The credit/debit card industry has had a lot of changes lately and that has resulted in much confusion and misinformation. This combination is ripe for fraud and scams. Please don’t waste your money. Knowledge is your best defense.
- Industry digital conversion. Yes, the industry is going all digital but NOT instantly. Many older counter top machines are now obsolete...but operational. They will not be serviced, downloaded or rebooted but WILL remain working until they fail. Only then will the merchant be required to get a newer machine. Planning for replacement is a good idea. New digital machines run from about $400 to $600 for counter top with wireless adding another $100 to $150. Fear mongers are pushing machines for nearly twice that!
- Chip cards ARE coming. This is also known as EMV conversion. The credit card with a chip in it is far more secure than the brown strip version. Europe and Canada have long proven its value. Neither the machine nor card manufacturers can make enough to convert quickly. The transition will take place over the next couple of years with Oct 2015 as the initial target date. New machines and readers will have a slot to insert the chip card as well as the known slot for magnetic cards. Initially, US chip cards will have both the chip and strip. This will allow for a more orderly change over as older analog machines (see #1 above) are replaced in the next several years. After 2015, strip reader machines will continue to work but breach protection will be absent.
- Credit card rates are getting more competitive. Value added services such as gift cards, ATMs, text messaging, online systems, wireless in store systems, and cash advances are showing up as additional offerings.
- As part of the more competitive nature, the older more costly tiered pricing system (usually 3 tiered) is giving way to the more competitive cost plus pricing system also known as interchange plus. Cost plus is a bit more difficult to show quickly but reduces total costs dramatically. This is the only pricing all big box stores use. An informed ISO (Independent Sales Organization) sales rep can explain it clearly and demonstrate its profit potential to a merchant.
The key issue will ever more be the knowledge of the sale rep from the ISO. Banks and warehouse stores continue to sell merchant services but as tiered pricing with no service rep available. Let’s face it, when you mix people, computers and money, it’s not a matter of ‘if’ issues arise, it is a matter of ‘when’. A knowledgeable rep will be invaluable in keeping these issues from becoming significant problems.
For questions call Chamber member Bear Thomas at Merchant Solutions International, Inc. in Williams, AZ at 602-910-0500.