Apple Pay – Explore The Paramount By Electronic Payment Gateways

Digitization of payments has revolutionized the trade and contributors like Apple Pay play a major role in it. In fact, it is overwhelming for a startup business to determine which one plays the trick midst a plethora of Credit Card Processing Services. However, electronic payment processing these days is simple on the outbreak of numerous choices and options for availability of merchant account services. In addition, the flexibility offered in making electronic payments using a mobile phone helps in broadening the scope of operations.

Credit Card Processing Services – What You Ought To know

Processing credit cards is imperative for a startup business. Typically, small or medium-sized startups, Enterprises, B2B or B2G service provider require this facility. Good payment processing company offers numerous customized solutions to meet business specific needs and wants. However, you need a merchant account to accept credit card payments online or at a POS terminal. Certain advantages are

• Substantial revenue boost
• Unified payment processing
• Security
• Flexibility of operations

However, integration of innovative payment processing technology like Apple Pay adds the cutting edge leverage to the business. The scope of various merchant services offered by the business can expand exponentially upon such successful integration.

How Things Work – Why You Need To Know?

The paradigm of credit card processing revolves around verticals like merchant, merchant’s acquiring bank, cardholder, cardholder’s issuing bank, and association of the card. Payment processing gateways like Apple Pay eliminate many verticals from this association due to innovation. On the other hand, a typical Credit Card Processor mechanism requires the engagement of all these verticals. Accepting credit cards is common these days. The steps involved in such credit/debit card authorization transaction are

• Cardholder pays the merchant
• Merchant’s acquirer bank sends the payment information to card network
• Card network sends the information to cardholder’s issuer bank
• Cardholder’s issuer bank sends approval
• Card network returns to merchant’s acquirer bank with payment approval

Merchant Account Processing through this gateway is lightening fast and payment processing requires merely a second or two.

Merchant Services And Their Indispensible Role – Is A Replacement Possible?

Financial service providers or banks that provide card payment acceptance and processing facility to a merchant are termed as merchant services. However, small business merchant services mandate acquiring a merchant account to begin accepting the payments. In addition, merchant services govern the merchant account rate. Therefore, the entire scope of entering into a minimum processing fee account solely depends upon finding the right Merchant Processing Account. Processors like Apple Pay or other third party payment processors eliminate the need for merchant services or processing account by operating on a parallel channel.

Understanding the imperatives of E-commerce is very essential to make the most of it. Many unparalleled service providers apart from the conventional credit card processing services help in expanding the horizon by offering competitive rates and better flexibility. Therefore, look for possible solutions available online for a rugged boost to your E-commerce before entering into an agreement. Service providers like Apple Pay do have unparalleled solutions that you need today to survive and thrive.

Understanding Your Electronic Payment Processing

Whether you are a web-store or a ‘brick and mortar’ merchant, you are going to need to be able to accept electronic payments for your goods and services. Credit card processing fees can be confusing and misleading. The following is a breakdown of payment processing fees associated with merchant accounts. Every electronic payment provider is different and may break out the fees differently on the monthly statement. You may see all or only some of these fees on your statement, but either way, you are paying them.

Before I break out the different costs, if you are looking to begin accepting credit cards, or if you already do accept electronic payment but are window shopping for a better plan, here are a few things to consider first:

  • Flexibility – Every business is different. Your business may provide high volume, low-cost products, or you may provide long-term, high quality services to customers. Whatever the case, It’s best to go with a provider that can give you flexibility and different options tailored to your specific needs.
  • Rate Break-out – The most important aspect I feel. Below, I will define all the different rates, but the more options associated, the better.
  • Service – When looking for a reputable service, I prefer real customer service. Whether online or a ‘brick and mortar’ retailer, it is important to have the human factor. Having an assigned account representative, close to you is invaluable. I also look for solid online customer service to include, online chat, email, forums, etc.
  • Financial Institution – An electronic payment processing merchant account serviced by a large and reputable bank is important. For example, choose a provider affiliated with Wells Fargo before going with one that services accounts for Bank-o-Save-alot.

Maintenance Fees

Application Fee – The first fee you will pay when setting up a merchant account for electronic payment processing. This fee can range from $0 to $300.00. This is a one-time fee associated with running a credit report check on new applicants, and setting up the account. Often, account executives will be flexible on the application fee depending on your business.

Statement Fee – This is a monthly fee associated with providing you this hard-to-understand statement that outlines all your costs associated with electronic payment processing. Statement fees usually range from $5 to $20 a month.

Monthly Fee – A flat rate fee associated with maintaining your payment processing account. This fee is uncommon. More common is a monthly minimum fee.

Monthly Minimum Fee – A fee assessed if your electronic payment processing rate fees do not reach a minimum dollar amount for each month. For example, your monthly minimum is $30.00, but your sales for the month only result in a total of $20.00. You will be assessed an additional $10.00 to reach your monthly minimum. Ranges vary, but are often between $20-$50 a month. With a good payment processing account, these fees may be flexible as well.

Yearly Fees – Like a credit card with a good APR, payment processing servicers may assess an annual fee associated with maintaining the account.

Per Transaction Fees – This is a dollar amount fee assessed for each transaction made. This is different from and IN ADDITION to, the Discount Rate percent outlined below. Rates vary between providers and depending on the type of electronic payment made. Typical transaction fees range from $.20 to $.50 per transaction. Typically, this rate will be lower for qualified credit card transactions, and higher for non-qualified or MOTO transactions (Explained more below)

Verification Fees – Or AVS (Address Verification Service). This is a separate per transaction fee assessed for each transaction that requires credit card verification. This service is a must for most online or telephone sales. This is a service that verifies a credit card transaction with the billing address of the credit card holder. This is REQUIRED BY LAW in some states, and is important to prevent electronic fraud. Some providers, such as PayPal, include this in their standard per transaction fees and rates. Some merchants use a different AVS than their payment processing service. I prefer to use one provider, but allow for the break-out of this fee for each transaction. For example, you are a retail shop that also has an online store. It is more cost efficient to only pay this fee for online orders, but not pay this fee in-store where the verification can be handled in person (with the person’s ID for example).

Charge Back or Reversal Fees – A fee assessed to the merchant if a transaction is charged back to the customer.

Early Termination Fee – Just like with a wireless phone provider, a merchant may be assessed a fee for early contract termination. Some fees are fixed or pro-rated. If planning to switch providers, it is a good idea to let a professional e-commerce consultant review your contract to see if it is cost-effective to switch providers now or later.

Discount Rates

The discount rate or transaction rate is a fee assessed in % for each type of electronic payment transaction processed. Again, this is where flexibility is important. An e-commerce consultant can help you determine which type of transactions you process the most and tailor a flexible processing plan to save you money. Discount rates vary based on one factor and one factor only: RISK. The higher the charge back or fraud risk, the higher the percentage rate. Again, this is also where finding a provider that breaks out these rates more, is going to be more cost-effective than one who only offers one or two processing rate plans. From the lowest risk to highest risk, the break out is as follows:

Pinned Debit or Check Card Rate – This is a payment processing rate applied if a customer makes a purchase using his/her debit card, and enters the 4-digit pin. This is considered the most secure form of payment because it is done in person, requires a security code and the funds are secured against the individual’s bank account. As mentioned, some providers only offer qualified and non-qualified rates. If you are a retail merchant, and a large proportion of transactions are processed in this method, it is important to have this fee broken out because it will always save you money. This rate is the lowest possible, yet is often NOT broken out from qualified rates as it should be.

Debit/Check Card Rate – This is the rate applied for transactions where someone uses their credit card associated with their bank account. Basically, if someone uses their debit card as a credit card. It is secured by the individual, and their bank account. This is the next lowest rate. This rate is often NOT broken out by electronic payment processing providers, as it should be.

Qualified Rate – This is the transaction rate applied to qualified credit cards. These are purchases made by the individual, in-person, and is secured by the financial institution ‘loaning’ the account holder the money for purchases. This is the most common rate applied and is more than pinned debit and check card transactions. A standard VISA or MasterCard account.

Mid-Qualified Rate – This is a rate assessed on transactions using mid-level risk cards. This rate is assessed IN ADDITION to the Qualified Rate. Again, this is often NOT broken-out by providers, but should be. An example of a Mid-Qualified card is a Rewards card. Why is it more? The rewards cards, such as Air-mile or award point offers pass the costs associated with the plans, to you the merchant, and to the card holders in the form of higher interest rates.

Non-Qualified Transactions – A rate applied to electronic payment transactions IN ADDITION to the Qualified Rate. This is the second highest risk transaction and is applied to transactions of high risk. For example, when the card is run without the person being there, (keyed entry), or Corporate Credit Cards. For example, automated monthly fees, or transactions where the card holder is not there when the card is processed. Corporate cards are higher risk because they may often default; imagine an employee who is laid-off or fired. He/She is more likely to run up charges on the card before the account is terminated.

MOTO and Internet Rate – Manual, telephone, or online transaction rates. This is the highest risk transaction and so is also the highest cost to the merchant. This includes online purchases, or over the phone transactions where the individual card holder cannot be verified in-person. This rate is often assessed with an AVS fee as well. Again, flexibility is important, depending on volume and type of business.

Summary: No matter what your business, it is in your best interest to find an electronic payment processing plan that is customized to meet your needs.

How Can We Ditch Our Wallets for Our Electronic Payment Future in the Age of Hacking?

Last week, I was sitting on the Starbucks patio, sipping on a Frappachino, I watched a car pull up into the drive-through, and the gentleman took their smart phone and waved it over a smart phone reader which deducted the cost of his coffee from his Starbucks card which was inside of his smart phone as an app.

That was a pretty cool trick, it just goes to show you that in the future your smart phone will be an all-in-one device, and will also serve as your credit card, and your customer loyalty card at the grocery store, and all the other businesses that you shop that. There’s only one problem with all of this, and that is the computer security of your smart phone, and the fact that the hackers can break-in.

There are so many components to all this, you have your 4G wireless company, the maker of the smart phone, and all the software programmers to create the apps. Therefore there are too many chances for gaps in security, and unless these transactions are 100% secure, someone can break-in to your phone, and therefore they’ll have access to your bank account as well.

On July 7, 2011 Google officially announced the end of the of the wallet, which shouldn’t be too surprising considering all the partnerships being announced between smart phone manufacturers, cell phone companies, and banks. On May 2011 there as an interesting piece in a Guardian article titled; “Google Wallet: A Big Deal or Another Buzz? Google is right – replacing credit cards with smarphones is a great idea, but will it work?” by Jean-Louis Gassee.

There was an interesting article by Adam Hoffman of (Electronic Receivables Department at CitiGroup) in Global Finance in June of 2011 which was extremely interesting as he was discussing the future of electronic payments. The article was titled “What’s Next in the World of e-Bills and e-Payments,” and he reminded the readers of the incredible future these technologies will have and what that means to changes in money flow.

This is quite incredible stuff, and these new technologies are totally leading-edge, but we’ve already seen the challenges and security holes in nearly all of the smart phones and their operating systems. How can consumers feel safe, and until they do how can the industry including the banking industry, credit card sector, and the makers of these devices convince the public that it’s okay and safe to use electronic payments in the age of hacking? Indeed I hope you will please consider all this and think on it.