online payment processing Archives - The Future of Payment Processing is Here!

May 24, 2019May 31, 2019

What Are Credit Card Merchant Fees?

It’s tough to do business today and not accept credit cards. Credit Cards offer your customers an added level of convenience, and accepting them means the potential for more sales. It also means paying credit card merchant fees, though, which could cut into your profits considerably.

Understanding Merchant Fees

Credit card merchant fees are what you pay every time you process a credit or debit card sale. The fees you pay are determined by the company with which you work to process these transactions. They typically involve three different costs – the interchange cost, the service cost, then the markup your payment processor applies to each transaction. There are many differences between payment processors, which means there are many different potential fees you could be paying. More than that, though, your processor’s costs are only one piece of the equation. They’re really the last step – the financial institution that securely pushes your transaction through to your bank account. Card issuers like Capital One and Citi are involved, as are the credit card networks with which they work – like Visa and Mastercard.

Rates vary by a number of different factors. There are typically PCI-compliance costs, annual fees on every account, and fees for chargebacks. You may also find hardware and software leases built into your account, and impact the rate for each transaction you process.

You may also hear the term “interchange” fees as you consider which payment processor is right for you. Every time a customer uses a card with your business (whether online or in person), there’s a fee paid from your merchant account to the customer’s credit card company. That’s the interchange fees, and they’re set by the network involved like Visa and Mastercard. Those fees are allowed to change twice each year: October and April. The reason behind these fees is to help the bank that issued the card cover its costs. After all, there’s some risk with credit cards like the potential for fraud. There are also some actual costs, like handling the sale, building the software, and that sort of thing.

Interchange fees vary just like the overall rates you’re paying, thanks to many different pieces of the processing equation. The type of card the customer uses is one of those. Debit cards with a PIN tend to be a much lower risk type of transaction, so the interchange rate is lower. Business cards, though, usually have a higher interchange rate. How the sale occurs also affects the rate. In person card transactions (also called card present transactions) have lower rates than those sales where the card isn’t present (as it happens with an online sale).

The total amount being sold affects rates, too, as the more business you do, the lower your rate. The type of business you own can also affect your rate. Some companies are simply a higher risk to credit card companies. Companies that deal with gambling and even hospitality companies deal with higher risk clientele, and thus they pay higher interchange fees.

Dumping the Interchange Fees?

Many companies looking to lower their overall payment processing costs look to interchange passthrough pricing to help with that. In this type of processing, the interchange fees and assessments are passed directly to your business. Sometimes called interchange plus, it means a little more transparency for some companies, though it’s not right for everyone. Instead, it’s just one more option to consider as you shop for the payment processor that might be right for you.

Lowering Your Credit Card Fees

There are four different kinds of pricing models among processors today. Interchange Plus pricing is probably the most common. You pay a percentage of the transaction, then a fixed fee. Flat rate pricing is becoming more common among small businesses. This is where you pay one single percentage on every single transaction you process. Subscription pricing is where you pay a smaller fee on each transaction, then a subscription cost to the service itself. Tiered pricing is the final type. There, the amount you pay depends on the type of card you charge. There are usually other add-on fees involved in this setting.

Your ability to accept plastic is almost essential in today’s business world. As you consider what might be right for your business, think about how you process credit cards. Card-present transactions mean far lower rates. Think, too, about the size of your overall transaction. If you’re processing more $5 transactions than you are $50, you need to factor that into the equation. Finally, think about your industry. If you work in a risky business, you’re going to want to do a little more shopping so you can pay less to help your customers.

To learn more about Y2Payments and our merchant services, contact us today at 888-693-1850.

April 24, 2019April 18, 2019

How PCI Compliance Protects You

As you probably know, PCI compliance details exactly what you have to do if you plan to store, process, or transmit any cardholder data in your company. The goal of these requirements, naturally, was to protect consumers, but the reality is that PCI compliance can protect you as well. Wondering how something as simple as protecting customer data can ensure your business stays safe? Take a closer look.

Protecting Consumer Credit Card Information

Today’s world revolves around technology, and more businesses than ever need to accept credit cards in their physical locations, over the phone, and online. Because so many people are using online payment methods and more, and so many businesses are accepting it, protecting it is an absolute must, and that responsibility falls to the companies involved in collecting the credit card information. That’s how the PCI Standards evolved – credit card companies wanted to ensure breaches didn’t happen at that point of purchase, and while the standards may seem a bit strict, the reality is they’re not just there for the banks and consumers. Instead, they’re there for you, too.

How Do They Work to Protect Your Company?

The number of identities in data breaches is only increasing. Nearly 150 million Americans have been exposed, and if you’re responsible for the next big data breach, you could have some very angry customers on your hands. Customers assume that you’ll take every precaution to help protect their information, and in the event that you don’t, you can expect to lose some business.

Digital security firm Gemalto found that 70% of customers would stop doing business with a company following a data breach. Can you imagine if 70% of your base walked away right now? That could create a serious impact when it comes to your profits. Those customers who had their data exposed in that breach could even sue you for the damages involved.

PCI standards, though, don’t just protect your business on the customer front. They also protect you from a financial standpoint. In the event that you choose not to comply with those standards, your acquiring bank can levy heavy fines against you. It’s important to note here that PCI standards are not laws. The government won’t shut your business down because you don’t comply. What will happen, though, is that your acquiring bank will fine you every single month until you address the compliance issues at hand. Those fines are not small, either. In fact, they could range from $5,000 to $100,000 on a monthly basis. If you don’t resolve the issue, you could have your ability to accept credit cards revoked, which creates the problem of fewer customers once more.

Keep in mind that data breaches don’t just affect consumers. The chances are good that your business does business online. How do you order supplies online? How do you pay for business-related services? You likely use a credit card, too, and a security breach on your vendors’ end could leave your entire company vulnerable. PCI compliance really is important, so it’s essential to understand the process.

What Does Being PCI Compliant Really Mean?

PCI compliance revolves around a number of different areas. First, you need to establish a secure network. If you’re online, and your payment system is likely tied to a computer network in some fashion, you need to ensure your system is secure. You should have the necessary protections, like an active firewall system, in place to ensure unauthorized individuals can’t access the sensitive payment information you may be storing or transmitting.

Beyond that, you need to secure your network against any threats. Information has to be limited to those who need it, so it should be encrypted at the point of transmission. Once the data is rendered useless, it must be securely destroyed.

To that end, you should implement access control measures that work for you. Restrict cardholder data to those with a unique ID who actually need to access that data.

Maintaining the security protocols you put in place is also essential. Test your networks and monitor them on a regular basis. Be sure you have policies in place that address information security as well.

A Good Payment Processor Can Help

PCI compliance protects both you and your customers, but online payment processing doesn’t have to be an overwhelming experience for your customers. Instead, choosing online payment systems built to help you maintain PCI compliance are the single best choice (and are offered at no cost) for a business of any size.

To learn more about how we can help, contact us today at 888-693-1850.

April 15, 2019April 18, 2019

Common Payment Processing Mistakes

Online payment processing is a must in today’s business world. It means your business can accept credit card payments without a hassle, but it’s not always as simple as you might imagine. In fact, many companies make some critical mistakes when it comes to payment processing, and those mistakes can be costly in today’s business world. Understanding exactly what those mistakes might be is key to helping prevent issues in your company. Take a look at a few mistakes you might be making right now.

Five Key Mistakes

Mistake #1 – Poor Examination of Available Options

The differences between payment processing solutions is vast and knowing exactly what you need at the outset is a good way to avoid any potential mistakes. There are multiple payment processing solutions available today and comparing each one on level ground is a must. While many businesses simply examine the overall cost involved, the reality is that if you look closer at the services and benefits each offers, you’re going to find far more to that bottom line cost than you might imagine, and if you get stuck in a contract with one that doesn’t work for your business, you’re going to create more problems for your company in the future.

Mistake #2 – Lacking A Signed Contract In Place Before Auto Billing

Many companies offer services or products on an auto billing plan. It’s a great way to offer your customers a convenient service they don’t have to renew and keep customers with your brand for longer than you ever thought possible. However, often auto billing can create a headache, particularly if you don’t have your customers sign a contract at the outset. Create a straightforward terms of service agreement before that first bill arrives. If you don’t, you may experience a chargeback that you can’t reverse, which may mean you have trouble working with your payment processor in the future.

Mistake #3 – Failure to Watch for Hidden Fees

The last thing your business needs is additional fees, and in the world of payment processing, they can add up quickly. More often than not, you find hidden fees with payment processors who offer lower rates than you’ve ever seen, but it happens with others too. Cancellations, withdrawals, and batch processing all often trigger additional fees. The volume of business, though, may also impact your fees.

More than that, though, how you process a customer’s credit card can affect your fees. Lower fees are available for swiped transactions, something you may not have realized when you initially signed up for that service. Knowing exactly what you might pay with each payment processor you consider can help you avoid any surprises at the end of the month when you’re working on your books.

Mistake #4 – Avoiding the Right Fraud Solution

In 2018 alone, private companies experienced a fraud rate of nearly 28%, according to 2018 ACFE’s Report To The Nations. If your company is in that 28%, finding the right solution to fraud is an absolute must, and often that begins at the point of online payment processing. Take the time to implement a robust fraud reduction program. Encrypt your data, and keep customer contact information up to date. Only give access to private financial information to those employees who truly need it and see if your payment processor can help offer you additional fraud protection that will keep your business (and your customers) safe.

Mistake #5 – Settling for a Payment Processor That Doesn’t Work For You

Imagine you’re going out for dinner tonight. Would you settle for a restaurant you don’t like? The chances are good that you wouldn’t, so why would you select a payment processor for your company that doesn’t seem to be a good fit? Because there are so many choices available, settling because you simply want what’s easy now could cost you more down the road. Instead, choose a certified payment processing company that seems like it would work well for every transaction you’ll have this year.

To learn more about common mistakes businesses make when it comes to payment processing, reach out to us today. We can help you decide if we’re the right choice to meet your needs. Call us at 888-693-1850.