Saving money, reducing debt, accounts receivable, and DSO (Days Sales Outstanding) are just a few of your responsibilities as CFO. Many businesses choose to accept electronic payments to improve cash flow and reduce DSO, but do you know what to expect and look for when setting up a merchant account? If your company has decided to accept credit card and eCheck/ACH payments, or if you are considering a switch to a new provider, choosing an all-in-one payment processor that can offer all of the following features would be an extreme asset to your business.
1. PCI Compliance
The best way to instill confidence in customers is to follow and comply with the strict standards and regulations of a quality management organization. By electing to accept payments, your business must adhere to and comply with the PCI Data Security Standard (PCI DSS), created and updated annually by the PCI Security Counsel. The Counsel provides an actionable framework for developing a robust payment card data security process – including prevention, detection, and appropriate reaction to security incidents. At a minimum, all merchants are required to complete an annual SAQ (Self-Assessment Questionnaire) to determine if they are PCI DSS compliant. A PCI compliant processor has already taken the steps to employ the highest levels of data security to ensure that your confidential business information is secure. As a reliable merchant account provider, they should offer to assist you in completing the SAQ to verify your compliance and guide you in taking the right steps to increase protection and improve business.
With the advancements in payment technology, having the freedom to pay anywhere, any time, on any device comes with consequences – including an increase in your responsibility to protect and secure your customers’ sensitive payment data, along with your confidential business information. To shield against fraudulent activity, trusted payment processors use tokenization technology and P2PE (Point-to-Point Encryption). Tokenization is the process of substituting a customer’s PAN (Primary Account Number) with a “token” – information that is useless to a hacker. You, as the merchant, will store the token in your system in place of the sensitive payment information. P2PE is a secure way to transmit data between two parties that helps protect the sensitive information obtained and sent on electronic transactions. With P2PE, credit card data is encrypted from the moment the card is swiped, while the data is in transit, all the way to authorization; preventing a merchant’s system from ever seeing or touching the sensitive PAN data. Together, these two security measures drastically reduce your PCI compliance scope and costs.
On October 1, 2015, the EMV (Europay, MasterCard, Visa) liability shift will go into effect within the United States. This shift will determine which party – either the merchant or the card issuer – will be responsible for the financial losses resulting from fraudulent counterfeit, lost, or stolen card-present transactions. EMV, a chip technology being utilized around the globe, is proven to have visibly reduced fraudulent card present transactions. Combined with a PIN or a signature, the chip will interact with a merchant’s POS (point-of-sale) system to validate the card user. The chip adds an extra layer of security and is virtually impossible to duplicate.
By working with a provider that can offer EMV transaction processing and chip-enabled equipment, you’ll benefit from increased security and fraud protection, while strengthening customer confidence in your business. Not to mention, you’ll minimize your risk of excessive financial losses, should your company be impacted by a data breach.
4. Fraud Tools
If you only accept payments online, don’t be fooled into thinking that the EMV liability shift has nothing to do with you. History has shown that where EMV has been implemented card-not-present fraud has surged. Fraudsters don’t just go away. They find other, less secure channels to attack. Using AVS (Address Verification) and CVV (Card Verification Value) are great, but you want to ensure that your processor offers an advanced suite of fraud management tools to help you detect fraud faster and protect your business. Fraud tools will allow you to set parameters that will prevent thieves from testing cards on your account, making transactions from blocked countries, and trying to charge amounts that are larger than products or services offered by your business.
5. eCheck (ACH) Payments
Similar to the paper check process, eCheck/ACH payments transmit a customer’s bank routing number or checking account number electronically through the ACH system for a more immediate transfer. Businesses often use ACH payment processing to offer direct deposit options for employees; allow for direct payments on loans, rent, mortgage or other bills; simplify business-to-business transactions; and even make e-commerce payments. By saving time and cutting costs associated with traditional check payments, businesses can save money while improving customer service and increasing profits.
6. Reduced Days Sales Outstanding (DSO)
How many days does it take for your company to collect money after a sale has been made? If you mail your invoices, it could take 30, 60, 90+ days by the time the customer sends back a check and it is cleared by the bank. By accepting credit cards or eCheck/ACH payments, your company can begin to collect immediately, reducing your DSO and increasing cash flow so that you can begin to reinvest it back into your business.
Whether you accept payments through one channel or many, having robust, detailed reporting in one centralized location is essential to your business. Only a select group of payment processors will allow you to track your transactions from inception to settlement because they are the gateway provider and processor all in one. A payment gateway sends credit card transactions to the credit card payment networks for processing. Processors that offer reporting application programming interfaces (APIs) will allow you to see whatever information is passed through on any transaction, and can be customized for your specific needs.
8. Integrated Payments
Does your company use a specific accounting, ERP, or CRM software system to manage your business? Payment processors may offer plugins or APIs to seamlessly integrate payment processing into your software. By processing from one single interface, you will save time and money, reduce double-data entry errors, and simplify the reconciliation process.
As you can see, there are many factors to consider when choosing a payment processor for a merchant account. Be sure to research each of the above items before you enter into a relationship with a new processor or renew your agreement with your current provider. Doing your homework will ensure that your business receives the lowest rates, the most secure, reliable system, and the integrated, robust reporting needed to keep your business on track and make your job easier.