Credit Card Lowdown

Frequent Traveler? Beware Of Conversion Charge

After reading this piece of news, I wonder how anybody can go about mouthing such stupid things like ‘the consumer is king’. If you ask me, it is all bull. A few months back, I’d written about how your insurance company plans your travel itinerary for you. And now we’ve got banks who are charging you through the nose if you have a good time when traveling abroad.

What am I coming to? First, let me do the asking: Do you travel extensively? Even if you are an occasional traveler, and have used your credit card when on your trip, it would do you good to check your credit card statement once you are back from your trip. Just to make the shock bearable, I’ll tell you what you’ll get to see – a little known charge called the 'conversion charge'. Little known, but enough charge to lighten your pocket by a few hundred dollars! Abclocal.go.com reports:

It's the fee your credit card company charges for converting your foreign charges into U.S. dollars. What used to be a nominal charge can now run into the hundreds of dollars…. The lesson here is shop for a card with low or no fee if you travel extensively.

Read more: Beware Of Credit Card Currency Conversion Charges

Payment Processors’ Battle For Supremacy Gets Ugly

Is online auction giant eBay Inc’s attitude towards Google Checkout discrimatory? It would seem so from its recent action to bar the weeks-old Google Inc payment product from its marketplace. Industry speculation is that eBay, which owns rival online payment processor PayPal, wanted to protect its own product. So, what does eBay, or rather PayPal have to say in its defense? PayPal executives say that eBay’s action had nothing to do with Checkout’s competitive position with respect to PayPal.

But how I see it, reality lies elsewhere. Just days after Google launched Checkout in June; eBay added the payment type to a list of payment methods its sellers may not accept. The list of prohibited payment services includes some 36 names, most of them relatively obscure. Digitaltransactions.net reports:

Checkout offers payment processing based on credit and signature debit card accounts users store with Google. It charges merchants a straight 2% plus 20 cents per transaction, a fee that undercuts PayPal’s sliding rate scale for all but the largest merchants. Merchants that spend heavily with Google’s AdWords online marketing service can get processing for free (Digital Transactions News, June 29).

Read more: PayPal Exec Says eBay Ban Against Google Checkout Is ‘Overplayed’

Businesses can get access to consumers' new credt card numbers

Reissuance of card numbers to combat identity theft, heavy promotion of no-fee balance transfers from one card to another, and bank mergers has led to consumers' credit-card accounts changing more rapidly than ever. According to recent figures released by Visa USA, more than 55 percent of Visa cards changed their account details in 2003. So, where does that leave businesses? Itmanagement.earthweb.com reports:

Even if your business does manage to gain authorization from your customers to automatically charge their credit cards, the majority of your customers' cards will cease to be auto-billable only one year later. Credit-card issuers in the U.S. have recently come up with a novel solution, however. Almost any business that asks for it can now learn a consumer's new credit-card account number -- whenever it may have changed.

Read more: Get Consumers' New Credit-Card Numbers

Web merchants fight Internet fraud

Credit card chargebacks are a way of life with most web-based companies and most of them had learnt to live with the inevitable loss of some money in the process of doing business. But now, more and more companies have begun to give fraudsters a run for their money and are refusing to give up without a good fight. I know all this sounds confusing so let’s start at the beginning.

Credit card chargeback is a payment fraud that saps hundreds of millions of dollars from online revenues of Internet-based companies. So, how does this kind of payment fraud happen? Let me explain with an example: A person orders a laptop from an online electronics company and offers to pay with his credit card. The laptop is shipped to him and his account is debited. However, after the due date, the person calls up the company and fraudulently claims that he hasn’t received the laptop. This would render the sale void and the person can then get his money and a free laptop as well. Alternately, the person could also claim that he did not order the product at all.

This just shows how easy it is for a customer to get a charge reversed. At the same time, it is extremely time-consuming for an Internet merchant to prove the sale was legitimate. Internet merchants suffer more from this kind of fraud because unlike a face-to-face sale, an online transaction does not require a customer's signature or credit card imprint.

However, now, Internet companies along with credit card firms are trying to fight back these fraudsters. Card companies are now offering payer-authentication services and other fraud-fighting tools and are also streamlining the process by which chargeback disputes are mediated. Visa and MasterCard already have some options available to merchants like a payer-authentication service, called ‘Verified by Visa’ for Visa cards and ‘SecureCode’ for MasterCard. If you are a cardholder registered with the programs, Internet retailers can ask for a password registered with your bank. This gives the retailer evidence of the purchase and advantage should a dispute arise.

And if you wanted to know what happened to the person who bought the laptop – well he first complained to the web-based company that he didn’t receive the laptop. When the company offered to send an FBI officer to his house to investigate, he immediately called back and informed them that he ‘just’ got the laptop!

Card companies face increasing security breaches

Suspect transactions seem to have become the rule rather than exception as increasing numbers pop up throughout the United States and other countries. According to officials investigating the case, a large number of these transactions may be related to a security breach that happened at a merchant facility in California last year. The fallout from this event is only now becoming known. Visa USA was one of the first companies that gave an indication that everything was not all right. Recently released figures from the company indicate just 17% of 231 large retailers comply with industry wide data-security rules. Data-security experts believe that this is the proverbial tip of the iceberg. They believe that more such reports will be forthcoming in the next few months.

Sadly, most of the card companies have been trying to take adequate precautions to avoid just such a problem. Visa, MasterCard International, American Express Co., Discover Financial Services LLC, and other card companies harmonized their individual data-security rules into a common set of rules known as the Payment Card Industry data-security standard. This was done a year back. The rules mandate measures such as data encryption, firewalls, and regular anti-virus scans and apply to all organizations, including merchants, that handle card data. However, more than 80% of the large merchants are not yet in compliance.

The need for payment processors

People today use a great deal of plastic money as opposed to a decade ago. This makes it imperative for businesses to ensure that they are capable of processing payment methods other than cash – this allows any company to expand its customer base by over 400%! Dailyindia.com reports:

Money mails and checks are just too inconvenient for online transactions, so payment processing of credit cards and similar options would be a necessity for Internet trading. Almost all merchant accounts offering payment processing services offer secured networks that would ensure the security of each compensative settlement.

Read more: Why Do You Need a Payment Processor?

Merchant Charges

The fact is, it is possible that merchants charge credit card users more than cash customers for the same purchase. Until 1984, the Federal Truth-in-Lending Act outlawed surcharges on credit card purchases. Since then however, no federal law has come up to take its place, even though other provisions of the law are still valid. Bankcard Holders of America allow certain states to prohibit surcharges.

While Discover permits surcharges for the states not mentioned, Visa and MasterCard rule against them. In the case of American Express, the practice is discouraged but for merchants entertaining MasterCard or Visa, it is prohibited due to their policy of disallowing discrimination.

The loophole that occurs in this context is that cash discounts can be offered by merchants. The implication is that you are not made to pay more than the price tag for using a credit card but they may charge less for cash payments. In the fine print of certain companies all prices reflect cash discount for card users to pay a certain amount more than the specified price. Despite being legal, this contradicts the essence of the law or regulations. This may exclude the service fee for services like tele-booking of tickets, but in person, higher charge than cash is not allowed. Credit card info.com reports:

Can the merchant charge credit card users more than cash customers for the same item? In a word, maybe. In a few more words-- probably, if the merchant goes about it the right way. The Federal Truth-in-Lending Act prohibited surcharges on credit card purchases until 1984; since then, there has been no Federal law on that subject. (Other provisions of the law are still in force.) The states of CA, CO, CT, FL, KS, MA, ME, NY, OK, and TX have laws against surcharges, according to Bankcard Holders of America.

iMAX Business Solutions expands services

iMAX Business Solutions, a company that specializes in providing high risk merchants with technologically sophisticated and secure payment gateways for all types of high risk merchants, recently announced the expansion of their High Risk Merchant Account Program. This program allows businesses that are considered too risky for most banks and credit card processing companies to process without limits. Sys-con.com reports:

"We offer our merchants a complete solution to all there offshore needs," says Scott Burke, President, iMAX Business Solutions. "We have a staff of professionals that are zeroed in on the high-risk arena. We offer offshore company formations, offshore bank accounts, and most importantly, secure offshore direct and third party merchant processing accounts for high risk businesses".

Read more: iMAX Business Solutions Expands Their Services to Include High Risk Merchant Accounts and Offshore Credit Card Processing

New application provides on-demand credit card processing

Payment Processing, Inc and Salesforce.com recently announced the launch of a new application PPI PayMover(sm) for salesforce.com's AppExchange. This application will allow salesforce.com customers to accept credit and off-line debit cards for payment; process payments; and create custom reports. Businesswire.com reports:

PPI PayMover for AppExchange enables better visibility into the total customer experience with higher satisfaction levels, larger purchases, and more frequent buying using credit cards.

Read more: Payment Processing Inc. Introduces PPI PayMover for Salesforce.com's AppExchange

Acies reports growth of 138% in merchant accounts

Acies Corporation, a financial services company specializing in payment processing and online banking services to merchants in the United States, recently announced growth statistics for its merchant account portfolio for the 12-month period ended November 2005. According to the report, total merchant accounts grew 138 percent in the period. Businesswire.com reports:

"We are pleased to report such a strong increase in our merchant account portfolio, even through the typically slow month of November, just prior to the holiday spending season, " said Oleg Firer, President & CEO of Acies.

Read more: Acies Reports Continued Merchant Account Growth in November