(Via YouTube.com)

Firstly, as all of us who live in the U.S. know well, the amount of the tip is not regulated nor is it regulated the form in which it should be paid – in cash or added to the total credit card bill. This is all left to the customer to decide. The merchant is not allowed to estimate the tip and add it to the bill. An automatically added tip can result in a customer dispute and a chargeback. Rather, the merchant must obtain an authorization approval from the card issuer for the full transaction amount – the sum of the bill amount and the tip, as decided by the customer.

It is important that merchants understand when an additional authorization is required. The following procedures apply specifically to transactions in which the cardholder adds a tip:

• The transaction amount is below the merchant’s floor limit, and the cardholder adds a tip in an amount less than or equal to 20 percent of the transaction amount. In this case the merchant is not required to obtain an authorization for the amount above the amount of the bill, even though the total transaction amount may exceed the merchant’s floor limit.
• The merchant has obtained an authorization for a transaction, and the cardholder adds a tip in an amount greater than 20 percent of the transaction amount. In this case the merchant must obtain an authorization for the additional amount. The card issuer is responsible for the full amount of the transaction.
• The cardholder adds a tip in an amount greater than 20 percent of the transaction amount and causes the transaction amount to exceed the merchant’s floor limit. In this case the merchant must obtain an authorization for the total amount of the transaction.

Zero-percent tip transactions. Following this rule is particularly important for restaurants and it means that card transactions should only be authorized for the known amount of the bill. Consumers today can, and do, check their credit card activity online in almost real time. If they see an amount that they do not recognize, cardholders are likely to ask questions and contact their card issuer, which can easily lead to disputes and chargebacks.

For example, if a restaurant bill is $50, but the staff adds a 20 percent tip ($10) and authorizes an amount of $60, that would create a discrepancy if the cardholder actually adds a $7 tip, or chooses to leave cash for the tip. In this case the customer would be overcharged and you might receive an angry phone call, or a chargeback, or both.

To ensure zero-tip authorization for all transactions, restaurant owners and managers should do the following:

• Train your staff to authorize only for the actual amount of the bill. Your personnel should understand the importance of not authorizing amounts that are higher than the bill amount and follow the procedure without exceptions.
• Set up your authorization system for zero-percent authorization. If you do not know how to do that, contact your point-of-sale (POS) terminal provider and ask for assistance.

Visa and MasterCard provide chargeback protection for restaurants. Their authorizations are automatically valid for the transaction amount plus 20 percent to protect merchants from chargeback liability for an incorrect or disputed transaction amount.

E-commerce merchants must understand their re-presentment rights and work with their processing banks to apply the necessary actions in a timely manner or otherwise these rights will be lost.

• AVS and Card Security Code re-presentment rights*. In cases of chargebacks associated with the use of the Address Verification Service (AVS) and the Card Security Codes (CVV2, CVC 2 and CID), processing banks can represent a charged back transaction if the merchant:
  • Received an AVS positive match in the authorization message and if the billing and shipping addresses are the same. A proof needs to be submitted of the shipping address and the delivery. You should design your sales and order processing procedures in a way that will allow you to store and easily access billing and shipping information for future references.
  • Submitted an AVS query during authorization and received a “U” response from a U.S. card issuer. This response means that the card issuer is unavailable or does not support AVS. Even though you did not receive a positive AVS match, you are still protected, because you attempted AVS verification.
  • Submitted a Card Security Code verification request during authorization and received a “U” response from a U.S. card issuer. The response means that the card issuer does not support the respective code. Just as with the above AVS verification response, you receive protection when the issuer does not support a card security code, because you attempted verification.

*Even though an acquiring bank has the right to represent a transaction on its merchant’s behalf under the above circumstances, there is no guarantee that the disputed items will be accepted.

If you believe that you have AVS or Card Security Code re-presentment rights on a charged back transaction, all available supporting evidence should be provided to the acquiring bank to be submitted with the re-presentment. Be advised that all relevant documentation must be submitted within a specified time frame.  Every time supporting documentation is requested, your processor will notify you what the deadline for receiving it is. If you are late, you will forfeit your re-presentment right.

Verified by Visa and MasterCard SecureCode re-presentment rights. Merchants who participate in Verified by Visa and MasterCard SecureCode are in most cases protected from “unauthorized use” types of chargebacks. If you participate in these programs and receive a fully authenticated or attempted authentication response from the card issuer and the authentication data was provided in the authorization request, you retain re-presentment rights.

“In Q4 2009 we began to see issuers release the pause button and mail more, and in Q1 2010 that trend continues. Throughout the remainder of the year we expect to see mail volume continue its slow climb upward,” said Anuj Shahani, Director of Competitive Tracking Services for Synovate’s Financial Services group.

JPMorgan Chase was the busiest mailer, according to the study, followed by Capital One, which more than doubled their mailed card offers compared to the prior quarter. HSBC also doubled its credit card mailings, after briefly considering leaving the U.S. market altogether.

Credit card offers are not only more numerous, but also better, according to the study. Almost two-thirds (65 percent) of the total mailed offers for the first quarter of 2010 carried an introductory purchase APR versus 58 percent in Q4 2009. Only 54 percent of the offers, however, carried an introductory rate for balance transfers in Q1 2010 versus 66 percent a year ago.

(Via Synovate.com)

(Via CBSNews.com)

The card issuer then has the right to charge back any transaction that is reported within the specified time period and that has occurred during the applicable period, however the card issuer cannot charge back fraudulent transactions.

Once a merchant is listed in the Global Security Bulletin, the card issuer’s chargeback rights start to apply. The chargeback liability period is for a minimum of six months, however MasterCard can increase it to a 12-month period. A six-month chargeback period is applied for less than $8,000 in cumulative fraud for three months following the month in which the chargeback identification criteria are met. A 12-month chargeback period is applied for $8,000 or more in cumulative fraud for three months following the month in which the identification criteria are met or for more than $10,000 in fraud during the month in which the identification criteria are met. The applicable chargeback period begins on the first day of the month following the month in which the merchant is identified in MasterCard’s Global Merchant Audit Program (GMAP).

Once a merchant is listed in a Global Security Bulletin with an applicable chargeback period, the card issuer cannot use the message reason code for Questionable Merchant Activity, in any of the following situations:

• The transaction was not reported properly within the applicable time frame.
• The reported transaction was the result of a fraudulent application or account takeover.
• The merchant is participating in MasterCard SecureCode, the card issuer provided the UCAF data for this transaction, all other e-commerce authorization request message and clearing requirements were satisfied, and the authorization request response message reflected the card issuer’s approval of the transaction.
• If the transaction was processed at a chip-compliant point-of-sale (POS) terminal, the intra-regional chip liability shift program is in effect, the transaction was reported to SAFE as counterfeit fraud, the transaction was identified properly as an offline chip transaction in the clearing record, or the transaction was identified properly as an online transaction in the authorization request message, and the authorization request response message reflected the card issuer’s approval of the transaction.

The average interest rate on credit cards with variable rates also remained steady at 14.03 percent, according to the survey.

Both the fixed and variable rates are still substantially higher than a year ago. Issuers had been raising rates in advance of the enactment of the CARD Act of 2009, which took effect in February, as they expected the new rules to reduce profits.

One of the provisions of the CARD Act requires issuers to inform cardholders how long it would take and how much it would cost them to pay off their card balance, if they only made the minimum required payment. Consumers have taken notice of this disclosure and some are adjusting their payment habits. 25 percent of consumers have been motivated by this warning and are making larger monthly payments as a result, according to an online poll conducted last month by the National Foundation for Credit Counseling.

(Via Bankrate.com)

Where Visa payWave is supported, cardholders can wave their card in front of a reader, instead of swiping it through a point-of-sale (POS) terminal. According to Visa, “over 32,000 retailers from 20 top brands accept Visa payWave payments.”

To use payWave, iPhone users would have to have it pre-installed on a memory card. As the iPhone does not have an external memory slot of its own, users will be required to get a new iPhone protective case, which is said to be already Apple-certified.

Once they have payWave installed, iPhone users will only have to wave their phones in front of a payWave-enabled reader to make a payment. The mobile payment application can be password protected and will work on both iPhone 3GS and iPhone 3G devices.

(See the full text of the pulled press release here.)

(Via YouTube.com)

A: It’s best to use a credit card if you’re buying a big-ticket item – such as a television or other pricey electronics. The credit card purchase gives you a number of protections that a debit card doesn’t, “Good Morning America” personal finance contributor Mellody Hobson said. For example, if you pay with your credit card, you’re free to dispute the charge if there’s a problem with the product you purchased.

(Via ABCNews.go.com)

Card issuers make more than $40 billion a year from the interchange fees, which are set by the Credit Card Associations of Visa and MasterCard. Retailers have long been complaining that the fees are excessive and hurt small businesses and now they have the backing of two of the most powerful senators.

“The motivation behind this is really to put merchants in a position where they don’t pay their fair share,” pushes back MasterCard Chief Executive Officer Robert W. Selander in a statement after his company posted a 24 percent rise in its first-quarter net income. “We think that Congress understands that you can’t give anybody a free lunch.”

If passed, the bill would prohibit Visa and MasterCard from setting higher interchange rates for premium rewards cards and will limit debit card fees. Among the proposed changes is a requirement that the U.S. government receive the lowest interchange rates. Sen. Durbin’s bill would also allow retailers to set minimum and maximum amounts for card transactions.

(Via BusinessWeek.com)

• With recurring payment arrangements products or services are received over time, while an installment transaction represents a single purchase where the customer receives the purchased item immediately upon signing the contract, with payments occurring on a schedule agreed by the cardholder and the merchant.
• With recurring plans the product or service can be received for an indefinite amount of time, until the plan is canceled, while installment plans payments are scheduled for a specific time period.

An example for an installment payment plan would be a car loan or a house mortgage, where consumers make a fixed number of monthly payments until the loan is paid off. Recurring plans are newspaper subscriptions, cable TV and internet services, etc.

The following best practices will help you to manage your installment payment plan arrangements more efficiently and to improve customer satisfaction:

• Give customers the option of choosing their billing date. This is especially important in arrangements where the payments are drawn from a checking account, as your customers know best when funds are available.
• Inform customers how your business name will appear on their statement. This information is managed through your merchant account’s billing descriptor. Contact your payment processor and make sure your billing descriptor is set up correctly. Issues may arise if your legal name is different from your “Doing Business As” (DBA) name, as your billing descriptor is typically set up to display the former, while your customers recognize the latter.
• Always ask the cardholder for his or her billing address as it appears on their statement and if different, the complete shipping name and address.
• Provide an easily accessible link to your cancellation policy on the purchase agreement or on your website. If a purchase is canceled, make sure the billing is immediately discontinued and promptly process credits when applicable. This will help minimize customer disputes and chargebacks.
• Provide your customers with clear information concerning the billing arrangements and all applicable shipping charges. Send a billing reminder 14 days prior to processing each payment.
• For web-based transactions, require that your customers accept your terms and conditions statement by clicking on an “Accept” or “Agree” button.
• Use the Address Verification Service (AVS) with the first payment. The AVS verifies the validity of the billing address provided by your customer by comparing it to the one on file with the card issuer.
• Ask for the card security code (CVV2, CVC 2 or CID) when processing the first payment. Card security codes are the three-digit numbers found in the signature panels on the back of Visa, MasterCard and Discover cards and the four-digit numbers found slightly above and to the right of the account numbers of American Express cards. The credit card companies introduced the security codes as an additional way to help merchants who accept payments in a non-face-to-face setting verify that their customers are in a physical possession of the card at the time of the transaction. Be advised that you should never store card security codes in any way to avoid fines.
• If merchandise cannot be delivered as promised, immediately notify your customer. Explain the reason for the delay and provide information on the expected new delivery date.
• Provide a toll-free number for customer inquiries and cancellation requests. Display your customer service number prominently on your website, so that it is easy to locate.

Average credit card interest rates fell for a record fourth week in a row, according to the CreditCards.com Weekly Credit Card Rate Report, after a sub-prime lender discontinued two of its credit card offers.

The average interest rates on new credit card offers was estimated at 14.12 percent, down 13 basis points from 14.25 percent last week, but still 1.48 percent higher than six months ago, when it stood at 12.64 percent. Issuers had been raising credit card interest rates, lowering credit limits and closing accounts, over the past few months in an effort to offset revenue losses expected to result from the regulatory changes that were introduced with the enactment in February of the CARD Act.

Subprime issuer First Premier eliminated two card offers this week. These were replaced in CreditCards.com’s report with similar cards, but with lower APRs, which drove down the average.

“As part of our ongoing process, we routinely review and evaluate the offers that we are marketing and decided to pull back these offers for the time being. They may or may not be brought back in the future based on that continued evaluation,” says Darrin Graham, vice president of marketing with Premier Bankcard.

CreditCards.com has estimated that, if a consumer borrowed $5,000 on a credit card today and made regular monthly payments of $150, at today’s average interest rate the consumer would have to pay $6,386 to pay off the debt – $194 more than would have been required six months earlier.

(Via CreditCards.com)

“One of the unfortunate results of the new restrictions on credit cards, besides the decrease in the availability of credit, is that added pressure is being placed on rewards,” says Scott Talbott, senior vice president of government affairs at The Financial Services Roundtable.

Listed below are a few reward program restrictions at several issuers:

• Discover’s cardholders lose their cash back points if an account is closed for any reason, sits inactive for 18 consecutive months or if the cardholder fails to make the minimum payment by the due date for two consecutive billing periods.
• Capital One’s cardholders lose miles they earned during a billing cycle in which a payment was received late. The other rewards remain unaffected.
• American Express and Citigroup’s Diners Club International cards also reduce rewards for late payments. Cardholders can have their rewards restored, however, by paying $29 and $15, respectively, for each month for which points are reinstated.

(Via SmartMoney.com)

(Via YouTube.com)

The upgrade is expected to bring in an extra $1 million to $1.5 million in revenue for the city, according to the mayor’s office.

Parking rates in the city range from $1 to $4 an hour. About 500 coin-and-charge meters have already been installed in the city and brought in extra revenue, Hernandez said.

“We’re guaranteed positive revenue because the city will never pay a vendor more than the revenue that the meter generates,” Hernandez said.

The new meters and long-term leases for city parking garages would help the city collect about $100 million to $150 million in revenue, according to estimates in Mayor Villaraigosa’s budget proposal for fiscal 2010-11.

(Via ContraCostaTimes.com)

• Clearly disclose the total transaction amount. Tell your customer, before the sale is completed, what the total transaction cost would be, including all applicable fees. Few things annoy customers more than ploys designed to disguise the total sales amount, in an effort to make it look smaller than it actually is. Remember that consumers don’t care how much the ticket itself is, how much the airport fees amount to, and how much an agency charges for the sale. The only price that matters from a consumer’s standpoint is the final transaction amount, so that they can compare it to rival websites and make an informed decision about the purchase. Failure to clearly communicate the final transaction amount is a sure proof way to generate customer disputes and chargebacks, as well as negative publicity.
• Tell customers how your name will appear on their credit card statements. Your customers must be able to easily recognize your company’s name on their statements. Your processor can manage this information field through the billing descriptor. Contact them and make sure that the billing descriptor is set up correctly. This is especially important if your legal name is different from your “Doing Business As” (DBA) name. In such cases, consumers can easily get confused, as they can recognize your DBA, while processors typically use the legal name in the billing descriptor.

• Clearly disclose all terms and conditions of the sale. Your customers should know all terms and conditions of the sale before making a decision to buy. Any unpleasant surprises after a sale is completed will most likely lead to a customer dispute and / or a chargeback. More specifically, your terms and conditions should provide the following details:
  • The amount of an itinerary change fee. If your customer needs to change his or her itinerary, he or she must know what the applicable fees would be before the transaction is completed.
  • How the itinerary change fee will appear on the cardholder’s card statement (in total or billed separately).
  • When the fee will be billed.
• Additional fee disclosures. Tell your customers what fees there are, if any, for the following services:
  • Baggage fees. If there would be charges for checked bags, tell customers what they would be. If there are different charges for the first and second bag, provide information about both.
  • Oversize / overweight bag fees. If different from the regular bag fees, tell your customers what they are.
  • Travel with pet fees. List applicable fees for pet travelers.
  • Unaccompanied minor fees. List fees for unaccompanied minors.
  • Preferred seat selection fees. Tell your customers whether seat selection is free and, if not, what the applicable fees are.
  • Beverage and snack fees. Be sure to let customers know what, if anything, they should expect to pay for food and drinks on board the airplane to help them avoid awkward situations.

A clear disclosure of the above information prior to the sale will ensure quality of service and help avoid unnecessary and costly customer disputes later. Require that customers accept the disclosure statement by clicking on an “Accept” or “Agree” button on your website before the sale is completed.

Credit card interest rates have been rising steadily over the past year to reach the highest levels in years. Credit card companies are rising APRs in response to the changes introduced with the CARD Act of 2009, which was designed to protect consumers from abusive credit card practices, including arbitrary rate hikes.

LowCards.com’s index shows that on the day before the CARD Act was signed – May 21, 2009 – the average APR was 11.64 percent. At the end of 2008, Capital One was offering its Platinum Prestige card at rates as low as 7.15 percent. Today, it’s at 11.90 percent. American Express’ Blue had an APR as low as 8.99 percent. Today, it’s at 15.24 percent.

(Via LowCards.com)

What are web cookies used for? Cookies were first used to help create shopping carts for e-commerce websites. Shopping carts enable customers to store items they are interested in purchasing and then continue browsing the website, adding or removing items from the shopping cart, without losing previously stored information, which is what the cookies are used for.

The use of cookies has since expanded and today embedding them into a web browser is an effective tool to help e-commerce merchants recognize and acknowledge existing customers, so that no log-in is required every time a repeat customer makes a purchase.

Web cookies can be used for an array of purposes, including:

• User authentication. Cookies can be used to remember a repeat customer’s log-in information about the user, so that the log-in fields are filled in when the customer returns to the website.
• Session management. Cookies can be used to store data about a user’s navigation patterns, including across multiple visits.
• Tracking browsing habits. Tracking cookies enable merchants to store information about visitors’ browsing habits. Such data allow e-commerce merchants to produce usage statistics. Advertising companies use tracking across websites to produce user profiles, which are then used to determine what advertisements should be shown to the user.

All major browsers allow users to decide whether to accept cookies or not, and how long to store them for. However, rejecting cookies makes some e-commerce websites unusable.

The ability of web cookies to maintain specific information about website visitors and to automatically provide it whenever a visitor revisits a website helps e-commerce merchants to simplify the order process for returning customers by not requesting that they provide payment details that have already been provided during a previous visit. Cookies remain stored in the browser until deleted by the user.

Consider adopting the following procedures when using browser cookies with your e-commerce website:

• Use permanent browser cookies to record and store non-sensitive cardholder information and preferences to enable repeat customers to order products and services without having to re-enter this information. Consumers appreciate not having to provide their payment details every time they visit a website, provided they are ensured that the process is secure.
• Use browser cookies to maintain active user sessions. Once the session expires, however, your website should prompt the user to log in again, regardless of the computer being used.

1. Never disclose publicly your birth date, pet’s name, mother’s maiden name, or your school.
2. Regularly review your account statements to make sure all transactions are valid.
3. Watch your credit card when making a payment in person and make sure you are given back your card and not a different card.
4. Make sure that your monthly credit card statements arrive on time. A missing statement could indicate that an identity thief has changed your billing address.
5. Put a fraud alert on your account to notify creditors that they should verify your identification before issuing credit in your name.
6. Never give your bank account or card number to anyone who calls you on the phone or sends you an email.
7. Notify credit card companies of any change of address if you are moving.
8. Pay attention to your mail, as financial companies are required to notify you when a data breach occurs.
9. Cover the ATM keypad with your hand when entering the PIN number.
10. Regularly review your credit report. You are allowed to one free credit report per year from each of the three national credit bureaus: Equifax, Experian, TransUnion. You can get your free credit reports from www.freeannualcreditreport.com.
11. Enable the encryption of your wireless router, if you are using one.
12. Shred paper documents containing sensitive personal information.
13. Mail anything with personal information or payment at the post office, not from your mailbox.

(Via Forbes.com)

1. Compare debit card rewards with credit card programs. Your credit card will most likely enable you to accumulate more rewards, but if you prefer using debit, make sure you understand what the reward program’s terms are.
2. Contact your own bank first. To save time, contact your bank first and ask about their debit program to see how it compares to other programs.
3. Know the fees. Be sure to check the fees associated with debit card programs, as they can quickly accumulate, diminishing or completely wiping out the value of your rewards.
4. Check out the local credit unions. Credit unions often have very competitive debit card programs.
5. Learn about signature and PIN-based programs. The reward program that you choose will require you to either sign sales receipts or enter a PIN. There may be different fees associated with each program.
6. Consider a debit account for a particular type of purchases.You may be able to maximize the value of the reward program if you are using your debit card for a particular type of purchases, such as grocery shopping.

(Via CreditCards.com)

(Via YouTube.com)

(Via YouTube.com)

The results easily beat analysts’ expectations. Analysts were on average looking for profit of $3.12 a share on revenue of $1.27 billion, according to FactSet Research.

“We are starting the year with strength across several of our business drivers, including healthy cross-border volumes, which contributed to our solid first-quarter results,” said MasterCard Chief Executive Officer Robert W. Selander.

Bigger rival Visa Inc. reported last week that its second-quarter profits rose by 33 percent from a year earlier to $713 million, up from $536 million a year ago, as payment volume grew 13 percent to $745 billion.

Both MasterCard and Visa, unlike rivals American Express and Discover, don’t issue the cards bearing their logos, which insulates them from losses arising from payment delinquencies and charge-offs. MasterCard and Visa make their money from the fees they charge banks for process card payments. JPMorgan Chase, Citigroup and Bank of America are among the top issuers of MasterCard- and Visa-branded cards.

(Via Reuters.com)

So what should we do with credit cards that we have in our wallets, but don’t really need and haven’t used for a while. Should we close the card or just let it stay there? How would each option affect your credit score?

To keep your credit score up, you should leave the card open, but not unused, unless you are charged an annual or inactivity fee, is the advice given by Jeremy M. Simon, CreditCards.com’s credit score expert.

Having a zero balance on the card will not hurt your credit score. In fact, it helps keep your credit utilization low, which is a good thing. The credit utilization ratio represents the used portion of your total credit, across all of your credit cards. It is a component of your FICO score, which is the most widely used credit score. The lower you keep it, the better.

However, you should not leave the card unused, to prevent the card issuer from closing down the account, which will automatically drive up your credit utilization ratio. Using the card for small purchases will help achieve this goal, just make sure you pay the balance off in full each month.

(Via CreditCards.com)

“The popularity of online dating has opened the floodgates of opportunity for identity thieves eager to capitalize on the vulnerability of individuals looking to make a personal connection,” said Jennifer Leuer, general manager of ProtectMyID.com.

Many online daters disclose too much personal information at a very early stage of the dating process. 30 percent of the respondents provided their home address, while nearly 75 percent disclosed their birth date to potential matches online. This information is used by identity thieves not only for personal gain, but also to sell it online.

So what should you do to protect yourself from falling victim to an online dating scam? Consider the following suggestions:

• Don’t disclose personal information too soon. Avoid disclosing information about your home address, work, phone number and educational background until you believe you can trust your prospective date.
• Don’t disclose your income on your dating profile. Don’t reveal your income, as this may leave you vulnerable to scammers looking for high earners.
• Don’t let your guard down. Some thieves are professionals and can steal your information before you know it. Do a background check on your prospective date. Start with googling their name and try to locate them on LinkedIn and Facebook.
• Use a strong password. Don’t use in your password information about you that is publicly available.

(Via Yahoo.com)

You will pass the test for Chapter 7 bankruptcy, if you file for it while you are still unemployed and will have your debts forgiven, says Ossenfort. The bankruptcy, however, stays on the credit report for 10 years, making it much harder to obtain new credit.

Paying off the debt is another option, and can be negotiated with creditors. Some creditors may be willing to set up a payment plan based on the debtor’s difficult financial situation and accept lower monthly payments. A credit counselor can help devising a payment plan and negotiate with the creditors.

If payments are at least 90 days overdue, the creditor may be willing to accept a lesser than the full amount to settle the debt. However, the debtor’s credit history will be damaged, as such accounts are reported as derogatory items and stay in your credit report for seven years.

(Via CreditCards.com)

Over the past three months, how have your bank's credit standards for approving applications for credit cards from individuals or households changed?

U.S. credit card lending practices remain tight, according to the latest quarterly survey of senior loan officers released on Monday by the Federal Reserve. Lenders either kept or increased tight lending standards over the past three months. The Fed’s survey includes an overview of 56 domestic banks and 23 U.S. branches of foreign banks.

One bank (2.9%) reported that over the past six months its standards and terms for approval of business credit card accounts for small firms have “tightened considerably,” while 10 banks (29.4%) said their standards and terms have “tightened somewhat.” 22 banks (64.7%) reported that their standards have remained “basically unchanged.” Only one bank has reported that its approval standards have “eased considerably.”

The situation for existing business credit card accounts for small firms is not much better. Two banks (5.9%) have said that their standards have “tightened considerably,” seven (20.6%) – that standards have “tightened somewhat” and 23 (67.6%) – that their standards have “remained basically unchanged.”

The application approvals for individual credit cards over the past three months have “remained basically unchanged” at 26 banks (78.8%). Five banks (15.2%) have said that standards have “tightened somewhat” and two (6.1%) – that they have “eased somewhat.”

(Via FederalReserve.gov)

As the economy has begun showing signs of revival, however, issuers have responded by returning to the pre-crisis levels of 12 months, though the six-month variety can still be found.

Moreover, a month ago Citi began offering a zero-percent promotional rate for 15 months. A few days ago the offer was improved even further – to 18 months.

Weber has estimated that the 0% interest for 18 months would save consumers who do balance transfers 30% more than they would save with the prevalent 0 percent for 12 months offer. For $5,000 of credit card debt at 14% regular interest rate, the additional interest-free 6 month period would add $400 in savings, bringing the total to over $1,000, according to Weber’s calculations.

The only caveat in the zero-percent offers, according to Weber, is that the longer periods are typically reserved to applicants with solid credit histories, while the less than perfect ones can count on seven to 12 interest-free months.

(Via Examiner.com)

• Implement card-not-present transaction screening that lets you avoid the manual reviews of low-risk transactions. Criteria that you can use in your transaction screening procedures can include:
  • Low transaction amounts. If the cost of reviewing the suspicious transaction equals or is not much lower than the transaction amount itself, it does not make much sense to subject it to a review. Your screening process should be designed to automatically exclude low-amount transactions from the review process.
  • Repeat customers with a good record. If an order has been received from a customer with a good payment record for at least the past 90 days and merchandise has been shipped to their address before, you should not subject the transaction to further review, even if it displays high-risk characteristics. The customer’s good history serves as a proof that he or she can be trusted.
  • An Address Verification Service (AVS) match and a shipping address that is the same as the billing address. An AVS match, combined with a match with the billing address is typically enough to guarantee that the transaction is genuine. However, if multiple high-risk characteristics are present and if the purchase amount is above the established dollar threshold, you may want to review the transaction.
• Decline all transactions that display high-risk characteristics and are not routed for fraud review. Such transactions should include the ones that fall below your preset dollar threshold and that:
  • Match information in your internal negative file. Your organization should build and maintain an internal negative file where details from previously processed fraudulent transactions are recorded and stored. Information that relates to customer disputes or chargebacks should be left out of the negative file.
  • Come from international IP addresses. Transactions placed from international IP addresses are proved to produce higher levels of fraud. Some merchants have decided not to accept international orders altogether, regardless of the amount.
  • Have international billing or shipping addresses. Similarly to the above characteristic, international billing and shipping addresses are linked to high levels of fraud. It has to be said, however, that not all merchants suffer the same levels of fraud from international transactions. Some types of merchandise and services are related to higher fraud rates than others and you should find out what your fraud risk is before deciding how to handle international orders.

• Presale or preferred seating tickets for concerts and sporting events. You can get a ticket for a hard-to-get-into event or a cheap seat.
• Rental car insurance coverage. Most credit cards today offer collision insurance for car rentals, covering whatever your primary car insurance won’t.
• Guaranteed returns. Many cards offer to cover the cost of a lost, stolen or destroyed item, within 90 days of purchasing it, if the store won’t do it.
• Cell phone replacement insurance. Your credit card may replace your damaged or stolen cell phone.
• Trip cancellation coverage. Offered by only 15 percent of cards, this perk will reimburse you the cost of nonrefundable flights in case your plans change due to an emergency or illness
• Cash without an ATM. Discover’s Cash-Over program lets cardholders use their credit card as a debit card. In essence, you can get cash using your credit card without paying a cash advance fee.
• Emergency travel assistance. Some cards will assist you in getting help while traveling abroad, e.g. finding an American doctor or replacing a stolen passport.
• Help with car shopping. American Express’s car-buying program lets build your dream car, then see a low price and a list of certified dealers who will honor it.
• Price protection. Your credit card may offer to refund the difference, if you find a lower price within 60 days of purchasing an item.
• Roadside assistance. Many cards will send a tow truck if your car breaks down and offer jump-starts, tire changes and locksmith services.

(Via CreditCards.com)

(Via MoneyWatch.bnet.com)

Nielsen BuzzMetrics’s survey reviewed 8,000 discussion forums, 45,000 Usenet forums and more than 135 million blogs to gauge consumers’ feelings about the credit card reform, focusing specifically on how consumers are reacting to the new law and what actions they are planing to take, who do they blame, how credit card companies communicate the changes and which companies are implicated.

Consumer sentiment turned negative almost immediately after President Obama signed the bill into law in May of last year, according to the report. A USA Today post on the law received 600 comments, mostly negative. The main issues USA Today readers had with the CARD Act was that it didn’t go far enough in protecting consumers or that it seemed to penalize those who were using credit responsibly, while most voiced concerns that credit card companies will find ways to go around the new regulations anyway.

“It was a little surprising to see the widespread negative or ambivalent consumer sentiment towards the credit card reform law. What was initially hailed as an important step in protecting consumer rights quickly turned into an exercise of public mistrust of both financial service companies and the government. As we have seen with the health care reform debate, many Americans think that companies will find ways around the law and find new sources of revenue,” said Ron Coyle, Lead Analyst at Nielsen BuzzMetrics.

(Via Nielsen.com)

(Via YouTube.com)

• First-time customer. Criminals can use stolen cards for a very short time, so they are always looking for new victims. Of course you will want just as many new customers as you can get but it is a good idea to pay closer attention to their first orders.
• Large orders. Orders with larger-than-normal amounts should too be examined closely. Criminals will try to maximize the potential of the stolen card by buying as much as they can before the account is closed. They can do that by purchasing multiple items at once or by purchasing big-ticket items.
• Big-ticket orders. As described above, big-ticket items conveniently achieve the criminal’s goal of maximizing the profit from a stolen card.
• Orders for several identical items. Such purchases may too be the result of a criminal’s attempt to utilize the card’s full potential before the account is closed. As they typically don’t make purchases for personal use but for resale, fraudsters don’t care what it is that they are buying, but how quickly they can flip it.
• Overnight delivery. Criminals do not much care about shipping costs, because they are not paying for them, so they are likely to forgo a free-delivery option in order to get the merchandise as soon as possible.
• International shipping addresses. A substantial number of fraudulent e-commerce transactions are shipped to international addresses and you should carefully examine such orders before fulfilling them. Be advised that the Address Verification Service (AVS) can only be used to confirm addresses in the U.S., unless the card issuer supports international AVS (unfortunately, international AVS is not currently widely supported by issuers). If you request verification for an address outside of the U.S., you will receive a response “G” for “Global.” In such cases, you will be liable for any chargebacks even if you receive authorization approval from the issuer.
• Transactions involving similar card account numbers. Software that generates card account information is in wide circulation and is often used by criminals. Account numbers generated in such fashion are often similar and your fraud prevention system should be designed to identify these similarities and alert you when it detects them.
• Orders from several cards with the same billing address. Multiple transactions involving cards with the same billing address may indicate that criminals are using several stolen cards at once. They may have stolen a wallet or may have fraudulently obtained information for multiple credit card account holders from a computer used by several residents of the same household.
• Multiple card transaction over a short time. Placing multiple transactions in quick succession may indicate that criminals are trying to max out a stolen card’s credit line as quickly as they can, before they get caught.
• Multiple shipping addresses. If several orders are placed using one card but with several shipping addresses, it may be a sign of organized fraudulent activity, rather than the work of a single criminal. In any case, having deliveries sent to different shipping addresses is not at all a typical consumer behavior and you should investigate such transactions.

Fitch’s prime credit card charge-off index dropped to 10.93 percent, a 0.34 percent decline from the month before. The March rate is still 17 percent higher than the same period a year ago. Charged-off are loans that lenders do not believe will be repaid and are written off their books as losses. The charge-off index is still higher than the 12-month average of 10.69 percent.

Payments late by 30 days or more dropped by 0.11 percent to 5.74 percent, while payments delinquent by 60 days or more declined 0.17 percent to 4.27 percent, according to Fitch.

“U.S. consumer credit quality remains under considerable pressure, though the pace of deterioration has moderated in recent months,” said Fitch Managing Director Michael Dean. “Defaults and delinquencies will exhibit some seasonal improvement but remain elevated in the coming months primarily due to the strained labor markets.”

Retail credit card charge-offs also fell in March – 0.40 percent to 13.01 percent – after reaching record highs in February. The March charge-off rate is still 17 percent higher than the same period a year ago.

(Via FitchRatings.com)

(Via YouTube.com)

The CVC 2 is a security feature that all major payment gateways and virtual terminals support and your payment processor should make it available to you.

How to use CVC 2? The CVC 2 should be used in every e-commerce or MO / TO transaction. Consider implementing the following steps:

1. Ask your customers for the last three digits in the signature panel on the back of the MasterCard card. Do not ask for the CVC 2 number, as your customer will most likely have no idea what this is.
2. Depending on the response your customer gives to your CVC 2 request, include one of the following indicators in your authorization request, along with the card’s expiration date and the account number:
   
   

   Indicator	When to Use It
   0	If the CVC 2 is not included in the authorization request.
   1	If the CVC 2 is included in the authorization request.
   2	If your customer has stated that the CVC 2 is illegible.
   9	If your customer has stated that the CVV2 is not on the card.




3. The card issuer will reply to your request with one of the CVC 2 result codes listed below. Take it into consideration, along with all other factors in determining the validity of the transaction.
   
   

   Result Code	Recommended Action
   M – Match	The CVC 2 is valid. Complete the transaction, taking into account all other transaction characteristics.
   N – No Match	The CVC 2 is not valid. View this result as a very strong indicator of fraud. It may, however, be the result of a key-entry error, so you may consider resubmitting the CVC 2 request.
   P – CVC 2 request not processed	You should resubmit the request.
   S – the cardholder has stated that the CVC 2 is not on the card	The CVC 2 code should be on all MasterCard cards. Consider following up with your customer to verify that he or she has checked the correct card location.
   U – the card issuer does not support CVC 2	In this case you should evaluate all available information and decide whether to proceed with the transaction or investigate further.

Storing of CVC 2 is prohibited. Never keep or store CVC 2 codes once a transaction has been completed. Storing CVC 2 codes is prohibited and could result in fines. You may store other account information, e.g. cardholder name, account number and expiration date but not the CVC 2.

Why should you use CVC 2? Using CVC 2 will benefit your organization in a number of ways, including:

• Enhanced fraud protection. Card-not-present merchants run a greater risk of processing fraudulent transactions than their store-front counterparts. Using CVC 2 provides an additional step in the process of verifying the validity of both the card and the cardholder.
• Reduced chargebacks. Reduced fraud leads to reduced fraud-related chargebacks. Chargebacks due to other reasons, however, will remain unaffected by the use of CVC 2.
• Improved bottom line. Fraudulent and charged-back transactions lead to lost revenue and can mean extra processing time and costs. CVC 2 helps limit such losses and minimize operating costs.

(Via YouTube.com)

Visa CEO Joseph Saunders said that “the number of Visa debit and prepaid Visa cards issued globally surpassed one billion for the first time in our history. This represents not only further penetration of debit globally but the underlying growth and importance of prepaid cards, which are a key contributor of all of our debit business overall.”

The number of debit cards issued in the quarter that ended in December of 2009 (the last quarter for which figures were released) were up 13 percent compared to a year earlier, to 1,02 billion from 905 million. The number of credit cards issued during the same period declined 4 percent, to 784 million from 813 million.

Debit payments volume for the same period grew 19 percent, while credit payments during the same period was up by 11%.

(Via phx.corporate-ir.net)

The report, issued by the consumer group Which?, estimates that four million U.K. debit card holders and three million credit and charge card holders are putting themselves at an increased risk of fraud through disclosing their PIN numbers to a friend or family member.

A third of the 1,045 surveyed consumers said they keep the PIN in their handbag or wallet with their card, 36 percent keep a note of their PIN at home, and 9 percent keep a note of it at their workplace.

86 percent of consumers believe that, if they were the victim of credit or debit card fraud, they would have any lost money refunded, according to the survey. Which? warns, however, that credit card companies would not necessarily reimburse the money if they could prove that a cardholder had not protected his or her PIN sufficiently well.

“The results show that too many consumers are putting their finances in jeopardy by not taking simple precautions,” said Martyn Saville, of Which?. “Writing down your Pin is like leaving your door open when you leave the house,” he added.

(Via BBC.co.uk)

Consumers have been complaining that prepaid cards expire when they wait for too long before using them or that they are charged fees because they don’t use them soon enough.

Although rebate cards resemble gift cards, the newly enacted CARD Act does not provide rebate card holders with the same protection that gift card holders enjoy. “A lot of people have the assumption that rebate cards have the same fees and expiration dates as a gift card because they look the same, and they come to find three months later that their cards are now valueless,” says Michelle Jun, a staff attorney with Consumers Union, the publisher of Consumer Reports.

However, rebate cards are not gift cards, primarily because rebate cards cards represent free money rather than an item a consumer has paid, says Crystal Wright, a spokeswoman for the Network Branded Prepaid Card Association.

To avoid unpleasant surprises, follow these four rules when using rebate cards:

• Use the card immediately to avoid any charges.
• Identify fees that can be avoided. Often fees are applied after a certain period and if you use the card before it expires, you won’t be charged anything.
• Take advantage of technology. Monitor your card’s balance, so that you always know what you have available to spend.
• Act fast if a card is lost. Rebate cards can be tracked, so that the merchant who issued the card can cancel it, if you contact them before the card was used. Be advised that you have limited protection for stolen rebate cards, compared to credit and debit cards.

(Via Bankrate.com)

(Via YouTube.com)

The average interest rate on credit cards with variable rates also remained steady at 14.03 percent, according to the survey.

Both the fixed and variable rates are substantially higher than a year ago, the survey’s authors remind us. The current average fixed rate is 1.37 percent higher than last year’s when it was 12.33 percent. The difference is even more substantial with the variable rates. Today, the mean variable rate is 3.25 percent higher than last year’s when it stood at 10.78 percent.

Affinity Federal Credit Union is the latest issuer to discard its over-the-limit fee, according to the survey.

(Via Bankrate.com)

Visa’s net operating revenue in the second quarter was $2 billion, up 19 percent from last year. Payments volume – spending on Visa-branded cards, was up 13 percent in the second quarter to $745 billion. The total number of transactions processed in the second quarter jumped 14 percent from a year ago to 10.6 billion.

“Our performance was fueled by higher-than-expected payments-volume growth,” said Visa Chairman and Chief Executive Joseph Saunders. He added that Visa “is increasingly optimistic that the worst of the recession is behind us.”

The San Francisco company expects its annual net revenue growth to be at the high end of its earlier stated range of 11percent – 15percent.

Visa and rival MasterCard make money from charging transaction fees every time one of their cards is used. They don’t issue the cards bearing their logos, which insulates them from losses arising from payment delinquencies and charge-offs. Such losses are borne by their member banks, such as JPMorgan Chase, Bank of America, Wells Fargo and Citigroup, which issue the cards.

(Via Reuters.com)

(Via YouTube.com)

(Via YouTube.com)

In order to get the best credit card processing terms, you will have to first understand processing risk associated with selling airline tickets and then design and implement best practices to manage it. A well designed risk management process will help you reduce customer disputes and related chargebacks, which are the principal reasons payment processors are cautious when underwriting merchant accounts for airline ticket sellers.

The following best fraud prevention practices should be taken into consideration by airlines and third-party agencies:

• Screen all high risk bookings. Screening high-risk bookings can help you detect and prevent fraud before it actually happens. Screening should be performed on transactions with characteristics such as:
  • Third party purchases.
  • First or business class tickets.
  • E-tickets or tickets not delivered to the cardholders’ billing address.
  • Date of travel that is less than six days after the ticket purchase.
  • Customers not enrolled in your frequent-flier programs.
• Use Address Verification Service (AVS) to confirm billing addresses for paper ticket sales. AVS helps you fight fraud by enabling you to compare the billing address (the address to which the card issuer sends its monthly statement for that account) provided by your customer with the billing address on the card issuer’s file before you process the payment. Be advised, however, that AVS fraud chargeback rights do not apply to e-ticket sales or to such cases where paper tickets are not mailed to the billing address.
• Track fraud by ticket source. When monitoring credit card fraud, it is a good practice to track different fraud sources separately. With merchants selling airline tickets these sources are internet sales, central reservations, ticket counters and travel agencies. This practice can help airlines identify the areas where risk exposure is the greatest and develop strategies to reduce risk.
• Participate in Verified by Visa and MasterCard SecureCode. These are fraud-prevention services that the Credit Card Associations provide to e-commerce merchants and to consumers shopping online. MasterCard SecureCode and Verified by Visa work by enabling cardholders to authenticate themselves to their credit card issuer through the use of a personal password that they have chosen when they registered their cards with the program. These services protect against fraudulent “unauthorized use” chargebacks.

Average credit card interest rates fell for a third week in a row, according to the CreditCards.com Weekly Credit Card Rate Report, after Target discontinued its Visa credit card.

The average interest rates on new credit card offers was estimated at 14.25 percent, down 13 basis points from 14.38 percent last week, but still 1.61 percent higher than six months ago, when it stood at 12.64 percent. Issuers had been raising credit card interest rates, lowering credit limits and closing accounts, over the past few months in an effort to offset revenue losses expected to result from the regulatory changes that were introduced with the enactment in February of the CARD Act.

Target announced last week that it would no longer issue new Visa credit cards, offering exclusively its store-branded card. The discontinued Visa card had a high interest rate of 23.24 percent and its elimination dragged down the average.

“Tests and guest research shows guests prefer the Target card – and guests with the Target card spend more at Target than similar guests with the Target Visa,” Target spokesman Eric Hausman explained the retailer’s decision.

CreditCards.com has estimated that, if a consumer borrowed $5,000 on a credit card today and made regular monthly payments of $150, at today’s average interest rate the consumer would have to pay $6,403 to pay off the debt – $211 more than would have been required six months earlier.

(Via CreditCards.com)

(Via YouTube.com)

(Via Mefeedia.com)

• Restrictions on fees. Inactivity or dormancy fees can only be applied after a card has not been used for 12 months. Restrictions also apply to fees for using gift cards, for adding money to the card and for account maintenance.
• Limit on expiration dates. Under the new rules, gift cards cannot expire for a minimum of five years after the last time funds were added to the account.
• Better term disclosures. Issuers must provide better disclosures of the terms and conditions of their gift card contracts.

However, one type of payment cards will not be covered by the new rules, writes Perkins. These are the reloadable prepaid cards. They are not marketed as gift cards, even though they share some common characteristics. They have a predefined dollar value and can be offered as a gift. Reloadable prepaid cards can come with a host of fees, including fees for activation, non-use, point of sale, cash withdrawal, balance inquiry, bill payment, transaction statement and even account closing, according to a study by Consumer Reports. Monthly fees can vary widely, from $13.95 to $115 the first month and $18.90 to $32.75 the second month, according to the study.

(Via AOLNews.com)

• Unclear on spending. While a zero-percent promotional credit card offer sound great, things change when the promotional period ends and if you have racked up thousands of dollars in debt. Gilmore gives an instructive example. “Say you now owe $3,000 and the new interest rate is 15 percent. If you pay the minimum, it will take you 215 months to pay off the card – and you’ll have paid $3,229.26 in interest.”
• Change in mentality. Many consumers use low-rate credit cards without giving it a second thought, because they expect that, even if they don’t have the money to repay the debt today, they will have it later. But some simply can’t do that, says Gilmore, especially after the low promotional rate ends and the higher one takes over.
• Creating a credit habit. Using your card for everyday purchases can form a habit. At the same time, some consumers don’t appreciate the effect credit card debt has on their personal finances and can get into a real trouble in a hurry.

Low-rate credit cards are good, but only if you can manage your spending, concludes Gilmore.

(Via Bankrate.com)

• The card’s security features are missing or altered. If the 3- or 4-digit card verification security code (CVV2, CVC2 or CID) is missing or has been tampered with, or if the hologram does not appear right, or if the “Good Through” date is altered, that should raise your suspicion.
• The card number on the sales receipt does not match the account number on the card. If the account number that your terminal has read from the magnetic stripe and printed on the sales receipt does not match the one on the front of the card, this should immediately raise a red flag.
• The merchant receives a pick-up response. If, during a Code 10 call with the card issuer, you have been instructed to pick up the card, you should follow the instructions.

Once you have accumulated enough information to justify a decision to recover a card, or after you have been instructed to do so during a Code 10 call, you should follow these procedures:

• Firstly, you should only attempt a card recovery if you can do so safely. You should never take unnecessary risks. If the customer acts in a threatening way, you should complete the transaction and alert your payment processor after the customer leaves your store.
• Once you have established that it is safe to recover a card, tell your customer that you have been instructed to keep the card, and that he or she may call the card issuer for additional information.
• Remain calm and courteous throughout the recovery procedure. If the cardholder behaves in a threatening manner, return the card immediately and complete the transaction.
• Once you have recovered the card, contact your processor for further instructions.
• Cut the recovered card in half lengthwise, but be careful not to damage the hologram, the embossed account number, or the magnetic stripe.
• Send the recovered card’s pieces to your processor.

Be advised that card issuers offer cash rewards to merchants for recovering altered and counterfeit cards or for information that can lead to the arrest and conviction of any person involved in a counterfeit operation. Contact your processor for additional details.

For cards that are found at your store or have been inadvertently left by customers and have remained unclaimed, you should follow the above procedures for contacting your processor and sending in the card.

U.K. consumers are more worried about credit card fraud than they are about violent crime, according to the report. 53 percent of the respondents were worried about having their card information stolen and used fraudulently, compared to 14 percent who said they were worried about becoming a victim of violent crime.

Cardholders are increasingly taking matters into their own hands and are acting to protect themselves against fraud. 78 percent of the surveyed cardholders destroyed any documentation that contained personal financial information. Additionally, 76 percent said they regularly reviewed their bank statements to make sure all transactions were legitimate.

14 percent of the fraud victims reported the incident to the police, while 91 percent reported it to their bank, according to the report. The survey also shows that wealthy households were more likely to be the victims of credit card fraud than poorer ones.

(Via HomeOffice.gov.uk)

(Via 39online.com)

(Via MyFoxHouston.com)

We learned last year that three marketing companies, Vertrue, Webloyalty, and Affinion, generated more than $1.4 billion by misleading customers into signing for their services, after completing a transaction on a major e-commerce website. The merchants that allowed the marketers to operate on their websites included Orbitz, Priceline.com, Buy.com, 1-800 Flowers, Continental Airlines, Fandango, and Classmates.com.

The marketing scheme worked by asking consumers to provide their email addresses after completing an online transaction and hit a big “Yes” button which promises a $10 cash-back offer or a coupon. The terms of the deal, however, include enrolling into a membership agreement with the marketer and paying a monthly fee for it.

After numerous consumer complaints, the U.S. Senate Committee on Commerce, Science, and Transportation launched an investigation. The Committee’s conclusion was that consumers were indeed misled into signing up for the marketer’s services and most merchants discontinued their relations with the marketers.

Visa now requires that e-commerce websites send a “clear signal to cardholders that a second purchase is being initiated and protects them from questionable marketing practices”.

(Via CNET.com)

(Via CNN.com)

So what should you do, whether you have just started your travel agency or have been in business for years to mitigate credit card processing risk?

Firstly, before you even apply for a merchant account, you will need to understand the potential sales agent liability associated with selling air fares online. Understanding your risk exposure will help you take adequate steps to minimize it and protect your travel agency from losses associated with chargebacks resulting from customer disputes and fraudulent transactions. As a sales agent of an airline, for example, your travel agency may be liable for the entire amount of an airline ticket, if it is successfully disputed by a customer or if it was purchased with a stolen credit card. To mitigate your risk, you will need to set up card acceptance policies and procedures to address the following issues:

• An authorization request that is approved by an issuer indicates that the credit card account is in good standing. However, the authorization approval is not a proof that the legitimate cardholder is making the purchase, nor is it a guarantee of payment. Be advised that, in most cases, airlines are liable for fraudulent card-not-present transactions, even when they were approved by the card issuer.
• As a travel agency, your organization may not necessarily be a Visa or MasterCard merchant, subject to the Credit Card Associations’ rules and regulations. However, the airline is a Visa and MasterCard merchant and it is subject to their rules and regulations. Be advised that, in most fraud-related transactions, the airline transfers financial liability to the travel agency it has partnered with as part of the contractual agreement. In such cases your organization will bear the full financial responsibility.

When selecting a payment processor, be sure to choose one with experience in working with travel agencies and other high-risk merchants. Your processor must be able to assist you in developing and implementing your fraud-prevention procedures and be proactive in identifying and correcting potential weak spots in your processing cycle. It is true that at first you may not have much of a choice when applying for a merchant account, as most U.S. processors will not accept a new travel agency under any circumstances. Once you establish yourself, however, you will have much more leverage. Typically, processors will request that established high-risk merchants provide processing statements for the latest six months of operations. If your statements show that you have managed to keep chargebacks down, most processors will be willing to work with you and you will have the choices you were initially denied.

It is important to differentiate between an authorized user and a joint cardholder, cautions Ossenfort. While the former is not financially responsible for the account, the latter is. “The account owner is responsible for all account activity generated by any and all authorized users,” according to Ossenfort. A creditor may try to collect an unpaid balance from an authorized user, but the authorized user is not liable for it and may request that the creditor does not contact them again in the future.

The bad news is that, while an authorized user is not financially responsible for the account, any negative activity on it may be listed on his or her credit report, just as all regular payments and other positive actions will help build the user’s credit history.

(Via CreditCards.com)

The report reveals that credit card use has decreased by almost 17 per cent in the past five years, while debit card use has risen by more than 30 per cent over just the last twelve months.

Analysts explain the data with the benefits and affordable schemes that banks and credit unions offer to debit card users. “Debit scheme cards give consumers the best of both worlds: accessibility of a credit card and they allow the consumer to use their own money,” according to Harry Senlitonga, a senior analyst at Datamonitor.

Additionally, with debit cards there are no interest fees because debit cards are tied to the cardholders’ bank accounts and there is no credit involved in the transactions. Credit card fees, on the other hand, are one of the reasons why Australians now move away from credit cards.

(Via News.com.au)

• Bank of America has two debit card reward programs with airlines, both of them carrying a $30 annual fee, while giving back 1 mile for every $2 spent. A Nascar card rewards program gives you 1 point for every $4 spent, and it’s free if you sign up online.
• Chase offers the Chase Extras program, which gives back 1 point for every $5 in signature purchases. However, if you are willing to pay a $25 annual fee, you can earn 4 points for every $5 spent. Chase also has airline reward programs, which let you earn 1 mile for every $2 spent and still carry a $25 annual fee. Cardholders who agree to pay a $65 annual fee get 1 mile for each $1 spent.
• Citibank’s debit cards earn you 1 point for every $2 spent with signature purchases, or 1 point for every $3 spent with PIN purchases. Additionally, you get automatic rewards, which vary by account type. There is no annual fee.
• Wells Fargo’s debit cards offer 1 point for every $4 on signature purchases and 16 bonus points for every $1 spent on the bank’s online mall. The annual fee is $12.

(Via NYTimes.org)

Visa said it would cap its weighted average intraregional “multilateral interchange fee” at 0.2 percent for four years on immediate debit transactions. Interchange fees are the transaction fees collected by card issuers for each transaction involving one of their cards.

The 0.2 percent limit will apply only to transactions in which the two banks participating in the transaction – the card issuer and the processor – are in different EU countries, plus national transactions in eight EU countries and Iceland.

No agreement has yet been reached on credit card fees, where the EU commission’s investigation continues.

In April last year, MasterCard reached a similar agreement with the EU, limiting its cross-border credit card interchange fees at 0.3 percent and debit card fees at 0.2 percent.

(Via WSJ.com)

Blippy enables its users to link one of their credit cards to their Blippy account and share purchases made with this card with everyone on the network or with a selected group of users.

According to Blippy’s official blog, “In early February, due to a technical oversight on our part, some raw transaction data appeared within the HTML code on some Blippy pages for about half a day. Raw transaction data is the messy one-line sentence that appears on a bank or credit card statement. For example, if you buy lunch from Quiznos, your credit card statement might display the raw transaction data as “Quiznos Inc Store #1234 San Francisco”. Blippy tries to clean this data so it appears as simply “Quiznos”.”

To make matters worse, “Google had crawled and indexed a portion of Blippy’s pages,” the blog post says. “Even though the sensitive information was hidden in the HTML and not visible in plain view, the Google crawler observed it and recorded the information to put into its search index. Google effectively took a snapshot of Blippy during that half day period.”

The compromised data have since been removed from the search results, but it will be interesting to see how users will response will be to the breach.

Via Blog.Blippy.com)

The Credit Card Associations of Visa and MasterCard recognize the lower processing risk, associated with face-to-face transactions and reward store-front merchants with lower interchange fees. Interchange fees are the fees that card issuing banks collect from each transaction that involves one of their cards. For card-present transactions, interchange fees can be lower by anywhere from a quarter to a half percent, compared to card-not-present transactions. The transaction fee that a merchant is assessed is the sum of the applicable interchange fee charged by the card issuing bank, and the processing fee charged by the acquiring bank.

In addition to transaction processing fees, merchants are typically charged fixed monthly fees for using their payment processing accounts (merchant accounts). Following is a breakdown of card-present merchant account processing rates and fees and our suggestions as per what they should be:

• Transaction processing fees.
  • Interchange-plus pricing structure. With this pricing model, your processor will add a surcharge to all transactions. The surcharge will be the same for all transactions, but your overall processing fees will vary, based on the applicable interchange fee. A reasonable interchange-plus surcharge would be 0.35% + $0.15 per transaction.
  • Tiered pricing structure. With this pricing model, your processor will set two or three rates (qualified, non-qualified and sometimes mid-qualified). Each transaction will be processed at one of these rates, based on a pre-defined set of criteria. The tiered processing fees are comprised of two components:
    • Discount rate. Discount rate is a percentage of the transaction amount. You should pay no more than 1.69% for credit cards and 1.40% for debit cards. These are the rates for consumer cards which are the most widely used. Various business-to-businesses, commercial, rewards and other types of cards get processed at higher interchange rates.
    • Transaction fee. Transaction fee is a fixed dollar amount that you pay for each transaction. You should not accept anything higher than $0.25 (it will most likely be the same for debit and credit cards).
• Set-up fee. Charged for setting up your merchant account. You should not be paying any set-up or application fees, even if your prospective processor attempts to convince you otherwise!
• Monthly maintenance fee / monthly statement fee. Most processors will charge you such a monthly fee, although they may have different names for it. You should not be paying more than $10.
• Customer service fee. This is another monthly fee that you should not agree to be paying.
• Monthly minimum fee. Most processors will set a minimum amount of processing fees that they would want to be collecting from you each month. So if your monthly minimum fee is $30.00 and your monthly transactions generate $15.00 in processing fees, your processor will charge you additional $15.00. Be advised that neither the interchange fees, nor the other fixed monthly fees count towards your monthly minimum fee.

In order to accept card payments, you will need a credit card terminal and your processor may provide you one and configure it to work with their system. You should also be allowed to purchase the terminal from a third-party vendor. Make sure that you carefully review the merchant processing agreement in its entirety for fees that may make card payment acceptance more expensive than it seems. All agreements will include provisions for chargebacks, bounced checks, representations, etc.

(Via YouTube.com)

(Via YouTube.com)

• About 37% of Gen Y members have been under- or unemployed during the recession, the highest number in more than three decades, according to a Pew Research Center study released in February.
• 61% of Gen Y members say they had some form of a health plan, according to the Pew study.
• 58% of the 18- to 29-year-olds pay monthly bills on time, a National Foundation for Credit Counseling (NFCC) 2010 survey reported.
• 60% of workers 20 to 29 years old cashed out their 401(k) retirement plans, squandering their retirement assets and paying a tax penalty, when they changed or lost jobs, according to an October study by Hewitt Associates.
• Close to 70% of Gen Y members are not saving, and 43% are piling up credit card debt, says a November MetLife poll.
• An average Gen Y member has more than three credit cards, and 20% carry a balance of more than $10,000, according to Fidelity Investments.
• Gen Y-ers are graduating from college with an average of $23,200 in student debt, according to the most recent data from the Project on Student Debt, a 24% increase from 2004.
• 25% of Gen Y members say they are spending more than last year, compared with 18% of all adults, according to the NFCC survey.

Yet, for all their troubles, Gen Y members tend to be confident that they will eventually dig themselves out of the financial hole and set things right.

“Yet, despite the problems they face, they tend to be upbeat – which is typical of young adults,” says Paul Taylor, executive vice president of the Pew Research Center.

(Via USAToday.com)

(Via YouTube.com)

(Via YouTube.com)

Capital One’s said its net income was $636.3 million, compared with a loss of $108.1 million a year ago. The bank’s revenue rose 29 percent, to $4.29 billion.

“We’ve demonstrated our resilience through the most challenging economic cycle we’ve seen in generations, and we believe that charge-offs in our consumer lending businesses likely peaked in the first quarter,” said Richard D. Fairbank, Capital One’s CEO.

Capital One’s charge-offs, loans the lender does not expect to be repaid, fell in the first quarter from the fourth quarter of 2009 as commercial, auto and retail banking performance improved, the company said. These gains offset a higher charge-off rate on domestic credit cards, which totaled $2 billion, up from $1.1 billion a year ago.

The bank’s U.S. credit card revenue decreased 3.6 percent, or $91.7 million, from the fourth quarter, while international credit card revenue decreased $2.8 million, or 0.8 percent from the previous quarter.

(Via MarketWatch.com)

AmEx For said its first quarter profit was $885 million, up 103 percent from $437 million a year earlier. Revenue rose 11 percent, to $6.6 billion from $5.93 billion last year.

American Express’ U.S. credit card unit, its largest division, reported a $428 million profit, compared with a $7 million loss a year ago. Revenue was up 14% in that division, as cardholders increased their spending. International Card Services division’s net income for the quarter rose to $151 million from $52 million a year ago. The division’s revenues, net of interest expense, grew 9% to $1.1 billion in the first quarter, mainly driven by increased cardholder spending.

American Express’ consolidated expenses for the first quarter increased to $4.4 billion from $3.6 billion a year ago, reflecting higher investment in business building initiatives and higher rewards costs.

Consolidated provision for loan losses decreased 48% to $943 million in the first quarter from $1.8 billion in the first quarter last year, indicating continued improvement in credit quality on the overall portfolio.

(Via MarketWatch.com)

Chargebacks typically result from inadequate card processing procedures and a consistently applied review process will help identify the problematic areas. It is well established that chargeback levels vary by industry type and some industries require more stringent chargeback monitoring procedures than others. MO / TO and web-based merchants typically generate higher chargeback levels than their store-front counterparts. The reason why is that the former operate in a card-not-present environment, while the latter physically process the card payments, which enables them to more easily verify the validity of both the card and the cardholder. Visa and MasterCard designate merchants operating in a card-not-present environment as high-risk by default and charge them higher processing rates.

The following best practices should be incorporated into your chargeback monitoring program:

• Track chargebacks and representments by reason code. Each reason code is associated with unique risk issues and requires specific remedy and prevention strategies.
• Separate initial chargebacks from chargebacks that remain after representment. This is important, because it will help you evaluate the effectiveness of your representment procedures by estimating the ratio of chargebacks that remain unresolved after you have provided the requested supporting documentation. If the proportion of net chargebacks (that you could not reverse) remains consistently high, you should consider reviewing your sales process and the effectiveness of your correspondence with your customers.
• Separate chargebacks resulting from card-present transactions from chargebacks resulting from card-not-present ones. If your organization combines traditional retail with card-not-present transactions (MO / TO or e-commerce), you should track the card-present and card-not-present chargebacks separately. This will help you estimate the proportion that each group represents. Similarly, if your business combines MO / TO and e-commerce sales, these chargebacks should also be monitored separately. Preventive and remedial chargeback measures vary by business type and monitoring chargeback rates separately will help better pinpoint potential problems.

Both Visa and MasterCard have developed their own chargeback monitoring programs to ensure that both merchants and processing banks are in compliance with their requirements:

• Visa’s Merchant Chargeback Monitoring Program (MCMP) monitors chargeback rates for all merchants on a monthly basis. If a merchant has excessive chargebacks, Visa notifies its processor in writing. MCMP applies to all merchants with more than 100 total transactions per month – sales, credits, etc. – more than 100 chargebacks, and an overall chargeback-to-transaction rate of one percent or greater. First notification of excessive chargebacks for a specific merchant is considered a warning. Visa imposes fines only if actions are not taken within an appropriate period of time to return chargeback rates to acceptable levels.
• Visa’s High Risk Chargeback Monitoring Program (HRCMP) is specifically designed to reduce excessive chargebacks by high-risk merchants. As defined by Visa, high-risk merchants include direct marketers, travel services, outbound telemarketers, inbound teleservices, and betting establishments. Just as the MCMP, HRCMP applies to all high-risk merchants with more than 100 total transactions per month – sales, credits, etc. – more than 100 chargebacks, and an overall chargeback-to-transaction rate of one percent or greater. Unlike the MCMP, under HRCMP, there is no warning period and fines of $100 per chargeback are imposed immediately if a merchant has an excessive chargeback rate.
• Visa’s Global Merchant Chargeback Monitoring Program (GMCMP). The Global Chargeback Monitoring Program (GMCMP) is operated by Visa International (a separate entity from Visa USA) and administered by each region. The program is based on the U.S. MCMP. The GMCMP applies when a merchant meets or exceeds specified International chargeback thresholds which differ by region. Under GMCMP, there is no warning period and fees may be assessed to the processing bank immediately if a merchant has an excessive chargeback rate.
• MasterCard’s Excessive Chargeback Program (ECP). Under the ECP, processors are required to calculate and report to MasterCard, for each calendar month, the chargeback-to-transaction ratio (CTR) for each of their merchants. CTR is the number of chargebacks received by the acquirer for a merchant in a calendar month divided by the number of the merchant’s sales transactions in the preceding month acquired by that acquirer, calculated in basis points (a CTR of 1% equals 100 basis points). MasterCard uses two chargeback classifications:
  • Chargeback-Monitored Merchant (CMM) is a merchant that has a CTR in excess of 50 basis points and at least 50 chargebacks in a calendar month. MasterCard assesses processors a reporting fee of $50 for each CMM report submitted.
  • Excessive Chargeback Merchant (ECM) is a merchant that in each of two consecutive calendar months has a minimum CTR of 100 basis points and at least 50 chargebacks in each month. This designation is maintained until the ECM’s CTR is below 100 basis points for two consecutive months. MasterCard assesses processors a reporting fee of $300 for each ECM report submitted, as well as an additional assessment fees, based on the merchant’s CTR rate.

Remember that chargeback management is a work in progress and you should constantly be looking for ways to improve your preventive measures. Lower chargeback rates demonstrate that you are serious about processing credit card transactions according to industry standards and will give you leverage when negotiating processing rates with your processor. On the other hand, be advised that the processing rates that you received from your processor when you set up your merchant account are only as good as your ability to process transactions in a way that was agreed on in your processing agreement. Excessive chargeback rates can and will increase your payment processing costs and, if inadequately addressed, these issues will eventually lead to the suspension of your merchant account.

(Via CNNMoney.com)

The average interest rate on credit cards with variable rates also remained steady at 14.03 percent, according to the survey.

Columbus Bank & Trust added an annual fee, ranging from $12 to $50 for its rewards program, according to the survey. U.S. Bank eliminated its over-the-limit fee and HSBC reduced its over-the-limit, cash advance and balance transfer fees, the survey reported.

Few issuers charge their cardholders annual or inactivity fees, according to Bankrate.com’s Credit Card Fees Study, released on Monday.

(Via Bankrate.com)

FaceCash is founded is Aaron Greenspan who a couple of years ago sued his former Harvard schoolmate, Facebook Mark Zuckerberg, over who created the social media website. The lawsuit trademark lawsuit was settled in 2008.

FaceCash is an application that users can download on their smartphones – iPhone, BlackBerry or Android. The user then enter his or her bank account information, social security number, driver’s license number, and upload a picture. Once the account is set up, the phone can be used for payment in any face-to-face transaction, such as at restaurants and grocery stores, provided the merchant has signed up for the service.

In order to accept a FaceCash payment, a participating merchant scans a FaceCash barcode on the user’s phone, and the user’s picture appears on the merchant’s computer screen, helping the merchant confirm the customer’s identity. The merchant then approves the payment to complete the transaction.

(Via Thinklink.com)

The charge-off rate for the first quarter was 11.17 percent of average loans, up 1.04 percent points from 10.13 percent a year ago. Wells Fargo charged off $643 million in credit card loans, up 10.5% from $582 million.

Wells Fargo reported a lower volume of credit card receivables at the end of the first quarter. The total outstanding amount was $22.5 billion, down 1.3% from $22.8 billion at the end of the first quarter in 2009. The lender said it has tightened its underwriting policy for new credit card accounts, while restricting balance transfers and limiting credit line increases.

“While we continued to supply significant amounts of credit to consumers and businesses in the first quarter, as we have done throughout the credit crunch, loan demand remained soft,” said Howard Atkins, chief financial officer at Wells Fargo.

Wells Fargo said itsincome from credit and debit card fees 1.4% in the first quarter, to $865 million from $853 million. The bank reported its income from processing and other card fees rose 13.9%, to $467 million from $410 million.

(Via CNNMoney.com)

Skimming is a fraudulent activity involving the illegal copying, or “skimming,” of the account information stored in the magnetic stripe of a credit or debit card. At ATMs, the fraud involves the installation of a skimming device over the ATM’s card slot, which reads the card information as the cardholder passes the card through it. Often a small camera is installed, in addition to the skimmer, to record the cardholder’s PIN.

The skimmed information is subsequently used to make copies of the card to be used in fraudulent transactions or the information itself may be sold to criminals.

Consumers should be on alert and inspect the ATM’s card slot, before inserting their card. Skimmers are not difficult to detect, according to Detective Brandon Mengedoht of the Montgomery County Police Department’s checks and fraud division.

“The skimming attachment protrudes from the card slot,” he said. “If you go up to where the slot is, you can tell something is off. You can certainly feel around before you put your card in.” The skimming device is often attached with a double-sided tape, making it easy to remove, Mengedoht added.

(Via WashingtonPost.com)

Web-based merchants should set up transaction velocity limits and controls as part of their fraud screening procedures to help reduce their risk exposure by identifying high-risk transactions and. Implementing velocity limits and controls will help determine when a cardholder or a transaction should be more thoroughly investigated. If the investigation then reveals a higher number of high-risk attributes than the merchant’s fraud prevention procedures allow, the transaction should be suspended.

Identifying high-risk transactions and focusing your fraud prevention efforts where they are needed the most, improves the efficiency of your risk management procedures and ensures that no resources are spent on evaluating transactions that are not likely to be fraudulent. When setting up your organization’s transaction velocity limits and controls policies and procedures, consider following these best practices:

• Implementing transaction velocity limits and controls. During the initial process of setting up and implementing your organization’s transaction velocity limits and controls, you should adopt the following procedures:
  • Establish your organization’s review limits on the number and dollar amount of transactions approved for a customer within a specified period of time. As you accumulate transaction data over time, you should adjust these limits to reflect the customer’s purchasing patterns.
  • Set up transaction review limits based on single transaction amount.
  • Ensure that velocity limits are checked for multiple characteristics, including shipping address, telephone number and email address.
  • Track and adjust velocity limits as you accumulate information on your customers’ purchasing patterns. The limit should be stricter for new customers and looser for customers with solid purchasing and payment track record.
  • Contact customers that exceed your preset limits to determine whether the activity is legitimate and should be approved. When communicating with your customers, make sure that you explain to them that you are taking these extra transaction verification steps as an additional fraud prevention measure. Customers may be annoyed by the questions you are asking, if they don’t know why you are doing it and a short explanation will go a long way towards maintaining a good relationship.
• Adjusting transaction velocity limits and controls based on transaction risk. It is important to understand that setting up transaction velocity limits and controls is not a one-time event, but a continuous process. Use your risk experience with specific products, shipping locations and customer purchasing patterns and modify your transaction controls and velocity limits to reflect it.

If adequately set up and consistently implemented, transaction controls will help prevent fraud, minimize customer disputes and reduce the number of chargebacks.

Average credit card interest rates fell for a second week in a row, according to the CreditCards.com Weekly Credit Card Rate Report, as Citibank reduced the low end of the annual percentage rate (APR) ranges on two of its offerings – the mtvU Platinum Select Visa and Forward Visa cards.

The average interest rates on new credit card offers was estimated at 14.38 percent, down four basis points from 14.42 percent last week, and 1.77 percent higher than six months ago, when it stood at 12.61 percent. Issuers have been raising credit card interest rates, lowering credit limits and closing accounts, over the past few months in an effort to make up for lost revenues they expect to incur from the regulatory changes that were introduced with the enactment in February of the CARD Act.

The declining credit card interest rates, combined with signs that the economy is improving, are seen as signs that issuers are feeling more optimistic about the future.

“I expect the pace of recovery to gain momentum over the course of this year and next as households and businesses regain confidence, overall financial conditions continue to improve and lenders increase the supply of credit,” San Francisco Fed President Janet Yellen said in a speech last Thursday.

CreditCards.com has estimated that, if a consumer borrowed $5,000 on a credit card today and made regular monthly payments of $150, at today’s average interest rate the consumer would have to pay $6,421 to pay off the debt – $233 more than would have been required six months earlier.

(Via CreditCards.com)

“The only ones that are really industry wide are the often talked about, but often misunderstood, automatic auto rental insurance and then also a promise of zero percent fraud liability and live customer service,” says Doug Miller, senior analyst for Banking and Cards at Corporate Insight.

The report found that most credit card companies offer some kind of travel support,while three issuers offer roadside protection to cardholders. Extended Warranty services are offered by 70 percent of issuers.

Among the reports findings are:

• 40 percent of issuers offer Lost Wallet services, including emergency cash wired to the cardholder.
• Eight issuers provide public disclosures about built-in cardholder benefits on their websites, while all others offer the disclosures through private links.
• Three issuers provide identity theft and stolen wallet services for free.

(Via CorporateInsight.com)

• Limits on expiration dates. The money on your gift card will be good for at least five years from the date the card is purchased. Any money that might be added to the card at a later date must also be good for at least five years.
• Replacement cards. If your gift card has an expiration date you still may be able to use unspent money that is left on the card after the card expires. For example, the card may expire in five years but the money may not expire for seven. If your card expires and there is unspent money, you can request a replacement card at no charge. Check your card to see if expiration dates apply.
• Fees disclosed. All fees must be clearly disclosed on the gift card or its packaging.
• Limits on fees. Gift card fees typically are subtracted from the money on the card. Under the new rules, many gift card fees are limited. Generally, fees can be charged if:
  • you haven’t used your card for at least one year; and
  • you are only charged one fee per month.

  
  These restrictions apply to fees such as:

  • dormancy or inactivity fees for not using your card;
  • fees for using your card (sometimes called usage fees);
  • fees for adding money to your card; and
  • maintenance fees.

(Via FederalReserve.gov)

(Via WLTX.com)

(Via ABCNews.go.com)

What is an ISO? ISO is an organization or individual that is not an Association (Visa or MasterCard) member, but that has a bankcard relationship with an Association member that involves acquiring or issuing functions such as the ISO soliciting merchant accounts, arranging for terminal purchases or leases, providing customer service, and soliciting cardholders.

What is an MSP? An ISO is sometimes referred to as a Member Service Provider (MSP), although their definitions are not always synonymous. MasterCard refers to its ISOs as MSPs, defining a Member Service Provider as “a non-member that is registered by the Corporation [MasterCard] as an MSP to provide Program Services to a member, or any member that is required to register, in the Corporation’s sole discretion, and has been registered as an MSP to provide Third Party Processor Program Services to another member.” The acquirer must register all ISO / MSPs with the applicable Association.

What are the ISO’s / MSP’s relations with member banks? It is important to understand that ISOs and MSPs are not banks and the actual handling of the merchants’ money is done by the processing bank that has contracted with the ISO. Each ISO / MSP must be sponsored by such a processing bank, member of Visa and / or MasterCard, in order to be registered by either Credit Card Association. Typically, processing banks are members of both Associations and the registration process for each Association is done simultaneously. An ISO / MSP can be sponsored by multiple member banks. Processing banks can also perform the job of their ISOs / MSPs, but they rarely do so and prefer to concentrate on issuing credit cards and acquiring payment transactions instead.

ISOs / MSPs must display the name of their sponsor bank on their website and marketing materials. Most disclosures are located in the footer of the ISO / MSP website. Our disclosure notice reads:

“UniBul Merchant Services LLC is a registered ISO / MSP of Wells Fargo Bank, N.A., Walnut Creek, CA”

How are ISOs / MSPs registered with Visa and MasterCard? The ISO / MSP registration process is fairly rigorous. It begins with the applicant finding a member bank to be its sponsor during the registration process. Prospective ISOs / MSPs then have to prove that they are financially able to perform their duties. The documents applicants must submit with their application include:

• Two years business financial statements or personal tax returns (last 2 tax years) for all principals.
• Personal financial statement for each principal.
• Executed Articles of Incorporation / Partnership documents.
• Detailed business plan.
• Copy of sales materials / solicitations.
• Complete list of current ISO employees / agents.

In addition, all principals have their credit history checked and evaluated to ensure that they are responsible with credit.

What are the ISO / MSP registration fees? Upon approval, the applicants must pay registration fees of $5,000 for each Credit Card Association. Every year thereafter, ISOs / MSPs have their registration reviewed and additional fees of $2,500 per Association are due upon approval.

What are agents? ISOs / MSPs can sign up sales agents to help them sign new merchants. MasterCard defines an agent as “an entity that provides Program Services to a member and is not registered by the Corporation [MasterCard] as an MSP.” Sales agents can only introduce themselves as representatives of their ISO / MSP and cannot advertise their own business name as a service provider.

Vendo is a “social” payment concept, built around trust, says Kortina and gives an example on how the service is used:

We have a restaurant that only accepts payments from customers who trust them — so it’s kind of like a house account system for them, where you just walk in, tell them your name (which usually they know anyway, because it’s mostly regulars that do this), eat your meal, and leave. Sometime that day they’ll charge you, but you don’t have to wait for the check.

Kortina repeatedly returns to the “social” aspect of his service:

Here’s how this works: I can authorize a friend or merchant I trust to just take money from me whenever they want. It’s like sharing a credit card with a family member or opening a tab at a bar.

Venmo is a safe method of making payments, says Kortina, because “I get a notification anytime someone I trust charges me and I have the ability to reverse charges.”

(Via WSJ.com)

(Via YouTube.com)

(Via YouTube.com)

Yet, not all issues have been eliminated and consumers need to understand what their rights and responsibilities are. Fox Personal Finance’s expert Andrew Housser has identified 8 potential pitfalls you need to be aware of:

1. Rising fees. There is nothing in the new law preventing issuers from raising fees, but they must first obtain your permission. You can opt out and close your account.
2. Interest rates can go up after a year. After your account has been active for a year, issuers can raise your interest rate, but not before sending you a notice of the changes. Again, you can opt out of these changes and close the account.
3. Variable rates mean rising interest charges. Variable interest rates are tied to the prime rate, so if it goes up, so will your card’s interest rate.
4. No-grace-period cards charge interest immediately. Make sure you understand the terms of your grace period.
5. Don’t count on getting a card. It will no longer be as easy to get a card as it used to be.
6. Find new ways to fund college kids’ expenses. Consumers under 21 will have to prove that they are able to repay their debt, before a credit card can be issued. Otherwise, they will have to get a co-signer or look for alternative payment methods.
7. Over-the-limit charges require previous permission. Your credit card company must first obtain your permission, before it can provide, and charge for, over-the-limit protection.
8. Watch for rewards-program changes. Issuers are changing the terms of their rewards programs, as it is becoming more expensive to maintain them with the limits on fees, imposed by the new regulations.

(Via Fox28.com)

The difference between Visa-branded credit cards and store cards is that the former can be used anywhere Visa cards are accepted, while the latter can only be used in the store that issued them.

The retailer plans to stop issuing Target Visa cards on April 29. A recent test, conducted by Target, revealed that consumers spend more at Target when issued Target Credit Cards than when they received Target Visa cards, the retailer said.

“Recent product testing and guest research underscores the tremendous value enjoyed by Target Credit Card guests. Target benefits from these powerful guest relationships through increased trip frequency and retail sales,” said Terry Scully, president, Target Financial Services.

Target is one of the few retailers that issues and services its own credit cards.

(Via MarketWatch.com)

Before we answer this question, let’s first take a look at the list of documents that are required from applicants for merchant accounts. The list may be different for each applicant, depending on the way the business is organized, the type of merchant account that is needed and other factors. Certain items, however, are always required, in order to help payment processing companies to evaluate the credit worthiness of both the business and its principals. Typically, applicants will be required to provide one or more of the following documents:

• Most recent tax returns (business and personal).
• Most recent personal and business financial statements.
• Most recent bank statements.
• Fictitious name statement (for DBAs).
• Partnership Agreement (for Partnerships).
• Articles of Incorporation (for Corporations).
• Dun and Bradstreet or other third party agency report showing the same legal name and address as the applicant along with a description of their location / facilities.
• IRS Confirmation of Non Profit Status – 501(c)(3) status – or other supporting documentation (for Non Profit Organizations).
• Government Entities must submit a Request for Approval of Proposal to do Standardized Government Business on Form “A”.

For new organizations, or if the business is a sole proprietorship, the principals’ tax returns are typically requested as a substitute to the financial statements. Additionally, unless the applicant business is a publicly traded company, the principals are required to provide their social security numbers, so that the processor may pull up their credit files from one of the major credit reporting agencies.

In order to understand why processors go into such great lengths to ensure that their prospective merchants handle credit in a responsible fashion, we need to first understand exactly what a merchant account is, from the processor’s perspective.

As far as merchants are concerned, a merchant account is a service that enables them to accept their customers’ credit card payments and then to have their money deposited into the merchants’ bank accounts, after the processor subtracts the transaction processing fees. At first glance, it looks like the processor is not taking much of a risk. After all, the merchant only gets its money after the processor gets it processing fee. So why are processors so cautious?

From a processor’s standpoint, a merchant account is a form of credit. When merchants accept credit or debit card payments, these payments are authorized by the card issuer and settled by the processor. While the processor does get its transaction fees before the merchant gets its money, the processor is also fully liable for the transaction amount, in case of a fraud or a chargeback. While any fees resulting from fraud and chargebacks are typically passed on to the merchant, if the merchant becomes insolvent or goes out of business, the processor must cover all such expenses. To further complicate matters, transactions can be charged back for up to six months after the transaction date, which leaves plenty of room for unforeseen events to take place. Moreover, in case of a fraud, in addition to the financial responsibility, the processor may also face legal challenges.

Personal credit history is just one of the factors that influence a processor’s decision when reviewing a merchant account application. Typically, it will only be an issue if there are many derogatory items in the credit file, especially if it shows a bankruptcy. For most applicants, however, an average credit score will be sufficient to pass the test.

Though few issuers charge inactivity fees, many have introduced a clause in their credit card contracts that requires cardholders to use their accounts a certain times a year or face an account closure.

The survey compares 73 basic credit cards from the 50 largest issuers. Some Platinum cards are used where there are no basic credit card offers, according to the survey authors.

(Via Bankrate.com)

In the letter Dimon wrote that “In the future, we no longer will be offering credit cards to approximately 15% of the customers to whom we currently offer them. This is mostly because we deem them too risky in light of new regulations restricting our ability to make adjustments over time as the client’s risk profile changes.”

Dimon also added that, “we have substantially reduced very low introductory or promotional balance transfers. This change alone reduced our outstanding balances by $20 billion” and “We reduced limits on credit lines, and we canceled credit cards for customers who had not done business with us over an extended period.”

(Via AmericanBankingNews.com)

“Our core businesses…produced over $5 billion of net income this quarter, earning attractive financial returns,” Chief Executive Vikram Pandit said in a conference call with investors.

Citi’s charge-offs – loans the bank does not expect to be repaid – rose in the first quarter to $8.38 billion from $7.28 billion. Overall, the bad-loan costs fell because the bank released $18 million from its reserves, compared with an increase a year earlier of $2.63 billion.

Revenue from Citigroup’s investment banking arm declined 34 percent to $8 billion. Citigroup reported $6.59 billion of trading revenue. The bank had $1.06 billion of mergers-advisory and underwriting revenue.

JPMorgan Chase’s first-quarter profit rose 55 percent from a year earlier, while Bank of America’s declined 25 percent.

(Via BusinessWeek.com)

“We want to bring some fairness into the issue,” explained Cahill. “I don’t think what we’re asking is … out of line.”

The state’s decision stems from a Massachusetts law that limits interest rates at 18 percent. Bank of America, the worst hit among the three banks, holding $231 million of Massachusetts investments, was approached by state officials who requested that it meet that cap for state residents. When the bank declined, Cahill’s office decided it would shift the funds into other accounts, according to the State Treasurer. Massachusetts has $9 million invested with Citi and $3 million with Wells Fargo.

(Via WashingtonPost.com)

Yet, there still are rewards programs that are worth participating in and credit card issuers and Forbes.com’s Eric Starkman lists three of them:

• Charles Schwab Bank Visa. This card comes with a generous 2% cash rebates on all purchases and has no foreign transaction fees, unlike most of its counterparts.
• Nordstrom Bank Visa. Nordstrom’s rewards program awards cardholders with two points for each dollar spent at its stores or online, or one point for each dollar spent elsewhere. Cardholders get a $20 Nordstrom “note” for each 2,000 points they accumulate, to be used as cash or at one of the company’s outlets.
• American Express Business Platinum Card. This card comes with a hefty $395 annual fee, so perhaps you should only consider it, if you intend to use it as a primary card. It lets cardholders convert points to frequent flier miles on multiple airlines or to redeem points at various major hotels.

(Via ABCNews.go.com)

• Future delivery of the service. Consumers have to book their car rentals in advance, often weeks or months ahead. If their plans change in the interim, they will have to cancel the booking and will typically be charged a cancellation fee. No one enjoys paying cancellation fees, even if they had agreed to it, and some will file a dispute to try and get their money back.
• Incidental and additional charges. Often, the final transaction amount differs from the original booking estimate. There can be plenty of reasons for such a discrepancy. For example, the consumer may request to keep the car for a longer period than what was originally agreed, and the added days may be charged at a different rate. Or the consumer may be charged for car damages that the rental company claims occurred during the rental period. There are a number of other charges that may prompt a customer dispute. Whether the disputes are justified or not, there is a direct correlation between customer disputes and chargebacks, so minimizing disputes results in fewer chargebacks.

Car rental companies should develop their card processing procedures with customer satisfaction at their center. Satisfied and well-informed customers are less likely to dispute transactions and are sure to become repeat customers. Consider implementing the following best practices into your card acceptance procedures:

• Obtain incremental authorization approval if the car rental period is extended. Whenever a customer requests an extension of a car rental period, you need to obtain a new authorization approval for the additional transaction amount that the extension will generate. Standard authorization procedures should be followed for the extension period. If authorization is declined, you should contact the customer and request an alternative payment method.
• If authorization for the extension period is declined, you should only settle the amount that was originally authorized. This will help merchants reduce chargebacks and processing costs. When the card issuer declines authorization, you should submit a settlement transaction for the total approved authorization amount and should not include the declined amount. Then contact your customer and request an alternative payment method.
• Submit an authorization reversal if the originally approved authorization amount exceeds the actual rental cost. If the actual cost is less than your previous estimate, you will need to submit an authorization reversal for the difference between the authorization amount and the actual rental agreement.
• Apply the final authorization and the 15 percent rule. At the end of the car rental period, authorization is required when:
  • There was no previous authorization. In this case you should authorize the total transaction amount.
  • There was a previous authorization but the actual final amount is more than the previously authorized transaction amount. In this case you should apply the 15 percent rule. To do this you should add 15 percent to the previously authorized amount and compare the total to the actual transaction amount.
  • The actual transaction amount is more than the total. If the actual transaction amount is bigger than the sum of the previously authorized amount plus 15 percent, an additional authorization is required for the difference between the original authorization and the final transaction amount. Otherwise, you are not required to request an additional authorization.

(Via YouTube)

The economic downturn is behind the company’s decision, according to Matt Hurwitz, a Schwab’s spokesman.

“The card was designed and modeled based on a very different economic environment than what we’re experiencing now after the financial crisis, in particular a change in people’s approach to using credit,” he wrote. “The economics of the program are being reviewed based on the current environment and usage patterns. For example, the majority of cardholders are not revolving credit.”

Yet, previous generations of 2 percent credit cards have not fared much better, even in far more benevolent financial conditions, says Lieber. Such generous programs can only work if there are enough customers to carry a balance, and pay interest on it, in order to subsidize the rewards of those who don’t. Apparently that didn’t happen in Schwab’s case, and the merchant fees it collected (together with issuer Bank of America), were not enough to cover the rewards program and its administrative costs.

(Via NYTimes.com)