What To Do With Old Credit Cards

What are credit cards made of?

A banking card is usually composed of the following raw materials:

• Several layers of laminated plastic, usually using PVC, alternatively PET  or a bio-sourced material.  
• Inks for printing credit cards with a magnetic stripe. 
• Metal oxide particles with solvents are often the basis for inks.
• There are different types of cards, all using different materials (plastic, plastic substitute, metal, and chips…). 

As a consequence, the way we should dispose of them should be adapted to each component. We can easily imagine the metal within the card shall go to a different recycling stream than the plastics.

The toxic journey of a credit card

What happens to the banking cards after we throw them into the trash bin?

Every year we use 30 million kg PVC for banking card issuance, the equivalence of the weight of about 150 Boeing 747s. 

In most cases, banking cards will either go to the landfill or be thrown into nature. This is the worst-case scenario as it will gradually turn into microplastic and gets back to us.

It will get back to us because we will ingest the particles through the food chain. It's already happening now. In fact, according to a study by the World Wildlife Fund, you are probably swallowing micro plastic equal to the weight of a credit card each week! That's where recycling fits in.

Can plastic credit payment cards be recycled? The answer is YES, but it's not that obvious.

Every banking card is a well-designed compound made up of metals (copper, nickel, gold, aluminum, iron), resin, glass, silicon, and plastics (PVC, PET). This complexity makes recycling payment cards challenging.

How does the recycling process work?

This is what happens in the recycling facility:

Recover plastic and metal: 

• The cards contain plastic (like PVC, PLA, PET): during the separation of materials, plastic and metal are isolated... Recycling metals and plastic and selling them to the second-hand market allows for the recovery of essential resources, which can then be reused in the industry.
• As an alternative, all can be incinerated to recover the energy, meaning the recovered heat can be injected to an industrial installation or to an institution.
• In incineration process, Bio-sourced material such as PLA (Poly Lactic Acid) is a better option than PVC, as it will not generate toxic gas during incineration.

Recycle metals: 

The metal will be sent to manufacturing for a second life: depending on the metal recycling processor, metal will be valued and re-injected into the metal industry. Source

 

 

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What You Need to Know About Card Testing Fraud

At first, these small unauthorized credit card changes aren’t a big deal, the charges are small after all. But then you start getting calls from customers about purchases they never made. When the calls have subsided, you start adding up all the chargebacks and authorization fees and realize that this month’s profits—and maybe even this year’s profits—are down the drain. Unfortunately, you are not alone. Businesses of all sizes continue to be the victims of debit and credit card testing.

What is card testing?

Fraudsters use card testing to validate credit card numbers for later use. Testing typically falls into two types: testing card numbers that have been illegally obtained, or intelligently guessing card numbers based on a known bank identification number (BIN). Fraudsters will send a high velocity of fraudulent purchases to an unsuspecting merchant’s site to see if each card is active and approved. This process reveals which cards have been canceled or deactivated—and which ones are still valid. Once the canceled or declined card numbers are weeded out, fraudsters move on to make larger purchases or resell the validated information.

How do botnets work?

The advancement of botnet technology in recent years has allowed card testing to grow exponentially. Unlike manual testing—which is time consuming and labor intensive—fraudsters can program networks of compromised computers (botnets) to run thousands of transactions at a time. The velocity of these fraudulent transactions can rack up thousands of dollars in transaction fees in a matter of minutes, leaving the unsuspecting business holding the bill. Not to mention serious brand damage and a major tax on their time and resources.

Which businesses are at risk?

Card testing attacks often target small and medium businesses as well as organizations that accept donations or even tuition. Often these types of businesses and organizations lack the tools and technologies to protect themselves—making them easy prey. Businesses and organizations that don’t sell a physical good tend to be particularly vulnerable because they assume fraud isn’t a worry—the fraudsters know this and deliberately target them as a result. Take nonprofits for example. Since many nonprofit donation pages collect little information from donors, and fail to place minimum limits for giving, they provide an ideal environment for card testing and other types of fraud. Source

Happy Easter

 

Happy Easter from us to all of you! Hope everyone had a safe and blessed holiday!

Bankcard Processors, LLC 

Phone: (850) 228-5571

Email: jphaire@bankcardprocessors.biz

Payment Fraud 101

Payment fraud is a growing concern for businesses of all sizes and industries, with losses estimated at over $42 billion worldwide in 2020 alone. For most businesses, particularly those that deal with a high volume of customer payments, payment fraud is an unfortunate yet unavoidable part of doing business. Managing the security of payments has become more complicated with the rise of digital commerce and new payment methods. As fraudulent actors’ tactics become more sophisticated, so too must fraud detection and prevention measures. The impact of payment fraud on businesses can be significant, including financial losses, damage to reputation, and legal and regulatory consequences.

Payment fraud is a type of financial fraud that occurs when someone intentionally uses false or stolen payment information to make a purchase. For example, fraudulent actors might use stolen credit card information, create fake checks, or make unauthorized electronic fund transfers. Retail businesses are particularly vulnerable to payment fraud, since they deal with a large volume of transactions and may not have the resources to thoroughly vet each payment method. Payment fraud can result in significant financial losses for businesses, damage to their reputation, and legal liabilities.

There are several types of payment fraud:

Credit card fraud

Credit card fraud is the unauthorized use of a credit card to make purchases or obtain cash. For instance, this fraud can involve the use of stolen credit card information or the creation of counterfeit credit cards. In credit card fraud, the fraudster can use the stolen credit card to make purchases online or in-person, or they may use the card to withdraw cash from an ATM.Credit card fraud losses increased to $4.2 billion in 2020, up from $3.5 billion in 2019. Card-not-present fraud is expected to increase from 57% in 2019 to 74% by 2024.

Debit card fraud

Debit card fraud is similar to credit card fraud but involves the unauthorized use of a debit card. The fraudulent actor may use a stolen debit card or the card information to make purchases or withdraw cash from an ATM. Debit card fraud can also occur if someone obtains access to the PIN associated with the card.

Bank fraud

Bank fraud refers to any type of fraud that involves a bank or financial institution. This can include fraudulent loans, account takeover fraud, and identity theft. Bank fraud can result in significant financial losses for individuals and institutions.The 2022 ACFE Report to the Nations found that banking and financial services are the second-most targeted industry for fraud, with a median loss of $100,000 per case.

Wire transfer fraud

Wire transfer fraud occurs when a fraudulent actor obtains access to someone’s bank account or wire transfer information and then uses it to transfer money to their own account. The fraudulent actor may employ various tactics to obtain the victim’s information, including phishing scams or hacking into the victim’s computer or email account. The FBI’s Internet Crime Complaint Center (IC3) reported that wire transfer fraud was the most commonly reported type of business email compromise (BEC) and email account compromise (EAC) scam in 2020.

Check fraud

Check fraud involves the creation or alteration of a check to obtain funds fraudulently. This can include forging a signature or altering the amount of the check. Check fraud can occur when someone steals a checkbook or obtains access to a victim’s checking account information. Checks were the payment method most vulnerable to fraud, accounting for 66% of all payment fraud in 2020.

Mobile payment fraud

Mobile payment fraud is the unauthorized use of mobile payment services, such as Apple Pay or Google Wallet, to make purchases or transfer funds. This can occur if someone gains access to the victim’s mobile device or payment information. Mobile payment fraud can also occur if a fraudulent actor creates a fake mobile payment account using someone else’s information. Seventy percent of fraudulent transactions took place on mobile devices in 2022. 

How does payment fraud happen?

Fraudulent actors use a range of tactics to obtain access to sensitive payment information or carry out unauthorized transactions:

Phishing

Phishing is a technique used to obtain sensitive information such as credit card details, log-in credentials, and other personal information. Phishing is often done through email or social media, where the fraudulent actor creates a fake log-in page or payment portal to trick the victim into entering their information.

Skimming

Skimming is the process of stealing credit or debit card information by installing a device on a legitimate payment terminal. The device captures the card information and PIN number, which can be used to create counterfeit cards or withdraw cash from an ATM.

Identity theft

Identity theft occurs when a fraudulent actor obtains someone’s personal information, such as their name, address, and Social Security number, to commit fraudulent transactions. This can include opening new credit cards, applying for loans, or making unauthorized purchases.

Chargeback fraud

Chargeback fraud occurs when a customer makes a purchase using a credit or debit card and then disputes the transaction with their bank, claiming that the purchase was unauthorized or defective. With chargeback fraud, the business is often stuck reimbursing the customer, even if the purchase was legitimate and made by the cardholder.

Business email compromise (BEC)

BEC is a type of fraud that targets the employees of a business. The fraudulent actor will send a phishing email to an employee, usually a senior executive or business partner, requesting that the employee disclose sensitive information or transfer funds to the fraudulent actor.

Malware

Malware refers to any type of malicious software designed to gain access to sensitive information or control a victim’s computer or device. Fraudulent actors use malware to steal credit card information, log-in credentials, and other personal information. Source

How Credit Card Processing Works

How does credit card transaction processing work?

Credit card transaction processing varies depending on where a transaction takes place and what type of card is used. For example, an online credit card transaction will be initiated in a different way than an in-person card transaction. Similarly, an in-person transaction will work differently if the credit card is stored in a digital wallet compared to an in-person transaction where the customer uses a physical card.

But even with these smaller variations, the overall credit card transaction process is mostly consistent across different types of transactions. Here’s a simplified overview of how the process works:

1. Initiation

The cardholder provides their credit card information to the business. For in-person transactions, this means swiping, inserting, or tapping their card. For online transactions, this means entering the card details manually or selecting a card from their stored payment methods.

2. Data transmission

The business’s POS system or payment gateway captures the transaction details and securely transmits this information to the credit card processor.

3. Authorization request

The credit card processor forwards the transaction data to the appropriate card network, which then routes the authorization request to the issuing bank.

4. Approval or decline

The issuing bank verifies the cardholder’s account, checking for sufficient funds and any potential fraud or security issues. Based on this evaluation, the bank either approves or declines the transaction and communicates this decision to the card network, which relays the information to the credit card processor.

5. Authorization response

The credit card processor sends the authorization response—either an approval or a decline code—to the business’s POS system or payment gateway. If the transaction is approved, the business can complete the sale and provide the goods or services to the customer.

6. Settlement

At the end of the day, the business submits the batch of all approved transactions to the credit card processor for settlement. The processor also forwards the transaction details to the respective card networks.

7. Funds transfer

The card networks coordinate with the issuing banks to transfer the funds for each transaction to the acquiring bank, which receives the funds in the merchant account. The acquiring bank then transfers the funds into the business’s regular business bank account, minus any processing fees. This entire process usually takes 1–3 business days.

8. Cardholder billing

The issuing bank adds the transaction amount to the cardholder’s account balance and includes it in the monthly statement. The cardholder is responsible for paying the credit card bill according to the terms and conditions of their card agreement. Source

Tips for Taking your Credit from Good to Great

Improving your credit score takes perseverance, but it may pay off.

Trying to raise your credit score? Here are a few tips on how to achieve that; 

• A higher score (especially above 760) may give you more options — and better rates — if you ever need a car loan, mortgage, or home equity line of credit. Even if you don’t have immediate plans to apply for financing, good credit may help you in other ways, like lower insurance premiums, renting an apartment and certain employers even run credit checks on job applicants prior to hiring them. Focusing on developing good long-term credit habits is an investment in yourself. Here are some specific actions you can take that may help to improve your score over time.

• Keep track of your progress. As you make changes, it will take time for your score to adjust. Scores update on a monthly basis, so be sure to track them regularly. You may be surprised to learn there are several different versions of credit scores available in the market. Be sure when you are comparing scores, you watch the score type and version (FICO® Score vs VantageScore®). Be sure you are tracking one score type consistently over time so that you are comparing apples to apples. 

• Always pay bills on time. It may seem obvious, but a history of consistent on-time payments is one of the biggest factors in building a good score. Thirty-five percent of your FICO® Score is based on your payment history, so be sure to always make at least your minimum payment, and more if possible, on or before your due date every month.

• Keep credit balances low. How much credit you have available is another important scoring factor, making up 30% of your FICO® Score. To help maximize your score, you will want to keep balances as far below your credit limit as possible. While there is no set rule on credit utilization ratios, most experts recommend staying below 30% as a guideline (the lower the better) while still actively using your credit. This would mean you would want to keep your balance below $900 on a credit card with a $3,000 credit limit. Consider setting up balance alerts, so you are notified when your balance reaches a certain amount or percentage of your credit limit.

• Pay your credit cards more than once a month. Getting into the habit of making small payments throughout the month (often-called micropayments) instead of a payment once per month may help you keep your balance a little lower. This can help ensure you make your minimum payment each month and may result in a lower overall balance. A lower balance helps keep your utilization rate low, which positively impacts your score. Lower balances may also help reduce your interest expense if you carry a balance. Just be sure you have made at least a minimum payment by your due date to avoid any late fees.

• Consider requesting an increase to your credit limit. If you have had your credit card for a year or more, and made your payments on time, your card issuer may be willing to increase your credit limit. You will need to avoid the temptation of charging more on the card in order for this strategy to help you lower your utilization rate. Be aware that this request may result in a hard inquiry on your credit file, which may have a short term impact of lowering your score.

• Keep unused accounts open. The length of your credit history accounts for 15% of your score, so closing old accounts may negatively affect your score. Open accounts with no balances mean you have more available credit, so it may help your score by keeping them open and using them sparingly.

• Be careful about opening new accounts. Recent credit activity makes up 10% of your FICO® Score. Too many credit inquiries in a short period of time may hurt your credit score. If you need a new credit account and can comfortably manage the additional payments, great. But avoid anything that might strain your budget.

• Diversify your debt. Ten percent of your FICO® Score is determined by your “credit mix”. Creditors like to see a pattern of handling credit responsibly over time on a variety of account types, including installment loans and revolving credit (like credit cards and lines of credit).

FICO® Score Rating;

Exceptional (800 or better)

You may generally be able to qualify for the best rates, depending on your debt-to-income (DTI) ratio and the amount of equity you have in any collateral.

Very good (740 - 799)

You may generally be able to qualify for better rates, depending on your debt-to-income (DTI) ratio and the amount of equity you have in any collateral.

Good (670 - 739)

You may typically be able to qualify for credit, depending on your debt-to-income (DTI) ratio and the amount of equity you have in any collateral (but you may not get the best rates).

Fair (580 - 669)

You may have more difficulty obtaining credit and will likely pay higher rates for it.

Poor (300 - 579)

You may have difficulty obtaining unsecured credit.

No score -

You may not have built up enough credit to calculate a FICO score, or your credit has been inactive for some time.

Source

Does Applying for Credit Cards Hurt Your Credit?

When you apply for a credit card, the card issuer will typically run a hard inquiry on one or more of your credit reports. According to FICO, a single hard inquiry will typically knock fewer than five points off your credit score.

That said, inquiries remain on your credit report for two years, and if you apply for more than one card in a short period of time, those multiple inquiries can have a compounding negative effect. To minimize the potential impact of hard inquiries, look for opportunities to get prequalified for a card before you apply. Many card issuers offer prequalification tools that can give you an idea of your approval odds with just a soft inquiry, which doesn't affect your credit score. Some credit card companies may even send you a preapproved offer in the mail based on a soft inquiry.

Does Opening a New Credit Card Hurt Your Credit Score?

If you're approved for a credit card, your account will be automatically opened. A new credit card can impact your credit score in a couple of ways:

• Length of credit history: The new account will lower the average age of your accounts. That may not be a big issue if you have a long credit history, but if you're relatively new to credit, it can have a more significant impact on your score.
• Credit utilization: With a new credit card, your total available credit will increase, which can help lower your credit utilization rate—the percentage of available credit you're using at a given time. However, if you start racking up debt on the new card, it could increase your utilization rate, damaging your score.

The good news is that the impact on your credit score for both of these factors is generally temporary in nature. Paying your bills on time and maintaining low balances can make it possible for you to improve your credit over time with a new card.

How to Responsibly Apply for New Credit Cards

There's nothing wrong with using multiple credit cards to take advantage of the different rewards and benefits they have to offer. However, it's important to take a responsible approach to avoid putting too much strain on your credit score:

• Get prequalified. As previously mentioned, prequalification tools typically only use a soft inquiry to evaluate your approval odds. While there's no guarantee that you'll get approved for a card after passing prequalification, it can help minimize your chances of getting denied.
• Don't open too many cards in a short period. While it may be tempting to open multiple cards quickly to take advantage of welcome bonuses and other new-cardholder perks, try to space out your applications by at least six months to lessen the impact on your credit score.
• Don't open new accounts before applying for a loan. If you're planning to apply for a mortgage or car loan, it's best to avoid applying for credit cards in the months leading up to your loan application. The temporary credit score dip and a potential increase in your debt-to-income ratio can impact your loan approval odds.
• Manage newly opened cards responsibly. Each time you get a new card, it's important to ensure that your spending doesn't change. Racking up a balance on the new card can increase your utilization rate and make it more difficult to keep up with all of your monthly debt payments.

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5 Important Credit Card Lessons for Teens and Young Adults

Here are the credit card lessons everyone should know before they swipe their first piece of plastic; 

1.) Understand how credit cards work

At first glance, it looks like you’re getting access to free money. However, that’s not how credit works. Your kids need to understand that a credit card represents a loan. You’re not using your money — you’re using the credit card issuer’s money. You have a limit that you can borrow up too, set by the card issuer.

Teens and young adults need to understand that interest is an extra charge for borrowing money. You can borrow a portion of your available balance, and then repay it. If you don’t pay off your credit card balance when the bill is due, you’ll be charged interest. The bigger the balance you carry, the more you’ll pay in interest.

Consider using a credit card calculator to show your child how much interest could accrue from regularly carrying a balance. Show them that running up a big balance and being charged interest can keep them from meeting other financial goals that might matter to them. When they understand that credit cards are loans, and not paying them off can cost them even more, they’re more likely to rein in their spending and make better choices.

2.) Know the difference between a credit card and a debit card

Make sure your student understands that:

• Debit cards provide access to your money. They connect directly to your bank account and the money you already have. In many cases, if you don’t have the money, you won’t be able to use the debit card.
• Credit cards provide access to borrowed money. As long as there are available funds (meaning you’re beneath your credit limit), you’ll be able to spend on the card — even if there isn’t money in your own bank account. But, if you keep the balance into your next billing cycle, you can expect to pay interest on top of the money you borrowed.

Credit card information is reported to the credit bureaus and impacts your credit score, while debit card information may not affect your credit score. You can build your credit history with smart and responsible credit card use.

3.) How credit cards work with your credit score

One of the most important credit card lessons is that your card usage can impact your credit score. A credit score is a numerical way to summarize your ability to handle loans and other financial obligations.Without a good credit score, you might end up paying much higher interest rates on car loans and mortgages — if you can even get those loans at all. In some states, your credit score might affect your car insurance premium, and there are some landlords that run credit checks before they’ll let you into an apartment.

A credit card can be one of the fastest ways to build good credit. If not used responsibly, though, it can sabotage your credit score. Credit card issuers report your activity to the credit bureaus each month, letting them know how much you owe and whether you pay on time. The biggest ways your credit card habits affect your credit score are related to:

• Payment history: Your payment history accounts for 35% of your FICO® credit score. If you miss payments or pay late regularly, that can drag down your score. However, when you pay your credit card bill on time each month, that creates a record of responsible behavior that boosts your score.
• Credit utilization: How much of your available credit being used makes up about 30% of your FICO® score. If you’re taking up more than 50% of your credit limit and carrying a balance each month, that can result in a lower FICO® score. However, if you keep your credit utilization to below 30% (even better if you pay off your card), you can see a better credit score.

Basically, anything you do with your credit card is reported on your credit report, and the information from your report is used in the formula that figures your credit score. Practice good credit habits, and you’ll see a better credit score.

4.) Be careful with credit card and financial information

I always tell my kids to be very careful with direct mail offers, for example. If you’re going to discard them, tear them up before putting them in the trash. People can get a hold of them and try to set up a credit card in your name. If someone steals your identity and opens a loan or credit card using your information, that could have a big impact on your score — especially if they run up bills and then don’t pay. While you might eventually get the situation fixed, it can take a long time and can cause a big headache.

You’re better off being very careful with your information, choosing strong passwords and carefully shredding any mail offers you get for credit cards (after you’ve carefully considered the offer inside).

5.) Start slow and practice

Teach your kids credit card lessons by letting them make small purchases and practice paying them off. If your child is a teenager, you can consider adding them to your own card as an authorized user. This will allow them to practice using a card while you keep an eye on them. Plus, your teenager will start building credit based on card usage. Another option is to help your child open a secured credit card. They will have to provide cash as collateral, but a secured card, unlike a debit card, is reported to the credit bureaus and can help them build their credit.

Be sure that you monitor their usage at first. Encourage them to make small purchases and then pay them off quickly with money they earn from a job. It’s important to let your child know that it’s vital to only make purchases if they are in the budget and if they know they will have the money to pay off the card when the bill is due. As you start slow and allow them to practice making smart and responsible decisions, they’ll be more likely to do the right thing when they have their own card.

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The Basics of Debit Card Processing

Debit cards look like credit cards. The key differentiator between the two is where the funds to pay originate. With a debit card, payment is linked to the cardholder’s bank account and the amount is immediately deducted from their account balance, whereas credit cards extend a line of credit from the cardholder’s card-issuer.

Here are four different types of debit card processing

• PIN Debit - Cards are programmed with a personal identification number (PIN) needed to make purchases. This form of debit adds a layer of fraud protection to cardholders, merchants, and banks.
• PINless Debit –Transactions below a certain dollar amount (or other criteria) don’t require a PIN or signature.
• Signature Debit - Cardholders sign a receipt or the signature screen of the point-of-sale terminal to complete their purchase.
• Contactless Debit - Customers wave or tap their card, wearable (smart watch), or mobile device over a near field communication (NFC) terminal that communicates with the radio-frequency identification (RFID) technology in the card or device. With a wearable or a mobile device, the debit card is linked to a mobile wallet, such as Apple Pay®, Google Pay™ or Samsung Pay®. The transaction moves through the debit network just as it would with a PIN debit purchase.

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