Dirty Little Secret Of Equipment Leasing

It is a rarely makes sense to lease a credit card terminal.  If you are dealing with a reputably merchant service company you can purchase credit card terminal for way less than leasing.   The leasing company is not the real problem; it is the merchant service company that “sells” the lease.  What most people / business owners do not realize is that the leasing companies are nothing more than a financing company for the merchant service provider who uses them to help place terminals.  In theory, if a business can not afford or have the capital to out lay for the equipment then the “leasing” company pays the merchant service provider the funds.  The leasing company collects payments to earn back what they paid to the merchant service provider.  In most cases the leases are set up for a 48 month term.  The leasing company could care less if they receive the equipment before the end of the term, because they paid out funds to the merchant service provider.  They cannot resale the equipment for anything close to what they paid merchant service provider.  This is where the problem is, the merchant service provider is who is bring the leasing company to the table.  The merchant service provider in reality earns a big commission from the deal.  The merchant service provider will earn more money if you lease the equipment.  For example let say the lease payment is at $35 (this is a low payment, I seen some as high as $99) for 48 months, that is $1,680 you would pay for the equipment.  The merchant service provider probably paid less than $300 for the equipment and earned a commission for over $1000.  Also the $35 does not include taxes the leasing company will collect from you and insurance that they will mandate and the intangible tax.  To end the lease, you have to make all payments and then return the equipment back to the leasing company.  That right you do not own the equipment. You can keep the equipment if you purchase it from the leasing company after the 48 month.  It called a residual value.  Most of the time the factor is 10% of the aggregate of the payments.  In the above example you will need to fork over around $200 to now own the equipment.  Also one other note, the leasing company will not remind you that you completed the term, because you have not until all payments are made and the equipment is returned.  YOU have to initiate the return to end the lease and payments.  I have seen situation where some were still paying after 8 years.  No one told them.  Beware when you call in the leasing company will try and talk you out of it by saying something like, if the equipment breaks while leasing we will replace it.  Let me tell you from experience you will pay hell getting them to make good on that.  The other thing they might offer is a new lease and equipment.  DON’T DO IT!!!

 

Bottom line you are much better off to purchase the equipment from a reputably source and have a good merchant service provider that offer their insurance.

If you have any question about this, please feel free to contact  us at 888-506-9225 or visit our website at: www.firstcoastpayments.com

Are You Being Charged Junk Fees?

Just like in your business you want and need to make a profit to pay overhead and expenses. This is true in the credit card processing business for the company that is providing the service.  With interchange plus pricing you will see the mark up because of the transparency.  This is what we promote and suggest that any business that is looking for credit card processing insist on. Some companies will give a low ball "show" rate only to make it up somewhere else. Hence the reason why you might see "junk fees". There can be that line that is crossed when too much is too much.  Sometime it is just plan sneaky. One of the worst offenders that I have seen recently is the attached statement.  

If you have any question about this, please feel free to contact  us at 888-506-9225 or visit our website at: www.firstcoastpayments.com

Say Good Bye To Your Credit / Debit Card As You Know It

Perhaps you can remember back when you got your first computer let’s say around 20 years ago?  How about your first cell phone?  Was it a flip phone just making phone calls?  How well would your old computer work today assuming it was still available?  Of course it could not do much in the world today.  In a similar way this is the problem with the credit / debit cards we are using today.  It is a technology from the 20^thcentury, operating in a much advanced 21^st century.   The magnetic stripe card we use today: the technology was developed back in the 1960’s and the ability to apply it to a plastic card came about in mass production in the 1970’s.  The data from these cards can be easily copied and reproduced to another plastic counterfeit card.  Until the “owner” of the card realizes the card data was stolen, the card can be used to purchase items.  Typically the fraudsters will resale these items for cash.

Since then new technology has been developed to make it much harder, if not impossible to replicate cards that can used in advanced credit card device readers.  It is known as EMV.  This payment security standard was developed by Europay, MasterCard, and Visa in 1994, hence “EMV”.  In the mid-1990s, EMV-compliant payment cards began to be issued and EMV-compliant POS terminals began to be installed in countries around the world. While different markets have migrated to the EMV standard at different speeds, the U.S. has been the one major international country not adopting the standard. Since 2011, however, the global card networks that first created EMV have renewed their push to bring the EMV standard to the United States.  Some ask why has it taken the US so long to adopt this or any new standard with a more secure technology than we use today?  The answer is not clear, however, in my opinion; the best reason is until recently it was less costly for the banks to absorb the fraud losses than to pay for the new more costly technology.  What seldom gets mention if at all about fraud loses is much of theses cost can ultimately hit the original accepting merchant that unknowingly took the counterfeit card.

An EMV card resembles the current magnetic-stripe cards with one significant difference, the EMV “chip” or microprocessor that is embedded in the card.EMV protect against duplicate card fraud. Unlike a magnetic-stripe card, an EMV card is not swiped through a reader. Rather, it is inserted into a slot on the terminal.  When the EMV card is inserted, a metal contact on its face connects the card to the terminal and the two devices are then able to communicate.  While the EMV card is used for a transaction and during the communication process for an approval response from the issuing bank, there is new dynamic CVV code used in the authorization request.  This dynamic CVV changes for each transaction.  It is validated against what is expected at the host.  The result is the primary account number is static yet data changes on each transaction.   The problem that EMV will not help against fraud is in a card not present environment such as goods sold on a website. 

Although EMV it is not a magic bullet, it is far better then what we have today.  For example card fraud in the U.K. began to drop following EMV implementation. But in 2008 and 2009 fraud losses began to rise, driven mostly by card not present transactions and cross-border fraud initiated with counterfeit cards using information captured from legitimate cards’ magnetic-stripe. After more countries had adopted EMV, card not present transactions and cross-border fraud losses fell. During the first six months of 2010 the same period the previous year.  Since its adoption in the European countries, and the U.K. in particular, EMV has effectively eradicated face-to-face counterfeit card fraud in card payments. Consequently, the U.K. case study has significant implications for U.S. merchants since it highlights the tangible reduction in fraud witnessed in a country following EMV migration.

Although many merchants may be skeptical of EMV migration given the significant upfront costs of upgrading payment acceptance terminals, over the long run merchants and the industry as a whole will benefit from a reduction in fraud. The magnetic-stripe is no longer able to fend off fraudsters armed with low-cost magnetic-stripe readers, card-duplication gear, and Internet-sourced card data that can be entered into the payments system without strong account holder authentication. The result has been an outbreak of card skimming that has cost the payments industry and merchants millions of dollars.

The fact that merchants in both Canada and Mexico are mostly compliant with EMV standards makes merchants in the U.S. very vulnerable to fraud. As the rest of the world moves toward EMV, merchants in the United States will be at greater risk of fraud until they install EMV-compliant POS terminals and banks issue EMV cards. 

If you have any question about this, please feel free to contact  us at 888-506-9225 or visit our website at: www.firstcoastpayments.com

Is Imprinting A Card A Thing of the Past?

In the program guide that every merchant signs and agrees to states, “IF THE TERMINAL FAILS TO READ THE MAGNETIC STRIPE OR IF YOU ARE

REQUIRED TO OBTAIN A VOICE AUTHORIZATION, THEN YOU MUST IMPRINT THE CARD.” 

When an account is approved a “merchant metal plate: is mailed out.  Not only should you have an imprint of the card, but the merchant info from the “plate” should also be included.  Now is a good time to pull this back out and be sure you have an imprinter and imprinter slips. If you need help with this let me know.  Let me know if you want a full copy of the guide.

I would like to add about the new cards will be issued soon to consumers called EMV cards with an embedded chip, also referred to as smart cards.  These cards are reported nearly impossible to counterfeit because the chip stores unique info that is constantly changing as the card is used.  Cards in use today use a magnetic strip that can be easily replicated and counterfeited.  Merchants will need to have the proper equipment to accept these new cards no later than October 2015.

I urge you to take the time to review the following:

IF THE TERMINAL FAILS TO READ THE MAGNETIC STRIPE OR IF YOU ARE

REQUIRED TO OBTAIN A VOICE AUTHORIZATION, THEN YOU MUST IMPRINT THE CARD. IN ADDITION, THE SALES DRAFT MUST HAVE THE CARD HOLDER’S SIGNATURE. FAILURE TO FOLLOW THESE PROCEDURES WILL PREVENT YOU FROM DEFENDING A TRANSACTION IN THE EVENT THAT IT IS CHARGED BACK UNDER A CLAIM THAT THE RIGHTFUL CARDHOLDER DID NOT AUTHORIZE THE PURCHASE. ENTERING IN INFORMATION INTO A TERMINAL MANUALLY WILL NOT PREVENT THIS TYPE OF CHARGEBACK.

Why we are at, I wanted to share the portion addressing businesses that do not accept a card in person.

Mail/Telephone/Internet (Ecommerce) Orders and Other Card Not Present Sales.

You may only engage in mail/telephone/Internet orders provided they do not exceed the percentage of your total payment Card volume reflected on your application. Failure to adhere to this requirement may result in cancellation of your Agreement. Merchants conducting Internet transactions using MasterCard or Visa Cards must have special codes (an “Electronic Commerce Indicator”) added to their authorization and settlement records. Discover Network does not use an Electronic Commerce Indicator. Failure to register as a merchant conducting Internet transaction can result in fines imposed by the Associations. Mail/Telephone/Internet and other Card Not Present transactions have a sub statically higher risk of Chargeback. Since you will not have an imprinted or magnetically swiped transaction and you will not have the Cardholder’s signature on the Sales Draft as you would in a face-to-face transaction, you will assume all risk associated with accepting a mail/telephone/Internet or other Card Not Present transaction. The following procedures, while they will not eliminate Chargebacks, are useful in reducing them and should be followed by you:

• Obtain the expiration date of Card.

• On the Sales Draft, clearly print the Cardholder’s account number; effective and expiration dates; date of transaction; description of the goods and services; amount of the transaction (including shipping, handling, insurance, etc.); Cardholder’s name, billing address and shipping address; authorization code; and merchant’s name and address (city and state required).

• For mail orders, write “MO”; for telephone orders, write “TO” on the Cardholder’s signature line.

• If feasible, obtain and keep a copy of the Cardholder’s signature on file on a form authorizing you to submit telephone and mail order transactions.

• You should utilize the Address Verification Service for all Card Not Present Transactions (see note below). Address Verification is specifically required for all

Discover Network Card Not Present Transactions, and if you do not receive a positive match through AVS, you may not process the Discover Network Card

Not Present Transaction. If you do not have AVS, contact us immediately.

• You should obtain the 3-digit Card Validation Code number and include it with each authorization request. Discover Network Association Rules specifically require that you submit the Card Validation Code with the authorization request for all Discover Network Card Not Present Transactions.

• For telephone orders, it is recommended that written verification of the sale be requested from the Cardholder (sent by mail or fax).

• You may not submit a transaction for processing until after the merchandise has been shipped or the service has been provided to the customer. (The Associations will permit the immediate billing of merchandise manufactured to the customer’s specifications [i.e., special / custom orders] provided the Cardholder has been advised of the billing details.)

• You should provide a copy of the Sales Draft to the Cardholder at the time of delivery. You must also obtain proof of delivery of the goods or services to the address designated by the Cardholder (i.e., by getting a signature of the Cardholder or person designated by the Cardholder through the delivery carrier). If the Card holder visits one of your locations to receive the goods or services purchased, obtain an imprint of the card and the Cardholder’s signature.

• Notify the Cardholder of delivery time frames and special handling and/or cancellation policies. Merchandise shipping dates must be within seven (7) days of the date authorization was obtained. If, after the order has been taken, additional delays will be incurred (e.g., out of stock), notify the Cardholder and reauthorize the transaction.

• You may not require a Cardholder to complete a postcard or other document that displays the Cardholder’s account number in clear view when mailed.

• If you accept orders via the Internet, your web site must include the following information in a prominent manner:

– Complete description of the goods or services offered;

– Merchandise return and refund policy;

– Customer service contact, including email address and/or telephone number;

– Transaction currency (U.S. dollars, unless permission is otherwise received from Servicers);

– Any applicable export or legal restrictions;

– Delivery policy;

– Consumer data privacy policy;

– A description of the transaction security used on your website; and

– The sale or disclosure of databases containing Cardholder account numbers, personal information, or other Card transaction information to third parties is prohibited.

• You may not accept Card Account Numbers through Electronic Mail over the Internet.

NOTE: Address Verification Service (“AVS”) does not guarantee against Chargebacks, but used properly, it assists you in reducing the risk of fraud by confirming whether certain elements of the billing address provided by your customer match the billing address maintained by the Issuer. AVS also may help you avoid incurring additional interchange expenses. AVS is a separate process from obtaining an Authorization and will provide a separate response. A transaction may not match addresses when submitted for AVS and still receive an Authorization. It is your responsibility to monitor the AVS responses and use the information provided to avoid high-risk transactions.

3.2.1. Discover Network Protocol for Internet Transactions.Each Internet

Discover Network Card transaction accepted by you and submitted to us shall comply with Discover Network standards, including, without limitation, Discover Network standards governing the formatting, transmission and encryption of data, referred to as the “designated protocol.” You shall accept only those Internet Discover Network

Card transactions that are encrypted in accordance with the designated protocol. As of the date of these Operating Procedures, the designated protocol for the encryption of data is Secure Socket Layer (SSL). We may, at our discretion, withhold Settlement until security standards can be verified. However, the designated protocol, including any specifications with respect to data encryption, may change at any time upon thirty (30) days advance written notice. You shall not accept any Internet Discover Network Card transaction unless the transaction is sent by means of a browser which supports the designated protocol.

If you have any question about this, please feel free to contact  us at 888-506-9225 or visit our website at: www.firstcoastpayments.com

Have A Professional In Your Corner?

When you need help with your taxes you most likely go to a CPA for help. When you need medical care you go to a M.D.  If you need legal help you will most likely turn to an attorney who has the designation of J.D. which stands for Juris Doctor.  Need help with investments; you might turn to a CFP.  It just makes sense to turn to a professional for the more important business and personal items in your life.  You can trust these professionals have the knowledge and expertise to deal with the complex issues in their field.  They also have pledged to a higher standard of code of ethical conduct.

Now in the credit card merchant processing field there is a professional designation.  It is called Certified Payments Professional (CPP). The first graduating class was in January 2012.  The CPP is awarded by The Electronic Transactions Association (ETA). 

By obtaining your payments processing solution from a CPP, you can be sure that your representative is knowledgeable about the products and services he recommends and has the expertise to recommend the best and most appropriate solution for your business.  Your CPP has made a significant personal commitment to his profession and has agreed to adhere to the ETA Code of Conduct.

Don’t just call anyone . . . call a CPP

If you have any question about this, please feel free to contact  us at 888-506-9225 or visit our website at: www.firstcoastpayments.com

PREVENT CREDIT CARD FRAUD AND PROTECT YOUR BUSINESS

Fighting fraud is all of our responsibility and a little diligence on your part could save your business hundreds or thousands of dollars. Don't be shy about contacting a Risk Representative at Capital Bankcard if you are unsure about an order or transaction. We can help you determine if the transaction is legitimate and give you guidance on steps you can take if you are suspicious.

If you believe a card is stolen, fraudulent or otherwise suspicious, you should train your staff on how to make a Code 10 authorization request. The Code 10 authorization request alerts the card issuer to the suspicious activity-without alerting the customer. During a Code 10 call, you will speak to the card issuer's special operator, who will provide instructions on any necessary action. This type of authorization request is the most likely to result in a call to law enforcement.

Code 10 steps

Keep the card in hand to quickly respond to questions. Call 1-800-228-1122 and say "I have a Code 10 Authorization Request." When connected to the special operator, answer all questions calmly and in a normal tone of voice. Follow all operator instructions.

If the operator asks you to retain the card, comply with this request only if it is safe to do so.

If you are keying transactions or receiving them off the internet, you are at even more risk for fraud. Below are some red flags to watch out for in these environments.

Orders that require you to ship product outside of the United States. There are obviously very legitimate orders from overseas but, if your business does not normally receive such orders, or receives any which seem unusual, you should give them extra scrutiny.

Transactions requiring you to "prepay" the shipping costs via Western Union to a specific shipping company being used at your customer's request. Any suspicious sounding shipping arrangements are a good sign of potential fraud.

Unusually large orders or those containing multiple quantities of the same item. You know your business better than anyone. If a large order seems particularly unusual in any way, trust your instincts and follow-up on it. Thieves know a stolen card number won't last long so they typically place large orders while they can. They are also always looking to maximize their resale value.

Orders from generic e-mail addresses (ie. john@yahoo.com) or calls using TDD (telecommunications device for deaf) to place orders. Many of these orders are legitimate, but they are sometimes indications of a fraudster looking to remain anonymous.

"Rush" or "overnight" shipping requests. Crooks want your goods as soon as possible for the quickest possible resale. The last thing they care about is extra delivery charges.

Transactions with similar account numbers, multiple orders from one account or multiple orders to one address from multiple cards. These are all highly suspicious and are worth your attention.

We want to ensure that you and your associates are able to spot potential fraud and take action quickly in order to prevent fraud and protect your business, but only when it is safe to do so.

If you have any question about this, please feel free to contact  us at 888-506-9225 or visit our website at: www.firstcoastpayments.com

What is the difference between a void and return?

From time to time a customer will ask this. This is a very good question. Also the next question might be when should I use them? While most terminals are different and the keys on the terminal might actual use the text of “credit” instead of “return”, however the premise is the same. A void, will delete a transaction in the current open batch. A return or credit will credit back the amount your select to the cardholder’s card. An example when and how to use it would be, the sale amount was $10, but the clerk mistakenly ran the transaction for $100. The batch is still open that has the $100 transaction. The best approach would be “void” the $100 and run the card again for the correct amount of $10. When using a return or credit is the customer come back the next day to ask for a refund for some reason and the transaction was in a batch that was already closed. This would be the reason to select return or credit depending on how the terminal is set up as different manufacturers uses different tags on the keys. Also keep in mind if the transaction was a pin based debit, you can only use return or credit while using the card as a credit card. Void will never be an option with a pin based debit.

If you have any question about this, please feel free to contact  us at 888-506-9225 or visit our website at: www.firstcoastpayments.com

Protect Your Business From Stolen Credit Cards

I receive many different questions from my customers. One item I am seeing on the raise is the use of stolen credit cards.

Retail Merchant: when your customer presents a credit card, ask for an ID to verify it is their credit card. This will ensure it is not a stolen credit card. If the person owning the card has not yet reported it stolen, the (stolen) card could be used for several hours or even days. Also it is a good idea to have the terminal to prompt for the last four digits of the card after you have swiped the card thru the terminal. This is an additional fraud protection for your business.

Websites taking payments via a shopping cart: always have the gateway set for zip code match, also known as address verification (AVS) and always require the card code*.

Locating *Card Code:
Discover, Master Card & Visa have three numbers on the back. 
American Express has a four-digit number on the front.

As a merchant, it is your responsibility to protect yourself against stolen credit cards. These tips will avoid the risk of a charge back. 

As always, anyway I can help you or your business, please contact me: As always, if I can help you or your business, please contact me at info@firstcoastpayments.com

or visit our website www.firstcoastpayments.com

Welcome To Our Blog

Welcome

I would like to welcome you to my blog about credit card processing & merchant services. I know there is much confusion on this subject, misinformation and in some cases down right abuses to business owners. I have witness this first hand. I hope I can help you as a business owner in this area. If you have any questions or need advice about your situation, let me know and I will be glad to assist.  Contact us via email at info@firstcoastpayments.com

Also check out at www.firstcoastpayments.com