DDDD (Daily Deal Dynamic Descriptor) helps reduce chargebacks and customer service overhead

At Social App Merchant we are always looking at new ways to leverage technology to improve the way our customers operate their business. Daily Deal websites are a big part of our business, and although the industry is in its infancy, we are definitely one of the payment service providers who have quite a lot of experience in dealing with these clients. In previous articles I discussed if Daily Deal websites are high risk, I don't believe they are and that is because I know what the best practices are for ensuring chargebacks are kept in check. And, with all my clients in this space I like to work with them to ensure they are in compliance with these best practices as its beneficial to everyone.

Back to how to leverage technology, we have introduced functionality that allows a daily deal website to pass through name of an actual deal to appear on the credit card statement descriptor, and not just the deal site and customer service phone #.


A merchant descriptor looks something like this:

DAILYDEALSITE

Dynamic descriptor gives the merchant the ability to control the descriptor on the credit card statement of the customer. Adapting this feature to our previous example, we get:

DAILYDEAL*GreenSpa

The “GreenSpa” would be information that the Daily Deal website would be passing with the transaction .

As Daily Deal websites grow in popularity, we are seeing that consumers are making many purchases at the same deal site on a monthly basis. They may see three charges from the same site but may not remember they made those three purchases. Also, they could have purchased several deals across two or more daily deal websites. By implementing daily deal dynamic descriptor (or DDDD - I like that!) functionality, your customers will know exactly what each charge is for. This will reduce the number of call center and email inquiries you receiver as well as reduce chargebacks.

If you are a Daily Deal website and would like to learn more about this, contact me! If you are looking for a processing solutions, we can definitely help there. Take a a look at www.socialappmerchant.com for information

JR

My new home - Patricia Weber Consulting!

I would like to take this opportunity to let everyone know that I have joined Patricia Weber Consulting as VP High Risk Merchant Management. I have known and worked with Patricia in the past and I am extremely excited about this opportunity. My main goal is to work with Internet Marketers to find the best possible credit card processing solution/s available to them. This is what I have done for the past few years and its what I love doing. Internet Marketers are by far the most innovative and fun group of people to work with. Some of the things I will be doing are:

- Setup merchant accounts and banking relationship for online marketers who fall into a higher risk category.
- Manage merchant account relationships acting as an advocate on behalf of their business
- Assist with expansion into the global marketplace
- Implement best practices to improve the customer experience.
- Recommend tools to reduce fraud and increase conversions.
- Prepare and execute a chargeback reduction plan
- Help high volume merchants spread volume across multiple banks to reduce the risk of their account being terminated without having any back up processing in place.
- Work with high volume merchants to increase their processing bandwith by setting up accounts with either no cap, or multiple accounts.
- Work with merchants to manage their accounts, monitor chargebacks and ensure processing uptime.
- Offshore company formation (when needed)

You can read more about our services here - www.patriciaweberconsulting.com.

In addition to our consulting, we also have another division called Social App Merchant. Social App Merchant focuses more on emerging markets and businesses that are "out of the box". As an example, we work with a lot of Daily Deal companies, mobile dating, etc etc. So, although the business might not be high risk, alot of banks don't really understand. So, we work with these merchants to find the right solutions for them.

You can read more about Social App Merchant here - www.socialappmerchant.com

I am very excited about this next stage or my career and working with Patricia. If I can help you and your business out in any way, please do not hesitate to contact me.

thanks

Jared

Terminated Merchant File, TMF, Match List. How to get on it and what to do if you are.

There are some lists you want to be on like a VIP list, a guest list, or a Christmas card list. But the TMF is one list that as an online merchant you don’t want to be on.

I speak with Merchants all the time who have been placed on the list, and usually I am able to get the a merchant account, offshore, as long as they can provide a letter the shows why they ended up on the list, and what steps they are taking to ensure they don’t run into the same problem again. The banks are I work with are open to this and understand that not everyone on the list is bad. So, being on this list is not a death sentence, but it can definitely suck. If you are on the list, and you need help, contact me and let’s evaluate the situation and let me help with solutions.

Getting back to the list, let’s start with the basics. What exactly is the TMF or Match List? The Terminated Merchants File (TMF) or match file is basically a list of merchants that have had their merchant accounts closed down by their processing bank on negative terms. If you are placed on the match file, you, any partner of your business, your business itself, and possibly anyone at your address can not sign up for a merchant account with a US based processing bank. Processing companies take the match file very seriously.

When you apply for a merchant account, the bank or processor will check to see if you are on the Terminated Merchant File (TMF). If you’re on it then this sends up a red flag to banks that you’re a credit risk. The chances are slim to none of getting approved once your name hits the list. Getting on the TMF list is the equivalent of getting blacklisted. However, as nice as it would be to say that that every business that is placed on a terminated merchants file deserves it. It’s absolutely not the case.

Now, how can someone get on this list you ask….well unfortunately, its not that difficult, the challenge is getting OFF the list, even if you didn’t deserve to be on it. Here are some of the most common ways of ending up on the list.

• Credit Card Fraud. If don’t have strong enough fraud control and detections, you can end up with way too many chargebacks.
• Friendly fraud. This is when a consumer disputes a legitimate charge such as from an adult website.
• Factoring. Factoring is when a merchant deposits transactions for sales generated by another business.
• Excessive chargebacks-approximately 1-2% of sales.
• Deception Marketing and Fraud. Types of fraud include not delivering products or misrepresenting products or services.
• Violating the terms of your merchant agreement
• Owing money to a bank or processor

Also, keep in mind that because of your merchant account provider, you could wind up on the TMF if your provider counts chargebacks in the month it comes in instead of the month the original transaction occurred. If you do fewer sales in the month the chargeback is processed, your chargeback percentage could skyrocket, and you end up on the list.

Regarding the last point above, owing money to the bank or processor – one of the easiest way to get on the list is to close your contract with a merchant provider and not pay your final bill. This is basically a guarantee you will end up on the list. Your final bill includes any processing costs that you owe, but also includes any monthly, yearly, or termination fees that were specified on your merchant contract. You are also liable for 6 months past the settlement date of the final transaction that was processed on your merchant account. The settlement date is defined as the date that the service or merchandise was fully delivered to and accepted by the customer.

How to get off the list, like I mentioned above is very challenging. Basically, the only company in the world that can get you off the TMF, is the company that put you on it. It does not matter who you talk to, what they promise, who they are, or anything else, it always comes down to the company that put you on it. Businesses usually learn that they are on the TMF when they try to open a merchant account with another company.

The company that puts a merchant on the TMF is the processor that is taking on the risk of allowing the business to process with them. These are often the back end companies that you may have never had any personal contact with. Merchant Service Providers and resellers are not normally the companies that can put a merchant on the TMF, unless they are taking on the risk of your credit card processing, so calling them may have no effect, but regardless, the company you signed up your merchant account with is who you should contact first. As soon as you find out that you’re on the TMF, call your merchant account provider-or the company that placed you on the list. Prepare to work to speak to many departments until you get in touch with the right person. You might end up being referred to the processing bank.
Depending on why you are on the TMF, it can be easy to impossible to get off the TMF. If you are on it for committing fraud yourself through your own merchant account, don’t count on ever getting off. Processors do not like fraud in any way, and if you as a business owner were the cause of it, they will not ever want to provide services to you again.

If you believe your business or name was mistakenly added to the Match file, you must work with the acquirer that added the listing to the file. Only the company that placed you on the list is authorized to request a change or deletion of the information.

If a business was placed on the match file for a high chargeback ratio, time is normally the only thing that will get the business off. The processor needs to know that they aren’t going to get stuck with any unanswered bills from the merchant’s former customer’s Chargebacks.

If you didn’t pay your final bill, it may just be a matter of making good on your debt with your former processor. I have seen this as low as a few dollars, and the merchant was removed about a week after they made payment.

Unfortunately the majority of the time it is not that simple to get off the match file. It normally takes several weeks to get off the match file. Sometimes it takes negotiations to get charges cleared up, or fees removed. At this point every case is unique. If after a few weeks you are not making any headway, you may need to consult a lawyer. Processors normally use a system called arbitration to avoid taking individual cases to court. It is cheaper than going to a court, and the results are often better for both parties.

Here are some tips for staying off the list:

• Don’t go over your processing limit, if you think you are going to speak to the processor first.
• Don’t use any deceptive billing, be upfront with customers about charges and when the charges occur. Always provide easy access to customer service.
• Have the customer service number on the credit card descriptor. You want them to contact you before the bank.
• Always provide top notch customer service and make sure there are open lines of communication.
• Monitor your transaction closely, if something appears out of the norm then investigate immediately.

If you have any questions about this posting, or how you can get processing even while being on the TMF list, please do not hesitate to contact me.

What priorities will FTC stress in its impending online advertising guidelines

Although not directly related to payments, this is an interesting article and will be even more interesting to see the new guidelines. This is something all online marketers should be aware of.

http://ftcbeat.com/2011/08/21/what-priorities-will-ftc-stress-in-its-impending-online-advertising-guidelines/

Merchant Accounts for Biz Ops ( and ways to help reduce chargebacks)

Anyone who is not familiar with Internet Marketing may ask, what exactly is a biz op? Well as I am sure you can tell, Biz Op refers to “Business Opportunity” and basically a biz op is a program/course that is created by someone to help other make income (usually from the comfort of their own) online. A lot of the biz ops are people who have made a lot of money with affiliate marketing teaching others how do to that exact same thing (and of course charging a fee for it). Some have free trial offers to sign up, then charge a membership fee to continue having access to the backend and the tools there. I have seen some very impressive and sophisticated backend’s with tools that I believe can really help someone.


However, like a lot of other things, a few bad apples ruined the bunch and biz ops have gotten a bad name amongst banks for credit card processing. Why is that? Well excessive chargebacks for one and shady people who are really only out there to make a quick buck.


I have been working with a lot of biz op marketers lately and the guys I work with know what they are doing. They have a sophisticated product, clear terms and good policies and procedures in place to reduce chargebacks.

Some of the strategies that I believe a biz op can put into place that will help them reduce chargebacks are:


1. Have good support channels. Your company should be accessible, communication and an active support forum can be helpful.

2. Methods for success should be clear.

3. Clear Fees. Costs are justified because people understand they can’t expect to earn money without an investment. Costs and Fees will actually legitimize the business because nobody would actually expect to earn money on something that
is free. Membership fees can also be justified if some kind of benefit to
insure your success is made available. It costs money to run a business and in
many cases it takes money to make money. An example would be if the company
hosts websites and/or other promotional aids to help you succeed (a detailed
back office for instance).

4. No Outrageous claims – “Work only two hours a week – No selling – No dealing with customers – Make millions” – No way…


Like I mentioned earlier, sometimes credit card processing/merchant accounts for biz ops are hard to obtain. I work with quite a few banks both domestic and offshore who do work with legitimate biz ops. I have heard horror stories from a lot of clients who were shut down by their previous processor for a variety of reasons and the biggest one I believe is that they just didn’t understand the business. Like any recurring billing, there is a higher risk of chargebacks so not only do you need strategies like the above to help reduce chargebacks but partners who understand the nature of the business to help you ensure that your processing will not go down.
This could include using a chargeback management system, as long as the ROI make sense. Spreading volume between multiple banks, including offshore and domestic. Or just going offshore and having more of a margin to operate in.

What I do is evaluate my client’s current situation (if they aren’t a start-up) and make recommendation and propose solutions. If they are a start-up I look at their marketing plan, where they are getting their traffic from, etc etc and propose a solution that will keep them up and running. A lot of processors won’t take biz op without processing statements, I can help with that.


Of course, like everything, pricing is factor. But any experienced marketer will know that paying a bit more to ensure your merchant account stays up and running ( as opposed to working with a company that offers cheap rates then shuts you down as soon as there is a problem) is worth it.

If you have any questions please do not hesitate to contact me.

5 ways for online marketers to increase conversions

If you have or have in the past operated any type of ecommerce website then you are probably familiar with low conversion rates and you probably have looked at things like time on page, time on site, cart abandonment, keyword conversions to try and improve those low conversions.

According to a recent study, about 10% of visitors to the average ecom website are actually there to consider making a purchased, and only 2% will actually make that purchase. 2%!!!!!

2% is a very low number for ecommerce (unless that is your chargeback ratio) so what most online marketers will do is try and push even more traffic to the site. The numbers do work, since 2% of 1000 is a lot more sales then 2% of 100. However, what about that 8% that were interested? How can you convert them? Increasing traffic is always important but why not look at some ways to increase the conversions to your site as well.

I believe that improving conversions is not only to look at the actual site, but look at suppliers to your business. Is your credit card processor the best fit? What about your call center?

Here are a five ways I think you can make your site more attractive to potential customers and increase conversions.

1. Look at declines from current Credit Card processor.

Depending on the type of account you have, where your customers are coming from and host of other factors, your decline rates might be way too high. If you have a US merchant account, but a significant portion of your traffic is international, then you may look at opening a international merchant account that you can process international transactions from. I have seen a lot of companies really increase conversions by doing this.

2. List popular items

This is very easy to do my looking at search queries and what is hot on your site. This is clearly what people are looking for the most and if you make it easy to find but putting it right in their face, you will have a better chance at selling it to them.

3. Engage your customer if they are taking too long.

This is great strategy if you see that customers are spending too much time on a certain page or on the checkout. Try and initiate a conversation through online chat to see if there are questions that the customer has.

4. Listen to your customers

Anyone can look at a best practice guide, but the best resource available your customer. Implementing a customer feedback system so you can see what people have issues with AND what they really like. But don’t just listen, it’s very important to take the feedback and address it on your website if you think its valuable.

You can also look at using incentives to get better feedback. Maybe entering customers into a draw of giving a prize if the feedback provided is valid and can be used.

5. Customer Service is Key.

Imagine walking into a store and you have some questions about a product you would like to buy. However, when you look around there is nobody to ask the question to or to help you. If that was me, I would walk out. The same principle applies online. Make sure your customer service is always available and can respond in a very quick manner. When a customer is making an impulse purchase, you need to make sure you address any concerns immediately before they are given the chance to walk away.

Having a great FAQ section, clear pricing shipping and return policies can address a lot of questions upfront, so make sure you have that in place. Also consider adding a live chat service.

In summary, online marketers invest massive amounts of money and effort to get visits. But if your site or service isn’t optimized to convert those visitors then a lot of money is being left on the table.

How to be effective when looking at your online merchant account pricing.

As mentioned in a previous post, the pricing quote you receive is not always the price you are going to actually pay. Anyone that's had to deal with online merchant accounts and credit card processing (with the exception of those that process strictly offshore) will tell you that its can be a pretty confusing subject. When you looking for a new merchant account there is a lot of things you need to factor, and although I have stated that price isn’t the only thing and that value is extremely important, you still need to understand exactly how your pricing works. So, when you start looking for a merchant account or would like to evaluate the one you currently have, there is a lot that needs to be taken into consideration. You've need to look at the discount fees, qualification rates, interchange, authorization fees and more. The list of potential charges can go on and on.

One of the biggest dirty secrets in the online payment processing space is to quote a merchant the qualified rate, which sounds great, but not really disclose all of the additional fees that you will pay. This is something that unfortunately has become common practice with too many companies these days (not all) and its something that I hear from merchants I work with all of the time. This is where most of the margin is, and my belief that it’s important to disclose all fees and teach merchants how the pricing work. I think if you are honest with a merchant then it’s much better for you in the long run.

Instead of looking at the big picture, merchants fixate on a single aspect of an account such as the discount rate or the early termination fee (which is a fee I am not a fan of). I completely understand this as I would do the same in a business that I am not familiar with, but what really needs to be looked at is what we call the EFFECTIVE RATE. Once you start looking at the big picture you will see that merchant accounts aren’t that hard to figure out and you will be able to not only accurately forecast your merchant account costs but also compare different quotes you receive.

The term effective rate is used to refer to the percentage of NET sales that a business pays in credit card processing fees.

For example, if a business processes $100,000 in NET credit card sales and its total processing expense is $4290.00, the effective rate of this business's merchant account is 4.29%. The qualified discount rate on this account may only be 2.25%, but surcharges and other fees bring the total cost over a full percentage point higher. This example illustrate perfectly how focusing on a single rate when examining a merchant account can prove to be a costly oversight.

Effective Rate = Total costs/ total sales

You need to make sure you are also looking at all of the possible fees, this can include:

• Discount Rates


• Monthly Service Fees


• Statement Fees


• Batch Total Fees


• PCI/DSS Fees (Data Security)


• Administrative Fees


• Transaction fees


• Any other miscellaneous Fees

In my opinion, when looking at costs the effective rate is the single most important factor when you're comparing merchant accounts. But again, cost shouldn’t be the only factor when deciding on the merchant account.

Calculating the effective rate of a merchant account for an existing business is easier and more accurate than calculating the rate for a new business because figures are based on real processing history rather than forecasts and estimates. Calculating the effective rate of a merchant account for a new business is a little tougher because of the lack of processing history from which to judge how a business's transactions will qualify. Nevertheless, making a conservative estimate of an account's effective rate is still vital.

To calculate the effective rate of a merchant account for a business without processing history you will need to estimate a few figures such as the business's average ticket, processing volume, etc. The actual methods involved in calculating the effective are pretty involved and beyond the scope of this article. Hopefully, these calculations aren't something you should have to worry about. In this case I would work with an experienced consultant of or a processor you can trust

If the effective rate ends up being significantly greater than your qualified discount rate, or the rate you were quoted, it’s time to re-examine your account and make changes. Using the example above, let's say the qualified discount rate for this account is 2.25%. That would mean the effective rate of 5% is more than double the qualified discount rate. In a situation like this, the chances are very good that there are a lot of additional surcharges being applied and you can either have a discussion with you current provider ( but would you want to work with a company that already has been deceitful) or look to work with a new provider.

Any provider that's courting your business should be able to speak with you and request the information they need to offer you a reasonably accurate effective rate. Alot of times this will be in the form of previous processing statements (if available) If they're unable to do this or they don't know what an effective rate is, they're probably not the best choice for your new merchant account provider.

If you need any help with deciphering credit card statements or if you are looking to get an effective rate quote on your business - please do not hesitate to contact me.