Digital Wallets, Mobile Commerce, and Your Business

Mobile wallets are mobile device apps that allow people to store and use digital versions of their credit and debit cards. They eliminate the need to carry around a bulky wallet, or worry about a physical credit card or cash getting stolen.

If a smartphone does happen to fall into the wrong hands, the mobile wallet would still be protected by the fingerprint ID, facial recognition, or passcode the owner has set to authenticate and open it.

With more and more consumers using mobile payment technology, such as Apple Pay, Google Pay, and Samsung Pay, merchants are accommodating them with NFC credit card terminals.

All it takes is a tap on the terminal for a customer to make a payment using their smartphone. Through Near Field Communication (NFC), the terminal is able to accept the transaction. Not only do mobile payments speed up your checkout line, they also help drive revenue by catering to customer preference.

How Does NFC Work?

Mobile wallet payments are called contactless because they don’t require physical contact between credit card and terminal, and instead get transaction data from the former to the latter through NFC.

NFC powers credit card terminals to create an electromagnetic radio field with other NFC-compatible devices, such as smartphones, smart watches, etc.

The radio field makes a safe channel for close-range contactless payments. The customer simply waves their device over the terminal to make what’s known as a “tap and go” payment. Physical credit cards can also be contactless, so not all contactless payments refer to mobile wallets.

Mobile Payment Security

Mobile payments are backed by leading-edge security. Take Apple Pay for example. When an iPhone user uploads their credit card information to a digital wallet, the card data is instantly tokenized and stored on a secure NFC chip in the phone.

The token is a random substitute that can’t be decrypted, so it’s worthless to credit card thieves. The token holds the place of the real card information, so nothing sensitive is ever stored on Apple’s servers, on the smartphone, or at businesses where the card is used.

Only the highly secure payment processor has access to the “token vault,” which holds the keys to match up tokens to the real card info they represent. To all other parties involved in the transaction, the token is meaningless.

Thanks to tokenization, NFC technology, and biometric authentication (fingerprint or face ID), mobile payments are considered even safer than traditional card-present transactions.

What About Online?

You can use a mobile wallet on your smart device and conveniently make payments in stores, or you can store a digital wallet on a computer to make online transactions with a simple click instead of keying in your payment information every time. For a big task, like Christmas shopping online, this is a major time-saver.

Digital wallets help reduce cart abandonment at your online store because payment occurs in one fell swoop, rather than requiring the customer to enter their information.

A mobile wallet typically refers to one that is stored on a handheld or wearable mobile device, like a smartphone, Apple Watch or Fitbit. A digital wallet securely stores payment data in the same way, but is typically stored on a computer and used for online purchases. Sometimes, the terms are used interchangeably or called e-wallets.

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Key Components of Card Processing

 Credit card processing involves several components that work together. Here is an overview of the main players involved:

Cardholder

The cardholder is the customer who owns a credit card issued by a bank or financial institution.

Merchant

The merchant is the business or individual that sells goods or services and accepts credit card payments.

Acquiring bank

The acquiring bank, or acquirer, is the financial institution that partners with the business to process credit card transactions. The acquiring bank receives transaction information from the business and communicates with the issuing bank to obtain authorization.

Issuing bank

The issuing bank, or issuer, is the bank or financial institution that issues the credit card to the cardholder. The issuing bank approves or declines transactions based on factors such as the cardholder’s available credit and account status.

Card networks

Card networks are organizations—such as Visa, Mastercard, American Express, and Discover—that provide the infrastructure and rules for processing credit card transactions. Card networks act as intermediaries between acquiring banks and issuing banks to facilitate transaction communication, authorization, and settlement.

Payment gateway

A payment gateway is a tool that transmits payment information from the business’s point-of-sale (POS) system or e-commerce platform to the acquiring bank for processing. It encrypts the cardholder’s data and ensures the transaction complies with security standards.

Payment processor

A payment processor, or payment processing provider, is a company that manages the transaction process on behalf of the acquiring bank, handling tasks such as communicating with payment networks, obtaining authorization, and managing the settlement process.

POS system

A POS system is the hardware and software businesses use to accept credit card payments. For in-person payments, this might include a card reader or a retail terminal. For online transactions, this would include the e-commerce platform and payment gateway.

These parties ensure that credit card transactions are secure and efficient and comply with regulations and industry standards, providing an easy and fast payment experience for customers and businesses.

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Why Local Businesses Are Choosing Vivid over Square and Clover

In the competitive world of payment processing and point-of-sale (POS) systems, local businesses are increasingly choosing Vivid over industry giants like Square and Clover. This shift can be attributed to Vivid's versatile payment options, tailored software solutions, comprehensive support, and advanced billing features. 

Let's delve into why Vivid is becoming the preferred choice for merchants of all sizes. 

Versatile Payment Options Catering to Diverse Merchant Needs

Vivid stands out with its array of payment options designed to suit businesses of varying scales. One of its most notable offerings is the cash discount option, which effectively eliminates credit card processing fees for merchants. This feature is particularly appealing to small and medium-sized enterprises (SMEs) that are often burdened by high transaction costs. By providing a more cost-effective solution, Vivid helps these businesses maximize their profits.

Tailored Software Solutions: A Step Above Square and Clover 

While Square and Clover are popular among micro merchants, Vivid offers a more diversified range of software solutions. VividPOS, the company's flagship software, caters to not just Quick Service Restaurants (QSR) but also Full-Service establishments, positioning it as a competitor to renowned systems like Toast and Lightspeed. What sets Vivid apart is its consultative approach, where each business is assessed individually, and the most suitable software is recommended based on the specific needs of that vertical or business type.

Unparalleled Support and Implementation Services

Vivid's commitment to customer support and service implementation is unrivaled in the industry. Unlike Square, which offers decent support but lacks in-store technology assistance, or Clover, which relies on Fiserv for support, Vivid boasts a nationwide implementation team. This team is responsible for hardware setup, training, and ongoing support, ensuring a seamless integration of Vivid systems into the businesses. Furthermore, Vivid provides 24/7 remote support and a dedicated relationship management team to aid in business growth, setting a high standard for customer service. 

Advanced Billing Software and Payment Flexibility

Vivid's edge becomes even more pronounced when it comes to billing software and payment options. While Square offers online and in-store payment options, Vivid enhances these with advanced billing software capable of handling ACH transactions, recurring billing, invoicing, and integrating seamlessly with online shopping carts. In contrast, Clover requires the use of multiple apps for different functions, and Square limits integrations with its software, thus restricting flexibility. Vivid's comprehensive and integrated solutions provide a more efficient and streamlined experience for businesses. 

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5 Factors For Banks To Consider When Choosing A Payment Processing Partner

 

Banks can derive powerful benefits by partnering with a top-notch payment processor. But financial institutions that don’t vet those partners with due diligence may inadvertently invite problems. 

There are five key considerations to explore when selecting the right payment processing partner, and these can help ensure a more rewarding and value-adding relationship.

1.) Experience Serving Banks

Banks are advised to seek out a payment processor with a proven and verifiable track record of successful bank partnerships. Experience in the nuances of banking, coupled with an understanding of the needs and preferences of merchants who rely on banks, is essential. Otherwise a bank’s vital merchant relationships may be jeopardized because of the payment processor’s lack of knowledge, resources, and vision. A qualified payment processor will anticipate what a bank and its merchants require. Then it will offer customized solutions to help ensure stability, profitability, and growth.

2.) Robust Security

Proactive risk management is priority number one for banking institutions. Don’t let a processing partner who isn’t vigilant compromise security. When vetting a payment processor, make sure they are expert at guarding against potential data breaches. They should use all the latest payment protection technologies such as data encryption, tokenization, PCI-compliant Level 3 processing, and access-restricted cloud backup. They should also know how to accommodate the needs of businesses within regulated industries. Law firms, for example, need a payment system that supports approved escrow accountability. Healthcare providers must ensure airtight HIPAA compliance. A qualified payment processor will stay updated on compliance issues, technological solutions, and best practices. They’ll also facilitate ongoing payment system security training for bank personnel and partnering merchants.

3.) Specialized Public Sector Solutions

A partner with creative solutions for government agencies, municipalities, and educational institutions is a great asset. They can open up new opportunities for banks to pursue those potentially lucrative accounts. For example, a flexible rate payment system, which utilizes industry-compliant legal surcharging, can ensure that the organization never again has to pay credit card “swipe fees” to companies like VISA and MasterCard. Overhead is significantly reduced, net revenue is increased, and flex-rate payments build public trust through greater financial transparency and equity.

4.) Strategic Consultation and Collaboration

Always demand that a payment processing partner does more than simply sell products and services to the bank. Look for one that will become a long-term solution-focused success collaborator. Their support and innovation should improve the bank’s customer service to help attract and retain merchant accounts. Banks who choose a superior payment processing partner can reduce in-house labor and overhead, while expanding their merchant account portfolio and market share.

5.) Flexibility and 24/7/365 Support

A B2B payment platform should be designed exclusively for B2B and be able to process multiple payments simultaneously, in a variety of currencies, with instant electronic invoices and receipts. Choose a partner with dedicated, personalized support that is not outsourced to a third party and extends around the clock, even on bank holidays. Then enjoy the competitive advantage derived from having a technologically advanced, strategically innovative, and highly responsive payment processing partner.

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Credit Card Processing Fees and Costs

 

Whatever pricing structure they use, processing companies base their pricing on four primary fees. These include interchange fees, assessment fees, processor markup fees and monthly account or statement fees. Knowing what goes into credit card processing fees can help you understand your options and spot the best payment processing service for your business.

Interchange Fees

Interchange fees are set by Visa, Mastercard, Discover and other card brands. These are the unavoidable, base-level costs of processing credit cards. Often called wholesale or base fees, interchange fees generally range from 1% to 2% of the transaction amount. Payment processing companies collect interchange fees during the transaction process. They then transfer these funds to issuing banks as payment for the credit service. Interchange rates vary greatly and depend on the merchant’s industry, the transaction type and the brand and type of card used. 

Here are a few examples of factors that impact interchange rates merchants pay to process credit cards.

• Transaction type: Card-not-present transactions, such as online sales, have higher interchange rates than in-store sales, where cards are physically swiped.
• Debit vs. credit card: Debit cards have lower interchange rates than credit cards because they are considered a lower credit risk.
• Card brand: Discover and American Express have higher interchange rates than Visa and Mastercard.
• Card type: Rewards, corporate and governmental purchasing cards have higher interchange rates than non-rewards cards since these programs cost the issuing banks more to administer.

Assessment Fees

Assessment fees, often called per-transaction fees, are also set by the card brands. These are flat per-transaction fees attached to interchange fees and typically range from 1 to 5 cents, based on the type of card and transaction.

As with interchange fees, assessment fees are collected by card processing companies during the transaction process. However, these fees are paid to the card associations, such as Visa, Mastercard, Discover and American Express, not to the issuing banks.

Processor Markup Fees

Markup fees are what credit card processing companies charge for their processing services. Markup fees vary based on the card company’s processing fee structure, such as a straightforward markup percentage called interchange-plus, complex tiered rates or simple flat-rate fees.

Each fee structure has benefits and drawbacks, which we explore in more detail below. Bottom line, markup costs vary greatly from processor to processor, so it’s essential to shop around for the best deal.

Monthly Fees

In addition to markup fees, many credit card processing companies charge monthly fees for specific services, such as statements, online gateways, PCI compliance and card terminals and other processing hardware. Some roll all of these services under a monthly account or subscription fee.

A few charge no monthly fees for credit card processing services. However, these providers typically have higher flat-rate processing fees that can cost more compared to providers that combine monthly fees with lower processing rates.

Other Costs To Consider

Some credit card processing companies have add-on and conditional fees that can affect your overall processing costs. To avoid surprises on your monthly statement, always check the fine print for add-on fees when comparing credit card processing companies.

• Chargeback fees: Unfortunately, chargebacks are an inevitable part of accepting credit cards and the cost of processing a chargeback varies greatly among processing services.
• Batch processing fees: Some tiered and traditional merchant services providers charge per-batch fees.
• Setup or termination fees: Card processing services with negotiated or tiered rate plans often require contracts with setup costs and hefty early termination fees.
• Monthly minimum fees: Some negotiated and tiered rate plan providers charge a monthly fee if contracted transaction volume minimums aren’t met.
• Same-day funding fees: Most card processing services deposit funds within one to two business days with no added fees but charge a fee for instant or same-day access to processed funds.

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How Payment Choice Can Impact The Customer Experience

Many of us appreciate having choice about how we pay for goods and services. Maybe we like to put larger purchases on a credit card rather than a debit card. Or to use different payment methods for in-store purchases and online shopping. And perhaps we find eChecks handy for paying bills.

Offering your customers a range of ways to pay can have a positive impact on their shopping experience. Add in convenience and security, and you can be well on the way to building a loyal customer base and accelerating your growth.

Offer the payment types customers prefer

So, can offering different payment types make your customers happy to shop with you? Whether you sell online, in store, or both, you should try to offer the options that meet most customers' preferences. Your payment processing platform should allow you to accept:

• Debit and credit cards. Card payments are pretty much a must-have for both eCommerce and in-person payments. For in-person purchases, you'll probably want to offer customers the convenience of contactless card payments, too.
• Digital payments. Add more choice by enabling customers to pay using digital wallets like Apple Pay and PayPal.
• eChecks. Ideal for recurring transactions like bill payments and subscriptions, eChecks also offer faster processing and deposits than traditional paper checks.

 A smoother payment experience

As well as giving customers choice about how they pay, look for a payment processing platform with additional features that can positively impact the payment experience. In general, most people will choose options that require them to make the least amount of effort. This so-called 'principle of least effort' is widely applied to consumer behavior. So, it's worth considering ways to:

• Make things easier for returning customers. Make checkout faster and easier for returning customers by securely storing their payment information so customers don't have to re-enter their details every time they check out. 
• Simplify recurring billing. A great solution for subscription—and membership-based businesses—customers just set up their payment details once and are automatically charged at each billing cycle.
• Avoid the hassle of expired cards. Save customers the trouble of updating their stored details when they receive a new card. Use a service that automatically updates their card-on-file information to help avoid the friction and lost sales that can have a negative impact on the shopping experience. Source

What is a Card Verification Value?

 

A Card Verification Value (CVV) or Card Verification Code (CVC) is a three- or four-digit security number on a credit card used to verify that the cardholder has the physical card during online or phone transactions, providing an extra layer of fraud protection. But card issuers have developed some pretty good defenses against these ne’er-do-well thieves. One of them is that little three- or four-digit number called a Card Verification Value (CVV) — or, as some call it, the Card Verification Code (CVC). It’s your job to keep that number secret.

How Card Verification Value Works in Card Transactions

The CVV/CVC was invented to put an extra lock on your credit card and keep fraudsters at bay. It’s a secret password to ensure the rightful card owner is using the card before any money changes hands.

Enhances Online Transaction Security 

That little CVV/CVC is like a guard dog, just watching over your credit card when you go to make purchases online. And even if some no-good thieves happen to get a hold of your card number, they won’t be getting very far without that magic code. These codes are a real fence against those sneaky outlaws who might get hold of your card number but don’t have their mitts on your card itself. Without the CVV, it’s like trying to get into the corral without the gate key — it just isn’t happening!

Verifies Card-Not-Present Transactions 

When you’re making an online or phone purchase of an item, the seller asks you for the card’s CVV. It helps keep fraudsters at bay with card-not-present (CNP) purchases where you don’t physically hand over your card. The setup keeps rustlers from making off with your goods should they steal your account number but not your CVV.

Where to Find the Card Verification Value on Your Cards

It’s mighty important to know where the CVV or CVC is hiding on your card because it’s the key to keeping no-good varmints from riding off with your money. Different cards stash it in different spots, so if you’re looking to protect your funds, you’d best know where to find it.

• CVV on Visa, Mastercard, and Discover: You’ll usually find the CVV on the back of Visa, Mastercard, and Discover cards next to the signature panel. It’s a three-digit number that stands off by itself, separate from the main card number, silent but deadly against would-be hackers and fraudsters. It may be only a tiny number, but it is like the lock on a cattle gate — without it, the rustlers can’t make off with your wealth. If you aren’t paying attention to it, you might as well leave your safe wide open!

• CVV for American Express Cards: Things are a little different if you’re using an American Express card. The CVV — or,  in this case, CVV — sits on the card’s front, a four-digit number above the card number. It’s about as hard to miss as a coyote in a henhouse, and Amex likes to make sure you can find it without breaking a sweat. So, it’s a little more prominent compared to other cards. It’s as if Amex is waving a flag, saying, “Here I am!” With Amex, you look at the card front to get the code you need.

• Differences in CVV/CVC Formats: The length and placement of CVV/CVC codes depend on the card issuer. Some cards, such as Visa, Discover, and Mastercard, use only three digits, while Amex goes the extra mile with four. 

Some cards, such as virtual ones, do not even physically display a CVV. Instead, each transaction is accorded a new number. Source