Mobile Processing: Charging Our Future

The most important thing to establish is that mobile processing is not a trend.  It is going to become the principal leader of the credit card processing system.  The rise of mobile payment processing is going to evolve, grow and blaze the path to satisfy the attitude of consumer buying habits.  The mobile processing industry has taken a life of it’s own and if a business owner does not embrace this kind of technology, they run the risk of being left behind.

One of the largest concerns with mobile processing is security.  Improving security measures is more critical now as many consumers have become leery of new technology and the risk of identity theft.  As mobile technology continues to rise, the security measures will continue to improve and integrate personal validation methods and technology.  The bottom line is that security will remain a top priority to ensure both the merchant and customers are at peace with the evolution of mobile technology.

It is predicted by 2017, mobile payments will go beyond $90 billion per year, and by 2020, 90% of consumers will be paying using smart technology.  In the business world, we know that consumer demands and needs drive the path of how business is conducted.  With a change of attitude in regards to consumer buying habits, businesses need to give consumers what they want by accepting credit card payment via a mobile device.  It allows the consumer to control the transaction from start to finish.

Mobile processing can be an essential business solution.  In the past, businesses that started out as cash-only operations were missing out on increasing sales by accepting credit and debit cards.  In turn, businesses that fail to adopt mobile processing will hinder the ability to increase sales.  The adoption of mobile processing will also add opportunities for customer engagement as well as the ability to cross-sell and up-sell ton customers.

In order to learn more about how mobile processing can help your business grow, contact Apex Payment Solutions today to ensure that you are meeting the needs of your consumers.  We can help you build a solution that works best for your business and allows you stay ahead of the curve.

Love It or Hate It: Interchange Fees

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Interchange fees are most simply put as a fee paid between banks for the acceptance of card based transactions, and the fee is typically paid by the merchant-acquiring bank to the cardholder-issuing bank in order to cover the cost to convert the charge on a cardholder’s card to a cash deposit into a merchant’s business banking account.  These fees are set by the credit card networks.  With a complex pricing structure, interchange fees are factored by the card brand, type of credit or debit card, region, the type and size of accepting merchant and the type of transaction.

Interchange is important because it facilitates growth.  Without merchants accepting credit or debit cards, cardholders would not carry cards and without cardholders, merchants would have no incentive to accept credit or debit cards.  With it all coming full circle, the more merchants and cardholders that are part of the processing system, the higher the value that is placed on the overall system. In short, the more places that accept credit or debit cards, the more valuable it becomes to carry cards.

Interchange fees make up the majority of credit card processing expenses.  A familiarity with interchange is vital knowledge for any business owner, and how it can impact the bottom line.  Understanding the categorization of each transaction, also called interchange qualification, happens on a per-transaction basis.  There are a number of factors that determine where a transaction qualifies at interchange (processing method, transaction date, merchant category code, card type, card brand and card owner).  It is important for a merchant to ensure that the majority of transactions qualify at the lowest possible categories as often as possible.

Apex Payment Solutions can help explain the importance of interchange fees and how to optimize each transaction.  It is important for merchants to have a complete understanding of how the credit card processing world works along with a complete understanding of how to adapt a processing behavior to achieve the lowest possible interchange costs.  It is important to talk with your Apex representative to help you with interchange optimization in your business.  The more you know, the more you can save.

Merchant Service Terms 101

Address Verification System (AVS) – This is a security feature that requires merchants to input address information for the cardholder during a manually entered transaction (such as payments made on a website).  The merchant’s system verifies the address entered matches the one that the issuing bank has on file.

Basis Point – It is a hundredth of one percent (1 basis point = .01% or .0001).  A merchant’s discount rate will usually be presented in this format, either as a percentage or fraction.

Batch – A group of authorized transaction from a given business day typically used in the settlement process.

Cardholder Verification Value (CVV2) – This is the three- or four-digit number that is printed on a card to verify authenticity.

Chargeback – When a customer makes a claim to his/her bank stating they did not receive the goods or services or never placed an order at all with a merchant within 60 days.  The issuing bank will then notify the merchant of the claim and will have a chance to validate and defend the purchase by providing such documentation as an invoice, customer signature or shipping documents.

Discount Rate – The fee paid to a merchant bank to handle the deposit of the funds into the merchant’s account.

Effective Rate – This is the actual amount charged by the merchant bank when processing each transaction.  This is usually more than the quoted discount rate because it is a calculated, bundled rate which includes the discount rated, assessment and other per-item transaction fees.

EMV – The smart chip technology that offers additional step for authentication above and beyond the normal magnetic stripe card payment for card-present transactions.  To learn more about EMV check out the Blog: The Top 5 EMV Questions Answered for Merchants.

Encryption – The process of transforming data into a secret code to ensure a safe and secure transmission.

Interchange – The exchange of transaction data between a merchant bank and the issuing bank.

Interchange Fee – This is the rate charged by Visa and MasterCard to complete a transaction and deposit money into a merchant’s account.  This feed is based on credit card regulations set forth by Visa and MasterCard.  American Express and Discover do not participate in the interchange process.  They each act as their own issuing bank handling all aspects of the card transaction and not sharing any of their fees.

Merchant Identification Number (MID) – The identification number that represents a merchant’s point-of-sale terminal for the purpose of processing and tracking credit card transactions. 

Merchant Services Provider (MSP) – The business that handles the setup of the front and back end of processors, along with the paperwork required in order for a merchant account to be allowed to receive transaction funds.

Monthly Processing Volume – This is the gross payment cards sales that a merchant processes in a month.

Payment Card Industry Data Security Standards (PCI DDS) – This was created by the four major credit card companies (Visa, MasterCard, Discover and American Express) in order to optimize the security of credit and debit transactions to protect the cardholders against the misuse of their personal information.  It is maintained by the PCI Security Standards Council.

Point of Sales (POS) – The application through which a payment transaction is processed in exchange for goods or services.  Point of sale usually refers to the actual device that processes transactions or it may also be used in reference to the point-of-sale system that manages all point-of-sale applications for a retailer.

Processor – The company that handles credit card transactions for merchant banks and is usually paid per transaction.

Settlement – This is the process merchants must complete at the end of the day in order to be paid for the transactions from the day.