An immense data security breach has purportedly compromised tens of millions of credit cards and debit cards, fostering concern and worry among customers who patronize merchants who use Heartland’s processing system.  Merchants, too, are extremely anxious about offering a platform where data security has been rendered vulnerable.  Of course, Heartland Payment Systems has also spiraled downward since the company reported the breach, receiving acerbic attacks from its perceived irresponsibility to its timing of the disclosure.  (Heartland announced the details of the data breach on the day of Barack Obama’s presidential inauguration.)

President and chief financial officer of Heartland, Robert H.B. Baldwin Jr., reported that malicious software was discovered in its processing system, enabling data to be pilfered as it crossed Heartland’s network.  The Princeton, NJ based company was initially alerted by Visa and MasterCard about “suspicious activity” pertaining to processed cards, and during the week of January 12^th, made the unsettling discovery that widespread fraud had transpired the year before.

According to Heartland, they acted immediately, contacting the federal authorities and hiring forensics teams to uncover the source of the data breach in the important quest to find the parties responsible.  The company continues to communicate with its massive client base (over 250,000 US businesses process with Heartland Payment Systems), providing information about the data breach and reassuring merchants that the company is taking proactive steps to prevent a future occurrence (e.g., devising a program to flag network anomalies). 

To its credit, Heartland has created the following site to provide further enlightenment on the breach and its aftermath:  http://www.2008breach.com.  But despite Heartland’s assertion that it maintains a stance of full transparency regarding this issue, many customers and merchants assert that Heartland is just performing exercises in “damage control.”

Indeed, this is a public relations nightmare experienced by Heartland.  Merchant account providers need to provide reassurance to merchants and their customers that all networks are secure, and that credit card data is safe.  It is difficult to speculate how many merchants may leave Heartland as a result of this breach, or how many merchants may now refrain from opening accounts with Heartland.

Moreover, the company is likely to face stiff fines and penalties due to its ostensible transgression.  Card-issuing banks may further exact a financial toll on Heartland Payment Systems as they may bill for their costs in closing and reopening customers’ accounts.  (This is especially likely as banks are experiencing their own financial woes, more averse than ever to paying for someone else’s tab.)

While Heartland tries to navigate through this difficult challenge, affected cardholders must also do their best to mitigate against any potential impact.  As always, statements must be dissected and unauthorized transactions must immediately be reported to card-issuing banks. 

Many customers who prefer to err on the side of caution are opting to get new credit cards, discarding old ones that perhaps have been compromised.  Those who demand further credit or identity theft protection will not be obliged by Heartland.  The company declares that such protection is not warranted because no Social Security numbers, or unencrypted PINs, addresses, or telephone numbers were exposed.

However, the amount of data compromised and the extent and way it has been used remains unknown.  As Heartland Payment System processes over 100 million transaction per month, the potential of this data breech is enormous.  It is being compared to past data security lapses sustained by TJX (TJ Max) or CardSystems Solutions. 

Needless to say, customers, merchants, and affected companies, all suffer when the integrity of data becomes compromised.  It is difficult to place a total dollar figure on losses incurred by all parties, as fraud expands and escalates as a result.  Our own collective intangible feelings about our systems of commerce become tainted as well.

Consequently, all companies who are trusted data custodians must strive for perfection.  Indeed, there is NO room for error.  

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To learn more about our merchant services, please visit http://www.intell-collect.com 

Imbued with entrepreneurial spirit, Joe Q. Merchant is in the process of opening a retail establishment.  Before the grand opening, he laments over his high startup costs, including the lease deposit for the storefront itself, inventory, insurance, professional fees, and other related expenses. 

Joe can be overheard as he recites his ongoing monthly expenses, too.  “I have the lease payment, product costs, quarterly insurance payments, wages, marketing, advertising, and a slew of other costs I don’t even know about.”  He adds, “Do I really need to accept credit cards as that’s only going to detract from my bottom line?  Accepting credit cards may be more trouble than its worth."

His wife, Jane Q. Merchant, is empathic and is equally concerned about the financial toll her Internet startup may exact on the family.  “Everyone thinks it is so cheap to do business online,” Jane says to her husband, “but between the web design, domain registration, hosting, optimization, and business registration fees, and a low profit margin on my inventory, it’s going to be hard to get and stay in the black.  She worries that opening a merchant account will only make it more difficult to attain profitability.

The Merchant’s (and merchants in general) must understand that credit cards are the preferred method of payment for today’s consumers and it would behoove any business – especially crucial for those who conduct business online (88% of Internet shoppers use credit for online purchases) – to put their fears aside and take the plunge into accepting credit cards in order to maximize sales.      

How many times have you passed by a gas station because it did not accept credit cards? Then think of the number of potential sales you just lost because you do not accept them either. You can double, or even triple your current sales, just by accepting payment via plastic.  (Think about the potential for additional streams of revenue by selling to individuals from all four corners of the globe.)

In addition, customers who are able to use credit cards for purchases will often buy more or place larger orders.  The fact that people become impulsive with credit card in hard, purchasing items they may not truly need, should also be factored into the “should we accept credit cards?” equation.  Remember, it is more difficult for people to part with Benjamin Franklin and his Presidential counterparts than to sign a receipt or punch in their credit card information.

While cash will always be accepted in places of business, customers who see the credit card logos displayed as an acceptable form of payment, will often times feel a sense of trust for your business. Consider the cash only business. Now, think of the connotations that come to your mind - you know what they are - so accepting credit cards for payment, legitimizes your business. Think of it as a form of positive psychology.  The unconscious mind is likely to view credit as accreditation for your company.

Merchants cannot underestimate the importance of creating an aura of professionalism.  It is imperative that your business is in step with the times.  Appearing outdated could negate any advantage your business may have over your competitors.  You would basically relinquish any leading edge you may have if another establishment makes it easier for the consumer to purchase a similar item or service even if yours is superior!

By accepting credit cards, you are giving your customers a choice regarding their payment options.  This will ultimately build confidence in your establishment and lead to repeat sales.

On an administrative level, credit transactions are easier to reconcile than cash transactions.  You hold improved security by not keeping large sums of cash on your premises.  Credit card purchases also clear more quickly than checks - depending on your merchant account provider (generally within 2-3 business days).  In addition, the risk of declined payments is greatly reduced because of immediate authorization of the card.

Although accepting plastic has the potential to significantly increase sales, it is not without its pitfalls.  One of the most significant disadvantages when accepting credit cards includes chargebacks or disputes initiated by a customer with their card-issuing bank.

While some chargebacks are beyond merchant control, you must take certain precautions to try to reduce their frequency (e.g., verify the authenticity of purchases when possible, exercise caution with certain International orders, have a liberal return policy, etc.) 

This is especially important to safeguard against fraud – stolen cards and identity theft – commonly involved in disputed transactions.  Again, utilize fraud preventative measures (your merchant account provider should be able to highlight such strategies).  Training your employees on identifying fraud is fairly straightforward, but it still costs money.

Despite any associated risk of accepting credit cards, including the chargeback taboo, merchants can ill-afford to establish a policy of non-acceptance.  By maximizing your customers’ purchasing power for your goods or services, allowing them to pay with credit cards, you will maximize your income.

If you are still leery about accepting credit, by doing your homework, you will discover that the increased sales you will amass from accepting plastic will far outweigh the fees involved in obtaining and maintaining a merchant account.  When deciding on a merchant account provider, there are virtually hundreds to choose from so take the time necessary to compare setup charges, equipment expenses, discount and transaction fees, etc.

Once you open a merchant account and obtain credit card processing capability, you will see firsthand how it will maximize your profitability, eliminate potential lost sales, enhance your business’s credibility and professionalism, and broadcast to the world that your business is ready for business!  Don’t forget to tell Joe Q. Merchant and his wife, Jane.

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To learn more about our merchant services, please visit http://www.intell-collect.com 

I received a call from a prospective client the other day who was disenchanted with his present merchant account provider but enamored with his credit card processing software, PC Charge.  He wondered if he could switch to our processing service but still maintain use of his cherished PC Charge software.  Happily, we were able to accommodate him.  His inquiry reminded me that many merchants value the ease of use and high degree of functionality that PC Charge offers.

At the risk of sounding like a promotional advertisement for PC Charge, the credit card processing software (operating on any Windows PC or laptop), offers an intuitive interface.  Fields are clearly specified and defined so that MOTO (mail order telephone order) merchants can easily populate them.  Retail merchants even have less work to do as a compatible USB card reader can be used to swipe a customer’s card so that the information will automatically appear in the interface fields.  Business owners who swipe cards can attain further benefit as the software allows the use of pin pads and check readers.

PC Charge is generally powered through the use of an Internet connection. Even mobile merchants can process payments over the Internet via TCP/IP using a cell phone.  Please note that PC Charge does not require Internet connectivity for transactions to be processed.  Customer payment may be facilitated through the simple use of a modem and phone line.

The credit card processing software should be classified as an “all purpose processing software” as merchants may process more than the typical credit cards and debit cards.  PC Charge can accommodate an Electronic Benefit Transfer (EBT), gift and loyalty card programs, check verification, check conversion, and check guarantee services. 

The software’s flexibility can also be underscored by its ability to handle recurring transactions.  Moreover, it offers multi-user capability, an automatic batching option, robust reporting, and fraud protection (AVS and CVV2 checks are available, for example).  Real-time processing is provided through a safe, encrypted mechanism and PC Charge is PCI-compliant.

Merchants used to be able to choose between PC Charge Express and PC Charge Pro.  The Pro version offered a greater array of options, including more detailed reporting, the capability to be used on multiple computers throughout multiple locations, and expanded variety of payment options, etc.  At present, Verifone is only offering the Pro version. 

In the event that you call Verifone directly, the Pro costs $674 for a single user lifetime license.  (Certain merchant account providers offer the software at a cheaper price.)  Technical support is provided free for the first year with the license, but a merchant who wants to renew such support must pay an additional $129 per year.

Of course, PC Charge alternatives exist – especially for those who do not want to outlay a large sum of money to obtain credit card processing capability.  Indeed, business owners may opt to get physical terminals, virtual terminals, payment gateways, etc.  However, those who opt to purchase the PC Charge software will be extremely pleased with the functionality and flexibility of this payment vehicle.  Just ask the merchant who contacted me! 

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To learn more about our merchant services, please visit http://www.intell-collect.com