The card networks’ crackdown on negative-option billing and subscriptions with free trials is continuing, with stricter policies from Visa Inc. set to take effect April 18.
The updated Visa rules will follow by a year tightened rules from Mastercard Inc. on negative-option billers. These are billers who, after getting a consumer to sign up for a trial subscription for a product, automatically charge the customer’s card on file after the trial ends or until the consumer cancels. Mastercard’s rule change requires merchants to gain cardholder approval at the end of the trial before they start billing. Merchants also must send the cardholder, either by email or text message, the transaction amount, payment date, and merchant name along with clear instructions on how to cancel.
Mark Standfield, president of Midigator LLC, an American Fork, Utah-based firm that works with merchants and merchant acquirers to prevent and mitigate chargebacks, tells Digital Transactions News that Visa’s upcoming changes are largely similar to Mastercard’s, though there are some differences. Visa’s rule will cover physical and digital goods sold through subscriptions, whereas Mastercard’s covers only physical goods, he says.
“The biggest difference that we saw is that Visa included digital merchants, not just physical merchants,” Standfield says.
Visa posted a notice about its planned changes on a Web site it maintains for merchants. The post notes Visa has had rules to regulate negative-option and subscription merchants since 2011. The notice identifies several “pain points” in promotions and introductory offers, including cardholder complaints and confusion when customers forget or did not understand that they had signed up for a subscription, the lack of a mechanism to distinguish transactions involving promotional or trial offers from any other subscription, and a lack of card-issuer clarity on available dispute rights.
“To enable greater customer recognition, easier cancellation, and clearer dispute rights, Visa is updating its rules related to transactions at merchants that offer free trials or introductory offers as part of an ongoing subscription service,” the post says. It later adds that “upon further review of its existing rules, Visa recognizes that free trials or introductory offers that roll into ongoing subscriptions or recurring charges can lead to problems for cardholders and clients, including multimillion-dollar operational cost increases due to high call-center volumes, customer complaints, write-offs and card closures/re-issuances.”
A Visa spokesperson declined to comment for this story.
Despite a card-network crackdown on subscription billers about a decade ago, problems have persisted and led to enforcement actions by the Federal Trade Commission and state attorneys general. That’s put more pressure on acquirers and the networks, according to Standfield. “When events like that occur it triggers an escalated response by the brands,” he says.
Alpharetta, Ga.-based acquirer Priority Technology Holdings Inc. earlier this year said it had closed 1,200 merchant accounts in order to comply with the new Mastercard rule. The processor’s problems came to light mainly because Priority is a publicly traded company; Standfield says other acquirers have encountered similar issues. “Due to their private status they largely stay off the radar,” he says.
The number of locations that accept EMV cards in the United States increased from 3.1 million to 3.7 million during the first six months of 2019, according to an infographic recently released from Visa. In total, some eight in ten storefronts now accept chip cards, an increase of 12 percent since December 2018.
Banks issuing Visa cards put 10 million EMV-enabled cards in the hands of American consumers between December and June 2019, Visa said. That brings the total number of chip cards in circulation to 521.7 million in the U.S., or 72 percent of total Visa credit and debit cards.
Overall U.S. payment volume is overwhelmingly spent on EMV cards; 99 percent of overall volume in June 2019 occurred on EMV cards.
Unsurprisingly, counterfeit fraud losses continue to drop. According to Visa, fraud losses have dropped 87 percent since September 2015 for merchants who have completed the chip upgrade, and 62 percent for all U.S. merchants. Card-present fraud overall has declined 40 percent, Visa said.
MC (DRI) Is a dispute process
that was put in place on 12th April 2019. The system is to enhance
the capability to prevent invalid disputes from entering the MasterCard
Network. Those disputes deemed valid by MC will allow for the Issuer to file a
dispute on behalf of their cardholder. A
merchant may contest a chargeback via a 2nd presentment or accept
the dispute. All cases that receive a response will be assessed a MC
association system fee of $3.00 per case. The fee will commence on any August 2019 case.
VISA ALLOCATION: FRAUD AND AUTHORZATION DATA DISPUTES
VISA VCR Allocation is a dispute
process that was put in place on 15th April 2018. VISA reviews data
and documentation submitted by an issuer for dispute. Based on the data, VISA
can assign liability to the merchant or reject the issuer’s claim. If a
merchant is assessed liability, the merchant may respond to the dispute via a
pre-arbitration or accept the case. All disputes must be responded to
regardless if the reply is an acceptance or a rebuttal with the intent to
contest. Any case that does not receive
a response will have an $0.85 cent fee applied.
VISA COLLABORATION: CONSUMER AND PROCESSING ERROR
VISA VCR Collaboration is a
dispute process that was put in place on 15th April 2018. This
system is similar to the dispute process that was in place prior to VCR. The issuer
files a dispute on behalf of their cardholder through VISA system to the Acquirer,
and the dispute is passed onto the intended merchant. A merchant may contest the dispute via a
re-presentment or accept it. All disputes must be responded to regardless if
the reply is an acceptance or a rebuttal with the intent to contest. Any case that does not receive a response
will have an $0.85 cent fee applied.
A business credit card can be much more than a convenient way to pay for purchases. These cards can also provide lucrative rewards, superior fraud protection, and smooth out cash flow. According to the Federal Reserve’s 2019 Small Business Credit Survey, 52% of firms with 1 to 499 employees use credit cards on a regular basis.
Here, seven small business owners reveal the smartest purchase they ever made on a credit card, and why putting those purchases on plastic was a savvy move. In addition, you’ll learn strategies for making the most of your business credit cards.
1. Travel rewards
I put all my marketing ad spend from Facebook and Google on my business credit card and pay it off monthly. It’s helped me gain an extra 30 days of cash flow at no cost and was the driver for scaling my business quickly. The biggest advantage, though, is that I’ve racked up 500,000+ miles by switching from my operating account to a business credit card. I’ve used these points to fly my family round trip, first class, to Spain for free. I don’t pay for flights anymore!”
—Jeff Root, owner, Rootfin.com, an insurance comparison website
Travel miles strategy:Business travel credit cards can offer lucrative rewards, but choose wisely. If you typically fly one airline, consider that airline’s co-branded credit card as it may provide perks such as priority boarding, free checked bags, and the ability to earn status faster with that airline. Otherwise, a card that offers flexible travel rewards that can be used with multiple providers will often be best.
2. Fraud protection
“Anytime I’m dealing with vendors outside the U.S., I find it’s critical to use our business credit card to pay them. It’s nearly impossible for a small business to go after someone for an international claim if they get taken advantage of, so using our card for foreign transactions gives us protection to dispute the payment and protect our cash on hand.”
Fraud protection strategy: Business credit cards provide excellent fraud protection. Under federal law, cardholders are not responsible for more than the first $50 in fraudulent charges, and most issuers offer zero liability. Business debit cards do not offer the same protection under federal law, so a credit card is often a smarter choice.
—Seth Kravitz, CEO, Phlearn, an online Photoshop and Lightroom training company
3. Finance large purchases
“When we first started our business we needed some specific third-party analytic tools that we simply did not have the money for. However, we did not feel we could move forward and be competitive without them. Taking a leap of faith, we purchased the program we needed on our small business credit card and luckily it paid off 10 times over! Leveraging our small business credit cards equity allowed us to purchase something we direly needed to grow our business, and it was the smartest purchase we have ever made for the business.”
—Mark Huntley, co-founder, Credit Knocks, an online credit information and review service
Financing strategy: You may be able to finance large purchases inexpensively by using a card with a low introductory rate or a low-rate balance transfer. Also, keep in mind that even a credit card with an interest rate of 16 to 18% is often cheaper than other small business financing options that often carry much higher rates.
4. Save on travel
“Booking our travel with our business credit card has to be the smartest purchase we’ve made. By using our credit card, we save on travel insurance and rental car insurance. We also earn rewards which lets us earn free flights and discounted insurance. I always make it a rule to book all our travel with our credit card as it helps us keep a record of our deductible expenses, too.”
Travel savings strategy: Some business credit cards offer collision damage waiver coverage when you rent a car as primary coverage, which means you may not have to file a claim with your own auto insurer first. Some offer secondary coverage, which may provide benefits if your auto insurance doesn’t cover the full amount of the loss or damage. Read the fine print to make sure you understand your benefits.
5. Fund your startup
“We spend thousands of dollars a month running online ads and paying for them with our business credit card. When we were first starting out, we needed the credit card because we didn’t have the funds to purchase the ads right away, so it was a way for us to initially get off the ground. But now we enjoy being able to cash in on all the reward points. We go on company retreats all the time, and much of the expenses are paid for due to credit card perks. These points keep adding up because we are constantly spending on the card.”
—Sean Pour, co-founder, SellMax, a nationwide car-buying service
Startup financing strategy: Most business credit cards rely on the owner’s personal credit scores when evaluating an application, which means these cards may offer financing for new businesses that don’t have access to other forms of financing. In addition, income requirements may often be met with income from all available sources, not just business revenues.
6. Save on important expenses
“Hands down, the best small business purchase we made on a credit card was hiring a developer to create our forum. The forum has proved very valuable since launch, because it has given our audience a platform to speak with one another, post pictures of their pets (bearded dragons, leopard geckos, etc.), and ask critical questions on how to take great care of their pets. We’re seeing an instant impact on user engagement, which has increased our repeat sales.
“Because our credit card offers 2% cash back on all purchases, we look at all credit card purchases as if they have a 2% discount. The forum was about $15,000, which made it obvious that we’d want to use the credit card to pay for the service; it yielded a $300 cash back return. This may not seem significant compared to the cost of the forum; however, over the course of a year, 2% cash back on all business expenses can cover a significant portion of someone’s salary or other business expenses.”
—Jeff Neal, operations manager, The Critter Depot, an online seller of insects and supplies for reptiles
Cash back strategy: Cash back is a popular reward that every business can use. Some cards provide flat cash back rewards across most purchases while others provide a larger cash back reward for specific categories of spending. Cards with the highest rewards may charge higher fees. You may maximize cash back by using more than one card. Analyzing your spending can help you determine which card works best for you.
7. Provide employee perks
“I charged my remote employees’ home offices on my credit card. I made sure they received top-of-the-line desks, ergonomic chairs, and brand new laptops for them to do their jobs efficiently. I immediately saw performance improvements in my remote employees—I’m not kidding! I later found that some of my remote employees had previously been working on their couches with their laptops on their lap. And not only did these employees’ efficiency improve once they had a real home office setup, but morale improved as well.
“And, as an added boost, I used a business credit card that gave me travel rewards for my purchase: win-win!”
Employee perks strategy: Some business owners accumulate cash back rewards throughout the year and then use those rewards for end-of-year bonuses or celebrations. Others share miles or travel perks with specific employees. Still others, like Allec, make purchases that benefit employees. Any of those strategies can have a positive effect on employee satisfaction and productivity.
Use the right card
Finally, when choosing a credit card, consider the impact to your business and personal credit. According to the Nav American Dream Gap Survey, 22% of business owners reported using a business credit card and 24% used a personal credit card the last time they needed funding. With a personal credit card, account activity will appear on the owner’s personal credit reports and can impact personal credit scores.
Small business credit cards, however, do not always impact personal credit scores, and most of them will report activity to commercial credit reporting agencies, which means they help build business credit.
Running a successful business requires succeeding at a number of important steps. For starters, you need to pick the right product or service to provide. You also need to have the right marketing and advertising strategies in place to get the word out about your offerings.
Then there’s the all-important matter of getting paid. Decades ago, setting up the payment side of things was as simple as purchasing a cash register and writing up receipts. But it’s 2019, and we’re past the point when a simple cash register will do. There are more players and devices in the space and shoppers are increasingly adopting alternative payment methods to fit their lifestyles.
This year, we can expect some pretty exciting trends to shake up payment processing. Here are the top five we’re seeing:
Mobile payment adoption will continue to grow
Back in 2014, Apple introduced a much larger audience to the mobile wallet market. It wasn’t long before a number of other big names – including the likes of Google, Chase, and Samsung – followed suit. By 2015, there were nearly a dozen mobile-wallet platforms from which businesses could choose.
By 2017, 39% of U.S. consumers were already using smart wallets. And today, 10% of Millennialsreport using mobile wallets to make all of their payments and adoption is growing with other demographics, as well.
Some experts even believe mobile wallets will become one of the most important features consumers consider when buying smartphones.
This helps explain why mobile payment volume is expected to reach $503 billion by 2020. With just a year to go, it’s probably safe to assume that more and more customers will be taking out their phones at the cash register.
That’s why if you’re not considering mobile payments yet, it may be time to look into the technology. Do a bit of research into where your customers stand with mobile payments. Survey your shoppers to get their take on Apple Pay and other solutions. If you know other merchants that are accepting mobile payments, talk to them to see how things are working out.
Then once you’re willing to move forward, talk to your payment provider and inquire about their mobile payment solutions.
“Buy now, pay later” will become more popular
Modern consumers (particularly Millennials and Gen Z) are rapidly gravitating towards alternative payment methods.
One example? “buy now, pay later.” It’s a service that allows shoppers to immediately take home their purchase while paying for their products over a number of installments. “Buy now, pay later” has proven to be a boon for merchants (especially retailers) and consumers alike.
With buy-now, wear-now, pay-later, the customer takes the product with them at the point of transaction and e-com goods are sent at the transaction point. The big win for retailers is they don’t have to figure out where to store layaway goods, deal with customers who change their minds and handle the mound of abandoned product.
As retailers and brands desire to capture the hearts, minds and wallets of millennial and Gen Z generations, understanding what drives their decision-making is critical. Connecting through a social cause, giving a voice in the development of a product and empowering customers with alternative interest-free payments that are convenient and simple to use are touchstones that resonate with the next gen.
What does this mean for you? If you’re a retailer selling high-ticket items, it may behoove to look into payment options such as “buy now, pay later.”
Remember, consumers want more flexibility with their payment options, and that’s not going to change anytime soon. If you’re unable to serve them in the ways that fit their lifestyle, they will likely turn to your competitors.
Zelle is moving right past Venmo
While Zelle and Venmo are primarily for peer-to-peer payments, it’s still a good idea to track trends in this space, as they may have some implications for your business.
Even though it debuted a decade ago, Venmo really only picked up steam over the past couple of years or so. People finally realized how easy it was to pay each other or split a bill in every cashless society.
Like Venmo, it allows users to send money to someone else without using cash, wire transfers, or checks. So, what does Zelle bring to the table? In a sign that traditional financial institutions are finally “getting it”, Zelle was introduced by the country’s seven largest banks (Bank of America, Wells Fargo, JPMorgan, Capital One, US Bancorp, PNC, and BB&T).
That’s all well and good for consumers, but if you’re an SMB, why should this make the list of emerging payment-processing trends for 2019?
Here’s the thing: Zelle may be eying a move that would introduce its services to small businesses, making it easy – and secure – for them to accept payments through the app. Once that happens, it’s likely that Zelle will explode in popularity.
Obviously, nothing is set in stone yet, but we highly recommend that you watch this space. You want to be prepared from when either Zeller or Venmo decides to make bigger moves towards the SMB space.
Payment security systems continue to evolve
As we just touched on, security is always a concern when it comes to disruptive technology.
However, security measures can be a disruption in and of themselves, too.
One example to look for in 2019 is biometric authentication (e.g. using fingerprint IDs to validate transactions).
While the idea may seem a bit far-fetched to some, it’s estimated that biometric authentication will support over 18 billion payments by 2021. That will mean a noticeable expansion of the technology – and perhaps even consumer demand for it – in 2019.
Keep an eye out for this trend — as well as other security issues — in the coming months. As we mentioned before, falling victim to fraud doesn’t just damage your finances, it erodes customer trust and could kill your reputation.
Acting on these important trends
Though adopting some of these trends may represent a major change to your company’s current operations, there’s still plenty of time to start the process. Pick one of the five above and then take the first step toward keeping up.
Mobile payments represent the next frontier in seamless commerce. Our mobile devices are the hub of nearly all our daily activities, and they have the potential to become the nexus of all our commercial interactions as well. When the payment form factor is a mobile device, instead of a card (or a check, or cash), all the contextual information – like rewards numbers, coupons, payment history – can be automatically loaded onto the transaction, allowing for a customized, data-driven user experience. And it all happens in the background: one authenticated tap and it’s securely done.
Consumers have a lot to gain from embracing mobile payments, not least of which is the sheer number of payment options. There are many different ways to pay with a mobile device, from dedicated peer-to-peer payment apps like Venmo and Square Cash, to payment capability embedded in retailer apps like Starbucks’ mobile app, to QR-code based apps like Alipay and WeChatPay, to tap-and-pay mobile wallets like Apple Pay, Google Pay and Samsung Pay. In-app mobile payments, whether in the context of gaming or retail, are another fast-growing segment, as are payments made at a mobile Point of Sale (mPOS) like those offered by Square or CardFlight.
In 2018, 55 million people in the U.S. used their smartphone to make a payment at a physical point of sale, whether by loading money into a closed-loop mobile app (like the Starbucks app) or by loading a credit or debit card into an open-loop mobile wallet (like Apple Pay, Google Pay, or Samsung Pay) and using it to pay at the point of sale.
The ETA Mobile Payments Committee reviews the State of Mobile Payments in the United States in its latest whitepaper. The report examines contactless transactions at the point of sale that are made with a mobile device, and presents data on adoption, usage, consumer attitudes, and projections for the future. The payments industry is working to make paying with a mobile device as natural as swiping or dipping a card or pulling out a dollar bill. Read the full report here.
If you have never encountered a credit or debit card with a chip
embedded in it, you’ve probably been living under a rock for the past 3-4
years. In which case, you’ve got an awful lot to catch up on and we’ll come
back to chip cards after you’ve covered the important stuff. However, if you
haven’t been living under a rock and you’ve seen a chip card, chances are
you’re at least familiar with the new payment process: dip the card in the EMV
slot, wait, enter your PIN or sign for the transaction, remove card, and go.
But as a business owner, you might still be waffling on whether you need to
finally get around to accepting chip card transactions. After all, do you really need an EMV card
Let’s talk about chip card
readers and what they mean for businesses, and discuss whether it’s essential
for merchants to accept chip cards.
What Is An EMV Chip Card?
talked about how EMV cards require you to “dip” the chip. But why? What makes
EMV more complicated than standard magnetic stripe (magstripe) transactions?
simply stands for EuroPay,
Mastercard, and Visa, the organizations that pioneered the
technology. It’s actually the name for a set of security standards used for
credit card processing. EMV has been the dominant technology in Europe and
Canada for decades, but most of the world has switched over to EMV.
EMV uses a computer chip to
perform complex, dynamic verification that the card is genuine. These computer
chips can store and process much more data than the magnetic stripes on cards,
which makes them much harder to counterfeit.
Magstripe cards are relatively
easy to “clone” — that is, to copy a stolen card number onto a blank card to be
used at a brick and mortar store. EMV prevents cloning, and because the
verification process is dynamic (it generates a unique code each time the card
is used, whereas magstripe transactions use a static code), it also helps
prevent theft of the card using a skimmer. A skimmer is just a piece of
hardware installed over a magstripe terminal that copies the card data when a
card is swiped — the scammer installs the skimmer on a terminal and then retrieves
it later to harvest the card data, presumably to sell to someone else who will
try to use it to make expensive purchases online, or clone a card for
chip cards help reduce card-present card fraud, which has been rampant in the
US for a while now. That’s good news for anyone who runs a brick and mortar
storefront — EMV protects you against some kinds of chargebacks by preventing
fraudulent transactions from being possible in the first place. (It’s not such
good news for online businesses, because instead of cloning cards, scammers are simply moving to the Internet to
make their purchases.)
The key takeaway here? That tiny
little computer chip in a credit or debit card is way more powerful than the
magnetic stripe on the back of the card and therefore makes it harder for
scammers to steal or use stolen credit card numbers.
The EMV Liability Shift &
You might be wondering why chip
cards have suddenly appeared on just about every single card a customer has.
All of that has to do with a liability shift that took place in October 2015 —
but the plans were already in motion years before that.
The card associations (Visa,
MasterCard, Discover, and American Express in the US) got together with banks
and decided that they were going to start issuing EMV chip cards, bringing the
US in line with all of the other countries that already rely on EMV. But it’s
one thing to send chip cards out to customers — it’s another thing entirely to
get business owners to update their hardware to EMV-compliant solutions.
solution, then, was that the banks and card networks agreed to stop absorbing
the costs of any fraudulent transactions that could have been prevented with an
EMV chip card terminal. They set the date for this liability shift to October 1, 2015. After
that point, the business would be eating the cost of any fraudulent
transactions — meaning that instead of the banks and card networks reimbursing
the cardholder for the sale, the merchant would eat the cost of the transaction
(as well as the cost of any merchandise) in addition to any chargeback fees
assessed by the payment processor.
(If you’re wondering, certain
types of businesses are exempt from the current liability shift. For example,
gas stations have until 2020 to get EMV-capable readers for their pumps.
However, brick-and-mortar businesses on the whole already need to be
Let me be clear here: There is no
law demanding that you accept EMV transactions. You aren’t doing anything
illegal by not having a chip card reader. However, you are putting your
business and your livelihood at risk in the event that you do encounter a scam
artist trying to take advantage of your lack of EMV support.
processors are generally free to take whatever measures they want or feel
necessary to encourage their merchants to upgrade to chip card acceptance, too.
In some cases, a select few merchant account providers have started charging
EMV non-compliance fees for merchants who opted not to upgrade their hardware
after a certain date.
we’ve covered that, let’s get to the point: In the lead-up to the EMV liability
shift, sales representatives for payment processors and software providers
alike were pounding the pavement, trying to convince merchants to upgrade to
EMV, usually with the promise of a free or discounted EMV chip card terminal.
You can still find these sorts of offers, but we strongly encourage you to be
wary of offers of “free” hardware because you almost always end up paying the
cost back in some other way (usually higher fees). That’s not to say there
aren’t legitimate, high-quality merchant account providers with free hardware.
They exist, but they are few and far between; you need to learn how to
recognize the tactics used by less reputable providers and steer clear of them.
card terminals can take many forms, with a variety of features (such as a
customer-facing PIN pad or a wireless internet connection). However, for our
purposes, you can separate them into two basic categories: (1) magstripe and EMV card readers,
or (2) magstripe, EMV and NFC-capable
The former are generally cheaper,
because they have a simpler design and less hardware. You can still get all the
other bells and whistles, so the exact cost for a terminal will depend on what
features you want. As a ballpark estimate, you can expect a retail price of
about $200 for a basic EMV chip card terminal.
latter types of terminal usually cost a bit more, but are branded as “future
proof.” That’s because they support magstripe transactions as well as the two
technologies that are likely to dominate the US payments space in the coming
years: EMV (chip cards) and NFC (contactless payments, such as mobile wallets).
Again, you can get a mix of features in addition to support for the different
payment types, and the more features you have, the more you will pay. If you
want to know more about NFC and why it matters to the US payments industry.
One of the major hurdles in EMV
adoption has been the longer transaction times with chip cards: Instead of
simply swiping your card, you need to insert it and wait for the terminal to
tell you it’s okay to remove the card. And initially, EMV transactions were,
well, slow and laggy. To combat this, the card networks have worked hard to
develop solutions to reduce the amount of time the card needs to be inserted
into the terminal. Overall, the time it takes to make a payment with a chip
card has dropped considerably. However, keep in mind that exact times will vary
according to the hardware manufacturer as well as the payment processor (and
your own internet connection speed plays a role too).
About Mobile Chip Card Readers?
“But wait,” you say. “I don’t
have a POS or cash register, or even a physical storefront. I just take
payments on my phone or tablet. And people are still giving away free magstripe
readers. Why do I need to upgrade?”
The mobile processing space has
been the slowest in terms of EMV chip card adoption. But even so, mobile chip
card readers (the kind that connect to your smartphone or tablet) are starting
to catch on, too.
basic magstripe readers still rely on the 3.5mm headphone jack, which is
obsolete on recent iPhone models. Most Lightning connector magstripe readers
Instead, mobile payment companies
(and hardware manufacturers) have switched their focus to Bluetooth
connections, which work with iOS and Android equally well. And rather than make
just magstripe readers that work with Bluetooth, these devices also have chip
card readers built in. (I need to point out that some headphone jack card
readers do support EMV, but by and large chip card readers use Bluetooth.)
As with terminals, mobile chip readers tend to come in two
designs: magstripe and EMV, or (2) magstripe, EMV, and NFC/contactless (often
called “all in one” readers). However, mobile hardware tends to vary much more
than terminals, so you will see some exceptions, such as the Square Contactless
+ Chip Reader which supports chip cards and NFC payments, but not magstripe.
Do I Need To Accept EMV Chip Cards?
officially here to stay. However — much to my dismay — magstripe transactions
probably aren’t going away yet, either. So where does that leave us?
As a business owner, you should have an EMV chip card terminal or
mobile reader. It is the smart decision to protect your business and it
can also help win over customer trust by showing that you’re keeping up with
the latest hardware and security measures.
If you’re a very low-volume
business, or you’re in the type of industry with very small transactions (dry
cleaners or coffee shops, for example), I will admit that the risk of a
fraudulent transaction is fairly low. But it’s still a risk, and an EMV terminal
(or mobile chip card reader) isn’t all that expensive.
If you’re a larger business, you
have a high average transaction size, or you deal in the sort of goods that are
desirable to scammers, you absolutely should be looking at an EMV terminal if
you don’t already use one. Again, the cost of the reader isn’t all that much,
and if you do deal with larger transactions, the cost of one case of fraud
could easily be equal to the cost of an EMV terminal or reader.
you’re not accepting chip card payments yet, it’s time to reach out to your
payment processor and ask about upgrading your hardware. If you’re able to,
this is also a great opportunity to shop around a bit and see if another
payment processor can offer you a better deal on hardware as well as transaction
Over the last few years the small business landscape has gone through serious changes, perhaps none more than the merchant sector. Just about every advantage once reserved for big business has been somehow scaled, repackaged, or economized for the small business owner to leverage in order to accelerate their own growth. Innovations in industries like banking, advertising, and technology have empowered small business owners to focus on their driving vision instead of the multitude of administrative tasks that often slow things down. Now the question is, what are the trends and insights small businesses should be focusing on to take their businesses even further.
Philip McHugh, Senior EVP and President TSYS Merchant Solutions, talked about his top three trends for merchants in 2019. Let’s break down each one and consider their implications.
Trend 1: The strong economy will continue, but businesses must continue to get smarter.
“People talk about a retail Armageddon and there’s a lot of negativity out in the news, but actually, overall the economy has been incredibly strong. Companies and small businesses will have to be smarter and use technology in a smarter way to survive.” – Philip McHugh
The labor market is strong, new businesses have been opening, and profits are up, and as we have seen, technology is the great equalizer for small businesses. It can create efficiencies and amplify limited resources to help people get more done with less. It’s extremely important to remember that simply riding out a good economy is not a strategy for success. During the good times, it’s extremely important for small businesses to re-invest and upgrade in the technology that can provide efficiencies and help strengthen their business in order to weather the cyclical downturns that are sure to come.
Trend 2: The explosion of choice will continue to give small businesses buying power.
“The second trend I see with SMBs is the explosion of choice, the explosion of the overall offer. For our industry, that basic, simple device with simple merchant acquiring contract is going to fade out over time. Now we have to be much more solution led.” – Philip McHugh
When it comes to purchasing for a small business there seems to be a seemingly endless range of choice. Ecommerce, social media, and easily available reviews and content have created complete transparency to make this the ultimate buyers’ market. Small businesses expect more from their vendors and suppliers, and we must do everything we can to deliver on those expectations.
Trend 3: Software, software, software.
“There are so many companies out there using software to simplify the life of the merchant, but I see this only growing and growing and growing in every single industry.” – Philip McHugh
The trend of integrated software vendors or SaaS companies is almost mind blowing, but it’s really amazing how these solutions have helped small business owners manage just about every aspect of their day to day. For small business merchants, the point-of-sale solutions have become really exciting. The back-office capabilities have become so powerful and easy-to-use and are now moving to become highly specialized for a range of major verticals like bar and restaurant, retail, medical and field service.
On this Valentine’s Day, insights from payments data show that Americans will continue to increase their day of love spending on experiences, according to an analysis from ETA member Mastercard. According to Mastercard SpendingPulse, which provides overall retail spending trends across all payment types, including cash and check, experiential purchases – restaurants and hotels – is set experience solid growth this Valentine’s Day.
For restaurants, retail sales could increase 5.4 percent to $15.3 billion today, Mastercard predicts. For hotels, sales could jump nearly ten percent year-over-year, reaching $1.4 billion.
Unlikely to feel the love tonight are more traditional Valentine gifts, the report said. Jewelry sales are expected to decrease this year to $1.1 billion, despite a 2018 Valentine’s Day performance that surged over 25 percent higher than 2017. Overall luxury sales are likely to be flat, Mastercard predicts, generated $250 million and falling just .4 percent.
Data from the National Retail Federation’s (NRF) Valentine’s Day Spending Survey predicts that consumers will spend $162 per person on average on Valentine’s Day in 2019, up from $144 in 2018. Despite the higher average spend, NRF data suggests a downward trend in participation in the holiday – 51 percent of Americans plan to celebrate the holiday in 2019, down from 55 percent last year and from a high of 63 percent in 2007.
Significant others aren’t always the focus of Valentine’s Day spending, the NRF survey found. Gifts for pets continue to be popular, the NRF report says – 20 percent of consumers will buy a present for the pets, totaling $886 million and dwarfing 2008’s $519 million. And 11 percent of Americans plan on treating themselves to gifts like clothing and jewelry; just under 10 percent plan to get together with other single friends and family.