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Lower Credit Card Fees & PCI Compliance Presented by Easy Pay Solutions

Learn about lowering credit card fees, understand interchange fees, tricks to reduce fees, minimize chargeback losses, and achieve PCI compliance. Contact Dave Crooks for expert guidance.

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Lower Credit Card Fees & PCI Compliance Presented by Easy Pay Solutions

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  1. Lower Credit Card Fees & PCI Compliance Presented by Easy Pay Solutions Dave Crooks, Presidentdcrooks@interserv.com800-715-7160

  2. Lower Credit Card Fees • The bad news • Visa & MasterCard have historically increased rates on most transaction types and added merchant fees • The interchange fees that Visa & MasterCard establish are based on risk, since the bank generally carries the risk of loss, fraud & bankruptcy • In hard economic times, bank losses increase so credit card interchange rates have historically increased at a greater rate

  3. Lower Credit Card Fees • The good news • The recently passed Dodd-Frank Act will lower debit card interchange rates for cards issued by large banks beginning in July • Unfortunately, corporate apartments don’t process many debit card transactions • Designed to lower payment costs for consumers…but will merchants pass savings on to customers? • Most significantly, for the first time the government has regulated payment card rates! • Can regulation of credit card rates be far behind? • Will Visa & MasterCard lower credit card interchange rates on their own volition to avoid government regulation?

  4. Interchange Fees • Suppose a guest checked into a corporate apartment and paid $3000 with a credit card. The merchant is paying a credit card discount rate of 2.5%. • The total cost to the corporate apartment for the credit card transaction is $75 (2.5% of $3000) • Approximately $66 of the $75 goes to the customer’s bank (the bank that issued the customer the card). This amount is regulated by Visa/MasterCard and is called the interchange rate. Theoretically, this money covers the issuing bank’s risk of loss and fraud • Approximately $9 of the $75 goes to the credit card processing bank (also called the merchant or acquiring bank), the bank’s distributors, and the credit card processing network(s)

  5. Lower Credit Card Fees • Tricks to reduce credit card fees • If entering a card into a terminal or credit card software program, always enter the cardholder’s zip code, check-in date, check-out date, and voucher number • May require you get a new software program for your terminal or computer • Visa and MasterCard have special promotional rates for consumer card transactions at corporate apartments…but they require different industry codes • Since a merchant account can only have 1 industry code, this will require 2 merchant accounts to take advantage of (one for Visa transactions and one for MasterCard transactions)

  6. Lower Credit Card Fees • Reduce your chargeback losses • Get a signature. When there is no signature, it's the cardholder's word against the merchant's word...and unfortunately, the cardholder usually wins • One other technique that we've seen work with a number of banks is to print your cancellation policy in BOLD PRINT right above where the cardholder signs the credit card signature-on-file form. With some banks, this has been persuasive • Be sure the cancellation policy is clearly spelled out in BOLD PRINT on an email or printed confirmation when the reservation is made…and keep a copy of it

  7. Lower Credit Card Fees • Reduce your chargeback losses • You can count on Amex to always side with the cardholder. The merchant rarely wins....right or wrong. This is unfortunate but a fact of life. • Did you know that 92% of Amex card holders also have a Visa or MasterCard in their wallet? Perhaps you should ask customers that offer you an Amex card, for a Visa or MasterCard...it would improve your odds in a chargeback situation

  8. Lower Credit Card Fees • Reduce your chargeback losses • With Visa and MasterCard, you need to get an imprint of the card to be on really solid ground in the event of a chargeback. I understand this is difficult in your industry...but it's the way the rules are written (the rules are the same for all US banks and their merchants). • The next best situation is to have a fax copy of the FRONT of the credit card and a driver’s license

  9. PCI Compliance • PCI = Payment Card Industry • Several years ago, Visa, MasterCard, and Amex all had their own unique security rules • Two years ago, they got together to form the PCI Security Standards Council…to implement one set of rules for all card brands • Rules apply to merchants that store, process and/or transmit credit/debit data • Rules vary depending upon how many credit card transactions you process • Rules are enforced by your credit card processing bank

  10. PCI Compliance • 6 basics of PCI • Build and maintain a secure network • Protect cardholder data • Maintain a vulnerability management program • Implement strong access control measures • Regularly monitor and test networks • Maintain an information security policy

  11. PCI Compliance • 4 levels of PCI merchants • Level 1 • Processing over 6 million transactions per year or who has had a security breach • Level 2 • Processing between 1 and 6 million transactions per year • Level 3 • Processing between 20,000 and 1 million e-commerce transactions per year • Level 4 • All other merchants process up to 1 million transactions per year • As you approach Level 1, the rules become more onerous

  12. PCI Compliance • Level 4 merchant requirements • Pass an external network scan quarterly • Applies to all internet merchants, or any merchant with credit card software on a computer connected to the Internet • Applies to all merchant with a credit card terminal connected to the Internet • Scans are checking for: • Some security updates to the Windows operating system have been applied • Firewall software/hardware is present and some updates applied • Open ports on the computer where hackers could infiltrate it

  13. PCI Compliance • Level 4 merchant requirements • Complete a PCI questionnaire (self assessment) annually • You may be required to submit this to your credit card processing bank • Applies to every Level 4 Merchant • Will require your technical staff to complete • In most cases, you must use PCI (PA-DSS) approved software in the computer or terminal

  14. PCI Compliance • PCI prohibits you from storing the following on paper or in the computer: • CVV, CVV2, CID information (three or four digit numbers on front of the card or on the signature line) • PIN numbers on debit cards • PIN block (an encrypted PIN number) • Magnetic stripe image • OK to store card number, expiration date and cardholder name in the computer as long as it meets the PCI (PA-DSS) encryption standard • Must store in secure environment if on paper

  15. Good Sense • Use passwords in all your software and change them frequently • Keep your computer servers in a locked room • Control who can make copies of files and store back-ups securely • Mask sensitive information on screens and reports (only display the necessary portion of the computer record) • Cross-cut shred paper with sensitive information on it • Consider a formal computer security review…it’s cheaper than paying for a breach

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