What Is A Convenience Fee?

 

 

 

Everything You Need to Know About Convenience Fees & Surcharges

Every expense of your business operations reduces your overall profitability. With the economic downturn caused by the COVID-19 pandemic you are likely looking for areas that you can save money or offset expenses by passing them on to your customers.

You know, there is an expense in accepting credit cards. The pandemic has caused an increase in the use of credit cards through increased online sales. As we move forward towards a cashless society, merchants are forced to accept more credit card transactions and that increases your operating costs. Implementing a convenience fee or surcharge can help you harness this cost of operations. We will explain the differences below as well as the important information you need to know.

What Is A Convenience Fee?

A convenience fee is a fixed amount added to the purchase price. The customer pays this fee in exchange for being able to use a payment method that is convenient to them. An important thing to remember when adding this fee is that your customer must have the option of paying by cash or check to avoid this fee. An example of a convenience fee you may have experienced is when you purchase movie or concert tickets online and pay a convenience fee. You are not forced to purchase tickets online. You choose to purchase online as opposed to paying cash at the box office when you arrive. As another example, some landlords may allow tenants to pay rent using an online portal. The tenant could go to the rental office and drop off a check, but since it is more convenient to pay online, a convenience fee can be tacked on for the convenience offered. There are very specific rules that vary by card issuer on how a convenience fee is assessed. While Visa has the most thorough policy, Discover and American Express are both rather vague about convenience fees. We will explain more about these rules below and show you how to properly charge a convenience fee.

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Merchants Caught Up in Risky Business

 

 

 

Merchants Caught Up in Risky Business

How To: Avoid Risk Holds

 Chosen Payments has recently seen an escalation in actions taken by the Risk Management departments of banks that provide funding for merchant transactions. These actions include delays in approving new merchant accounts as well as holding up transaction funds deemed by the bank to be suspicious in nature.

Behind the Scenes

Before we share some tips on how to avoid having your funds delayed, we will provide a brief education about the relationship between Chosen Payments, the funding bank and your Merchant Account. In order to provide overnight funds, Chosen Payments engages with a partner bank (funding bank) that agrees to provide funds to you immediately on behalf of the bank that issued your customer’s credit card. Let’s say your customer uses a Wells Fargo Visa to make a $10,000 purchase. Our funding bank provides the $10,000 into your Merchant Account overnight and then contacts Wells Fargo to ask for reimbursement for the amount they advanced to you. As a result of this relationship, the funding bank owns and manages the risk of every single transaction they process. This is important to note as Chosen Payments has no control over risk holds or delays in funding except to serve as your advocate based upon what we know about you, your business and our history of doing business together with you.

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You Got All the Card Information – You Still Fell Victim of Fraud – Why?

 

 

 

You Got All the Card Information – You Still Fell Victim of Fraud – Why?

 

Credit card fraud is at an all-time high. Statistics say that online fraud is up more than 750% from where we were just one year ago today. With more and more companies utilizing eCommerce, thieves are looking to use eCommerce too as a way to steal from you.

 

We recently saw an erroneous comment on social media from someone who admonished merchants to always get the credit card number, the 3-digit security code, the expiration date and the billing address and you will be safe from fraud. Nothing could be further from the truth. Thieves can obtain that same information from a variety of methods and use it later in fraudulent transactions.

 

The Skimmer

 A credit card skimmer can easily capture all of the data from your credit card. In fact, the magnetic stripe is loaded with personal information that may include much more than just the credit card data. It includes the billing address of the card and some even carry such personal data as your date of birth. Skimmers are most commonly used at gas stations. They are easy to insert into the pump credit card reader and you likely won’t even know that your card has been compromised. Thieves capture your data from the skimmers on Bluetooth devices and don’t even need to get out of their car to do it.

 

The Hacker

Hackers are constantly trying to penetrate large servers that store credit card data. Examples of recent victims are Chipotle, Marriott, Target and most recently Click2Gov, an online portal that many city municipalities use for processing tax and license payments. Once thieves successfully breach a system, the thieves have access to thousands of cards along with the full data. It’s not just through data breaches that cyber thieves can steal credit card information. Cyber thieves are also using a strategy called “formjacking” where malicious code is used to steal credit card details during the checkout process on eCommerce sites. This type of fraud is on the rise, with reported attacks affecting major sites such as Ticketmaster and British Airways.

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The Game of Family Fraud

 

 

 

The Game of Family Fraud

 

More than 120,000 small to medium size businesses experienced internal credit card fraud in 2018 that is referred to as “friendly fraud” or “family fraud”. The words fraud, friendly and family don’t seem to go together. “Friendly fraud” is committed by someone you are friendly with or perhaps an employee that you consider to be “family”.

 

How it Happens

In the simplest version, your employee issues a credit from your bank account that goes to their own personal credit card to pay down their own personal balance. In most cases, we find that merchants seldom question credits, returns or voids that occur within a typical business day. Both credits and voids are frequently used to commit fraud against employers and may go undetected for a long time. We will share methods you can use to prevent product loss as well as the theft of money from your bank account. In the most common fraud scheme we see, an employee says that a customer called in with a complaint and in an effort to resolve the issue, your trusted employee issued a refund to make the customer happy. This likely would seem completely normal. The other method of friendly fraud occurs when your employee completes a transaction and then voids the sale as if it never happened. Their friend walks out of your business with a load of merchandise that was paid for as they left and then the transaction is erased while you sustain an unknown loss.

 

Monitoring Credits/Returns

When an employee issues any type of credit, discount or adjustment that posts to a credit card, you need to compare the credit card number on the original sale to the credit card number receiving the credit. This isn’t just a good business practice, it is a requirement by the card brands. Always verify the last 5 digits of the card being refunded are exactly the same as in the original sale. Any type of refund or credit should be accompanied by a simple form of written documentation summarizing the original date and charge, the return/credit information and a written statement about what caused the adjustment. This form should require two signatures including the person initiating the credit and another employee who verifies the card digits and the purpose of the credit issued. If there is a claim that no other employee was available at the time the credit was issued, due diligence should be exercised in verifying all details of the specific transaction.

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