Key Participants in Credit Card Processing

A good first step in understanding the process is to review industry terms for the key participants:

• Cardholder. A cardholder is the customer, or consumer, who is using the card for payment. The cardholder could be either the owner of the card or an authorized user.

• Issuing bank. An issuing bank is the entity that issued the credit card to the cardholder and is responsible for authorizing the transaction. If a transaction is approved, the issuing bank sends funds to the merchant bank, which in turn bills the card owner through a monthly credit card statement.

• Merchant. A merchant is a business that accepts credit card payments from customers for its goods or services. These include in-person, online or phone payments.

• Merchant bank. A merchant bank, also known as an acquiring bank, maintains the merchant account where the funds from credit card transactions are deposited. Some merchant banks act as payment processors in the card transaction. Others rely on third-party payment processors to manage the payment details.

• Payment processors. A payment processor, or merchant services company, helps manage the transaction process with the merchants, banks and card networks. In addition to helping authorize transactions and ensuring the transfer of funds, some payment processors also offer the hardware and software required to accept card transactions.

• Card networks. Credit card networks such as Visa, Mastercard, American Express and Discover are responsible for the infrastructure that allows the transmission of credit card details between the merchant bank and the issuing bank. Credit card networks have rules for the use of their networks and set interchange fees for their services. Source

Protecting Your Business  From Holiday Payment Fraud

Smart Tips from John Haire at Bankcard Processors...

The holiday rush is a wonderful time for business — but it’s also when fraudsters work overtime. With more transactions, online orders, and busy staff, scammers see opportunity. That’s why this time of year is the most important for merchants to stay alert and take simple steps to protect both your business and your customers.

Here are a few ways to keep your payment processing safe this holiday season:

1. Stay Alert to Suspicious Transactions

Watch for unusual orders — large purchases from new customers, mismatched billing and shipping addresses, or multiple cards used by the same person in a short period. When in doubt, verify before you process.

2. Keep Your Equipment Secure and Updated

Make sure your credit card terminals, POS systems, and online gateways are running the latest software updates. Outdated equipment can leave your business vulnerable to breaches or data theft.

3. Train Your Team

Your staff is your first line of defense. Remind employees not to override fraud alerts, skip signature checks, or process transactions when something feels “off.” Encourage them to trust their instincts.

4. Watch Out for Phishing and Account Takeovers

During the holidays, scammers often pose as your processor, bank, or even a familiar vendor. Never share login information, passwords, or account details over email or text — and contact your processor directly if something looks suspicious.

5. Reconcile Daily and Review Chargebacks Quickly

Catching discrepancies early can prevent larger issues later. Daily reconciliations help you spot unauthorized transactions, and timely responses to chargebacks protect your revenue.

At Bankcard Processors, we take your security seriously — from PCI compliance to fraud monitoring and data protection. If you’d like help reviewing your setup or tightening your fraud prevention measures before the holidays, I’m here to help.

This season, let’s keep your business merry, bright, and secure.

Holiday Savings & Referral Rewards

This season, I’m helping businesses keep a little more in their pockets. If you haven’t had your processing rates reviewed lately, now’s the perfect time — many of our clients are saving more than they expected.

And if you know another business that could benefit from lower rates and personal service, send them my way — you’ll both enjoy special savings or account credits as our way of saying thanks.

Let’s make sure you and your network start the new year saving smart.

Happy Thanksgiving!

 

Happy Thanksgiving from us to you! Hope you have a healthy and safe holiday!

Bankcard Processors, LLC 

(850) 228-5571

jphaire@bankcardprocessors.biz

10 Credit Card Security Tips

When it comes to identity theft and credit card fraud, it's becoming more important than ever to be vigilant and take steps to protect your personal information. Over the last few years, in part due to the COVID-19 pandemic, the fraud rate has skyrocketed. In 2021 alone, the number of adults impacted by traditional identity fraud increased by more than 50%, with 1 in 20 people becoming victims.

These tips can help you spend safely and guard your sensitive data...

1. Consider a contactless card

These credit cards look just like EMV chip cards (they dip into a sensor rather than being swiped). Contactless cards show an image of 4 curved lines somewhere on the card. That tells you that you can tap the card over a sensor when you go to pay—rather than inserting the chip into a reader.

• Your card must be pretty close to the sensor—within 2 inches—to transmit the information.
• Rather than giving the merchant your credit card number, the card sends a one-time code—just like the chip.

2. Be aware: Zero-liability fraud protection

Credit card issuers offer zero-liability fraud protection. That means if a fraudulent transaction appears on your account, you can alert the card issuer and follow their process for reporting the crime. You won't have to pay for purchases you didn't make. Be sure to check your accounts regularly to make sure that you recognize all of the charges.

3. Set up fraud alerts to monitor your accounts

Setting up alerts can help you manage your accounts—and help you spot fraud. Alerts can typically be set on the card issuer's website or app. Sign up for automated alerts of suspicious account activity wherever offered. It may be a good idea to sign up for alerts via text and email. If an account is taken over, hackers may be able to intercept alerts sent by SMS text or phone call.

4. Alerts can also help you manage your accounts

Card issuers typically offer a number of different alert options. For instance, you can choose to get a text or email anytime a purchase is made on the card, or you can even set a purchase limit that would trigger an alert. You can also request alerts when your balance reaches a certain threshold, when you're near your limit, when the payment date is approaching—and more.

5. You may be able to freeze your account

Some cards allow you to freeze your account for extra security. Recurring payments and rewards are still allowed to go through, plus transactions that were made before the freeze, but any new purchases are declined until you unfreeze the account. The feature can generally be activated online or through a card issuer's app, so you don't even have to speak with anyone to freeze and unfreeze your account.

6. Take advantage of digital wallets

Most smartphones have a digital wallet. You add your credit or debit card information and then you can use your smartphone (or smartwatch) to pay in a brick-and-mortar store or online when retailers offer the option. Digital wallets work by transmitting a unique, random transaction number to the merchant instead of your card number.

Your account information is encrypted in your digital wallet and can only be accessed via password or, with most mobile devices, your fingerprint or facial recognition. And, if your card information is ever lost or stolen, banks can reissue a new one immediately to your phone instead of having to wait days for a card to arrive in the mail.

If you ever misplace or lose your phone, you can lock your digital wallet remotely. Plus, there are no fees for using digital wallets.

7. Follow safe online shopping guidelines

The first step to safe online shopping is to check that you're shopping on a secure website. Look at the URL to find out if it's secure—it should begin with "https" not "http." The "s" indicates that the connection between your internet browser and the company's server is encrypted. You'll also see a padlock icon next to the URL in your browser.

• If you set up accounts with merchants or websites, make sure that you use strong passwords—and don't reuse the same password across multiple sites.
• Make sure your device, whether it's a computer, phone, or tablet, has the latest security updates from the system maker.
• When shopping away from home on your computer, phone, or tablet, avoid using public Wi-Fi to help keep your data secure.

Consider using a credit card rather than a debit card for online shopping. Even if you do everything perfectly, you may end up shopping on a retail site that has been compromised. That could leave your bank account vulnerable.

8. Stay safe while traveling

It can be a good idea to call your card issuer and let them know you'll be traveling away from your usual area. One way financial institutions fight fraud is by declining transactions that seem to be wildly different than your usual pattern. Calling ahead of time can help ensure that you have access to your cards.

Before traveling, consider making a copy of all the cards you carry in your wallet—that way you'll have the emergency phone numbers handy, plus a list of your cards.

9. Practice good internet habits in general

Guarding against hackers and scammers can help keep all of your sensitive information safe.

• Ignore deals, freebies, and awards that sound too good to be true. Disregard offers that appear to come from unusual foreign contacts, as well as requests from strangers for help.
• Ignore phone calls, emails, or texts that appear to be from the IRS. The IRS will not contact you by phone, email, text message, or social media to request personal or financial information.
• Be suspicious of anyone requesting your Social Security number, date of birth, financial account number, PIN, email, or passwords—especially if there is a request to verify your information when you were not expecting it.
• Never click a link or download an attachment inside an unexpected email. Go to the company's website and log in to your account from there.
• Never provide personal information over the phone to an unsolicited caller. If you think the call might be legitimate, hang up, and call the company directly.

10. Use all of the security features available and monitor your data

Many companies, including Fidelity, go to great lengths to safeguard customers' information and provide security tools. For instance, Fidelity offers 2-factor authentication, designed to prevent someone from accessing your account, even if they have your password.

Here are a few actions you can take to reinforce those safeguards...

• Sign up for 2-factor authentication when offered.
• Make sure your financial institutions have up-to-date contact information for you, especially your mobile number.
• Check your credit report regularly.

Source

What Does Credit Card Processing Cost?

Credit card processors typically charge a processing fee for every credit card payment you accept. Depending on your processor, you may be charged additional fees depending on what pricing model the processor uses.

Processing fees

Transaction fees can be broken down into two primary kinds: wholesale and markup. Wholesale fees, also known as “interchange” fees, are charged by the issuing bank and the card network. Markup fees are charged by the credit card processor and the payment gateway. Unlike wholesale fees, markup fees can be negotiated.

There are three types of credit card processing fees you should be aware of:

1. Interchange Fee. The interchange fee is the wholesale fee mentioned above. This is a standard, non-negotiable fee that covers the costs of processing the transaction, the risk of payment approval, and the risks of fraud and bad debt. Collected by the consumer (issuing) bank, the interchange fee is a percentage of the purchase total plus a set transaction fee that’s determined by each card network. This fee represents the largest cost of credit card payment processing, and is typically impacted by the type of credit card involved in the transaction. The average interchange rate in the U.S. is approximately 1.8% for credit cards and 0.3% for debit cards, but the actual rate a merchant will pay varies greatly. For example, interchange fees on premium or rewards cards are generally higher.
2. Assessment or Service Fee. This is another non-negotiable fee, but this time it’s the card network that charges it. This fee is typically a small percentage and can be affected by your transaction volume and your risk level as assessed or calculated by the card networks.
3. Processing Fee. Each payment processor charges their own fees. This is known as the payment processor markup, and it varies depending on the pricing plan of the processor.

Types of payment processor pricing models

Payment processors leverage a variety of pricing models. These are the four you are likely to come across when selecting a payment processor:

• Flat rate. The processor charges a simple fixed fee for all credit and debit card transactions regardless of the card used for payment. Note that card-present transactions often have a lower flat rate than card-not-present transactions, as they carry less risk. This can be structured as a simple base rate (for example, 2.9%), or a base rate plus a small per-transaction amount (for example, 2.9% + $0.30 per transaction). This model merges the wholesale and the markup fees instead of splitting them out.
• Tiered. The processor charges a fee based on the card type used in the transaction, how much risk is associated with the transaction, and the overall transaction volume of the business. This model is considered to be the most complex and potentially most confusing to merchants.
• Interchange Plus. The Interchange Plus is the most common pricing model, and often considered the most transparent and cost-effective. Here, the merchant is charged a percentage of the transaction plus a fixed per-transaction fee. In this way, the wholesale fee (the “interchange” part) and the markup fee (the “per transaction” part) are distinctly and clearly separated. For example, a $100 payment made with a Visa Rewards credit card might carry a total (effective) rate of 2.13%, which includes the interchange fee, the card network fee, and any other fees charged by the credit card processor.
• Subscription. The processor charges a flat monthly service fee, along with a small per-transaction fee. The wholesale fee is charged separately from the markup fee.

No matter which pricing model your business selects, note that not all transactions clear at the same rate. A qualified transaction will process at a lower rate than a non-qualified transaction. Source

8 Strategies to Maximize Customer Lifetime Value

Customer lifetime value (CLV) is one of the most influential metrics companies use to predict revenue potential and make strategic marketing decisions. Whether you’re operating a single brick-and-mortar store, eCommerce operation, or multi-location business, understanding how to maximize your customer lifetime value helps your team increase revenue by investing in the customers who are most likely to provide long-term profits. These eight proven strategies will foster positive, long-term relationships between a business and its customers to improve average CLV...

1. Utilize Cross-Selling and Up-selling 

Cross-selling is a sales strategy that persuades customers to purchase complementary products with their main purchase. For example, a fast-food restaurant might ask if you’d like fries with your burger, or an eCommerce website shows “customers also bought” suggestions.

Up-selling offers customers an upgrade or special perks at a higher rate. Examples of up-selling include a website setting a minimum order value to qualify for free shipping or an airline charging extra to let customers pick their seats on the flight.

Both strategies increase the order total to boost total revenue and CLV.

2. Offer a Memorable Customer Experience 

Did you know that 86% of buyers are willing to pay more for a better customer experience? Or that a poor customer experience stops 58% of people from doing business with that company ever again?

3. Create a Loyalty Program

Don’t take loyal customers for granted! Entice your customers to continue using your business with a simple, easy-to-understand loyalty program that offers them perks, so they keep coming back for more.

For example, Starbucks rewards customers who download their app and join the rewards program. Customers can order ahead, pay through the app, and save time, giving them a more convenient experience. With each order, they also collect stars to earn free food, drinks, and more.

4. Listen to Your Customers 

If you’re proactive and using customer data analytics to monitor and understand your audience, then you’re probably aware of what your customers are saying. Are they happy with your products or services?

When customers aren’t satisfied, they’re usually vocal about their grievances, especially in product reviews and social media comments. Let them know you’re listening, you understand their concerns, and you’re taking steps to remedy the issues. Don’t be afraid to send out surveys to collect direct feedback and turn customer complaints into customer care opportunities.

5. Reach Consumers with a Seamless Omnichannel Approach 

Today’s buyers are accustomed to shopping on a variety of devices, platforms, and channels. They don’t think about channel boundaries, and they expect businesses to be accessible at every touchpoint.

A well-structured omnichannel strategy is consumer-centric and connects all channels – phone, web, mobile, email, social, store, etc. – around the customer’s experience.

6. Build a Community 

Customers are more likely to remain engaged with your brand if they feel like they’re part of a community rather than a statistic pushed through a sales funnel. To maximize customer lifetime value, your business should seek ways to foster a community for your customers.

Interact with them on social media. Encourage consumers to post reviews and photos, share opinions, offer advice to one another, use branded hashtags, and engage in a community setting.

7. Set Up a Referral Program 

Remember that part of the CLV equation includes marketing expenses to attract and retain customers. Imagine how much you could maximize your average CLV if those customers found your business through word-of-mouth referrals instead of costly advertising campaigns.

Referral programs are easy to set up and serve as a low-cost way to increase customer lifetime value. When done correctly, a referral program fosters goodwill and genuine sentiment about your brand, products, and services. It rewards your existing customers for touting your business and offers incentives for new customers to give your brand a try.

8. Offer Free Upgrades 

Businesses sometimes balk at the idea of giving away freebies, but the truth is, they work. Not only do they make a positive impression, but they’re also a valuable way to conduct beta research on new products and get feedback from customers before the product launch.

Freebies and upgrades make customers happy and ensure they remember the positive experience with your business. Businesses that calculate and analyze their CLV are in an advantageous position to predict their revenue growth and decide the best ways to spend their marketing dollars for maximum impact.

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