The New Contactless Payments Many industry leading Processors are now offering the new contactless payment technology. You have seen it on television. Remember the runner that darts into the convenience store during the race, grabs a drink taps his keychain fob and leaves? That’s it! It’s safer and more secure than the old magnetic strip cards. It reduces risk and chances of fraud for both the customer and the store owner. A real benefit for the business owner is speed. Transaction times are reduced considerably. The time it takes to do a transaction, based on data from an American Express study in 2003, is reduced by 53% over regular cards and is 63% faster than cash transactions. Studies also show a 20% lift in ticket size; people spend more. This is a real plus for business owners. For most industries, transactions under $25.00 do not require a signature from the customer, and the business owner is protected from charge backs. If a stolen card is used and the card holder disputes the charge, the bank that issued the card covers the cost; not the store owner. As far as cards available for use at businesses goes, Chase has already issued millions of credit cards with the Radio Frequency Identification (RFID) chip in the card since 2004. All of American Express’ new replacement, and renewal Blue Cards being issued have the RFID contactless payment technology. Launch of additional American Express Cards with RFID is being evaluated. MBNA is issuing affinity credit cards for sports stadiums in multiple cities based on RFID contactless technology. This will accelerate in 2006. Citi is issuing millions of debit cards using contactless technology in key fob and card form. Currently Keybank is issuing debit cards based on contactless technology. HSBC is launching contactless payment cards based on RFID. An on and on. So in answer to the first question above, yes, it is very real. Millions upon millions of cards and key fob payment devices have been issued since 2003. This technology will grow dramatically over the next year. Do they work? Absolutely! What’s more, the technology is now evolving into what is called a phone wallet. Cell phones are being sold that allow the customer to store their card information on the cell phone and use Near Field Communications (NFC) to make payments. They select the card on their phone, point it at the contactless device and hit send. The transaction is complete! If the ticket is over $25 you print a receipt for them to sign. If under $25, you are done! In summary, yes, contactless payments are not only here to stay, they are the way business will be transacted in the future. Transaction costs, if you chose a reputable company to process transactions, are no more than standard card payments. Many industry leading processors are currently offering the readers and technology. Most are trying to sell complete sets of new equipment. We are aware of one company that is offering free contactless readers and terminals to new clients.
Truncation Compliance This sounds like something you would experience in a horror movie. A procedure that the aliens employ to get you to submit. It’s not. It is simply the lawmakers’ way to tell you that you need to have the latest technology in processing machines. The problem is, the lawmakers don't let you know about it directly. Others need to make you aware of the issue. The bad news is, non-compliance can cost you big bucks in fines.
Each state imposes its own penalties, but not adhering to this
simple rule can cost up
to thousands of dollars per occurrence depending on the jurisdiction. The next time you run a credit or debit card simply look at the customers receipt, that is, the one that you give to your customer. Closely examine the section of the receipt where the card number and expiration date are printed. If you see the entire card number or the expiration date you are not complying with the new rules. In order to be in compliance only the last four digits of the card number can be displayed and the expiration date must not be included on the receipt. The copy that you keep for your records may have all of the information displayed. |
Truncation Compliance The reason for the rule is customers tend to simply their receipt away. Anyone finding it would have the card number and expiration date. They could use the information to order products over the internet and on the phone. Many older machines are not capable of truncation. Your solution is to get a new credit card terminal that can be programmed to truncate (shorten) the information displayed on the customers copy of the receipt. Simple fix, but it can be expensive. There are a few of the more reputable processing companies that will provide state of the art equipment to their customers for free. If you are not in compliance or are unsure, you need to contact a payment professional immediately.
Take
Debit Cards Smarter To Save Money Do you ask each customer that hands a card to you, ‘debit or credit’? If you do it could be costing you money. You see, when you take a debit card and allow the customer to key in their personal identification number (PIN) the transaction costs you a flat fee. Usually the fee is 65 to 75 cents. This includes the fee for the transaction and the network fees. Some processors report these separately on their statements, which is confusing. Some report it as a flat fee, which is easier to reconcile. Lets look at an example. A customer comes in and buys a $10 meal and hands you a debit card. You ask, ‘debit or credit’? She Says ‘debit’ and you have her key in her PIN number. That transaction just cost you about 70 cents. If you don’t ask and just run the card without a pin number being keyed in you would pay about 38 cents to complete the transaction. You just lost 32 cents because you were not informed by your processor about how the system works. If your processors’ or banks' representative has done their job and set you up on the correct industry code, that same transaction would cost about 25 to 30 cents! They do not want to inform you, they just made more money! This scenario is based on the average card and rates we have seen in the industry. A reputable processor will tell you that if a sale is under about $30 do not ask. Just run the card like a credit card and it will cost you less. If it over $30, ask the question and try to get the customer to key in their pin number. A good processor will program your terminal to cost you less even if the PIN is not keyed in on a debit card. Their costs are less, and, if they care about their clients they will pass the savings to you.
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