October 15, 2017
As a business, each expense counts, including credit card processing costs. Credit card processing is a necessity to businesses today, but it comes at a price, is very complex, and complicated to understand. Furthermore, for online businesses and companies with recurring customers the threats of fraud and loss are very high. To improve your company’s profit margin and reduce risk, we discuss steps you can take to protect your sales and mitigate expenses, potentially saving thousands of dollars each year.
Chargebacks can be the death of a business, not only as a loss of revenue, sales and product, but with the potential loss of card processing services. The card brands have specific tolerances based on the ratio of sales to chargebacks and disputed transactions. Anything over a 1% ratio of chargebacks to sales, jeopardizes your ability to accept credit cards as a form of payment.
When shopping for payment processing services, processors look at each of the KPIs of your current processing to establish your risk profile. The more chargebacks that you have increases the processor’s risk of loss, as such your processing rates will be adversely affected. Bevel employs a team of certified payment professionals with the expertise and experience in helping businesses better manage their payment ecosystem. We can help you to not only win a chargeback dispute, but also identify and reduce chargebacks from occurring in the first place.
The primary cost element of your processing rate and fees is the card brand interchange, which is roughly 85% of your total card processing cost. The monies collected for interchange goes directly to the card issuing bank of the customer’s card used for purchase. There are over 900 different interchange rates and fees between Visa, Master Card, Discover and American Express. These rates are set by the card brands and vary based on numerous factors, such as: card type (debit, credit, rewards, business, international, etc.), card present vs. card not present, when you settle your payment batch, the data included with the payment record, and the various combinations of these elements.
There are a few things that you can do to take back control of this process and optimize interchange fees. First, you must be aware of all the variables affecting processing costs to adopt better processing habits to lower your overall processing rate. It takes a keen understanding of how this ecosystem works to be able to optimize how each transaction qualifies for the card brand’s interchange. Just like going to a CPA to ensure you are getting the most out of your taxes, Bevel’s payment experts know how to extract the most value out of this ecosystem, to not only improve how your transactions qualify but to make sure that you are not over charged or suffering from poor processing procedures. Due to the complexity of the fees surrounding interchange, it is common for many processors to inflate pass-thru costs.
Inflated costs are enough to worry about; however, fraud is occurring at the highest rate in history. Since 2008, both first-party and third-party fraud have grown by nearly triple digits. This explosion has impacted everyone from consumers, merchants and the financial institutions. As the rate of fraud has increased so have the processing costs of higher risk transactions, most commonly those where a customer is not face-to-face at purchase. Regardless, the expenses associated with these fraud losses trickle down to your overall processing costs. There are best practices and certain tools that can be used to mitigate payment fraud that will protect your revenue and keep payment processing costs down. Utilizing Address Verification Services (AVS) offered by the card brands is an inexpensive and very telling fraud mitigation tool when used properly. Many businesses will get card billing information but do not rely on the AVS response with their decision to deliver goods. Here is a key tip, card brands will offer protection from fraud if product was shipped to the billing address of the credit card.
Although AVS is a good tool, it does not protect so much against trained fraudsters that know how to get around it, hence why it is critical to utilize multiple fraud tools to stop fraud before it causes significant damage to your business. Bevel has built proprietary technologies to help merchants further decrease fraud with Card Account Validation (CAV) and Fraud & Reputation Database. The combination of these services provides insight to any known fraud associated with any card information provided to you by a customer. Additionally, these tools further reduce risk by allowing you to validate a card prior to accepting it as a form of payment in the first place, providing you with much needed insight and protecting the relationship with your payment processor.
As more businesses move online the increase of chargebacks and fraud continues to rise at alarming rates. Minimizing the costs associated with these losses as well as optimizing interchange can be done with expert knowledge and the implementation of the latest technologies. Working with partners like Bevel, that have certified payment professionals and multiple options to support your payment goals, is a critical step to building a credit card processing ecosystem that will reduce costs and keep your business growing.
August 1, 2017
The Bevel Hosted Payment Page is more customizable than ever.
Earlier this year we announced the release of our latest Bevel Hosted Payment Page. This month, we’re happy to report that we’ve added even more value to the e-commerce solution we love so much. For businesses looking to sell online and need simple credit card acceptance functionality added to their pages, it’s the perfect fit.
Our favorite feature yet is the ability for our merchants to create a unique shopping experience for their customers by taking advantage of the complete control of the design and settings of their Bevel Hosted Payment Page account. Online shops can add their business logo, choose a color scheme, pick the accepted payment types, select and arrange data fields, build receipt templates and more. For a full list of features available with Bevel HPP, visit our Support Center. Bevel HPP provides a highly customizable experience that’s truly easy to navigate, so businesses can get up and running in no time. It’s also seamlessly integrated with the Bevel Payment Gateway, shielded by the protection of BevelSecure, our combination of PCI-validated point-to-pointe encryption (P2PE) and patented tokenization. What that means for our businesses is that their PCI audit scope is minimized and the cost and time put into managing compliance is reduced. Let’s also not forget that the Bevel HPP is completely complimentary to all of our Bevel users.
If you’ve already been using the Bevel HPP to process your online payments and want to see what’s new, we want to make sure you’re loaded with the right information, so you can get the most out of your account. Visit our Support Center for more details on the features of your Bevel HPP and you won’t miss a thing.
Our merchants processing with the Bevel Payment Gateway can log into their accounts and visit the Marketplace tab to get setup with a Bevel HPP account.
If you’re aren’t yet processing with us, to get signed up for your own Bevel HPP, visit www.bevelpayment.com/contact-us/.
June 22, 2017
Next to cash, credit cards and debit cards have become the most popular form of payment. According to the Federal Reserve Payment Study, the number of transactions for debit cards and credit cards is 47bn and 23.8bn, respectively; both will continue to grow at a compounded annual growth rate (CAGR) of over 6.5 percent.
If debit cards and credits cards are so popular, then why are businesses exploring other mediums for making and receiving payments?
The answer lies in the high processing cost associated with each transaction when carried out with a debit card or credit card. This is where an Automated Clearing House (ACH) transfer comes in.
Here are the 5 reasons that makes ACH, a smarter choice for businesses.
One of the biggest appeals to ACH is low processing fees, compared to checks or credit cards. In a Wall Street Journal (WSJ) article, Bank of America, stated that on average an individual spends $4 to $20 on writing a check (including printing, payment initiation, authorization, signing, mailing cost, and time spent). With an ACH, however, funds get transferred between the two bank accounts through a clearing house, keeping the transaction cost very low.
Let’s see how much you end up paying as a fee when you use a check, credit card, or ACH for a $100 transaction:
Check: $12 (Average of $4 and $20 based on the WSJ article)
Credit Card: Approximately $2.50
Convincing enough to switch, right?
Settlement time for an ACH provides a happy medium between checks and credit cards. An ACH settlement can take three to four business days; a check can take five to six business days; a credit card can settle payments in two to three business days.
Furthermore, National Automated Clearing House Association (NACHA), the electronic payments association, has approved an operating rule that will make same day ACH transfer a reality. To facilitate same day ACH transfer, NACHA plans to create two windows:
A morning submission deadline at 10:30 AM ET, with settlement occurring at 1:00 PM.
An afternoon submission deadline at 3:00 PM ET, with settlement occurring at 5:00 PM.
Businesses can expect improved workflow efficiency, flexibility with payments, and quicker access to cash. However these improvements will take time to get rolling because NACHA plans to implement them in phases starting in next fall.
ACH allays some of the most common fears about checks. Unlike checks, which are vulnerable to both being misplaced and to signature forgery, ACH transfers are direct and eliminate intermediaries. Because your customer could be hesitant to provide his bank account details, some of ACH’s payment processors carry out two-way micro validation to confirm the authenticity of the two parties involved. The processors makes two micro deposits of $0.01 to $0.25 in the customer’s and the business owner’s account. The customer has to verify the exact amount in order to begin sending money. For the business owner, this verification ensures two things: the account information he entered is accurate and there are no transaction blocks to his account.
No more cutting checks! ACH is here to make money transfers simple. ACH gives you the best of both worlds: as a payer, you say good-bye to bulky check books, and, as a business owner, you give your customers the flexibility to make a one-time payment or set up recurring payments with ACH. Furthermore, since the transaction takes place between two bank accounts, ACH saves you the trouble of following up with customers on payment failure due to card expiry.
ACH is ideal for businesses that run on the subscription model because it allows them to accept payment in the most cost-effective way by saving them money on transaction fees. The more transactions these businesses make, the more transaction fees there are, and the more money they lose. Therefore, ACH is the best choice.
Make the switch.
Now that you know the advantages of ACH for your business, it’s time to stop cutting checks. ACH is easy to use. Plus, you save money and can apply these savings to other aspects of your business. So, switch to ACH, and carry out your financial transactions in a smarter way.
Bevel can set you up with an ACH account in less than 12 hours for only $0.25 per transaction with no set up fees. Get more info by emailing us at firstname.lastname@example.org
May 18, 2017
Whether you’ve had a merchant account for a year or a decade, you may not completely understand each and every rate and fee that’s listed on your merchant statement. From PCI compliance and chargeback fees to interchange and batch fees, there’s a lot to learn, and trying to do so on your own may leave you scratching your head. One thing’s for sure, however: Authorization and/or transaction fees will almost always appear on your monthly credit card processing statement, so knowing what they refer to is imperative.
When a consumer uses a credit card to make a purchase, the terminal or POS system will dial out to the processing platform—the organization authorizing the transaction—to confirm the card with the issuing bank and verify the funds are available. This process, which you pay for through an authorization fee, essentially facilitates the transaction.
Once the processing platform ensures the card is in good standing and the funds are accessible, it sends the approved authorization to the merchant service provider, who then completes the sale. Doing so transforms the authorization into an actual transaction. Consequently, your merchant service provider charges you a transaction fee to cover the cost of this process.
Occasionally, however, a card does not get authorized for a transaction, and the card is “declined,” at which point the customer needs to either pay with cash or another card that is able to receive an authorization.
So it is quite common for merchants to have more authorizations than transactions. It is NEVER possible to have a transaction without an authorization.
Because every transaction requires an authorization, many processors simply charge merchants a handful of pennies for each authorization. Other processors simply charge for every transaction. But merchants should look carefully to make sure they’re not getting charged for both authorizations AND transactions. Some processors charge merchants both of these fees as a way of padding their profits.
The average authorization or transaction fee is anywhere from $0.00 to $0.30. But since credit card processing fees vary depending on your merchant service provider, authorization and transaction fees do, too. To find out what your cost per transaction is, take the total amount of fees paid and divide by the number of transactions.
If you’re unhappy with the amount you’re paying, consider contacting other merchant service providers to see if they can offer you a better deal.
May 2, 2017
Square reported earnings and one thing from the report really caught my eye. They reported that a higher percentage of revenue is coming from large merchants. Square offers a simple pricing structure of 2.75% per transaction (or 3.5% and $0.30 if Keyed In). This is a great deal for some merchants but a bad deal for others. At Bevel we actually refer people to Square if they process small transactions. When your average transaction is $5-$8 it makes sense to pay a flat 2.75% and we are happy to point you in that direction.
The part of their report that surprised me was that they reported growth with large merchants. They consider large merchants anyone who processes between $125,000 and $500,000+ annually. Square is a great option for small merchants, but they are usually not the best option for large ones. 2.75% flat with no other fees works great for small transactions, but not if you process large ones. If you are a large merchant, paying 2.75% is one of the most expensive ways to process credit cards.
Large Businesses are Not a Good Fit
Interchange rates are set and published by the card brands and they are the same for everyone. If you look at the long list of rates published by Visa and Mastercard, they range from .05% and $0.22 for a debit card, up to about 2.95% and $0.10 for some commercial cards. So with Square you are guaranteeing that you will pay close to the highest possible rates available.
All of the credit cards in your wallet have an interchange rate attached to them. Square is paying that rate, but they are charging you 2.75% whether the actual interchange rate is higher or lower. When I look in my own wallet I see 2 cards. My Bank of America debit card has a rate of .05% and $0.22 and my Amazon Rewards card is 1.65% and $0.10. If I purchase something with my Amazon card and the merchant is using Square, the merchant pays 2.75% and Square keeps the difference (just over 1%). Reading through Square’s earnings report, they said that their average profit per transaction was 1.01%, so the example above sounds about average.
This Member Switched to Bevel and saved $4,000/yr
Below is a snapshot from an actual merchant who was using Square before switching to Bevel. He processed $26,823 and paid a total of $398.34 in fees (1.48%) with Bevel. This same bill would have been $737.63 (2.75%). This is the type of merchant that Square is referring to in their earnings report. He will save over $4,000 this year by switching to Bevel to process credit cards.
Square is great for certain businesses and we refer people to them on a daily basis, but if you are a large merchant, Bevel with our true interchange rates will save you money. Give us a call and speak to one of our experts. We can analyze your business needs and if we are not the right fit, we would be happy to suggest an alternative.
April 19, 2017
Keeping payment card transactions secure is a shared responsibility. Merchants, credit card processors, card-issuing banks and the major card brands all have a role to play.
Visa provides the following suggestions for actions merchants can take to help make payments as secure as possible on their end.
Make the switch to EMV terminals.
EMV technology encrypts each transaction so the data cannot be stolen and duplicated on counterfeit cards, effectively reducing fraud at the point of sale. EMV terminals authenticate the card using the dynamic information contained in the embedded microchip. The cardholder validates that they are the owner of the card while the card is still in the EMV terminal, completing the dual verification process.
If you haven’t already made the switch to EMV at your business, you’re not doing everything you can to protect yourself and your customers from card fraud. Work with Bevel to identify which EMV terminals best suit your needs and budget. As an added bonus, many of these terminals are also NFC capable to accommodate your mobile wallet customers.
Merchants that choose a dual-interface terminal that handles both contact and contactless transactions can potentially qualify for Visa’s Technology Innovation Program (TIP) to reduce their annual PCI DSS validation requirements and associated costs.
Implement Point-to-Point Encryption (P2PE).
P2PE technology eliminates account data from the merchant environment and encrypts sensitive cardholder data until it reaches an end point of secure decryption. Like EMV, this process makes the data useless to criminals.
Merchants should consult with their processors to determine the best solution for their business. Adopting a P2PE solution may also qualify them for TIP and provide a PCI DSS scope reduction.
Outsource the handling of e-Commerce cardholder data to a PCI DSS validated service provider.
Taking this step reduces risk exposure and costs associated with securing the merchant environment. It can also significantly reduce PCI DSS applicability for merchants who do not store, process or transmit cardholder data. Visa’s Global Registry of Service Providers provides a list of PCI DSS validated and registered service providers.
Bevel Payment Solutions consolidates a number of security solutions to help protect your business not only from fraud but from the crippling costs of a data breach. Protect your revenue, your customers and your reputation by taking a proactive stance to keep payment processing as safe as possible.
February 16, 2017
What you don’t know can hurt you when your small business handles sensitive payment data. In fact, being unaware of the risks and responsibilities you inherently assume in payment processing can expose your business to fines, fees, and operational upheaval.
Here are five things most businesses don’t know about payment processing.
Most debit and credit cards that were re-issued in the United States in 2015 to include EMV chips now include a magnetic strip on the back and an EMV chip on the card’s front. Yet, many businesses don’t know there are significant differences in payment security when a card is swiped versus inserted into the EMV payment terminal.
When a customer uses the EMV chip card feature, the processing environment utilizes a security measure called tokenization. This process replaces the sensitive cardholder data (i.e., the 16-digit personal account number) with a series of randomly assigned numbers used to process the payment. If the transaction is intercepted during processing or later compromised in a breach, data thieves cannot use the token to commit further fraud or identify the account owner.
According to a recent cybersecurity article in Forbes, nearly 20 percent of small businesses have been impacted by a security breach. First Data estimates that most small businesses that are victims of a payment security breach don’t know it occurred until the damage has been done. If a breach does occur, mandatory investigative audits of payment security practices cost the average small business about $36,000, according to First Data.
If you are party to a payment transaction found to have offered the lowest level of security, you could be held responsible for costs associated with the breach, including identity protection services for breach victims, the cost of card re-issuance, fines, and legal fees.
Now that the October 2015 deadline for transitioning point-of-sale equipment to be compliant with EMV card chip technology has come and gone, merchants who don’t accommodate EMV chip cards could be held liable in the event of a payment security breach.
Choosing a payment processor that guarantees PCI-compliant payment processing and accommodating EMV chip card technology at the point of sale are two ways to enhance payment security, but you cannot rely on one method in isolation. Your business needs to conduct its own audits to proactively identify vulnerabilities, and potentially adapt those processes as your business grows.
For example, the PCI compliant security standards set forth by the PCI Security Standards Council outline the specific protocol merchants should follow based on the volume and type of annual transactions. At a minimum, internal audits of firewalls, networks, hardware, and software should take place quarterly, under PCI-compliant processing standards.
Not all breaches occur with a sophisticated hack. In fact, Computerworld reports that the 2013 Target payment security breach originated with valid log-in credentials from the company’s HVAC vendor that were not properly safeguarded.
Your internal procedures make a significant impact on payment security. Passwords should not be posted on computers or at point-of-sale systems, should be changed at least every few weeks, and consist of eight characters including letters (upper and lower case), numbers and symbols.
One employee’s innocent mistake can make or break your payment security and cost your business dearly. Conduct ongoing training sessions to ensure secure payment procedures. For example, customer credit or debit card numbers should never be written down or kept on file.
Mobile payments should be processed only with a secure and password-protected connection, using the mobile payment provider’s secure app or provided dongle. The operating system of any mobile device used to process payments should be updated to reflect the most recent version (which is often patched when security vulnerabilities are detected).
Payment security is an important issue for any merchant that handles sensitive data. The more you understand how to provide a secure environment in your technology and internal processes, the less you risk you face as a business.
February 16, 2017
First off, magnetic-stripe cards are pretty outdated, they’ve been around since the 1960’s. And surprisingly, the United States is one of the last countries to still have them around. EMV has been the standard in most parts of the world for decades (you may have noticed that chip cards are the norm when you travel to places like Europe, for example).
EMV cards are primarily designed to prevent fraudulent transactions that take place when someone physically swipes a counterfeit card at a payment terminal. And chip card technology works. In countries that have adopted EMV as the standard, certain types of credit card fraud have dramatically declined.
So what exactly helps chip cards fight fraud? Two key features:
Magnetic-stripe cards are, well, magnetized. When you swipe them, the payment processor reads their magnetic fields and matches them to your bank account information. The problem with this is that the data is static, making it easier for fraudsters to lift your information and clone it onto a new card. In fact, there’s something called a skimmer which they can get or make for as little as $20 that can do this pretty easily.
On the other hand, the data on chip cards is constantly changing, making it extremely hard to isolate and extract. To rip it off, someone would have to get into the physical chip circuit and manipulate things to get your bank information. Not only is this level of data surgery really difficult, but it also requires a set of high-tech equipment that can cost north of $1 million. That’s probably not the kind of cash your average fraudster has handy.
Magnetic-stripe cards broadcast bank information into the payment terminal as-is. Our readers keep this information safe by encrypting it as soon as it’s received. Chip cards are different in that they have sophisticated encryption built right into the chip. When you dip a chip card (it’s a dip instead of a swipe), it talks back and forth with the payment terminal in a secret language to make sure it’s actually you who’s paying.
The long and short of it? EMV and NFC are both much better ways to pay than magnetic stripe cards. And as a small business, you’ll be able to accept both. You can order your contactless and chip reader machine today. Plus, if you order one before Jan 15 2016 you will be receiving it for free!
February 12, 2017
If you’re running a business, you could be leaving a lot of money on the table by not accepting credit card payments. According to Intuit, not accepting credit cards can cost the typical business $7,000 in annual sales.
That said, a lot goes into setting your business up for credit card processing. Between numerous middlemen and different rate plans, there’s a lot to consider. Before diving into that, let’s discuss what exactly occurs when you accept a credit card payment from a customer.
Credit Card Processing Ins and Outs
Let’s start off with a scenario that we’re all familiar with. A customer visits a business to make a purchase. When rung up, she opts to pay with her credit card. Four parties are initially involved with the transaction:
The issuing bank (the bank that issued the credit card)
The acquiring bank (the Merchant Account Provider’s bank)
Most businesses turn to a Merchant Account Provider or bank with a merchant services division for their credit card processing needs. That’s because accepting a credit card transaction isn’t as simple as a cash deposit. There is more risk involved.
The issuing bank charges the Merchant Account Provider an Interchange fee for the transaction. This fee varies greatly due to factors like credit card type and risk. This Interchange fee is passed onto the business while the Merchant Account Provider simultaneously charges the business a markup to process the transaction.
Why All the Fees?
The acquiring and issuing banks are both taking a risk on the transaction. From the perspective of the issuing bank, the customer could fail to pay his credit card bill. From the perspective of the acquiring bank, the customer could file a chargeback if the product is deemed insufficient, doesn’t arrive or is the result of a stolen or fraudulent credit card.
Credit Card Processing Middlemen
I expound on this further in this article, but there are more behind-the-scenes players powering credit card transactions. In brief, they include:
Card Associations: They set the rules and manage Interchange for the credit card brands (Visa, MasterCard, Discover and Amex)
Payment Processors: They maintain the computer network that supports communication between the Merchant Account Provider and banks
Payment Gateways: They facilitate the transfer of information between the credit card terminal and Payment Processor.
Some of this complexity can be bypassed by working with a Payment Facilitator like Square or PayPal. These companies are ideal for small-scale merchants due to their quick setup. That said, they can also hold funds from your bank account since they don’t underwrite their customers. The funds are held in the event of a chargeback.
If your credit card terminal is managed by a different company, then there’s a whole different support staff to deal with.
I know, there are many parties involved. That’s what I meant when I said accepting credit card payment is more complicated than depositing cash in your bank account. Unfortunately, not accepting credit cards can be dire for a business especially since credit cards are the preferred payment method for larger purchases, according to CreditCards.com.
Luckily, you can work with a Merchant Account Provider that provides all these services in one. This will reduce the number of middlemen you have to deal with and simplify your credit card processing. The more streamlined your services, the easier it is to focus on other important aspects of your business.