defend the customer.

What’s Friendly Credit Card Fraud?

The easiest way to explain it is to give you an example:

John wants a new G.I. Joe with the kung fu grip. He heads over to your online store where you sell vintage toys and buys one for $125.00. GREAT! You knew someone would want it and they did. It’s off your shelf and the 10 bucks you paid for it at the garage sale was well worth it.

Until it’s not.

You see John had a plan.

He was going to order the G.I. Joe with the kung fu grip and when he received it his plan was to call his credit card company and dispute the charge. You just happened to be the first person he found and now you’re left holding the bag. You see, the credit card company just took back the $125.00 directly from your bank account and charged you a $65 charge back fee that you couldn’t cover so the bank just charged another $29.00 insufficient fund fee.

Yay! Lucky you.

That’s friendly fraud.

Why is it Called Friendly Fraud?

It’s called friendly because any real and loyal customer may have a viable reason to get their money back. Maybe it’s a returned item. Maybe the item never made it. Maybe it was damaged. Maybe the order was canceled and not caught in time. There are any number of reasons.

The point being, it’s hard to determine what a real claim and a fraudulent claim is. After all, there are millions of transactions every year where something goes wrong, and the customer is entitled to a refund.

What Are Common Friendly Fraud Claims?

Some of the claims fraudsters may use when contacting their credit card company include the following:

  • The item wasn’t delivered
  • The item doesn’t match the online description
  • The item was returned but the refund was never processed
  • They canceled the order but the item was sent anyway
  • They don’t remember buying the item so the card must be compromised.

Great. Now that you know what some of the common fraudulent claims are, you probably want to know how to protect yourself. We’re getting to that, but I want to first reiterate that most of the times these claims are valid and that’s what makes this a very difficult type of fraud to combat especially for large merchants.

How Can I Help Prevent Friendly Credit Card Fraud?

Glad you asked!

Here are 4 tips you can use to avoid friendly fraud:

  • Require a signature upon delivery to verify the customer received the order. Having a paper trail that shows the product was ordered and delivered will help when working with the credit card company and hopefully give pause to the fraudsters.
  • Your refund policy should be clearly displayed on your website and be easily available to the customer. Make sure your refund policy states that a refund is issued when the item is returned and specify a period of time for return.
  • For returns, be sure to issue return labels with tracking information so there is a paper trail documenting the return. Providing a paper trail that confirms the customer did or did not return the item is important. You can also include an email and online account order history that clearly shows all transactions.
  • Collect as much customer information as you can. Having a customer database that includes order history, delivery dates, and call logs with your customer service representatives is a great way to deter fraudsters. If they know you’re being vigilant they will look elsewhere for a victim.

Yes. Friendly Credit Card Fraud is a thing and you can help prevent it from happening to you. Follow these simple steps and keep your house in order – fraudsters go after the easy targets.
Now please send me the link to the G.I. Joe with the kung fu grip because my husband is a 55 year old child and would love it.

Categories
Credit Card Processing

How COVID-19 may change how your business takes payments

Before COVID-19 your customers never gave a second thought about entering their PIN number on your credit card terminal or grabbing the pen from your store’s clerk to sign a receipt.

Now consumers are anxious about the spread of COVID-19 and are being cautious about what they touch in public. Even though you may have instituted new policies around cleaning your credit card machines and screens, according to a Mastercard study, 50% of consumers worry about touching these devices.

From IBM’s creation of the Magstripe in 1960 to EMV in 1994, advances in payment technology have always played a big role in how consumers interact with businesses. In fact, just over the last 5 years, innovation and technological advances have again drastically changed how you accept payments.

From digital wallets and wearables such as smart watches to ‘tap and go’ (Near Field Communication or NFC) cards there has been a huge shift in how consumers purchase goods and services. And, while the United States has been slow to adopt contactless payments, the international market has been full speed ahead for over a decade.

How COVID-19 is changing the way customers pay you.

In a recent study conducted by American Express, the impact on in-store purchases shows 58% of consumers who have used a contactless payment method state they are more likely to continue this form of payment now.

Further, the study shows that the handling of cash is down as well. According to the study, more than 16% of consumers no longer wish to partake in cash transactions. The study also found 15% of consumers say they no longer wish to insert or swipe their credit or debit cards.

Fifty percent of consumers also agree that using contactless is safer for personal health than using cash or swiping a card and it is more convenient and faster with both bolstering an almost 10% increase in the past 8 months.

What can you do to keep your business current with consumer desires

Below are some of the easy things you can do right now to keep your business up to date with today’s consumer

Upgrade payment processing equipment

  • Call your merchant service provider to see if they can provide an upgrade to your credit card terminal for NFC or ‘tap and go’ transactions
  • Upgrade your POS (point of sale) equipment to utilize NFC transactions
  • If you have age-appropriate wares upgrade to a digital scanner to confirm the age of your customer

Improve your online store

  • Make it easier for people to shop and pay online so they can pick up at your store
  • If you don’t have a website with eCommerce ability contact Stafford Technologies to help you move your inventory online
  • For the foodservice industry, be sure your menu is online and interactive
  • Make it easy for people to understand the number they need to call to order and pay over the phone

Advertise contactless payment at your business

  • Put signage in your windows letting people know you have contactless payment options
  • Ensure your website reflects all your contactless payment and pickup options
  • Include a banner in all your advertising alerting consumers you have contactless payment options

COVID-19 has created a change for the better in how consumers and businesses interact

Consumers are seeing the benefits of interacting with your business through contactless payment and, this form of payment is quickly becoming the consumer’s favorite way of paying for goods and services.

As a business owner, while you do want to remove as many hurdles as you can to make visiting your business and buying from you as easy as possible, there is the added benefit of lower costs in labor, increased productivity, and more efficient payments.

Improve the way you take payments today.

Categories
Business Credit Card Processing

How To Keep Your Hard-Earned Money

Let’s face it, the way we do business has changed and you may be accepting more payments without a card present.  A card-not-present (CNP) transaction is when a customer buys something online or over the phone and you don’t have access to the card used. From curbside to online, here are a few ways to help prevent card not present disputes no matter how you’re doing business.

You can prevent disputes and fraud with these handy tips


Online Orders:

  • Cancellation and Return Policies: Clearly display your policies. Provide tracking once order ships and use an “I agree” checkbox prompting policy acknowledgment during the order process.
  • Confirm Identity: Confirm the customer’s identity by asking for the complete billing address and the CVV code on the card.
  • Tracking: When shipping products, send tracking information once the order ships.
  • Recurring Transactions/Subscriptions – Send an email reminder before each cycle

Telephone Orders:

  • Cancellation and Return Policies: Clearly communicate your policies with your customers.
  • Verify Shipping Information: Confirm you are shipping to your customer’s billing address. If not shipping to the billing address, ask for a “ship to” address and send tracking information once the order ships.
  • Shipping & Delivery Expectations: Set clear expectations on delivery time frames and update customers if there are changes.
  • Send Order Confirmation: Includes details of the order and relevant policies. For services, be sure you clearly communicate your terms & conditions and cancellation policy.

Curbside Pickup Orders and Deliveries:

  • Order Confirmation: Send confirmation as soon as the order is completed that includes your policies and pick-up instructions. If someone other than the Card Member is picking up the order, be sure to note this on the order invoice and confirmation.
  • Get Receipt Acknowledgment: Have the customer sign the credit card receipt when the order is picked up or delivered. If the customer’s email address was captured when the order is placed, send an order status with pickup details such as the date, time, and person who received the order. NOTE: This can act as a supporting document in case of a dispute.

Best Practices for Managing Disputes with Card Not Present Purchases

There are three types of chargebacks where the customer calls his or her credit card company or bank to reverse a charge. Below we’ll look at all three and ways you can insolate yourself from giving back your hard-earned money.

No knowledge on the part of the Card Member

  • Use the name your customers know your business by on your merchant account. This way your customer recognizes the charge on their card statement.
  • Include the customer service phone number on statements
  • Explain auto-renewal and auto-shipment terms for free trials, reiterate your cancellation policy in your confirmation emails and include the steps the cardmember should take once their trial ends

The Card Member claims that the transaction was returned or canceled

  • Clearly display return and cancellation policies
  • Note “non-cancellable” or “non-refundable” purchases
  • Call out advance payments that are billed immediately
  • Send a reminder 10–30 days before auto-renewals or recurring billing
  • Issue refund credits promptly

The Card Member claims that the goods/services were not received

  • Hold the charge until shipping or service date
  • Notify customers about delays in fulfillment
  • Confirm when subscriptions will begin
Categories
Credit Card Processing

Avoid These Costly Credit Card Processing Mistakes

Whether you want to admit it or not, everyone makes mistakes, even you. Lets face it, we are only human. Learning from our mistakes, and the mistakes of others, is what makes us successful. It is the same with accepting credit card payments. Learning to avoid credit card processing mistakes can add up to big savings. Here are five of the most common and costly credit card processing mistakes businesses make, and how to avoid them:

Key entering card information without getting a manual imprint when a card won’t swipe.

It is a matter of convenience. Customers are lined up at the register and the card reader does not recognize the card you are trying to swipe. Instead of locating the old, manual card swiper to make a manual imprint, you simply key-enter the card information into your Point-of-Sale (POS) system. While this saves time, it also opens you up to fraud and higher processing rates.

Without a card imprint and customer signature, the transaction is subject to a higher processing fee by the card networks. No imprint or customer signature also offers little defense should a chargeback result. (Fraudsters alter cards so they will not swipe, charge a large amount, then initiate a chargeback if the unsuspecting merchant does not make an imprint and get a signature. In most cases, the merchant loses the sale and merchandise.)

The best way to avoid this situation is to make a manual imprint and get a signature. Also be sure to follow all POS prompts when key entering card information.

If a purchase seems suspicious, or questions arise when entering information, call your processor or voice authorization center. They can walk you through the steps necessary to successfully accept the card.

Not asking your processor to help you find the lowest processing costs.

Running a business takes a lot of time and energy, and the last thing an owner wants to do is keep up with the all the requirements from the card brands on interchange qualifications.

If you are consistently seeing mid-qualified or non-qualified transactions, your processor can help you discover why your transactions are not qualifying for the best rates. Sometimes simple changes can make a big difference, such as ensuring transactions are batched out within established timeframes, making sure POS devices and software are properly encoding transactions, or taking advantage of special programs.

If you don’t know, ask. Your processor should be able to evaluate your situation and offer money-saving suggestions.

Tossing monthly statements into a drawer without opening and reviewing.

Yes, reviewing a monthly statement may be time consuming, but it also can be time well spent. Reading the statement message each month will keep you up to date on any potential price changes that will affect your bottom line.

Familiarizing yourself with cash flow, charges and rate changes gives you a snapshot of your financial health. It also can uncover hidden costs which you can work with your processor to rectify. If you don’t understand an item or term on your statement, call your provider for an explanation.

Consider switching to online reporting. Checking your account via a secure website provides an immediate snapshot of transactions, and eliminates the need for paper statements, offering an environmental benefit.

Ignoring Payment Card Industry Data Security Standard (PCI DSS) compliance.

PCI DSS is a set of security requirements established to protect cardholders’ account data from fraud. The PCI DSS were developed by the PCI Security Standards Council, which includes American Express®, Discover® Financial, JCB International, MasterCard® and Visa®. For business owners, the standard requires that all hardware and software coming into contact with cardholders’ data must be compliant. The risk of noncompliance includes massive fines, a loss of reputation and bankruptcy.

To avoid this very common credit card processing mistake simply call your processor for any assistance you may need with becoming PCI compliant.

Not reading and understanding pricing and terms of the agreement.

Some processors will do just about anything to win your business. They’ll offer flashy rates, fancy equipment and fabulous deals. For example, some processors will offer a “New Low Rate.” Many times, this is an introductory rate that expires after a number of months. Other processors will offer a low rate, but add extra fees to every transaction. Some processors require business owners to purchase equipment from them. Others require businesses to lease equipment for a set period, and charge a penalty for opting out before the agreement ends. IMPORTANT NOTE: all processors pay the same rates to the credit card associations to move transactions. (Both Visa and MasterCard post interchange rates on their websites.) The differences are in the extras a processor offers.

One of the most important ways to avoid a processing mistake is to never make a rash judgment or decision – take a moment to consider a processor’s strengths and if those strengths line up with your needs.

Categories
Credit Card Processing

Questions To Ask Your Credit Card Processor

Make Time for A Yearly Payments Checkup

Add one more item to your list of annual checkups – a review of your payment needs. Along with health, insurance and vehicle exams, it is a good idea to make time once a year for a review of your processor and payment agreement.

An annual exam with your processing partner can uncover changes that may save you money, or introduce new security procedures to protect your customers and your business. The following are 10 important questions to ask during a review to ensure you are receiving the best return on your investment, and that you are safely operating within industry standards.

Has my business changed?

Changes to your average transaction to an increase to your overall sales volume, fluctuations in the types of transactions you process may help you qualify for lower rates. Or perhaps the addition of an online presence or an expansion into new items or services may require updated processing services – and may allow you to offer your customers new ways to pay.

Does your processor understand your business?

Just as you wouldn’t call a plumber for an electrical problem, why consult a processor who knows nothing about your business? Your processor should understand your business model, what drives your industry, and offer suggestions to help you grow and succeed

Is your processor EMV® chip card ready?

Make sure your business is using secure, up-to-date credit card machines to accept payments. Chip-enabled terminals take advantage of the fraud-fighting technology built into EMV cards and may help protect you from card-present counterfeit fraud. Many newer terminals also allow you to accept digital wallet payments via Near Field Communication (NFC), including Apple Pay and Samsung Pay.

Is your processor keeping up with latest technology?

In today’s business environment, it is essential to have a POS solution that is secure, fast, redundant, and supports the latest payment technologies such as EMV and NFC/Apple Pay™

Does your processor support Apple Pay and other mobile wallets?

Accepting the latest ways consumers want to pay requires a processor willing to invest in research and development while forging partnerships with all players in the payments industry. Your processor should have the industry connections needed to stay on top of new payment developments, the ability to quickly adopt new ways to pay, and the knowledge to help you determine which new consumer payments are right for your business.

Are the rates on your statement the same as outlined in your contract?

Compare your contract with a monthly statement to ensure fees and rates are consistent. If not, ask your processor about the discrepancies.

Is customer service available when you need it?

Many businesses today operate 24/7, and the last thing you need is a processing problem outside of customer service hours. Ensure customer service representatives are available during your business hours, not just your processor’s.

Do you receive regular communication and educational opportunities from your processor?

Your processor should provide regular communication about industry news, regulatory changes, new products and other payment developments that affect your business.

Do you receive statements and payments on time?

Statements should be timely and available to meet your business needs. Many processors offer online access to real-time transaction information to help you track a wealth of information including fees, batch processing, income and volume.

Should your exam lead you to begin the search for a new processor, remember, not all processors are equal. Research and evaluate vendors based on your gathered information, experience and need, not just on price. Then choose a payments partner that best meets your requirements. In the end, you will benefit from the effort. To ensure you continue to benefit, set a reminder now to conduct another payments review in 12 months.

Categories
Credit Card Processing Security

EMV and Counterfeit Cards

You have heard all the talk about the “Liability Shift” – well the October 1, 2015 deadline has past and the world has not come to an end.  As you are aware the new credit and debit cards that are being issued have a microchip embedded on the front of each card. The purpose of the microchip is to make it harder for criminals to use your debit/credit card fraudulently and is designed to meet the EMV standard. Now we all know that there will always be criminals and having this new technology is not going to prevent other forms of card fraud.

EMV- which stands for Europay, Mastercard, and Visa – is the global standard for smart cards.  Europay, Mastercard, and Visa were the original payment brands that came together to create the standard. The standard has since been regulated by American Express, Discover, JCB, MasterCard, UnionPay, and Visa and is now known as EMVCo.

Four things should be noted about the liability shift:

  1. The arrival of October 1 does not mean that all debit/credit cards need to be EMV, it means that merchants need to be ready to accept chip-enabled cards by that date if they do not want to be affected by the new fraud liability rules.
  2. Upgrading POS systems to accept chip cards is not legally mandated- it is an optional measure to protect your business from fraud liability.
  3. Even if you have an updated EMV-compliant POS machine, if you run a counterfeit chip card via the magnetic strip reader instead of the chip reader, you will be liable for the fraud.
  4. Even if the counterfeit card swiped at a traditional POS machine is in the form of a traditional card, you will be liable for fraud if the data on the counterfeit card was obtained from a legitimate chip card.

What is a Counterfeit Card?

Counterfeit credit cards are fakes that have real account information stolen from victims. Often, the victims still have their real cards, so they don’t know a crime has occurred. The cards appear legitimate, with issuers’ logos and encoded magnetic strips. To create a counterfeit card, criminals go into any local supermarket and grab prepaid debit cards you normally buy as gifts. Honest people go to the counter check out and activate the card by loading a dollar amount onto the card.  For criminals however, they are just shells – they want them to look like a real credit card and don’t care about the numbers embossed on the front or anything printed on the card such as: “A Gift For You”.  All they want is a card that looks like the real thing and has a mag stripe so they can load stolen data onto the back of this card and use it at another store.  Now the cashier that gets that card will think it’s just another one of the dozens of cards they accept each day and will just swipe away!  A counterfeit card created, sold on the street and used to buy goods and services is as easy as 1-2-3!  Scary, I know.

There are things that merchants can and should do even without EMV-enabled equipment to protect themselves.  By setting your current credit card terminal or POS system to prompt for the the last 4 digits of the card number on the front of the card and using the CVV/CID from the back or front (American Express) of the card are great tools to prevent fraud!  Why?  It really is quite simple – when card data is stolen and encoded onto a “shell” the information will not match.  For example:  The last four digits of your card are 6848 however the stolen data that was encoded on the “shell” end with 1298.  Unless it is a very sophisticated criminal group, most counterfeit credit cards are crudely encoded and are designed to just “get the job done” rather than impress.

Categories
Credit Card Processing Security

What is EMV?

We have been inundated with phone calls for the last few months, from our merchants – all asking the same questions:

What is EMV?
What is chip card technology?
Can I be fined or even arrested if my terminal is not EMV Capable?
Without an EMV machine,  will I lose ALL chargebacks on your account?
Is it true that EMV is the only way to process credit card charges after October 1, 2015?

610 Merchant Services is here to help put all of our merchant’s, and hopefully some new ones, minds at ease.  We all have heard or read something about the looming October 1, 2015 liability Shift.

Lets start off by defining Liability Shift: this simply means there is a change in the financial responsibility to the merchant, bank or credit card company should a fraudulent transaction take place.  Today, if a card present  in-store transaction is made using a counterfeit, stolen or otherwise compromised card, consumer losses from that transaction fall back on the payment processor or issuing bank.   After the October 1, 2015, deadline (which was created by major U.S. credit card issuers MasterCard, Visa, Discover and American Express), the liability for card-present fraud will shift to whichever party is the least EMV-compliant in a fraudulent transaction.

Now at this point you may be asking what is EMV?  EMV stands for Europay, MasterCard, and Visa.  EMV is a global standard for credit and debit payment cards based on chip card technology.

As the U.S. payment industry transitions to EMV technology, there’s a lot to adjust to, starting with what to call the new cards. You may have already heard or read these terms – don’t stress over the different terms either, they all mean the same thing.

  • Smart card
  • Chip card
  • Smart-chip card
  • Chip-enabled smart card
  • Chip-and-choice card (PIN or signature)
  • EMV smart card
  • EMV card

How will EMV Effect Your Business by 610 Merchant Services of Stafford VirginiaHere is how the new technology cards work:  Rather than a magnetic strip, EMV uses a microprocessor chip embedded in the card.

Unlike magnetic stripe transactions where typically the track 2 data containing the card number and expiry date is processed, every chip card transaction contain dozens of pieces of information to be exchanged between the card, the terminal and the acquiring bank or processors host.  This requires the terminal to perform many stages of complex processing, including cryptographic authentication, to successfully complete a transaction.

What does this all mean for merchants?

Pre-October 1st Scenario
1. A counterfeit card is used at a merchant location
2. Customer sees charge, calls credit card company to dispute and charges it back
3. Merchant supplies signed sales receipt and will win chargeback

Post-October 1st Scenario
1. Card data is stolen and encoded onto a fake credit card
2. This “counterfeit” card is used at a merchant location
3. Customer sees charge, calls credit card company to dispute and charges it back
4. If the counterfeited card was originally an EMV-issued card (i.e. a chip card) then:
Merchant supplies signed sales receipt and will win chargeback ONLY IF merchant has an EMV terminal;
Merchant will lose chargeback if merchant does not have an EMV terminal
5. If card was not issued as an EMV card then Merchant will supply sales receipt as normal and win chargeback regardless of type of machine they have (EMV-enabled or otherwise)

We have heard so many sales tactics (or lies) such as:

1) If you don’t have an EMV machine, the police will give you a $100 ticket.
2) Without an EMV machine, you will lose ALL chargebacks on your account.
3) EMV is the only way to process credit card charges after October 1, 2015, so without that machine, you won’t be able to take cards.
4) Your website needs to be able to take EMV cards. (Hint: There is no EMV acceptance ability – i.e. chip reading – on websites and there is no Liability Shift for e-commerce or Key-Entered transactions.)
5) EMV cards are cheaper than swiped sales.

Don’t be fooled by these sales tactics.  610 Merchant Services is here to answer any questions you have.

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You can fill out the easy form below and we’ll get back to you soon or you can call us at: (540) 446-0826