Archive for June, 2006

Visa and MasterCard’s July 1st deadline for implementing credit card number truncation is only two weeks away. On this date all credit card terminals must be compliant or risk fines starting at $5,000 per violation.

The first phase of this new security initiative was implemented on July 1st, 2003 and required all new terminals to be programmed to use credit card truncation. Existing merchants were unaffected. However, all existing merchants must be compliant as of July 1st of this year. If you are an existing merchant and have not been contacted by your processing bank to have your credit card terminal reprogrammed for credit card truncation, you should contact them immediately and request this to be done. This is important not only because of the potential fines you face if you are not compliant, but you may own a piece of equipment that is not capable of credit card truncation. If this is the case, you will need to account for the time it takes to acquire one and have it programmed. Known terminals that are not credit card truncation compliant include the popular Hypercom T7P with 256K of memory.

Credit card truncation is the removal of the first twelve digits of a consumer’s credit card number from a consumer’s transaction receipt leaving only the last four digits intact. Typically the first twelve numbers of the consumer’s credit card number is replaced with twelve X’s (Example: XXXX-XXXX-XXXX-1234). The purpose of credit card truncation is to prevent fraudsters from being able to use stolen receipts to make fraudulent purchases. Combined with the removal of expiration dates from consumer receipts implemented a few years this should reduce the opportunity for credit card fraud.

It should be noted that credit card truncation only applies to the consumer copy of the transaction receipt. The merchant’s copy can still have the full credit card number present and un-truncated. Also, many states have enacted laws requiring credit card truncation. Besides the fines imposed by Visa and MasterCard you may also face legal action from your state if you fail to comply.

SitePoint, the premier webmaster community on the Web, has agreed to publish its third merchant account related article written by Merchant Account Services. The article, which compares a true merchant account and gateway to third party providers, will be published on June 14th, 2006. It includes a special calculator that allows readers to compare any true merchant account to the three largest third party providers. It is similar to the recently published True Merchant Account vs Third Party Comparison Calculator.

Previously featured articles include Put your Money where your Mouse Is: 6 Payment Gateways Reviewed and The Chargeback Challenge. Both were highly rated by SitePoint’s large reader base.

Google’s Gbuy is set to launch in a limited capacity on June 28th. It will take six to eight weeks for new implementations to be completed but existing Beta testers will be ready to go immediately. Initially the merchants will not pay any fees for transactions processed through Gbuy. Rates are then expected to be between 1.5% and 2.0% which makes Gbuy a lower cost alternative to Paypal.

Gbuy will not offer a transparent checkout system like Paypal Pro what can be achieved with a true merchant account and gateway. Customers will be taken to Google’s Gbuy website where they will complete their transactions.

Merchant Account Services is pleased to announce the launch of yet another calculator designed to empower merchants. The Debit vs Credit Calculator allows merchants to determine what the size of a transaction will be for the two to cost the same.

Why is this important? PIN-based Debit cards typically have a fixed rate associated with them. Thus, unlike credit cards, even though your transactions get larger, your costs stay the same. This makes PIN-based debit great for large transactions. However, this is bad for small transactions as your debit fee also does not contract as your sales shrink in size. For these transactions, credit cards and check cards tend to cost less. By knowing the point where the two costs converge you can then encourage your customers to pay using your preferred method of payment.

Checkout the Debit vs Credit Calculator today!

Visa and MasterCard forbid Internet merchants from using software or equipment that does not support the Electronic Commerce Indicator. Electronic Commerce is when the cardholder’s information leaves possession of the cardholder and travels through an open connection, such as the Internet, to reach the merchant. In order to designate this type of transaction, the Electronic Commerce Indicator (ECI) must be included on the payment transaction message format to show that the transaction originated form an Internet source. This indicator is assigned in the point of sale product utilized by the merchant. Credit card information sent via email does constitute a transaction needing the ECI in the transaction to the processing bank.

Visa U.S.A. introduced a penalty structure effective June 1, 2000, for acquirers who fail to identify an electronic commerce transaction with the correct electronic commerce indicators. MasterCard International introduced a penalty structure effective August 1, 2000, for acquirers who fail to identify an electronic commerce transaction with the correct electronic commerce indicators.

If a merchant’s software sends an ECI (values of 5, 6, or 7) the transactions are noted as a secure ECI transaction and must be using a secure form of processing card data. These transactions are eligible for CPS rate programs. If the software sends up an ECI value of 8 or 9, the merchant is processing the card data in a non-secure format and the transaction cannot qualify better than EIRF (i.e. the highest rate you can pay for a transaction).

All terminal products that are certified to pass an ECI send a value of 8 because this is a non secure way of processing electronic commerce transactions. But there aren’t any credit card terminals currently supported to handle ECI. This means you must use special software or a gateway only. Visa and MasterCard employ 250 employees whose sole purpose is to find web merchants who violate this policy. Violating could result in fines, your account being terminated, and/or you being blacklisted for accepting credit cards.