Security - PAYARC

‘Tis (Almost) The Season: 9 Ways to Guard Against Fraud
By now, holiday online retail trends should be no surprise to merchants: both sales volume and fraud rise dramatically. Last year, fraud attempts were up over 30% during the holiday season, and the trend is sure to continue in the 2017 holiday shopping season.

Merchants should keep tight reigns on fraud prevention and risk mitigation year-round; however, the holiday season often calls for extra measures. While we’re still several months out from the peak period, merchants need to start thinking about fraud prevention measures now to be prepared in time. We’ll break down nine different ways online merchants can prevent fraud this holiday season – and beyond.
1. MasterCard SecureCode and Verified by Visa – These are both 3D Secure protocols that ensure the person attempting the purchase is the owner of the card prior to authorization. Not only do these tools cut down on fraudulent transactions, but they boost consumer confidence that their information is being verified and protected.
2. Address Verification Service (AVS) – This is another tool that validates whether the person using the card is the cardholder or not. It works by validating the billing address offered at the time of purchase with the one on file with the issuer during authorization. If the authorization is approved and the AVS response indicates a match, merchants can proceed with the transaction.
3. Card Verification Value 2 (CVV2) – This protocol requires the purchaser to enter the three-digit security number printed on the back of a Visa card to verify that the customer making the purchase is in possession of the actual payment card.
4. Tokenization – Payment tokenization eliminates the need for merchants to handle or store payment data. Instead, sensitive payment data is replaced with a unique identifier – called a “token” – while the actual payment data is stored in a third party data center.
5. Chargeback alerts – Some third party solution providers offer chargeback notifications that alert a merchant when a dispute is filed with an issuing bank in the solution provider’s network. This gives the merchant an opportunity to handle the dispute directly with the customer rather than after the entire chargeback process has already occurred. Since chargebacks result in fines and penalties for merchants, it is optimal to address disputes before they turn into chargebacks.
6. Device fingerprinting – A device fingerprint is a pattern of online behavior that is identified and attached to a particular device. It can be used to identify devices which have previously been known to commit credit card fraud or online identity theft, making it easy to block purchases and transactions from those devices.
7. IP geolocation – IP geolocation can be used to identify anomalies in CNP transactions that may signal fraud. For example, if a billing address and zip code associated with Chicago is entered during the purchase authorization, but the IP address is located in Brazil, this could signal possible fraud. Depending on the type of tool, it may block the transaction altogether or route to a manual review team for further research.
8. Behavioral modeling/profiling – Some third party payment solution providers have created algorithms based on machine learning technology that enable behavioral modeling and profiling. This rules engine can identify and detect potential fraud based on anomalies to established behavioral patterns associated with payment card data. When “out-of-the-ordinary” patterns or behaviors are identified, the engine alerts the merchant to the inconsistency. From there, merchants can decline the order or submit to manual review for further authentication.
9. Big Data – Merchants can tap into multiple data sources in real-time to identify inconsistent or anomalous transaction behavior. Some tools gather social data to detect inconsistencies in location or other identifying information. Some solution providers offer access to negative information databases and behavioral databases, which merchants can use to sniff out suspicious orders and route them for additional verification or review.
The best bet for merchants looking to curb fraud this holiday season is to employ a tailored combination of some of the tools and protocol listed above depending on their unique needs. There is no silver bullet when it comes to fraud prevention, but having a fine-tuned, layered suite of tools that can be adjusted in real-time proves to be the most effective strategy.
Payarc

November 15, 2021

Fraud Prevention, Industry Insights, Security

fraud-prevention
Top Considerations for Running $1 Trial Offers
Offering $1 trial offers is a great way to acquire new customers and enable people to try your product or service at a discount. It’s a lucrative business model for subscription and continuity merchants who offer products and services at a recurring fee. While it has several financial benefits, this model also has some drawbacks. Here’s everything you need to know if you’re considering running a $1 trial offer to promote your products or online services at a discount.

The Benefits of $1 Trial Offers

A survey by Vantiv and Socratic Technologies found that 92% of millennials have active subscriptions online, which means that $1 trial offers are still very feasible ways to ramp up your revenue. Plus, millennials are all about investing in experiences rather than things, and a recurring payment subscription model with discounts offers customers an affordable alternative to buying the same product online every month.

Having the $1 trial option alone is a great way to get more consumers interested on your product as it is more likely to push potential customers to click the buy button. In fact, having a $1 trial can draw in more customers than a free trial due; once a customer invests money—even as little as $1—the chances that they will stick around beyond the initial trial increase.

A $1 trial offer is also a clever way to market products. It eases people into the financial investment with a deep discount and allows them to try a new product or service they may be interested in but may not have otherwise tried. This often results in increased customer loyalty over time, boosting recurring revenue. Recurring revenue is predictable revenue—an enticing benefit for merchants.

The Downside of $1 Trial Offers

Some companies that run $1 trial offers can get into trouble when it comes to chargebacks. The process of accepting and processing recurring card transactions can lead to a higher amount of chargebacks than other models. In some cases, the terms and conditions of the trial are not clearly delineated and consumers get charged for their second month without realizing that they have opted into a recurring service.

When this occurs, friendly fraud swoops in and can take a bite out of profits. When a customer doesn’t recognize a charge on their monthly billing statement, they contact their issuing bank to report a fraudulent charge. If the issuing bank rules in the customer’s favor (they typically do), the merchant is left with a messy chargeback. Not only have they lost the customer, but they’ve lost the money they have to refund, the product or service that the customer received, and they have to pay fines and fees associated with the chargeback.

Getting hit with too many chargebacks can push a merchant to a chargeback monitoring program, which costs even more in terms of money and reputation.If this happens too frequently, a merchant can lose its merchant account. A lost merchant account can be the death of a business.

It’s also important to consider whether your product or service merits a $1 trial offer. A site membership that offers digital content or physical products at a discount with the subscription model is more profitable with the $1 trial offer than the alternatives. As long as consumers know what they’re getting into, $1 trial offers can be very enticing and they can drive up your customer conversion rates, save you unnecessary marketing costs and increase your revenue stream.

Merchants offering $1 trial offers should find a merchant services provider that has the ability to manage and minimize chargebacks, reduce card declines and have a cost-friendly model (charging you every month or quarter, rather than for every transaction). Some questions to consider when looking for a payment processing partner include:
- Will I be able to access an intuitive dashboard to track subscriptions (including upsells, downgrades, and cancellations)?
- Does the gateway integrate with my current sales system?
- Does this provider have experience with true and friendly fraud chargebacks and can they help manage and advise on strategy for both?
- Can they help me minimize card declines and help reduce churn?
- Do they offer excellent customer support and will they respond promptly to any issues arising out of “$1 trials” including card declines and chargebacks?
Our team at PayArc says “yes” to these and more. We offer payment processing solutions for businesses of all sizes along with top-tier customer support. Contact us today if you’re in need of a top-tier payment processing services provider.
Payarc

November 15, 2021

Industry Insights, Security

free-trial
Top Ecommerce Fraud Prevention Tricks for the Holidays

The holiday season is the most important time of the year for online businesses. While an increased number of shoppers are perusing ecommerce sites, an increased number of bad actors are, too. Even though Christmas is behind us, the holiday selling season is not over. Many consumers will take advantage of post-holiday sales and begin redeeming gift cards received during the holiday season (typically spending more than the gift card amount). Without the right ecommerce fraud prevention tricks, merchants are at risk for serious losses. It’s important to have the right tools in place to combat fraud year-round, but merchants are especially at risk during this busy time of year.

ACI Worldwide found that attempts to commit fraud online during the 2017 holiday season increased by 22% year-over-year. Additionally, the company found that overall online transactions were up 19% compared during the 2017 holiday season compared to the 2016 one.

This research helps to paint the picture of how prevalent fraud is in the online retail world nowadays as cybercriminals capitalize on ecommerce sites’ vulnerabilities. Here are the best ecommerce fraud prevention tricks your business should implement for the holidays.

Clearly Defined Rules and Communication

Every person involved in helping your online business run smoothly should be trained to identify potentially fraudulent activity. They should also know how to handle these situations, including working with other departments in separating true fraud attempts from false alarms.

One of the top ecommerce fraud prevention tricks is to create checklists designed to minimize risk. These checklists can be shared with team members and help to identify situations that may throw a “flag”. This may include an unusually high number of orders originating from a certain location, inconsistent patterns in purchasing behavior, or other suspicious activity. Staff should also be aware of processes for approving and declining orders as well as escalation paths for each situation.

Ideally, business owners should train each staff member to understand the fraud-prevention tools that have been implemented. This can streamline operations when orders are rushing in. It is much easier to maximize legitimate sales if each team member knows how to identify potential fraud and react to suspicious activity to prevent chargebacks and loss merchandise from taking a bite out of business.

Similarly, every team needs to be aware of what is going on during the holiday season from a marketing perspective in order to identify whether or not online traffic increased due to holiday promotions and coupons or nefarious activity. Everyone should be aware of new product releases and volume expectations to ensure that legitimate sales are not being declined due to a misunderstanding.

This is one of the most important ecommerce fraud prevention tricks as keeping the lines of communication open across multiple teams can help every staff member identify and flag fraudulent activity in real-time.

Monitor Transactions and Fine-Tune Fraud Controls

The best ecommerce fraud prevention tricks help merchants stop fraud and chargebacks, saving thousands of dollars in losses during the holidays. Monitoring sales during the holidays is integral. Ecommerce businesses should monitor accounts and transactions for any potential red flags, including billing information that differs from the shipping address.

Automated fraud prevention tools run the gamut. Consider implementing tools that identify customer IP addresses. Geolocation tools can identify transactions originating from a country that is known for fraudulent activity. Alternatively, they can also identify “high-risk” IP addresses that have been flagged for fraudulent activity in the past.

Minimize False Declines Without Sacrificing Security

Flagging “unusual” activity can be a slippery-slope for businesses during the holidays and may hamper seasonal earnings potential if fraud controls are too strict. Merchants can research the types and patterns of transactions the business experienced during the previous holiday season to help anticipate what may be expected this year. These learnings can help inform settings for fraud tools to ensure that legitimate transactions are not unnecessarily declined.

Also consider additional steps to take rather than declining a suspicious transaction outright. Instead of flagging a transaction or escalating a dispute, merchants can request that the customer authenticate themselves through additional means to confirm their identity. There should be a healthy balance between enabling frictionless transactions and properly authenticating customers. Onerous checkout experiences can impede on the customer experience and damage a brand’s reputation.

Bulking up customer service teams another way to manage customer expectations and reduce fraud. Having a well-staffed team to handle customer questions and concerns can alleviate the stress customers feel, leading to a better brand experience. It can also reduce post-holiday chargebacks from customers who use the dispute process because they were unable to easily contact a business for returns or other issues.

Our team at PayArc can help you enjoy a smooth and profitable holiday season as we implement the top ecommerce fraud prevention tools in the industry. Contact us today to see how we can help your business reduce fraud and boost sales this holiday season.

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Payarc

November 15, 2021

Fraud Prevention, Industry Insights, Security, Technology

fraud-prevention
Visa International Card-Not-Present Interchange

Visa has specific interchange for transactions that occur using an international card in a card-not-present environment. The term“Card-Not-Present” refers to credit card transactions where the card is either keyed in (as in, the EMV chip is not inserted into the terminal or the magstripe isn’t swiped through the terminal) or the transaction is taking place online (where there is no terminal). These transactions tend to have higher interchange rates because they are more susceptible to fraud.

Visa refers to international card-not-present interchange rates as “international secure ecommerce interchange rates.” The rates change depending upon what type of card is used.

Secure eCommerce refers to online transactions that take precautions in protecting cardholder information by checking AVS or asking for the CVV. If someone uses a Visa Classic (the simplest credit card Visa offers, offers no rewards), Visa Gold (Visa’s mid-level credit card) or Electron (a Visa debit card that cannot be overdrawn – this card is not available in the United States), then the interchange rate for a secure ecommerce transaction is 1.44%.

If a customer uses a Visa Signature or Visa Premium(higher spending limit, cardholder benefits) card, then that interchange rate is 1.80%. For Visa Infinite, a card offered to cardholders with a high net worth that comes with a range of luxury benefits, the rate is 1.97%. Finally,the rate for a commercial Visa card is 2.00%.

It is useful to be aware of these rates, particularly if you run an online business that sells mostly to international consumers.Similarly, it is recommended that you take some precautions to protect cardholders from fraud; e.g., make sure that your transactions are secure according to Visa’s rules and regulations, so that these rates don’t increase even more.

Payarc

November 15, 2021

Fraud Prevention, Industry Insights, Security

interchange; visa; ecommerce
What’s a Chargeback? Understanding Different Types of Ecommerce Fraud
If you are a new merchant in ecommerce, you will likely find yourself asking “what’s a chargeback?” at some point. Chargebacks are an unfortunate reality for online merchants, though with the right knowledge and planning, chargebacks can be minimized. A chargeback is happens when a customer disputes a charge with their payment card issuing bank and the bank refunds the transaction to the customer.

Thoroughly understanding the answer to the “what’s a chargeback” question can help a merchant prepare. There are various types of chargebacks, but all have negative consequences for merchants by way of fines, fees, penalties, and damage to a business’ reputation.

If the “what’s a chargeback” question is still perplexing to you, don’t worry. We’ll walk through the different types of chargebacks and how you can avoid them.

“What’s a Chargeback?” Type #1:True Fraud

When evaluating the types of chargebacks, the first term you need to understand is true fraud, or unauthorized use. This happens when bad actors use stolen payment card information to make a purchase and the true cardholder files a chargeback to dispute an unauthorized charge.

This type of chargeback typically occurs as the result of identity theft of card skimming. Fraudsters gain access to a cardholder’s payment card data and use the information to make unauthorized purchases, which the cardholder becomes aware of when reviewing the monthly statement. In some cases, however, unauthorized use could be the result of a family member making a purchase without the actual cardholder’s knowledge. This is a less nefarious type of chargeback, but just as costly for merchants. Simple miscommunication among family members could result in a chargeback that costs the merchant in lost merchandise, shipping fees, and fines incurred by the card networks.

“What’s a Chargeback?” Type #2: Friendly Fraud

Friendly fraud is not “friendly” at all. This happens when a customer seeking a refund chooses to bypass the merchant and go directly to the issuing bank in an attempt to achieve the desired outcome. This can occur if a merchant has a confusing or “unfair” return/refund policy—or if the merchant has no refund policy at all.

After receiving the product, some customers may claim that they were unaware of the purchase or say that they never received the product or say that they returned the product without receiving credit for their return. Simply put, the customer could be looking to use the product or service without paying for it.

In these cases, customers claim they never received the product or were unaware of the purchase, even after receiving the merchandise. In some cases, a customer may claim they returned the product and did not receive a credit for it. This can happen with digital services as well. Regardless of the type of purchase, the customer is seeking to defraud the merchant through dishonest means.

This type of chargeback can be combated by having clear returns and refund policies that are clearly listed on the website. Having excellent shipment tracking and delivery confirmation that requires a signature can also aid in avoiding and/or fighting these types of chargebacks.

Tips for Preventing Chargebacks

Here are some tips we have compiled if you’re looking to prevent chargebacks:
- Use Proper Authorization Protocol: When processing card-not-present (CNP) transactions, use AVS and CVV2 to confirm the purchaser’s identity. Protocol like 3D Secure 2.0 can add an extra layer of security to online transactions and cut down on chargebacks.
- Make Sure the Billing Descriptor Is Clear: Many disputes happen because of confusion or miscommunication. Merchants can eradicate these types of chargebacks by using clear billing descriptors, which include the merchant name (DBA) and other details that identify your business. When the customer checks their card statement after making a purchase with you, there will be less confusion about when or with whom the purchase was made
- Clearly Present T&Cs and Policies: Having clearly articulated and posted terms & conditions, return policies and refund policies can cut down on chargebacks.
- Optimize Customer Service: Merchants should have properly staffed customer service phone lines that minimize wait times. Allowing customers to contact by email can be beneficial as well—so long as emails are promptly (within 24 hours) returned. Also consider implementing chat lines to quickly address customer issues.
- Work With a Reputable Payment Processor: Working with a trusted payment processor that offers consultative services regarding chargeback management can save merchants hundreds of thousands of dollars in the long run. Having a chargeback prevention plan—and a chargeback management strategy—is essential to guarding hard-earned profits from true and friendly fraud.
Payarc

November 15, 2021

Fraud Prevention, Industry Insights, Security

chargebacks
Mobile App Payments Commentary: MobilePaymentsToday.com
Jared Ronski, Principal at PayArc, was recently featured in MobilePaymentsToday.com. He offered commentary on the $101 Billion Mobile App Opportunity for merchants, noting the importance of understanding different, nuanced monetization models in mobile apps. He also offered best practices for business owners and developers looking to take advantage of this sector, point to the following key considerations:
- Payment experience should not be an afterthought
- Security
- Customer service
- Fraud prevention
You can read the full article here. Please comment to let us know your thoughts.
Payarc

November 15, 2021

Security, Technology

mobile-apps-payments
Need for Speed: How to Get a Fast Merchant Account
If you’re an online business, having a good merchant account is vital. This kind of bank account allows you to accept credit cards for payment, so it’s one of the first things you’ll want to get up and running when you’re launching your ecommerce business. Every day that you don’t have a fast and functional merchant account is a day with lost profits, so it’s important to select one that will let you hit the ground running. Here’s your step-by-step guide to how to get a fast merchant account:

Step One: Do Your Research

Even before you open your application, you’ll need to know what your business looks like to the merchant account providers you’ll be applying to. If you’re a high risk business, (including subscription businesses, adult material, travel packages, or a startup, there are specialized merchant accounts for these businesses to help you get a merchant account fast.

If you’re not a high risk business, it’s still important to do research and understand what account provider is a good match for your business. The size of your business, whether you plan to scale up, if you want to accept international currency — all are important subjects to take into consideration before getting a fast merchant account.

Look at different processors and don’t be afraid to ask questions! Some things to ask about include:
- Transaction fees: How much will you be charged for each transaction?
- Chargeback fees: Chargebacks are an unfortunate part of accepting credit card payments, and you won’t be able to prevent them altogether. But, you can at least prepare for what kind of fees you’ll have to pay in the event of a chargeback.
- Fraud prevention: Face-to-face credit card payment fraud is down 28 percent from just three years ago, but fraudulent card-not-present transactions (mostly online) are up 106 percent. Find a processor that’s Payment Card Industry Data Security Standard (PCI DSS) compliant to ensure they’re up to date with the latest security requirements.
- Integrations: It’s important to be able to integrate anywhere you want to. Some merchants offer over 300 integrations!
- Reporting: Find out what kind of data your account provider can pass on to you.
Once you’ve found a promising account provider that meets your needs for a fast merchant account, it’s time to apply.

Step Two: Prepare Your Application

Once you decided on an ecommerce merchant account, you’ll fill out an application. This is a generally pretty straightforward process where you’ll provide some important information to the account provider. It can includes a cover letter that answers any potential questions or concerns, and spotlights any important experience or qualities that make you stand out from your competitors. Many merchant accounts require an underwriting process for approval. The application usually will ask for certain documents and information, so they’ll be able to run a credit and background check.

You’ll also probably be asked to provide your Employer Identification Number (EIN), business checking account information, a business license, your social security number, and other business operational information.

While this might sound like a lot, the application step shouldn’t take you too long to complete. Having all of your information accurate and documents filled out and ready to go will help you get a fast merchant account.

Step Three: Submit and Wait

It can be hard to figure out an exact estimate for how long it will be in between submitting your application and getting your merchant account up and running: it might take anywhere from as little as 24 hours to a couple weeks. The length of time will depend on the kind of business you have, the kind of history you have as a business owner, and how organized and quickly you submit all the requested documents.

In most cases, waiting a few days isn’t an issue. But what if you really want to get your merchant account ready as soon as possible? Needing a fast merchant account approval can be an important priority in some scenarios. For example, what if you have to get your ecommerce store ready for a big holiday rush — you have a limited time frame to capitalize on your profits, and every day you aren’t approved is a day that you’re losing potential sales.

That’s when it’s a good idea to try to find a merchant provider that works with your business and guarantees you’ll be approved fast. Working with experienced providers, such as PayArc, will help.

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Payarc

November 15, 2021

Industry Insights, Security, Technology

payment-processing
Small Business 101: How to Get an Ecommerce Merchant Account
Maybe you’re a brick and mortar store looking to expand your customer base to people who can’t reach your physical location, or maybe you’re a unique small business that only sells products online. Whatever your situation, having an online business presence is just good sense. Still, whether you’re just getting up and running as a business or are trying to expand your brick-and-mortar sales by offering products online, there are a lot of things to keep track of. There are strategic and operational things to consider when you’re launching a new ecommerce business, and one of the most important considerations is your payments operation.

What is an Ecommerce Merchant Account?

So what exactly is a merchant account? Essentially, it’s what allows you to accept payments online. A merchant account is a special type of business bank account that lets your business accept different types of payment—typically debit and credit card payments — necessary for online purchases. Every time someone pays for something with a credit card, funds are transferred to a merchant account that a merchant holds with a bank. The merchant is responsible for all the transactions on their account, and every bank has its own terms of service.

So you know you need a merchant account — that’s a given. It’s time to go shopping for a provider. You’ll want to have an idea of what kind of services you want your merchant account to provide. What kind of credit cards and currency do you want to accept? How will the payment gateway (a service that authorizes credit card payments, usually set up with the merchant account) be integrated? What sort of authorization process does the provider have? What kind of customer service is available? Finally, you don’t want to skimp on security: make sure the merchant account provider is PCI DSS Compliant, which means they meet certain requirements like protecting cardholder data and regularly updating antivirus software. Depending on the type of business you have, you might also want to look into extra security and fraud monitoring tools. Once you’ve found a merchant account provider that fits your needs, you can begin the application process.

Ecommerce Merchant Account Red Flags

It’s good to have an understanding of what might cause your application to be flagged. These reasons don’t mean you’ll be denied outright, but if you answer “yes” to any of these questions, it’s worth doing a bit of extra research and go the extra mile to ensure your application will be approved. You might also have to pay extra fees or agree to special restrictions.
- Are you a high risk business? Every time a ecommerce merchant account processes a payment on a credit card for you, there’s a risk, and if you’re in an industry with a higher risk than usual, you might have to look for specialized providers. Examples of these “high risk” businesses include those that involve adult material, gambling, or travel packages.
- Are you a start-up? Even if you’re not part of one of the high risk industries, up to 70 percent of startups fold. Again, this doesn’t make it impossible to find and be approved for a merchant account, but it might be worth turning to a processor or agent that specializes in helping startups through the approval process.
- Does your business have a subscription model? These are one of the special, risky industries, because businesses that involve subscriptions have higher than average chargeback and online fraud rates. There’s also a longer rate between when customers pay and receive their product, which can make some merchant account providers skittish. If you show that you have put thought into how to control this so-called fulfillment duration, that’ll go a long way to getting you approved.
Once you decided on an account, you’ll send a cover letter that answers any potential questions or concerns. Elaborate on any steps that you’ve taken to mitigate risk, be straightforward and honest about potential issues, and spotlight any important experience or qualities that make you stand out from your competitors.

Finally, a word of warning: do your homework before applying for an ecommerce merchant account and choose a reputable provider. Be wary of “free” ecommerce merchant accounts or those that offer cash back if you find another deal. Make sure you protect your financial information, read all the fine print, and research everything carefully.
Payarc

November 15, 2021

Industry Insights, Security, Uncategorized

payment-processing
The Benefits of Cash Discount Programs for Merchants
When you combine merchant fees with dynamic interchange fees issued by credit card companies, accepting credit cards can be costly and confusing for a small, growing business.

Customers often want to use their preferred method of payment, so not offering credit card payments isn’t an option.

First, let’s dig into the different types of fees before determining if a cash discount program is right for you.
- Merchant fees are typically flat rate fees paid by the merchant to the issuer of the point-of-sale (POS) terminal every time you run a transaction.
- Interchange fees, which are levied by the credit card companies, often include a flat rate transactional fee plus a percentage of each transaction.
How do Customers Typically Want to Pay for Goods?

There isn’t a one-size-fits-all answer. It depends on a variety of factors.

A 2016 study of 1,000 consumers indicated that “40 percent chose credit cards, while 35 percent selected debit cards and only 11 percent specified a preference for using cash.”

But as soon as you factor in considerations like transaction value or even store type, those numbers change dramatically.

It’s important to consider your average transaction value and business type when determining whether a cash discount program may be right for your business.

If you’re a business with a low average transaction value, like a nail salon or a coffee shop, merchant and interchange fees can add up to thousands of dollars a month. To combat this monthly expense, some businesses add a surcharge fee when customers pay with a credit card.

Credit card surcharges have somewhat of negative connotation among consumers, and some states even prohibit businesses from charging these fees. The following states don’t allow surcharges:
- Oklahoma
- Maine
- California
- Texas
- Colorado
- Connecticut
- Kansas
- New York
- Massachusetts
- Florida
In some cases, surcharges don’t make business sense. A low average transaction value and high credit card usage among your customer base, it may make sense to implement a cash discount program.

What are the Benefits of a Cash Discount Program?

A cash discount program offers merchants a way to offset tiered fees incurred when running credit card transactions.

A cash discount program allows merchants to implement a service fee (no more than 4% per transaction) to customers that pay via credit card while offering a discount to customer that pay with cash.

Cash discount programs require merchants to provide at least one notification before purchase that service fees are added to purchase, though multiple points of notification are recommended. Information about the service fees must also be included on customer receipts.

A cash discount program often encourages many customers to pay cash, which in turn reduces the transaction volume fees you incur from the credit card companies, your bank, and the terminal leasing fee needed to run credit cards.

In fact, you can use the money you save and your additional cash flow to reinvest in your business—something your customers will likely appreciate. If you’re a coffee shop, for example, you can use your new cash flow to make WiFi free or add a few comfortable couches for your guests to relax in.

If you’re considering a cash discount program, you will need a specialized vendor. Look for a vendor that has a varied fee structure that works with your business and average ticket size. This is rapidly growing subset of payment processing, so there is an abundance of companies to choose from.

How to Select a Cash Discount Program Vendor

Do your due diligence and ask potential vendors how much their customers save on average. You may also ask to view a sample receipt and check out their BBB rating. Your vendor’s technology should allow you to accept all credit card types, mobile wallets and EMV chip cards. Finally, make sure they disclose all fees to you.

Pricing usually comes in two forms; a flat rate, which works great for high transaction volume but low average transaction value, or a percentage of sale, which is ideal for businesses with a high dollar transaction value. Also, your vendor might offer free in-store signage to make your customers aware of the change.

PayArc has recently launched our Cash Discount Program, and we’re looking for motivated merchants to partner with. If you’ve been considering implementing a cash discount program, contact us today so we can show you the incredible savings we can provide.
Payarc

November 15, 2021

Fraud Prevention, Industry Insights, Security

payment-processing
The Future of Frictionless Payments

New technology has expanded the ways we pay. Where cash was once king, credit and debit cards now reign supreme. Even that upseating is in the process of dynamic change. As consumer lifestyle preferences shift and convenience is valued over all, many consumers are looking for even easier ways to pay online.

This is where frictionless payments begin to take hold. Embedded and “invisible” payments experiences are taking ecommerce by storm, enabling consumers to pay for goods and services in the blink of an eye. In fact, as biometrics continue to seep into the payments experience, the blink of an eye (via facial recognition tools) may be a new way to pay soon enough. Ecommerce companies like Uber have made it easy to conduct commerce on mobile phones without even experiencing the act of payment. Instead, users simply choose what they want: transportation from Point A to Point B; the actual payment happens behind the scenes, so as to not encumber the customer.

This is the new trend in payments: frictionless payments. With it comes a lot of responsibility on the part of merchants to ensure that these types of transactions happen safely and securely

Security in Frictionless Payments

As digital commerce accelerates and the Internet of Things (IoT) grows, payment options are growing in tandem. With 8.4 connected devices—a number forecasted to increase to 20.4 billion within two years— it’s not surprising that consumers want to be able to pay anytime and anywhere. It’s critical to ensure these “anytime, anywhere” payments are protected with the utmost security.

An example of such security measures is 3D Secure. The first 3-D Secure (Three Domain Secure) authentication has been around for years as a security layer for card-not-present (CNP) transactions. One of the primary reasons it was created was to increase consumer confidence in online transactions. While it was effective in securing transactions and garnering the confidence of consumers, it also introduced unnecessary friction and false positives into the equation, causing merchants to experience more cart abandonments.

The new 3D Secure 2.0 (3DS2) has made frictionless payments a primary focus. The updated version allows the transmission of more data during transactions, enabling risk-based decisions for authentication. Using token-based and biometric authentication allows this protocol to facilitate secure, frictionless payments by freeing up consumers from the need to remember static passwords.

Other Considerations for Frictionless Payments

The core component of frictionless payments is convenience. Users are able to pay on their terms without being overburdened by security measures (though the security is still in place to adequately protect transactions). Having the proper payments infrastructure in place has become increasingly important to facilitate frictionless payments as new channels become commerce channels.

Conversational commerce has ushered the rise of using voice assistants and chat bots (via messaging apps). As more mobile websites and mobile apps come into play, consumers are increasingly using mobile wallets as streamlined ways to pay from a smartphone. This signals great strides in optimizing convenient ways to pay; however, the fraud problem still exists on these channels. It’s an ongoing game of striving to make the payments experience seamless for consumers without making it a cake walk for bad actors.

Each new payment channel and instrument can be an open invitation for hackers and fraudsters looking for an easy target. The interconnectedness of these channels and payment methods (credit cards to wallets and wallets to apps, etc.) make it ripe for the fraudulent picking. Merchants that go the route of offering in-app payments should be sure that login security is strong without being cumbersome for the end consumer.

A Vision for the Future of Payments

We will continue to see frictionless payments get more sophisticated as technology evolves. Existing technology has already afforded consumers some interesting and unique ways to shop and pay. Amazon, an e-commerce mammoth, has led the charge in frictionless payments. Their Amazon Go grocery store promotes what it calls a “a check-out free shopping experience” where customers don’t endure a checkout line—they simply walk out with their selected items, which are automatically charged to their connected Amazon account.

No matter where you are on the frictionless payments journey, it can be beneficial to work with a professional, trusted payment processing partner. PayArc offers payments support across the spectrum—from payment gateways to chargeback management and fraud prevention—to help merchants streamline payments across all channels. Reach out today to learn more about how we can help you optimize your payments operation.

Payarc

November 15, 2021

Security, Technology, Uncategorized

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