Author: Arash Singh

Ever so often, a merchant would face the ordeal of chargebacks from customers. These refunds not only take away from a business’ level of efficiency, but also incur transaction and processing costs.

In the current landscape, especially with regards to the online market and the sale of digital goods, the number of disputes are increasing. According to Visa, in 2015 alone, over 2.6 million chargebacks were initiated by customers who were unable to recognize their own transactions. This was a 13% increase compared to 2014. 

Even more troubling was that 20% of all the chargebacks were related to consumers buying digital goods. These goods included, but were not limited to, music, movies, and purchases made through mobile phone applications. 

Chargebacks are expensive such that the cost of working on a dispute often outweigh the customer purchase itself. Therefore, merchants who take steps to ensure a decreased volume of chargebacks are the ones who are thriving in the current landscape. 

With the plethora of unrecognized disputes on a customer’s part, using a chargeback management tool like Visa Merchant Purchase Inquiry (VMPI) is a game-changer. This tool allows merchants to optimize their business’ customer dispute process and, in turn, help improve the bottom line. 

What VMPI does is allow issuers to send merchants notifications before a dispute can even be raised. This lets merchants have the opportunity to provide details for the transactions in question and as let them proactively settle conflicts at breakneck speed. 

For example, let’s say a credit card user is concerned about a transaction on their bank statement. The cardholder would then call the issuer and ask about the transaction and state that they did not recall making the transaction in the first place. 

Using VMPI as a chargeback management tool would then let merchants initiate the resolution process. VMPI would notify the merchant about the inquiry. The notification, which would include data that helps the merchant find the inquiry in their own database, would allow the merchant to respond back as close to real-time as possible. Visa would then share enhanced data with the issuer, and the latter party would inform the customer about the transaction. 

Once the cardholder understands and recalls the reason for the transaction, they would be satisfied with the resolution process. In turn, this would build trust between the cardholder and the merchant, resulting in a positive-sum gain. While the customer will continue trusting and using the merchant’s products or services, the merchant would be able to know that the integrity of their business is protected and well-regarded. 

Ultimately, VMPI helps protect merchant revenue by virtue of being automated and allowing for close to real-time responses and data access. By using the tool, chargebacks would decrease along with the increase of customer satisfaction.

Merchants who would like help getting started with VMPI are more than welcome to contact the PayFrame team. Each of our team members have numerous years of experience when it comes to chargeback management tools and effective business solutions. 

Our friendly team of experts may be reached at either info@payframe.com or 1-888-668-0733.

As a merchant, decreasing the amount of chargebacks and receiving notifications for potentially fraudulent purchases are fundamental parts of a successful business. 

When a customer files a dispute over a transaction, for instance, the issuer can use a tool called Visa Merchant Purchase Inquiry (VMPI) to help resolve the conflict as quickly as possible. This not only ensures better business practices, but also increased customer satisfaction.

If a merchant is using the VMPI tool, then they can access Visa Resolve Online (VROL) to first identify details about the disputed transaction. The tool would then send the merchant data so that they could locate the transaction within their own database. 

After successfully identifying the transaction and pulling key information from the database, the merchant can then respond close to real-time back to VROL. Visa would then share the detailed information with the issuer, who may then use it to effectively find a solution with the cardholder. 

Emphasizing the need to use the VMPI tool is a study from 2015. Visa calculated that over 2.6 million chargebacks were initiated by cardholders, and the main culprit of these chargebacks is that the cardholders did not recognize their transactions. It should also be noted that 20 per cent of these chargebacks were related to digital goods, which include movie downloads, music, and purchases made by mobile applications. 

The cost of these disputes can be expensive and negatively affect a business’ bottom line. Therefore, merchants should have a means to prevent disputes from happening in the first place should a cardholder not recognize a transaction. 

Merchants can easily sign up for VMPI and take their businesses to the next level. The first step would be to complete Visa’s questionnaire form, and merchants should be prepared with information such as their business’s name, address, as well as their merchant identification number. 

The next step would be to have one’s Visa-issued Cardholder Acceptance Identification Number ready at hand. By contacting their payment processor, merchants can easily receive this number if they do not already have it.  Merchants should also get their acquirer’s Bank Identification Number from their payment processor. 

Once the aforementioned information is gathered by the merchant and the application is approved by Visa, then the VMPI facilitator would then connect the merchant’s CRM to the VMPI engine. 

Before the merchant’s account goes live, Visa would check to make sure that both the data transfer process and account connectivity are working properly. 

The ability to resolve transaction disputes through VMPI is useful for any business. At PayFrame, our team of experts can both help businesses with the process of setting up VMPI, as well as provide game-changing information about credit card processing rates. Monthly bills, for instance, can be reduced by 5 per cent to 45 per cent through our innovative system that is easy to use, concise, and clear. 

To contact our team and take your business to the next level, give us a call at 1-888-668-0733 or send an email via info@payframe.com.

As part of the European Union’s Revised Directive on Payment Services, Strong Customer Authentication (SCA) is integral to all businesses. Complying with the policies set out by the initiative should therefore be at the forefront of merchants’ minds. 

On September 14, 2019, new obligations for online payment authentication went into effect as well, and businesses should ensure that payments across the EU are not only secure, but easy and efficient. These obligations are expected to be fulfilled by December 31, 2020. 

This post provides a guide to help merchants comply with the new SCA standards. 

Firstly, it is important to know how to authenticate a payment. At the time of writing this post, the most popular method of authentication for online card payments is through the use of 3D Secure. Based in XML, 3D Secure adds an additional layer of security that occurs after a cardholder checks out. 

For instance, during the process of making an online purchase, a customer would be asked by their bank to give additional information. This information may come in the form of a one-time code that is sent to the customer’s mobile phone. Another option for authentication is through a fingerprint if the customer is using a mobile banking application. This ensures that the customer’s identity is verified, as well as their consent to the transaction. 

As for other methods of authentication, Google Pay and Apple Pay already have their own means to ensure that customers can make secure online purchases. For instance, payments typically require either a password or a fingerprint to verify one’s identity. 

It should be noted that there are exemptions to SCA. For instance, payment providers can request exemptions during the payment process. What happens next is the customer’s bank would get the transaction request, assess the level of risk, and decide whether or not to approve the exemption. 

Requesting this exemption is useful when it comes to the flow of customer checkout. This is because the extra authentication steps may put off a customer during the checkout process. Therefore, having exemptions, especially for low-risk payments and purchases, may reduce the customer drop-off rate, as well as lessen the tension between a customer and the business.

Another exemption to take into account is when transactions are below €30, which are considered as low value. However, it should be noted that if such exemptions occur five times since a customer’s last successful authentication, then a bank will need to request authentication. This also applies if the total sum payments that were previously exempt exceeds €100. Each customer’s respective bank has the responsibility to track down the number of times exemptions have been used, as well as decide whether or not to apply means of authentication.

When it comes to recurring payments, SCA is required for a customer’s first payment. Commonly used for subscription-based services, this exemption can help businesses and customers complete transactions at a faster rate. 

Another exemption to take into account would be the case of corporate payments. For instance, when business travel expenses are made by an agent, payments can be made using virtual card numbers that are used in the travel industry. 

As a business owner, it is integral to also understand that it is the issuing bank that holds the decision to proceed with an exemption or not. When an exemption request gets denied, for example, a customer would be asked to take those extra authentication steps in order to fully comply with SCA. A common solution for this would be to preemptively have authentication during the checkout process. 

At PayFrame, we are dedicated to helping businesses both succeed and comply with SCA. To contact PayFrame and learn more about how our products can help, email info@payframe.com or call 1-888-668-0733.

Whenever you use your credit card to make a purchase, you may be subjected to extra fees by virtue of using your card. These fees may come as surcharges or convenience fees. 

Credit card surcharges most often occur at the point of purchase, and there can be strict rules in terms of which cards can charge such fees. In most places in Canada, credit card companies don’t let vendors surcharge credit card purchases. However, according to the merchant rules set by credit card companies such as Visa, American Express, and Mastercard, eligible merchants can charge a service or convenience fee.

It should be noted, however, that this fee has to be clearly disclosed to card owners before a purchase is completed by them. Cardholders must also be informed that they can cancel their purchase without any penalties should they wish to do so. 

It should also be noted that according to Canada’s Code of Conduct for the Credit and Debit Card Industry, merchants can offer discounts if their customers wish to use a payment method that is not a credit card. 

While customers do not usually have to greatly concern themselves with these details, it is another story for merchants and payment card networks. For instance, merchants and payment card networks may be subjected to rules in order to ensure transparency and correct policy conduct. 

One of these important policy elements is that payment card networks must work together with merchants in order to make sure that merchant-acquirer agreements and monthly statements are both easy to understand and contain enough details. 

When it comes to the aforementioned agreements, the cover page should encompass a summary of the contract, as well as a box with the fee disclosure information. This information can include, but are not limited to monthly minimums and administration fees. Payment card networks such as Visa and Mastercard should have these rates and fees easily accessible on their respective websites as well. 

Another policy that merchants and payment card networks should take into account is that the former should get a notice of 90 days minimum should there be fee increases, a decrease in interchange rates, or new fees with regards to credit and debit card transactions. Payment card networks should also allow a notice of 180 days minimum before applying any structural changes. This particular policy is in conjunction with how merchants are able to cancel their contracts if payment card networks fail to notify them of the aforementioned changes in time.

As for the choice between accepting either credit card or debit card payments, it is on the payment card network to help ensure that merchants have that choice. For instance, a merchant can choose to accept only credit card payments and not any debit ones. 

When it comes to discounts, payment card networks should also let merchants give discounts that are dependant on the payment method. For example, merchants can give their customers discounts depending if the latter party uses cash, a debit card, or a credit card to make a purchase. These discounts must be clearly disclosed at the point of purchase. 

In the case that a customer holds a premium credit card, the policy of transparency continues to be applied. These cardholders should be well-defined individuals based on their spending habits and income. When a payment card network wishes to delegate a new debit or credit cardholder, they should make sure that the cardholder gives consent to it.

When considering a preferred method of payment, whether you are a merchant or a consumer, it is important to take the fine print into account. Convenience fees and methods of payment can vary between different payment card networks, and one should conduct thorough research before accepting a contract. 

Here at PayFrame, we believe in upholding a policy of transparency as well. If you have any questions about methods of payment and surcharging laws in Canada, then please do not hesitate to contact us. Our team members may be reached at +1 888-668-0733.

The number of surcharge fees for credit purchases is increasing in the U.S. As a merchant, it is important to stay informed about the changes and news surrounding the relevant payment card networks. 

An important case to know about is Expressions Hair Design v. Schneiderman. The company, located in upstate New York, surcharged its customer a rate of 2.75 to 3.5 per cent. Expressions Hair Design’s owner, Linda Fiacco, stated that the justification for the charge was that it covered the transaction fees associated with credit card processing.

The U.S has a history of no-surcharges when it comes to credit card purchases. Between 1971 to 1984, the federal law barred these charges, and after the law expired, states such as California put into place their own no-surcharge laws. It was in 2014 when a group of retailers went against California’s attorney general. 

Notably, the argument against the prohibition of surcharges was that it restricted free speech rights under the First Amendment. It was argued that the preference to have surcharges as opposed to discounts was justified, as the choice affected customer reactions. However, the district court ruled that the California statute regulated speech and not conduct, which ultimately resulted in the case being struck down. 

Despite this, it was the Expressions Hair Design v. Schneiderman case that began to undermine the no-surcharge laws, particularly in New York. In March 2017, the Supreme Court ruled in Expressions Hair Design’s favour with respect to how the law contradicted with the merchant’s free speech rights.

In the court’s decision documents, Chief Justice John Roberts wrote that the surcharge law “is not like a typical price regulation.” He added that “What the law does regulate is how sellers may communicate their prices.”

With the ruling in place, merchants could charge $10 in cash and a credit price of $10.30, for example. However, merchants cannot charge $10 in addition to a three per cent surcharge for the use of a card. Roberts noted that the law regulates speech, as the monetary amount works out to be the same. In the case of California, the law was ruled as unconstitutional in the courts with regards to the Italian Colors Restaurant et al. v. Harris case as well. 

As of now, there are 11 states that have laws in place to prohibit merchants from surcharging credit card users. These states, in addition to New York and California, include Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma, and Texas.

In the case of Minnesota, the state prohibits sellers of goods and services who are responsible for customer credit cards from surcharging customers who wish to use a credit card as opposed to cash, cheque, or other methods of payment. 

As for the states that allow merchants to give their customers discounts and thereby encourage methods of payment that are not debit or credit cards, there are 10 that are applicable. These states include California, Colorado, Connecticut, Maryland, Massachusetts, Nevada, Oklahoma, Washington, Wisconsin and Wyoming, as well as Puerto Rico.

As a merchant, it is important to be aware of your respective state’s policies when it comes to surcharges, fees, and credit card interest. Contacting an attorney, your state attorney general, or an expert at PayFrame would be a step in the right direction if you have any questions or concerns. 

An expert at PayFrame may be contacted via email at info@payframe.com or phone at 1-888-668-0733.

As the technological world continues to advance at a breakneck pace, merchants should be up to speed when it comes to Strong Customer Authentication (SCA). 

Championed by the European Commission’s Revised Directive on Payment Services, SCA is integral to good business practices. It not only helps facilitate competition and efficiency within a business, but innovation as well, which is the driving force behind success. 

Consumers who are subjected to SCA, for instance, feel more secure when making online purchases, thereby driving more traffic and positively affecting the bottom line. 

In addition, payment services and providers within the financial technology market, for example, benefit from SCA by virtue of ensuring retailers that monetary amounts are on their way. As for account information service providers and aggregators, strong authentication allows customers to have overviews of their accounts and balances, which builds transparency and trust. 

When it comes to the objectives of the Regulatory Technical Standard, SCA is just as important. The main objectives, which are backed by the European Commission’s Revised Directive on Payment Services, are twofold. The first objective is to ensure consumer protection. Conversely, the other objective is to both level the playing field and encourage competition in a rapidly evolving market. 

SCA helps define the standards of how these objectives are fulfilled as well. For instance, consumer protection can be achieved via innovative and secure electronic payment methods that meet SCA requirements. These requirements include, but are not limited to a user’s ability to provide passwords and PIN numbers, a mobile phone number or a card, and biometrics such as an iris scan or a fingerprint. 

Throughout the European Union, SCA is already commonplace at various locations. When a customer pays with either a credit or debit card at a store in-person, for example, they must authenticate the transaction with a PIN number. 

It should be noted, however, that for remote electronic transactions involving monetary sums, SCA has only been applied to some countries. At the time of writing this post, these countries include the Netherlands, Belgium, and Sweden. As for other countries, they have service providers apply SCA on a voluntary basis. 

The infrastructure for SCA have to be set up by payment service providers and banks as well. This is in addition to improving on fraud prevention practices. Therefore, both their consumers and merchants should be well-informed and trained on SCA in order to fully take advantage of what it upholds. 

In the case of online payments, security should be enhanced through various methods such as one-time passwords and verification links. The reasoning behind this is to prevent hacking and fraud. Belgium, in particular, has applied such security measures and has seen a reduction in online fraudulent activity. 

With a plethora of credit card processor options out there that aid in SCA, one cannot be certain that they are always getting the best rates. At PayFrame, however, we are dedicated to helping your business succeed in a constantly evolving marketplace. Working with our team will guarantee the highest quality of service available, as well as our full commitment to help you reach your business goals. 

To contact the PayFrame team, email info@payframe.com or call 1-888-668-0733.

Before merchants can begin to surcharge for credit card purchases, they must first consider the requirements that a payment card networks have in place. 

For instance, should they wish to apply a surcharge, they must first identify the stakeholders. What would customers think? What are the top competitors doing? How would a business be disclosing surcharges to its customers? 

In addition to asking oneself these questions, it is also important to look into one’s specific state, in the U.S., and its statutes, laws, and policies. At the time of writing this post, the states that have laws in place which prohibit surcharging credit card users include California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. To ensure that surcharging is permitted in one’s respective state, one can contact their attorney or an expert here at PayFrame

The next logical step when it comes to best practices for merchants would be to know when they can begin surcharging. In the case with Visa, merchants must notify the payment card network, as well as the acquirer, 30 days before surcharging customers.

As for when one can surcharge, this only pertains to credit transactions for the U.S. and its territories. Meanwhile, for Visa, debit and prepaid payment methods cannot be surcharged.  

It is important to note that a surcharge cannot exceed the cost of acceptance for the credit card. In addition, when it comes to disclosing surcharges to customers, proper signage, as well as notification, are required at the point of entry and the point of sale. Finally, the itemization of the amount surcharged must also be clearly identified on the receipt at the end of the transaction. 

Mastercard’s policy on customer notification and disclosure is similar to that of Visa. For Mastercard, merchants must provide a clear disclosure about surcharges to their customers. This disclosure should occur right at the point of interacting with customers. Customers should also be notified of the surcharge dollar amount via the receipt. 

Another important requirement to take into consideration for Mastercard is the specific rules of other accepted brands of payment card networks such as PayPal, American Express, and Discover. 

For instance, merchants can surcharge Mastercard cardholders depending on the cost of the aforementioned brands and the surcharging restrictions associated with them. Merchants should always look into the specifics for each of the brands they work with by contacting their acquirers. 

In terms of a merchant’s ability to surcharge with Mastercard, it is based on whether the merchant can satisfy particular disclosure requirements. For instance, one of these requirements is to notify both Mastercard and one’s acquirer of the intention to surcharge. This should be done in no less than 30 days before the surcharge gets implemented into the merchant’s system. 

Specifically, for Mastercard, one should have information regarding the merchant’s name, merchant contact information, type of channel, as well as the type of surcharge in order to fulfill the aforementioned requirements. In addition, one should have the number of surcharging locations, the date at which the surcharge would begin, and the merchant’s address ready at hand. 

The types of surcharges allowed for Mastercard include product-level and brand-level. While product-level surcharges let merchants impose the fee on particular Mastercard credit products, the latter option allows for merchants to charge the same percentage for all Mastercard credit cards.   

Of course, in both cases, there is a limit on the surcharge fee. This amount is dependent on the merchant’s cost for the payment card network’s credit acceptance. For a product-level surcharge, it must not exceed the merchant’s cost to accept a particular product of Mastercard. Conversely, for a brand-level surcharge, the amount should be less than that of the merchant’s average effective discount rate. This rate is what the merchant pays their acquirer for Mastercard credit acceptance. 
It is integral for any merchant to pay close attention to the payment card networks with which they work. The PayFrame team would be more than happy to provide advice and help business owners on this front. One can contact a PayFrame expert at either 1-888-668-0733 or info@payframe.com