what do you mean by “chargebacks are not excessive”. From which % of whole sales / total nuimber of transaction do they consider chargebacks excessive ?
It cost us a quarter every time he runs a charge. This is an exanple of a charge
N N 202.53.245.20-1088104129-527006-29416-14
06/24/04 12:08 jhyjhfjhcf 0.00
As you see he doesn’t try to hide the farud the orders are for 500 to 2000 my only option is to drop my realtime processing and go to processing the cards myself. The orders are authorized for payment I have to run the payment but of course I do not so the charge is only .25. Credit card fraud usually comes form me the merchant not doing my job and check the address before sending the order. Some are getting real good at hiding smaller amounts etc. but a quick check with the 800 address verification is all you need most of the time, Be advised to check ALL ORDERS with a billing address different from shipping I usually call the person as well as check.
I read about the guy having all the trouble with his processor seems he really needs a crash course in checking his charges before he batches out, I think Cardservice is probably going to suspend his account anyway as too may chargbacks on to few orders. He really needs to be more careful in sending his goods out. I know if we had that many we wouldn’t be around doing business. God Bless Joe
Thanks for that information I plan on giving them a call now. been with them 3 years and I am happy as well.
Question, I two am in process in choosing a merchant and a payment gateway. From what I have seen they are all pretty competitive in fees. Sure a percent matters, but I would rather pay extra to a company with a good reputation. My question is if I go with PayPal does the customer have to set up an account (ex. user name, password, etc)? Or do they go through a standard process? (w/o setting up an account) Because personally that is a tedious process, I just want to input my delivery address, payment info, print my receipt and move on.
Supposedly if you use Paypal, your customers do not have to sign up for an account to make a payment.
Just out of curiousity, how much volume do you plan on doing monthly? If it’s $2000 or less, Paypal is a great choice. If it’s more then that, you may want to consider a true merchant account.
If you have the correct Paypal account: http://paypal.typepad.com/pdn/2004/02/sign_up_not_req.html - members do not need to be registered
Thanks for the link Corey, and stymiee right now my business is in the start up phase, so I plan to move around 2k per month with my first two marketing campaigns. I would like to go through PayPal but to me personally it just doesn’t seem like a professional way to accept payments. It llok like you are buying froma n online auction. What do you guys think?
Depends on who your clients are. A lot of people (including myself) have extra money in a Paypal account. People pay me using Paypal & I just keep that money in there.
I always recommend though getting a separate bank account for Paypal.
How do you use PayPal as a payment processer?
You just go to their website & sign up. I usually recommend Paypal in conjunction with a merchant account depending on your consumers. It usually takes about a month to get verifed etc.
I think a lot of the information in the initial post here is quite good and valid. I would like to offer a few clarifications on a couple items, though.
First, it is important to keep in mind that merchant processing is a team effort. Merchant processors all operate on very low margins with the majority of all fees going right back to the issuing banks as part of the Visa/MC interchange costs.
Merchant processors incur a multitude of costs to keep an account up and running. There are BIN sponsorship costs, account-on-file costs, network processing fees, customer service costs and then you also have to account for the risk losses that are taken on merchants due to chargebacks & NSF’s that are left unpaid.
One of the myths about credit card processing is that many merchants believe that the rate charged on a merchant account (the 2.xx%) is “mostly profit” when in reality only a small portion of this represents net profit.
Another area that is often not even mentioned and quite frequently confused are “downgrade costs.” And this is an essential piece of information to understand when comparing merchant pricing.
For example - you could get a rate of 2.10% with one provider and pay MUCH MORE than you would with a rate of 2.35% with another provider, based on HOW downgraded transactions are classified.
Some processors will classify different types of transactions on a “mid-qualified” or “non-qualified” level which has a much higher % rate… but this is often not part of the sales pitch to you and quite frequently this is hiddien the fine print.
Yet, it can have a major impact on your pricing so you will want to ask any prospective processor: (a) what are the mid and non-qual fees specifically and (b) what exactly, specifically determines what types of transactions fall into the different tiers and (c) statistically speaking, what are the break-downs portfolio-wide?
Also, in terms of the business checking account issue - this is often required but not always required. It is perfectly acceptable to some processors to use a sole proprietor’s personal bank account sometimes.
Lastly, regarding the “2% chargeback rate” - this rate was actually reduced to 1% by Visa. However, to be automatically placed on the Visa chargeback monitoring program, you would need to have at least 100 interchange & chargebacks in a given month as well.
I never heard about such “downgraded transactions”. Can you tell us more?
Thank you in advance.
Sincerely,
Fab.
It varies a little from acquiring bank to acquiring bank, but usually if the AVS (address verification) does not happen, the transaction can be called a mid-qualified or non-qualified transaction keyed transaction. This is because with no AVS, the transaction has more of a chance of being fraud.
Unfortunately, processors are relying on this archaic method of verifying a transaction which in this day and age, is not all the best. A lot of processors are now taking VBV into consideration as well.
Most U.S. purchase & now some UK purchases are being counted as qualified transactions. For some of the other countries, unfortunately not but most merchant’s business does not comes from those countries or maybe the merchant does not even accept business from those countries due to the already high risk of fraud
Thank you Corey for your information.
So is AVS required by all the merchant account services? Or the Merchant can decide if use or not use it?
Also, I don’t know about the new VBV… is it something similar to AVS?
Thank you.
Fab.
Well not required but preferred. But you should always use AVS & look at the AVS code to see if it matches. If there is not a match, you need to consider if you really want to accept that transaction
VBV is Verified by Visa. This basically protect you on the orders that say ‘I didnt do it’ chargeback reason & helps to cut down on the fraudulent transactions.
Ok, I will surely do it. I had not enough knowledge about such issues…
VBV system looks great. I hope it will be implemented soon!
Thank you again.
Fab.
It actually already is. I know LinkPoint & Auth.net connects. I am sure verisign would as well. We tried to sign up as a reseller but they seemed to have different numbers & wanted a pretty large sum of money. We wanted to become an all-in-one place. But you also might want to check out http://www.fraudgate.com - working on something with them to help cut down fraud at least
Visa and MasterCard have been pursuing gateways and processors to reach compliancy for the past several years. As these payment systems reach compliancy you will notice a much higher rate of adoption in the merchant market.
There will be several large marketing campaigns in the next several months concerning card-holder adoption, which will be done by Visa and MC. Many merchants are actually using these beneifts they recieve, and turning them into savings and benefits for cardholders that are enrolled who shop with them. They can do this because the transaction is as secure and reliable as a brick-and-mortar transaction, regardless of the typical fraud indicators.
I’d love to chat, but STAY TUNED. We will be submitting a large post to SitePoint which breaks down each program, how it works, who needs it, who should want it, international coverage, who has it now, how to get it, etc.
This sounds really interesting…
Fab.