If you’ve heard that Heartland Payment Systems had a data breach, you’ve heard correctly. If you want to know what REALLY happened check out www.2008breach.com
Don’t rely on blogs or even the press, they are not always fully informed and sometimes rely on speculation.
Keep looking as the information on the web is constantly being updated.
Michael
A large number of businesses have recently received notices on their monthly merchant statements that indicate that beginning in the next month or 2 their processor will be charging a monthly compliance fee of $19.95 or some other random number. If you get one of these notices you need to run to your phone and call your processor and ask them to explain what it is. One merchant was told it was the cost that they were incurring to bring their systems into compliance with VISA and MasterCard’s data security standards.
It’s nice that they want to simply increase their charges but constantly updating systems is part of being in the card processing industry. How is it right for them to charge you extra for something that is just a cost of doing business? It isn’t!
Another version of this has them requiring businesses to subscribe to a third-party certification company to document that the merchant is in compliance. The cost for that service is usually around $350 or so and who knows how much of that goes back to the credit card processor.
You need to read the notices on every month’s statement for any notification that rates are going up. The costs from Visa and MasterCard are still essentially the same (with some minor modifications) as they were a couple of years ago. You should NOT be paying more than you were before. You can view the wholesale rates being charged by Visa and MasterCard on their websites and looking for the link to “Interchange Tables”. Compare those rates to the ones shown on your monthly statements. If you don’t see the same rates, you need to change processors to a company, like Heartland, that provides Interchange Plus pricing. For more information on Heartland’s commitment to fair pricing visit www.merchantbillofrights.com and see what you should be getting.
Remember, it is not your job to pay additional because your processor needs to update their systems!
Have a great day.
Michael Matfess
We’ve all seen them, maybe even used them. They are plastic and they have the name of a store or restaurant or even a mall on them. Gift Cards have taken the world by storm. For decades gift givers have spent hours shopping for ‘that perfect gift’ only to discover that the recipient went back to the store and returned or exchanged the item. Retailers hated it because they had all of these open packages and consumers hated the wasted time and recipients felt guilty about the returns. The first idea was paper gift certificates. It was a good idea but it sometimes created bookkeeping headaches as people worked down the value over time.
Ultimately, the Gift Card was born. In it’s simplest form it is a pre-paid debit card. You swipe the card through the reader and everything is fine. Obviously, the cards and the transactions cost money so what is the advantage to you, the merchant?
A survey by the U.S. National Retail Federation last year suggested that eight out of 10 people would include gift cards among their holiday shopping purchases. The main reason: convenience. In other words, if you don’t offer them, then your competition is probably going to snag some of that business, However, it gets better. Statistics indicate that between 25% and 40% of all gift cards are never redeemed. Even when the cards are redeemed, typically the consumer will spend more than the face value of the card; up to twice the original value. One reason found in a study by the J.C. Williams Group was that 40 per cent of shoppers using a retailer’s card bought items at full price. Only 16 per cent of shoppers using other payment methods bought at full price.
So, reduced returns, use of the money, non-redeemed cards, and more full price sales. There is plenty of good news for the merchant.
However, as I am always interested in full disclosure, there are some down sides to the merchant. First, the cards can cost from around $1.00 to more than $3.00 each depending on the level of customization and the quantity being purchased. There are sometimes setup/implementation costs. Finally, there is either a monthly maintenance cost or a per transaction cost. I recently set up a small computer/electronics retailer with a gift card progam that came with 100 Gift cards with a stock print and his company name on the front. His total cost was $75 for the setup and he pays a flat $30 per month with no fee per transaction. He expects to sell the cards with a minimum of $50 on each card. If he sells 100 cards at an average of $50 each that will result in cash of $5000. If even 10% are not redeemed (which is below the 25%-40% industry range), he will have more than covered his costs. He expects that the additional business and visibility created by having the cards being given as gifts will help build his business as well.
Gift cards aren’t for everyone but they can be a nice revenue and cash flow boost for the right kind of business.
If you want more information on gift cards, feel free to drop me a line.
Michael
The other day a restaurant owner was complaining that it didn’t seem fair to him that he had to pay the processing cost for the tip portion of the credit card charges. He was pleasantly surprised when I told him he is right. In most states it is legal for the business to deduct the ‘actual’ processing cost from the tips due an employee. The key point is that the business owner can’t make a profit by overcharging the employee for the cost. Consequently, due to the varied rates being applied by different cards, most restaurant owners have no way of calculating the amount to deduct or it is too time consuming to make it worthwhile. Now, Heartland Payment Systems will program the terminal (not available on every terminal so be sure to ask about this) to print a report that will show each server’s total tips, the cost for those transactions, and their net tips for each batch.
I happened to mention this to a group of people including a local restaurant owner who said, “how much could it add up to each year?”
So, let’s do the math: His restaurant does about $1.2 million in credit card per year which he estimated meant it was about $1 million in meals and about $200 thousand in tips. His average cost was over 2% for credit cards so we used 2% to make our math easier. That means that by switching to ‘tip discounting’ the restaurant would reduce their operating costs by $4,000 per year. Because of the size of the restaurant and the turnover in servers, etc. the effect per waitperson was only about $1-2/week.
If your credit card processor isn’t offering you ‘tip discounting’ reports, you should call or email me at once as this is YOUR money!
Best regards,
Michael Matfess
First, sorry it has been so long since my last post. I always have good intentions but as we all know, the road to hell is paved with good intentions.
Second, I want to make sure all merchants who accept credit cards are aware that beginning in October you MUST truncate the customer’s credit card number on ALL receipts. Up until now, you only had to truncate the number on the copy you were giving to the customer. This is changing and you need to look at your receipts right now and make sure that your copy isn’t showing all 16 digits. If it is, call your credit card processor immediately. It is a quick fix and a brief download to your terminal. If this is a problem for them, you need to change processors, IMMEDIATELY!
It is your obligation to protect the credit card numbers of your customers. Even if you don’t have a security breach, you still don’t know if one of your customers decides to stop patronizing your establishment because he sees the slip has his card number on it. It’s simple, it’s free, just do it!
Michael
We all know that our credit cards have long account numbers that, along with the expiration date, are pretty much all a thief needs to spend our money. Consequently, it is now required that the customer copy of the credit card receipt have the account number truncated to only show the last 4 digits and it may not show the card expiration date. Please note this is the CUSTOMER’s copy not your copy.
So, if it isn’t required to truncate the merchant copy, why do it?
Let me first turn this around and ask, “why not do it?” Once the transaction has been processed and approved through your credit card terminal, why do you need the entire account number and expiration date? The answer is you don’t. But, by not doing it you have now created a potential data exposure that can cost your company hundreds of thousands of dollars in fines, audit costs, and lawsuits.
Call your credit card processor TODAY and ask them to update your terminal to “truncate both copies” of the receipt. If they won’t do it FOR FREE, call me at 617-650-2552; we need to talk!
Michael
Express Funds is the newest and best way for businesses to deposit checks. It will save you time and money.
Well, I apologize for not posting sooner. This month just flew by. Something happened last week that just floored me. I was with a merchant, reviewing her credit card statement. She pointed at a charge labeled “POS – entry not qualified” and asked if I knew what is was for as she wasn’t even using a POS system. I looked through the Visa and MasterCard interchange rate sheets to find this item and lo and behold, it doesn’t exist. In other words, it looked like her processor just made it up. I told her she should call the customer service number and ask. She promised to do that and let me know once she got the answer.
Apparently, she waited on hold for over 20 minutes and then was rudely told it was a Visa charge and there was nothing she could do about it. When the merchant asked the customer service rep to explain where she could find this on the Interchange Rates, the CS Rep didn’t even know what interchange rates were.
If you want to review the Interchange Rates you can see them at
Visa: http://usa.visa.com/download/merchants/Interchange_Rate_Sheets.pdf
MasterCard: http://www.mastercard.com/us/merchant/how_works/interchange_rates.html
If your credit card company or the salesman trying to get you to change to his company doesn’t know about interchange, that is a problem. For more information about interchange rates and how they impact your credit card processing costs, feel free to comment here or email me directly at michael.matfess@e-hps.com
Take Care!
A few weeks ago I was reviewing the credit card statement from a veterinarian’s office. I noticed, tucked into the last page a $130 chargeback on the account. So, I asked the vet what happened to cause the chargeback.
“What chargeback?” she asked.
So, I showed her the charge and I explained that a chargeback occurs when a customer disputes the charge and the merchant can’t prove that the customer (and the credit card) were involved in the transaction. I then asked her if she sent a copy of the signed slip to her credit card processor when the customer first challenged the charge. Apparently, she never got the request so she missed her opportunity to present her side and now she is out $130.
Okay, you may be asking what went wrong, as did she.
First of all, let’s be sure we understand how the process is supposed to work for a transaction where the customer/card are present (not mail order or telephone order).
1. A customer doesn’t recognize a charge on their account OR a customer is trying to avoid a charge on their account.
2. The customer contacts his/her bank (the one that issued the card – 800 # on the back of the card) and says they want to dispute the charge.
3. The issuing bank contacts the processor asking for proof of the transaction.
4. The processor asks the merchant for the “signed credit card slip” IF IT WAS A CARD SWIPED TRANSACTION! If it was a KEY ENTERED transaction (because the card reader couldn’t read the card) then you will be asked for the “manual imprint with signature”.
IF YOU DON’T HAVE A SIGNED SLIP FOR A CARD SWIPED TRANSACTION OR A MANUALLY IMPRINTED SLIP WITH A SIGNATURE FOR A KEY ENTERED TRANSACTION, YOU WON’T GET PAID!!!!!!!!!!
This is the biggest single failure among merchants for defending against chargebacks. The manual imprinter (see a photo at http://www.dabow-inc.com/webpics/dabow-inc%20website%20pictures/imprinters/4850%20imprinter.jpg ) is your only ally if the card’s magnetic strip is damaged and you have to manually enter the credit card number into your terminal (they only cost about $25 each so get one today). This is how you can prove the card was present when the charge occurred. Don’t bother with photocopies of cards or IDs, they may be helpful in a court of law but that is far more expensive than just getting paid the first time.
Assuming you provide the correct documentation in a timely manner, you will prevail and the chargeback will NOT be allowed.
So, what happened at the vet? First, the card wouldn’t swipe and they manually entered the number into the terminal and it went through just fine. No one trained the staff to take an imprint of the card (and they didn’t even own a manual imprinter). The pet died a few days later. The owner decided that the vet didn’t deserve to get paid and disputed the charge. What should have happened is that the processor should have contacted the vet and they claim to have mailed the notice to the vet. If that vet had been a Heartland customer, the local Relationship Manager would have received an email/notice of the chargeback request, the vet would have received an email and a mailed copy, and we would have ensured that the vet had the information to fight the chargeback. The outcome was a lost $130 because the salesman who sold tehm their credit card terminal either didn’t know or didn’t care about ensuring that the vet got all of her money all of the time.
Be sure to protect yourself against chargebacks!!
Email me with any questions about preventing chargebacks at
My name is Michael Matfess and I am a relationship manager with Heartland Payment Systems. Heartland is a direct processor of credit cards that focuses on the needs of the business owner. I decided to start this blog as I have seen a lot of confusion in the marketplace regarding your rights as a merchant who accepts cards as well as your responsibilities. Right now, data security is the hot topic for any business that accepts credit cards. You can pick up any newspaper in any city in the country and see another story about identity theft or stolen data from retailers and restaurants.
One reason I started this blog is that many small to medium sized business owners seem to feel they don’t need to worry about this. They think that the ‘bad’ guys will only target the large chains. Well, if you count yourself in this group, you couldn’t be more wrong. Ask yourself this question: “Is it easier to break into Fort Knox or a local jewelry store?” Sure, the prize is larger at Fort Knox but so is the work. Now, if you break into a jewelry store the most valuable pieces are probably in a safe that is fairly difficult to get into. But, what is sitting on the desk in the back office? The day’s credit card slips or the batch report or a scribbled note that Mr. Smith called in his credit card number so his son could pop in and pick up the lovely necklace he wanted for his wife.
So, here is rule #1 for the business owner:
DO NOT LEAVE ANY CREDIT CARD SLIPS/RECEIPTS/REPORTS THAT SHOW CREDIT CARD NUMBERS AND EXPIRATIONS IN AN UNLOCKED DRAWER OR CABINET!!!!!
Now, let me tell you what one of my customers said to me when I suggested this. He told me that they have a great security system and his office was secure. I then asked about when the building was occupied and he told me he trusts all his employees completely. I then complimented him on how clean the offices were and asked if they did it during the day. “Don’t be silly, the vacuum would be too loud to get any work done. We have a service that comes in every night.”
I smiled, leaned forward, and said in a very soft voice “And I assume the cleaning crew is also above reproach, too?”
Fortunately, he laughed and agreed that he needed to re-think his data security.
That is my suggestion to all of you for today. Take a moment and ask yourself what you are doing with your customers’ credit card numbers when you aren’t personally there to watch over them.
