Upcoming SBA Rule Changes to Affect Small Businesses [2023 Update]

During the events at National Small Business Week the Small Business Administration announced upcoming changes due to take effect on July 22, 2013. These changes shift what defines how “small business” is defined. The administration is increasing the size standards in 70 industries. These standards lay out the maximum size a firm can be and still be considered a small business.

This shift in classification is noteworthy because companies that do not currently qualify for this categorization will now be eligible for special SBA loans and government contracts set aside to help smaller firms. Defining much larger businesses as “small” could have costly implications for the “little guy”.

The indicator that the SBA looks to for this classification is the average annual revenue of the company. The threshold that is increasing in about 25 industries will increase over 500 percent from the current $7 million to $35.5. That translates into around 17,000 U.S. businesses that will now be considered a small business.

NAICS Sectors and One NAICS Subsector

There are four NAICS sectors and one NAICS subsector that are revised in the new standards. They are:

NAICS Sector 71, Arts, Entertainment, and Recreation
NAICS Sector 52, Finance and Insurance
NAICS Sector 55, Management of Companies and Enterprises
NAICS Sector 11, Agriculture, Forestry, Fishing and Hunting
NAICS Subsector 213, Support Activities for Mining

There is already controversy surrounding the amount of contracts that are to be awarded to smaller firms, a mark that the federal government has missed over the past 11 years, according to an article by the Washington Post. A total of 23 percent of federal contracts are earmarked to be granted to companies with the designation from the SBA. Adding more players to the mix will surely increase competition in an already competitive process.

Bitcoin: The Hidden Danger to Your Business

Bitcoins (BTC) are a growing new form of digital currency created in 2009 by Satoshi Nakamoto, who envisioned them as a peer-to-peer, electronic cash system. His goal was to create a decentralized currency, not backed by any central bank or country, therefore allowing the free market and determine the worth and pricing of the bitcoins. New bitcoins are “mined” electronically and the rate of creation is halved every four years until the total number of coins reaches 21 million.

There are a few reasons why businesses should stay away from accepting bitcoins as a form of payment for goods or services. The first is their extremely volatile exchange rate. The value of a single BTC rose steadily from 2009 to early 2013. In April 2013 the value was nearly $270 per bitcoin. Shortly after reaching this peak value the currency plunged in value to around $50 per BTC. While the value did rise again in the following months, it stabilized around $100 in value. The threat here to the business is that while there is a real value behind this currency, it fluctuates more rapidly than the rate of the USD. This can expose the business to losses if the value drops suddenly.

Another reason that business owners should not accept bitcoins is the exposure the company can suffer as it pertains to business intelligence. One point that supporters promote is the anonymity of transactions while using BTC. While this is true for the most part, determined individuals can associate real-life identities with the unique addresses assigned to Bitcoin wallets. All BTC transactions are recorded in a public ledger. Therefore, any company or individual that makes a payment to a company has their unique wallet number and can use it to track future transactions.

The threat to businesses from this is their future transactional data is public record. Information such as supply chain details, spending habits, and financial data could become available to competition. This knowledge can be analyzed to take away competitive advantages and undermine market share of your business.

Bitcoins can also be the target of theft. Because of their electronic nature and being stored on either a personal computer or mobile device they are subject to hackers trying to gain access to your digital wallet. Over the last few years, there have been incidents where over USD $8 million have been accessed and removed by hackers from exchanges.

Finally there are concerns that federal regulators could step in and enforce responsibility of companies to ensure that customer’s personal data remains private. The Federal Trade Commission (FTC) has been assessing the privacy of customers that use bitcoins to pay for goods or services from businesses and how security practices may need to be updated in light of new financial products.

When you boil down all these facts about the exposure a business experiences when dealing with this new currency, the risks greatly outweigh the rewards. Merchants should evaluate what level of risk they are willing to be subject to before diving into this market that is still in its infancy. Host Merchant Services can provide secure and reliable payment processing at a low cost to your bottom line. Contact one of our payment experts today at 877-517-4678 for a no obligation evaluation of how we can help your business.

Update on Visa & MasterCard Settlement [2026Update]

The Visa MasterCard Settlement that was reached last fall in the class-action lawsuit between Visa and MasterCard and a large group of retailers is still being argued over. The latest update comes with concerns from some of the class members such as Wal-Mart, Target, and national associations representing grocers, smaller retailers, etc.

At its core, a settlement is just that: settling. The two parties agree to terms that include both sides giving up something in an attempt to mitigate the concerns of the plaintiffs but not at the full value of the original case. The defendants must also address the initial concerns of the case but are then granted protection from future legal action and costs for addressing those concerns.

The fear that the class members have is that the “Release” that the defendants sign will be too broad and protect Visa and MasterCard from legal actions in the future. This protection leads the associations, states, and others to believe that the banks and card brands might be abusive in the future. If there are future abusive practices, these members believe that they will be powerless to seek any relief in the court system.

Visa MasterCard Settlement And Processing Fees

Part of what the settlement established was the right for merchants to offset their processing fees by directly surcharging customers who use credit cards. On the surface, this looks like a good concession by the card brands in favor of the merchants. But considering that some large merchants, such as Wal-Mart, have publicly stated they will not be surcharging customers it is almost a tool in the belt that can’t be used.

On the flip side, if businesses choose to surcharge on credit card transactions it puts the customer in a direct decision-making situation. Customers could very easily make a shift back to using cash instead of cards, which equals a loss for payment processors.

As far as the appeal by the plaintiffs in this case it looks unlikely that Judge Gleeson (the judge for the case last year) reconsider the appeal as he has already heard the concerns and rejected the legitimacy of them. Furthermore, a separate appeals court heard the same argument and also dismissed them. Thus, as it stands currently, it appears that the settlement will move forward barring any unforeseen complications.

About Visa

Visa Inc. Is a known financial company that facilitates electronic money transfers, around the world. Established in 1958 Visa has grown into one of the most recognizable payment technology companies. It acts as a bridge between consumers, businesses, financial institutions, and governments enabling convenient transactions like credit and debit card payments.

Visa’s primary focus is on providing payment solutions through its branded credit and debit cards. These cards are widely accepted across millions of locations worldwide making Visa an essential player in the global payments network. The company’s innovative technologies like contactless payments and mobile wallets have further improved transaction efficiency and security.

By issuing cards to individuals Visa collaborates with financial institutions to offer Visa-branded cards. This approach allows Visa to concentrate on developing and maintaining the infrastructure for secure electronic payments.

In addition to card-based transactions Visa actively explores cutting-edge technologies such as blockchain and artificial intelligence to remain at the forefront of the changing financial landscape. With a commitment to promoting inclusion and a wide range of payment solutions available Visa continues to play a role, in shaping the future of digital transactions worldwide.

About Mastercard

Mastercard Incorporated is a known financial services company that specializes in facilitating electronic payments and transactions. Established back in 1966 Mastercard has emerged as one of the players, in the payment industry offering a range of products and services.

At its core Mastercard provides payment solutions, such as credit and debit cards to individuals, businesses, and governments worldwide. The company’s recognizable logo with interlocking circles represents its commitment to connecting people and businesses through electronic transactions.

Mastercard operates a network that spans across countries and currencies. This enables users to conveniently make purchases withdraw cash and carry out transactions with security. Similar to Visa Mastercard works together with institutions globally to offer products branded under the Mastercard name of directly issuing cards to consumers.

Known for its focus on innovation Mastercard consistently introduces technologies and features to enhance the payment experience. This includes advancements in payments, mobile wallets, and robust cybersecurity measures for safeguarding transactions.

With a dedication towards inclusion and a vision, for a future where cash becomes less prevalent, Mastercard continues to shape the landscape of digital payments.

The company’s dedication, to state-of-the-art technology and international collaborations, solidifies its standing as a contributor to the advancement of transactions, on a global scale.

First EMV ATMs to Go Live in the U.S.

Just a few days ago we gave a brief overview of what EMV chip card technology is. With the payment technology firmly in place in almost every other region than the U.S. the only next step is to bring it stateside. Today news was released that the very first EMV enabled ATM machines are operational in the United States. The ATMs that are currently live are located at a bank branch on Park Avenue in New York City.

The more secure technology has been long tested in Europe as it has been in service in most of the continent since the late 1990s. According to one industry source, 36 percent of all bankcards and 65 percent of terminals, ATMs and other machines globally are EMV compatible. Also, since France adopted the EMV standard (and was the first country to do so) there has been a reported 80 percent reduction in credit card fraud.

Why a U.S. Rollout is More Complex

Many consider the U.S. payment industry to be one of, if not the most, complex in the world. This is due to several factors. For one, we lack the presence of a one central authority when it comes to issuing deadlines for implementation to issuing banks. In addition to this, there are a greater number of card issuers here, which increases the “moving parts” of a national overhaul.

Much of the decision making process lies with the issuing banks and credit unions. While they understand the importance of upgrading the existing infrastructure, decisions on scope and capabilities must be made and a roadmap for rollout designed.

ATM Specific Factors to Consider

ATM owners and operators have a few things to consider when deciding to upgrade or not. Because the liability of fraud and noncompliance rest on the operators of each machine the best route would be to analyze the number and type of transactions at each location. There are then three options:

Upgrade or replace the machine with EMV capability
Don’t upgrade and risk the chance of fraud or noncompliance
Take the machine out of service

Obviously most operators would like to keep as many locations operating to maintain revenue but it is possible that some locations just have too low of traffic to be worth upgrading or might be located in higher risk areas.

$500 million Processed Through Mobile Wallets in [2023 Update]

U.S. consumers spent over $500 million through mobile wallets on their smartphones last year. While this is miniscule as compared to the overall merchant services industry, where trillions of dollars that are spent annually through plastic credit and debit cards, it does signal a growing trend in the industry. Mobile wallet apps have experienced slow adoption rates in the U.S. but are projected to grow. According to Berg Insight, the industry could reach $35 billion annually by 2017.

While this figure still is just a fraction of the overall payment processing industry, it is a technology that as consumers adopt they will start to expect the infrastructure in any store they wish to spend money in. This presents a problem for small-businesses. For one, the physical machines can be expensive and require complicated installation. Some systems might not integrate into existing POS terminals at all. In addition to the implementation hurdles, policies must be formed to train staff on the procedures of actually taking a payment.

A short time ago, HMS announced a partnership with Barclays US to get the word out about the bPay mobile wallet initiative. bPay is a mobile wallet that has been initially rolled out in the Wilmington and Newark areas of Delaware. In the initial rollout, Host and bPay are looking for small and medium-sized businesses that are interested in being setup to take payments via the customer’s smartphone and a QR code that is presented on the POS system. In addition to the time savings offered, the platform also supports mobile marketing features such as SMS text and in app advertising.

Some merchants wonder why they should implement a solution like this if taking plastic cards isn’t broken. The answer is that in reality, the consumer is king. And because of stores like Starbucks, which has a mobile wallet integrated into their mobile app, paying with your smartphone is creeping into mainstream culture. As the industry continues to grow consumers will want to buy more than just coffee on their iPhone. Forward thinking merchants that want to stay ahead of the curve should look to implement a solution now as to not fall behind.

Businesses that are interested in learning more about getting setup to accept bPay transactions should give our payment experts a call at 877-517-4678 today!

Mobile Payments at Farmers Markets [2023 Update]

I recently stopped down at the Cherry Creek farmers market here in Denver and noticed a couple things. One, there are way more vendors that have setup shop at this event than in years past. And two, very few of the businesses there were setup to accept credit cards. This surprised me. The amount of lost revenue that these small businesses were losing out on must have been substantial.

I spoke with one farmer that had peaches and tomatoes and asked him why he did not take cards. His response was pretty standard from what I have heard other merchants say: accepting credit cards is too expensive. While this misconception of the payment processing industry seems to have dwindled in recent years there are still business owners out there that are hesitant to sign up for a merchant account. This may be because of a bad experience with a shady processor in the past or simply hearing horror stories from friends, family, and other business owners.

The truth of the matter though is that we have come out of the dark ages of processing’s past. Where tiered pricing and hidden fees were rampant and the “norm”. Host Merchant Services believes in modern transparent pricing based on the interchange plus model. Anyone who takes cards has to pay the interchange rates set by the big boys, Visa, MasterCard, Discover, and American Express. No way around this. With that being said, our belief is that we should provide a fair price relative to the merchant’s volume, average ticket amount, and type of business.

But I digress, back to my conversation with the farmer at the booth. He was familiar with other “four sided” mobile payment processing solutions but was hesitant to go that route because of the one rate, flat pricing structure. He had researched enough online to know that there are hundreds of rates for all the various classifications of cards and that one rate for all them just didn’t add up.

He was not aware that companies like HMS existed with the same mobile swiper solution but also a fair pricing structure. Our solution is powered by HMSPay for iPhone and Android operating system. The handy mobile swiper turns your smart phone into a go anywhere POS. Some of the features that it performs are:

Authorize and capture charges immediately
Authorize and reserve funds immediately
Email receipts
Capture relevant data
Void transactions as needed
Process credits and refunds

With these features your customer get the same experience they are used to in brick and mortar locations and the convenience and speed of paying via card. Setup and installation of HMSPay is a 30-second, two-step process. Visit your appropriate app store on your phone to download the application and attach the device. To get setup with a merchant account contact our friendly payment experts today at 877-517-4678 or simply fill out the form on the right and we will get in touch with you.

What is EMV Chip Card Technology?

EMV® is a worldwide standard for credit and debit card payments based around the use of chip card technology. The acronym stands for Europay, MasterCard, and Visa, who collaborated to create the technology. The goal of this project was to create a card that worked based off of a microprocessor chip that is read by the payment terminal.

How it works

The transaction has a built in verification system that requires both the chip in the card and a PIN number the customer enters. This extra step verifies that the person with the card is in fact authorized to use it. This is just the first facet that makes these transactions more secure. Each chip contained in the card generates an original and unique code for each transaction. This unique identifier makes it easier to track transactions and identify fraud.

Comparison to Existing Magnetic Stripe

Everyone knows the magnetic stripes exist on almost every single card in the U.S. currently. These pass very simple data through the system at the time of the swipe, mainly just card number and expiry data. The data passed back and forth between the terminal and chip card is much more sophisticated and encrypted for added security. Another downside to the magnetic stripes is their shelf life. Many frustrated clerks can tell you that a card that is used often does not usually make it to its expiration date. Merchants should know that they need to swipe the card to get the lowest interchange rates for most cards. Often times, front line workers do not know that the business is paying a higher rate if the card is keyed as opposed to swiped.

Future Growth

EMV is already widely used worldwide. As of Q4 2012, there are roughly 1.62 billion EMV cards in consumers’ hands. Combine this with the 23.8 million terminals that have been deployed throughout Europe, Asia, and Africa and it’s easy to see that this technology is here to stay. HMS fully supports EMV processing and works with merchants to offer this to their customers. With Visa and MasterCard poised to really step on the gas concerning U.S. migration, merchants need to be up to speed on the new processes and technologies.

This upgrade in technology will have an impact on a wide range of hardware including:

ATMs
Existing POS machines
Vending machines
Automated fuel pumps
Ticketing kiosks
Etc.

While replacing the vast amounts of existing hardware might seem daunting on a macro level , the time and capital committed to this migration is absolutely worth it when you consider the upside. The combination of both new terminals and chip cards will reduce risk for both consumer and business. Also, by making chip cards more universal, American tourists who travel abroad will have a consistent experience and won’t need a “special card” for overseas trips. This point is even more powerful when you consider that there are roughly 56 million trips outside the country by U.S. citizens just in 2012. So send us an email or better yet just give us a call at 877-517-4678 to discuss how Host Merchant Services can help your business stay ahead of the EMV curve.

Your Business Should Consider Going Cashless [2026 Update]

The long-lived standard of paper and coin currency is nearing its end. The simple truth is that debit and credit cards, mobile wallets, and various other ways to pay are bringing about the beginning of the end of Washington, Jackson, and even Franklin. Businesses are going cashless.

The truth is that when businesses accept cash payments, there is a certain element of risk involved. First, you have the human element. A clerk has to take a payment and in most cases must give the customer back some change. This is assuming that the clerk has the ability to do the simple math it takes to subtract the transaction total from the amount tendered.

While the average third grader can do this, you know what your mother always told you about assuming. In addition to this oversight, bills can stick together, drop on the floor, or even be mistaken for a different denomination. Also, when employees do not have to worry about this exchange of currency they can focus on providing superior customer service.

When cash is accepted as a payment it also decreases the speed of the transaction as compared to accepting credit cards. The clerk must take the extra time to count out the change and double-check to make sure it is accurate. Credit card transactions are mostly completed by the customers themselves through POS terminals and swipers. Thus freeing up time for the employee to wrap up the sale and provide the best customer service.

The next con about accepting cash payments is that it tends to not be very clean. With the average lifespan of a $1 bill being 18-22 months, you can imagine the amount of dirt, bacteria, and other generally gross germs. Decreasing the amount of cash used in transactions can help improve the overall health of the employees at your business. And may also keep your customers from getting sick too!

According to a 2009 University of Massachusetts study, 90 percent of 234 paper bank notes tested positive for traces of cocaine. Another 2001 study found traces of heroin, methamphetamine, and PCP. While these levels are very low and not enough to make someone sick, it still makes you think about what our paper money goes through.

It’s hard for anyone to deny that payments are shifting from greenbacks and coins to plastic and electronic. And while cash isn’t going to disappear overnight, it benefits merchants to adopt the technologies of the future to get ahead of the curve.

Benefits Of Business Going Cashless

The shift, towards a cashless business model, has become increasingly popular in today’s landscape offering a range of benefits that go beyond mere convenience. As technology advances businesses are realizing the advantages of adopting cashless transactions. Here are some key advantages of a business going cashless;

Improved Efficiency and Speed;
One major benefit of embracing a cashless approach is the enhancement in efficiency and transaction speed. Electronic payment methods like credit cards and digital wallets streamline the payment process reducing the time required to complete transactions. This not only improves the customer experience but also enables businesses to serve more customers in less time ultimately boosting productivity.
Lower Operating Costs;
Handling cash involves expenses such as security measures, cash handling fees, and the need for physical infrastructure like safes and registers. By transitioning to a cashless system businesses can reduce these operating costs. Allocate resources effectively. This aspect is especially relevant for medium enterprises (SMEs) where every saved penny contributes significantly to overall profitability.
Enhanced Security;
Cash transactions inherently carry security risks such, as theft and counterfeiting.
Going digital with transactions helps reduce these risks because electronic payments leave a trace and often have built-in security features. Digital payment systems use encryption and authentication measures creating an environment, for both businesses and customers. This can result in a decrease in fraud and unauthorized transactions.
Insights from Data Analysis;
Cashless transactions generate data that businesses can use to analyze customer behavior and gain insights. By studying purchasing patterns and preferences businesses can make decisions about inventory management, and marketing strategies. Engaging with customers. This data-driven approach allows businesses to customize their offerings to better meet customer needs building long-term relationships.
Convenience for Customers;
In today’s convenience-oriented world cashless transactions provide customers with a seamless and hassle-free payment experience. With the increasing availability of mobile payment options and contactless cards, customers can make purchases quickly without the need, for cash. This convenience not only enhances the customer experience but also appeals to tech-savvy consumers who prefer efficient modern payment methods.
Global Access;
Cashless transactions simplify business operations by eliminating the complexities of currency conversion and cross-border transactions.
Digital payments offer advantages to businesses operating on a scale facilitating smoother operations and unlocking new market opportunities. This is particularly beneficial, for eCommerce companies that serve customers worldwide.
Advancement of Financial Inclusion;
Embracing cashless transactions can contribute to promoting inclusion by granting individuals who lack traditional banking relationships access to banking services. Mobile banking and digital wallets act as gateways for underbanked populations enabling their participation in the economy. This fosters growth, and reduces poverty. Creates a more inclusive society.

Conclusion

To summarize the benefits of transitioning to a cashless system extend beyond convenience. The efficiency, cost savings, heightened security measures, and data-driven insights associated with cashless transactions position businesses, for growth and success in a digitalized and interconnected world. As technology continues to advance adopting a cashless approach is not merely a passing trend but rather a strategic decision that can significantly impact a business’s performance and enhance its competitive advantage within the market.

Contact one of our payment experts today at 877-517-4678 to learn more and get setup to take payments.

Five Tips to Help You Get a Merchant Account [2023 Update]

If you are lucky enough to be a business owner that has trained your customers to pay in cash or personal check, bravo. For the remaining 99% of entrepreneurs out there, the harsh reality is that our society is trending towards a cashless economy. Personally I rarely have actual cash in my wallet and have three or four different cards that I use on a regular basis. In fact, when I do have to go out of my way to visit an ATM, it seems more like a chore than anything else. Setting a reminder to stop at the bank. Getting out of my car to go inside. Sometimes even waiting in line. But I digress; back to the topic at hand. The reality is that customers want to pay for your products or services with a card. Now let’s look at some things that will help you get approved for a merchant account.

Knowing Your Financial Risk

If you have a business that currently or has previously taken cards, you have some sort of processing history. The important points to keep in mind here are the amount of chargebacks and refunds. If these numbers are high, this may be a red flag to underwriters and either a.) cause you to have a higher rate or b.) be outright rejected for processing. If this is the case, no need to worry though. Similar to personal credit, the reputation of your business can be repaired. This process just takes time and patience. In the meantime HMS can refer you to one of our partners that specializes in “high risk” processing.

Make a File For Your Documentation

Merchant service providers want to see accurate financial statements to approve applications for a merchant account. These can include P/L statements, merchant account statements, or other reports that show financial history. These are crucial as they show the reliability and consistency of the business revenue.

Don’t Fib About Future Sales Projections

Underwriting typically does not base approval on projected volume of sales. So adjusting this number in an attempt to get a better outcome probably won’t help you. But if it comes to light that you intentionally manipulated this, it might reflect on your business as shady and untrustworthy.

Accurate Business Descriptions

Be as thorough and accurate as possible when defining the type of business that you are running. This helps our staff identify your business needs such as POS solutions, e-commerce setup, or maybe a mobile swiper. It also is important because some industry and business types are on a list of high risk merchants and this requires extra steps to get you processing. Knowing these things upfront will help expedite the time it takes to get you setup and accepting payments.

Take Steps to Reduce Fraud

No one likes fraud. It is a headache and waste of time for merchants who just want to be made whole again. To payment processors it is an unfortunate part of doing business. It seems like there are always a select few“bad guys” that want to scam the system. That’s why it is important to put measures in place to reduce your businesses exposure to people who want to cheat the system. One of these is AVS (Address Verification System). In a card not present transaction it is used to match the address the customer provides to the address on file with the card issuing bank. If these do not match a warning is presented and the business can investigate further. Important fraud prevention steps are important to reduce the amount of risk and possible financial loss that the business can incur.

National Small Business Week Guide

At Host Merchant Services we know that while Fortune 500 companies may get the national spotlight and most of the media attention, small businesses are what really powers our communities and helps grow our nation. A recent stat showed that two out of every three new jobs created in the US is generated by small business. That is why since 1963 the U.S. Small Business Administration has celebrated National Small Business week. This year the event runs from June 17-21 and has events spanning from coast to coast to highlight the contributions of hard working entrepreneurs.

The official cities for this year’s event are Seattle (June 17), Dallas (June 18), St. Louis (June 19), Pittsburgh (June 20), and Washington, D.C. (June 21). If you are lucky enough to live in or near one of these cities it is worth your time to check out the on-site conferences. These will feature experienced speakers providing knowledge and advice to running a successful small business. There are also networking opportunities with other like-minded business owners in the area.

If you cannot make it to one of these sites in person, Google is hosting a series of online events that will cover essential business skills for keeping up with the competition in today’s competitive environment. The topics that will be covered are Getting Started with Social Media, Managing your Business’s Online Reputation, How a Mentor Can Help Your Business, and How to Get a Loan for Your Business. This wide range of topics can help anyone from just getting started to seasoned professional.

In addition to the official sites and the online events there are gatherings planned in almost all 50 states. A full list of events as well as an event map can be found on the SBA website. Business owners should also check out their site at http://www.sba.gov/ for tips and advice on starting, running, and growing your business.

In addition to these important skills for starting and managing a business it is important for every small business to be able to accept payments from their customers for whatever good or service they are providing. Host Merchant Services can help guide owners through the world of merchant services and payment processing in a consultative manner. Whether a fledgling company just getting moving or an established business with years of experience under your belt, we can help get you setup and processing payments on your way to expansion and growth.

Contact us today to get a no obligation quote for the lowest interchange plus pricing available and top tier customer service.