Tag Archives: merchant services

Coinbase Registers with the SEC

On May 10^th, Coinbase announced that it had filed for a registration statement with the Securities Exchange Commission (SEC). The announcement came along with their reports for the first quarter of 2022, where they reported missing the revenue estimates that were previously given by analysts and sending shares down as much as 19%.

In a released statement from Coinbase discussing their registration statement with the SEC, the statement was intended to be used for potential prospective offerings, including the sale of new securities. However, new securities won’t be immediately available.

This statement, and their recent Q1 results, came during a major sell-off in the crypto market which has been referred to by some as a crypto crash, with Bitcoin dropping below $30,000. Coinbase has lost more than 70% of its value since late March.

Coinbase commented on its goals and approach to capital structure over the years, stating that its aim has always been to raise capital at the lowest cost possible to its shareholders. They expect that the shelf registration would speed up the process of issuing securities to a matter of days, which they hoped would allow them to time the market conditions better.

While these are the company’s statements on the matter, the reality is that their decision could have been driven by other factors, such as the uncertainty surrounding crypto assets regarding the U.S. federal securities law, as well as the mounting pressures for crypto regulation.

Coinbase reported, in their filing, that the SEC traditionally doesn’t confirm the status of crypto assets as securities in advance. Since the evolution of crypto assets and their classification is still ongoing, it’s difficult to predict how to classify them. The only crypto assets that the SEC has given a definitive view on are Bitcoin and Ethereum, which they don’t see as securities. However, Coinbase stated that the SEC’s views are not binding for courts, other agencies, or even the SEC itself. Coinbase believes that should the SEC change its approach, it could have a significant impact on the business.

Other crypto assets have yet to be ruled out as securities by the SEC under their current rules, though the company’s analysts argued that none of the assets traded on their platform are considered securities.

For their part, Coinbase gave a warning on their filing for people investing in crypto assets. They warned that should the SEC, or any other regulatory authority be it national or foreign, determine that a crypto asset traded on the platform was a security, Coinbase wouldn’t be able to continue offering said asset until they could do so in a compliant manner.

This statement helps shed light on Coinbase’s decision to file with the SEC, as they seem to be preparing in advance to offer crypto assets on their platform that are considered a security by the SEC or any court.

The registration has more potential benefits for Coinbase, as it would allow them to provide the company’s crypto products and assets on top of those from third parties. As of now, there is regulatory uncertainty regarding the company’s yield-generating activities such as staking and lending. These could eventually be considered securities, but the filing would allow Coinbase to act quickly on that matter.

Coinbase also revealed that it had received investigative subpoenas from the SEC regarding its stable coin and yield-generating product plans. Should these be classified as securities, the registration could help the company keep these services afloat by meeting the necessary compliance measures.

In the last part of their statement, Coinbase mentioned that they believed this shelf registration statement would enhance the company’s flexibility, as well as enable access to other capital markets more efficiently and effectively when market conditions were optimal.

Inflation Moderates Slightly in March 2022 After Increasing for 8 Months

The consumer price index (CPI) fell from 8.5% in March to 8.3% in April, according to the report from the U.S. Bureau of Labor Statistics, failing to meet the expectations of Wall Street for consumer prices and inflation. Economists had previously forecasted a drop to 8.1% for the same time period, owing to raises in rates from the Federal Reserve. However, it still was the first drop in eight months. While experts believe that inflation may finally have peaked, others feel that the Federal Reserve will need to be more aggressive regarding the interest rates for things to return to normal levels.

This is reflected in the way that prices went up. The consumer price index went up 0.6% for most items between March and April, with the exception of groceries and gas. Wall Street expected a rise of only 0.4%, given that the increase was 0.3% in March. The fact that the increase doubled is a sign that inflation is still a factor.

This increase in prices caused the stocks to end lower once more. The Dow Jones Industrial Average finished 1% lower, or over 300 points,the same day the report was released. The S&P 500 meanwhile fell 1.6%, and Nasdaq Composite fell by 3.2%.Some of the heaviest hits were felt in the Tech industry, with companies such as Netflix, Amazon, Apple, and Tesla falling by 3% or more due to the continued offload of shares by investors.

This data has worsened the state of the crypto market, as well as further eroded the confidence of its investors. Bitcoin’s price fell another 7% to reach around $29,000, its lowest point since the late 2020-early 2021 surge in price. Though it has since stabilized at around $30,000.

While food, shelter, and vehicle prices surged, gas prices fell around 6%, which helped counteract the overall increase and slow the rate of inflation. Experts believe that the peak of inflation has most likely been reached, but that the prices will continue to be above the Fed’s expectations during 2023. The chief economist of Comerica Bank, Bill Adams, stated that the slower inflation seen in April was most likely an effect of March’s gas price surge, itself owed to the Russia-Ukraine war.

This slow down of inflation, after a 40-year high, paints a slightly better picture after months of price increases. Still, April was the second-highest inflation level in four decades. The Federal Reserve set a 2% rate of inflation as its target, but experts expect that to rise to 5% or 6%, one of its highest points in history.

Chris Zaccarelli, chief investment officer of Independent Advisor Alliance, stated that the Fed would need to raise rates more quickly and to higher levels in order for things to stabilize. He predicted at least four 50 bps rate hikes during 2023. On May 10^th, one day before the report was revealed, United States President Joe Biden referred to inflation as his top domestic priority and the mainproblem that families are currently facing. This increased escalation in inflation is owed, in part, due to disruptions in supply chains caused by the worldwide COVID-19 pandemic.

Trends in Mobile Credit Card Processing for Fall 2021 and 2022

Over the last 12 months, almost every retailer felt the need to shift from the in-store traditional payment methods to the new-age digital methods. Businesses have also understood that this shift has a vast scope – it is not just a momentary reaction to the prevailing coronavirus pandemic, but a long-term trend. IBM’s U.S Retail Index study revealed that the transition to digital payment was speedy due to the pandemic, which otherwise would have taken five years. E-commerce purchases are predicted to grow by 20% this year.

Even in these uncertain economic times, retailers can be confident that online and hybrid shopping will continue to grow. Today, the customers have become more aware and want more flexibility and security in mobile solutions from these brands. And therefore, brands cannot just sit quietly.

We know that even if the pandemic ends, the e-commerce growth and related customer needs are here to stay. For businesses to keep up with the competition, they must shift to modern payment methods. This article will discuss six trends in mobile credit card processing for fall 2021 and 2022 that will make their way into the future.

#1 E-Wallets

With the increasing number of smartphones, e-wallets have become the most convenient mode of payment for consumers. A mobile wallet syncs your bank accounts and credit cards and turns your smartphone into a contactless payment device. According to some statistics, the global estimate of smartphone users in 2021 was 3.8 billion, compared to 2.6 billion in 2016. A smartphone has become a necessity as it gives you apps for every need from banking to driving, social to nutrition tracking related to all aspects of your life.

55% of Americans use their smartphones when shopping, all due to the increasing use of e-wallets like Google Pay and Amazon Pay. With mobile wallets becoming popular and the growing use of peer-to-peer transfers, the security of these apps has also increased. E-wallets are going to change the way how we pay now. It is one of the most significant trends in mobile credit card processing that cannot go unnoticed.

#2 Social Shopping

A retailer’s most remarkable ability is being able to use personal relationships to his advantage and engage their customers in their business. More than 78% of customers trust the recommendation of their friends and family for shopping, so brands can count on social media sharing and engagement as a better proof of purchase than a direct message to the consumer.

Retailers can hire social media influencers for promotion and make use of social media tools to get to know their customers better. They can further promote positive reviews, give better customer service and sell directly on the platform where their customers spend substantial time.

#3 Contactless Payments

During the pandemic time and earlier, we would hesitate to touch cash as we did not know how many hands the bill was exposed to. With credit cards, handing them over to the cashier for a swipe and typing your card pin is avoided to minimize the touch. Things have changed much over the past months, and Mastercard’s survey suggests the same. The survey says that more than 51% of people use cashless payment in some form. Contactless payments are now more secure than the traditional swipe method with scanning technology to complete the transactions. All this is possible because of the encrypted microchips and mobile apps.

#4 Mobile POS Devices

As more and more consumers use contactless payments, retailers align their shopping experience with POS technology. With the help of mobile POS, retailers can accept payments anywhere as these are wireless devices and not connected to checkout locations. This gives even the smallest brick and mortar storse the flexibility to offer customers multiple checkout locations. With various payment solutions, customers can safely pay in line with social distancing norms. More than 73% of customers want more checkout options with advanced technology. Having said this, mobile point-of-sale devices are fast becoming a necessity for retailers large and small.

#5 Biometric Authentication

If someone had talked about authenticating a process using biometrics five years ago, it would seem like a scene from a futuristic movie. Now this process is everywhere and most of use this technology daily to unlock our phones. Biometric authentication consists of fingerprints, face, and voice recognition that we use today to unlock e-wallets. Biometric authentication gives more security as it is unique to each customer, and due to this trust, the technology attracted huge investments. According to a study by Mobile Payment Authentication & Data Security, by the year 2024, the use of biometric authentication is expected to grow more than 1000%, with a transaction value of more than $2.5 trillion. By the end of 2019, transactions valued at $228 billion were already authenticated by biometric technology.

#6 Flexible Payments

With consumers demanding more convenience and security while using mobile wallets for payments, the pandemic has also forced them to maintain and stick to a budget. Retailers now offer options like installments or Buy Now Pay Later to their customers. With enhanced security, convenience, and accountable spending, consumers have accepted these offers enthusiastically. Consumers get maximum flexibility with the zero-interest installment schemes which the retailers offer at the point of sale. It helps the customers to make large purchases easily without worrying about the having the full payment up front. The popularity of e-commerce and online shopping is growing drastically. The mobile payment strategy of the retailer will play a significant role in the purchase pattern of their customers. This strategy is almost 80% responsible for the rise or fall in sales. If the customer is getting complete flexibility in payments, multiple payment choices, and a streamlined checkout process, nothing can stop him from completing the decisive step of the final purchase.

Bottomline

As the digital world is changing fast, all kinds of e-commerce stores and other retailers need to adapt to the latest payment trends as soon as possible. With contactless payments and e-wallets offering complete convenience to consumers, they are becoming popular at an unimaginable speed. If your customers get absolute security along with seamless checkout, they will keep coming back to shop at your store. Therefore it is important for all fintech companies to keep a watch on. One thing is certain – that even if the pandemic ends, the e-commerce growth and the related customer needs are here to stay. For businesses to keep in the competition, they must shift to modern payment methods.

What Do Merchant Services Interpret As Low-Risk Accounts?

Merchant services providers will dictate the rates you spend over your risk level. A merchant services provider will review your risk level surrounding your operations and how often you manage returns and other issues.

A high-risk business will spend more on interchange fees and other markups. It may also have more stringent contract rules and other standards for operation, with the business showing too much unpredictability in how it can handle its funds.

So what types of merchant services accounts are low-risk ones? Some businesses will have a lower risk because they don’t handle as much money, or they are in industries that are a little different from what people are used to managing. You can check your current efforts to see whether you are at high or low risk in managing your work.

How Much Money Is Being Handled?

Online merchant services will deem businesses that operate less money on average as being low-risk entities. The values of any chargebacks or returns will be minimal for these entities.

A low-risk company may be one that handles less than $20,000 each month. It could also be a company where the average credit card transaction one processes is worth less than $500. It is easier for some merchant services teams to support businesses that don’t handle as much money, as the potential value of losses will not be as dramatic.

What Industry Do You Follow?

Your business’ industry can dictate your business’ risk value. A merchant services team can review your MCC code to determine which field you work in, thus helping dictate the rates you wish to manage.

Stores that sell traditional clothing products, household goods, and other common items might be low-risk places. But a spot that sells things like firearms, timeshares, gambling-related activities, and other potentially high-value or volatile items might be a high-risk company.

The Number of Chargebacks

Your risk may also come from the chargebacks you collect. A chargeback entails cases where someone’s credit card purchase is refunded due to an error or other issue. A business with fewer chargebacks will have less of a risk.

A chargeback takes a bit to manage, as it involves moving money back and reversing various fees and charges. Some online merchant services might not accept businesses that take in too many chargebacks unless they can produce substantial rate hikes.

What Country Do You Operate From?

The country you work out of may also influence your risk. A low-risk company is traditionally one located in a country that is financially and economically stable. These include countries that have strong standards for which businesses can operate and how they can work online. Some of the more prominent low-risk countries include the United States, Australia, the United Kingdom, Canada, Japan, and various places in the European Union. Since the risk starts low there is always a risk when working with different countries due to their currency as well.

Do You Handle Returns?

Not all returns on your credit card transactions come from chargebacks. Your customers might also return products they purchased with you. They are still entitled to credit card refunds for their returns.

Your business will have a higher risk if you have too many people completing returns. These returns are often likely for clothing and personal care products, but they can occur at any point.

Talk with the merchant services team you wish to contact for your credit card processing needs to see what your risk is and what rates you can utilize. Don’t forget to review your business yourself to see what it is doing right or wrong and if you need to make certain changes to keep the risk of operating your business under control.

Why is a Business Considered High Risk For Merchant Services?

High risk businesses are subject to more expensive merchant service charges than others. A business will spend more to process each transaction if it is a high-risk entity. It could also be subject to increased charges. Contract terms for the business could also be restrictive. Some companies may even have some of their revenues tied up in rolling reserves. They may not get those funds in their reserves until weeks after they are paid.

The issues that come with being a high-risk business for merchant services are significant. But what would cause a business to become high-risk in the first place?

You must be aware of these concerns that can cause a business to become risky for merchant service providers. There’s always a chance you might fall into this category.

High Risk Business For Merchant Services – Top reasons

The Industry May Be Risky

The most common reason why a business can be considered risky is because of its format. Businesses in certain fields are more likely to experience chargebacks, fraud, and other concerns.

Some of the industries that are often high-risk include:

Adult product businesses
Bail bonds
Online electronics sales
Debt services
Timeshares
Telecommunications sales, including for VoIP services or calling cards
Travel services
Firearm dealers, including those who sell ammunition
Software downloads
Dating and personal sites
Online auctions
Multi-level marketing programs
General business opportunities; include promotions where someone could invest in a business endeavor that hasn’t gotten off the ground yet

These industries and many others have higher chargeback rates than others. Their financial stability and legality can also be in question in some cases. There’s a chance a company might shut down or become heavily regulated, causing its risk to increase.

The Products or Services Are Questionable

A business can also be a high-risk one if it sells products or services that might be of concern to some merchant service providers:

A company sells expensive items. These include customized vehicle parts, high-end computing systems, and many other high-price things.
A business can provide memberships or other items that entail automated recurring billing processes. Billing errors often occur here, thus leading to chargebacks.
A business could sell items that banks might ban. These banks could prohibit the sale of certain products or services. While some banks may allow these sales, the fact that others will not do this could increase a company’s risk.
Some of the products a website offers can be future deliverables. These include things like event tickets, hotel or transportation reservations, and other things that will be scheduled for later. A business may issue chargebacks or returns for cases where these events are cancelled or the purchaser has buyer’s remorse and wants to walk back the transaction.

These threats are significant ones that can occur among many businesses. A business can review its operations to see what types of items or services it sells to determine its risk.

MATCH Listing

High-risk businesses will be on the MATCH list. The Merchant Alert To Control High-Risk list highlights merchants whose accounts have been terminated in the last five years. The MATCH list highlights companies that have struggled to manage their accounts and have been deemed unable to work with them as desired.

Not Enough Financial Data

A merchant service provider may list a business as high-risk if it doesn’t have enough company financials to review. A business must have enough money to support its chargeback liabilities. A company that doesn’t have enough proof to show it can handle chargebacks will be charged more.

This problem is more prominent among newer businesses. But more established companies could also have the same issue. Some businesses may be willing to conceal their financial data to reduce the risk of losing funds.

Poor Credit

A business could also have a poor credit rating. The weak rating may be due to a business running up significant debts and being unable to manage its inventory. A business with a weak credit score may be high-risk due to how it might be unable to manage chargebacks and other threats. A business needs to manage its funds well, or it will be unable to get a better credit rating going forward.

Time In Business

Most business owners don’t assume that the amount of time they’ve spent in business will influence their risk. But businesses that have been around for a while won’t be as risky to merchant service providers. A long-running business will be more established and will have an idea of how it can run its operations. It will be more stable, thus reducing its general risk.

Online Operation

A business can reduce its risk for chargebacks by managing physical card transactions. But companies that don’t see the actual cards these customers use will be high-risk entities.

A business that operates online will complete CNP or card-not-present transactions. These deals allow someone to enter one’s card data online. While a website might offer a secure platform for transactions, there’s always the chance that someone might engage in card fraud. Someone who isn’t the proper customer might take the physical card and enter it into a website for a purchase. The risk of purchase fraud will increase the general risk that the business holds.

Check Your Business Status

Take a good look at your business and see how it operates and functions. Be aware of what it is doing and that you have control over how you operate things. Look at what you sell and how your finances look, especially if you’ve been around for a while. Your review can help determine if your business is a high-risk entity and if you’re going to spend more on credit card processing efforts.

But don’t think that if you’re a high-risk business operator you can’t find merchant services. You can still look for many merchant services that can support high-risk entities. But be advised that you will still pay more for the service than if you were at a lower risk than what someone is often willing to afford or support.

How Can You Qualify For EBT Merchant Services?

Electronic Benefit Transfer or EBT merchant services will let you collect payments from people who have EBT accounts. You can help people who qualify for EBT benefits get access to the foods they need. You won’t spend anywhere near as much in processing EBT payments, as they are government-supported transactions. Your business will also become more popular, as customers who have EBT benefits can recommend your business to others.

You can only utilize EBT merchant services if your business qualifies to serve EBT customers. Your business must apply to be a part of the Supplemental Nutrition Assistance Program or SNAP before you can accept EBT payments.

What Stores Are Eligible?

Only eligible stores can use EBT merchant services. You must meet one of two standards established by the United States Food and Nutrition Service:

You must have a substantial inventory of staple foods.

You will need three stocking units of three staple foods in each of the SNAP program’s four staple food categories. These four staple food categories are:

Fruits and vegetables
Breads and cereals
Meat, fish, and poultry
Dairy products

You must also have three stocking units of one perishable staple food item in at least two of these categories.

Your business requires 36 staple food stocking units here. A stocking unit is a measure of how many items you have in your inventory. Your business needs to provide enough food here, although the specific amounts you’ll require will vary by food.

You could also derive at least 50 percent of your gross retail sales from sales of foods in the four staple food categories.

You can take your gross retail sales and remove non-food sales, prepared or heated food sales, and accessory food sales to see how much you are selling in staple foods.

Qualify For EBT Merchant Services: Provide the Necessary Info

You must also include the proper info on your business to qualify for EBT sales and EBT merchant services. You’ll need these points in your application:

Details on all the owners and partners in your business; tax numbers and other identifying features may be necessary
The estimated sales totals for each category of items you sell
Details on what you sell, including how you support the staple food categories
Banking info on where your SNAP deposits will go; these are the funds you will utilize to cover SNAP transactions at your business
Details on the EBT merchant services team that will provide you with the necessary equipment for processing EBT payments

The timeframe for when you will be approved will vary surrounding the backlog the government has for applications. It could take weeks or even months to get a response, but you can always check the application of your status online if necessary.

EBT merchant services will be there to help you collect EBT payments from eligible customers. You’ll help everyone with their needs, but you must also ensure you qualify for everything before you start accepting these payments from your business customers.

How Does EBT Work?

Electronic Benefit Transfer (EBT) is a system that enables individuals and families to receive government assistance benefits in an secure manner, without the need for paper checks or vouchers.

So how does EBT work? It begins by providing recipients with an EBT card to a debit or credit card. These cards are loaded with the benefits they qualify for, such as SNAP (Supplemental Nutrition Assistance Program) WIC (Women, Infants, and Children), or TANF (Temporary Assistance for Needy Families).

When making purchases at retailers recipients simply swipe their EBT cards through a point-of-sale machine. The purchase amount is then deducted from the balance on their card.

EBT transactions are processed instantly using networks. Recipients can also check their account balances online or by calling a toll number provided by the issuing agency.

It’s important to understand that EBT can only be used to buy approved items within categories. For instance, SNAP benefits cover food items, like bread, milk, fruits, and vegetables. Cannot be utilized for alcohol or tobacco products.

EBT has made the distribution of benefits and has helped to maintain the dignity of those who require government assistance by providing them with access, to necessary goods, without any social stigma.

Future of EBT and Potential Advancements

As technology continues to progress so does the potential, for advancements in Electronic Benefit Transfer (EBT) systems. The future of EBT looks promising with possibilities on the horizon.

One area that shows promise is the integration of applications with EBT systems. This would allow users to conveniently access their benefits through their smartphones eliminating the need for cards or paper vouchers. With more and more people relying on smartphones for tasks this advancement could greatly enhance accessibility and convenience for individuals receiving benefits.

Another exciting advancement is the inclusion of biometric authentication methods in EBT systems. This involves using fingerprint or iris scanning technology to verify a user’s identity during transactions. Not only would this improve security by reducing fraud and unauthorized use but it would also simplify the process by eliminating the need for PIN numbers or passwords.

Moreover, ongoing research is exploring how blockchain technology can be utilized within EBT systems. Blockchain has garnered attention due to its transparent nature making it an excellent candidate for enhancing transactions like benefit transfers. By leveraging technology EBT systems could further enhance security measures. Streamline auditing processes.

Additionally, artificial intelligence (AI) holds potential, in advancing EBT systems.
AI algorithms have the capability to examine patterns, in data and provide predictions based on an individual’s needs and spending habits. This enables benefit programs to customize assistance programs effectively addressing requirements, with efficiency.

When envisioning the future of Electronic Benefit Transfer (EBT) we can anticipate advancements that offer immense potential. These developments encompass applications, biometric authentication methods integrating technology, and utilizing AI. Not do these advancements promise to enhance accessibility. They also aim to bolster security measures concerning benefit transfers.

Frequently Asked Questions About EBT

Can I use my EBT card to make purchases online?
u003cbru003eYes in states recipients can now use their EBT cards to shop for groceries. However, it’s important to note that the availability of this option may vary depending on your location and the retailers participating in the program.
Are there any fees associated with using an EBT card?
No, the government does not charge any fees for using your EBT card. However, it’s worth mentioning that some ATM operators or certain retailers may apply convenience fees if you withdraw cash or make transactions at locations.
Is it possible to transfer funds from my EBT card to someone’s Bank account?
No, you cannot transfer funds from your EBT account to another individual’s bank account or vice versa. The program is specifically designed to help eligible individuals directly purchase goods and services.
What should someone do if they lose their EBT card?
If your EBT card is lost or stolen it is crucial to report it by contacting your state’s SNAP office or customer service hotline. They will assist in deactivating the card and issuing a replacement as soon, as possible.
What steps should I take if my purchase doesn’t go through with my EBT card?
If you encounter any problems while trying to make a transaction using your EBT card reach out to customer service, for assistance. They will be able to help you troubleshoot the issue and ensure that you receive your benefits promptly.

Chinese Fintech Firm, Ant Group, Forced to Postpone Record IPO

China made a surprising decision when they postponed Ant Group Co.’s IPO. The decision caused Hong Kong shares to plummet and made investors wonder about the financial future of the fintech company.

The postponement came after a meeting between one of Ant’s founder and Chinese regulators. The Shanghai Stock Exchange also removed the company from its listing. They claim it’s due to disclosure and listing condition issues that Ant Group can’t meet.

Why did it happen?

Jack Ma, a co-founder of Ant Group, openly told Chinese regulators that they were excessively risk-averse and it didn’t live much room for innovation. This move was a first for Chinese regulators, though, especially the night before such a large IPO release.

According to the Shanghai Exchange, recent changes in fintech regulatory may make it hard for Ant to pass the requirements. This mostly pertains to the information disclosure.

What Would the Changes Do?

The new regulations put the squeeze on Ant and many other fintech companies. Ant specifically would face new rules requiring them to have more cash reserves for the loans it offers. This would put more credit risk on the company.

Is that the reason Ant Group IPO was canceled? It’s yet to be determined. Some think it’s a power move by Beijing to remind Ma that they are in charge. The move was still drastic on China’s part as it hurts capital markets as a whole, but it could be a precedent they are trying to create.

A Detrimental Move for Ant Group

The move to pull Ant’s IPO cost them over $3 trillion in orders that were pending from retail investors between its two listings. In China alone, the listing would have brought the company $34.5 billion, making Ant worth $313 billion. This would have been one of the largest IPO releases in history.

As far as Ant Group is concerned, they feel they will rise above. They will continue to converse with regulators, figure out what they need to do, and come back stronger than ever.

Chinese Hackers Were Successfully Able to Bypass 2FA

On December 19, the cyber security firm Fox-IT, which is headquartered in the Netherlands, reported that they discovered a previously-unknown infiltration of managed service provider and government computer systems in at least 10 countries, including the United States, Mexico, Brazil, the United Kingdom, France, Germany, Italy, Portugal and Spain. These systems covered a wide range of industries, including aviation, construction, energy, finance, gambling, healthcare, insurance, offshore engineering, payroll and HR services, physical lock manufacturing, software development and transportation. Fox-IT believes a Chinese government-funded hacking group managed to bypass two-factor authentication (2FA) to initially access and then spread through these systems.

What Is 2FA?

Two-factor authentication was designed to make it more difficult for hackers to access secure, private data. It requires that a user provide two unique forms of information to prove identification when logging into accounts. For example, a system might recognize a user by their physical hardware, via a unique linked code, coupled with a separate unique password. The user might input a memorized password or a one-time password generated by a separate piece of hardware called a token or password generator. In banking, 2FA occurs when a card holder uses their physical card with their unique PIN number at an ATM or during debit transactions. In point-of-sale software payment processing, a merchant or an employee uses 2FA when they sign into their point-of-sale software on a computer, a unique device, with a unique password.

Which Group Is Responsible?

Although many hacking groups supported by the Chinese government exist, Fox-IT has linked this event to a Beijing-based group called APT20. Security firms believe this group started in 2011. Since the Chinese government invests a lot of time and money into hiding their hacking groups, APT 2020 was able to keep a low profile during 2016 and 2017. Firms couldn’t track them until they slipped up in 2018. Fox-IT referred to the 2FA bypass as “Operation Wocao” after a member of APT20 used the Chinese curse word “wocao” in a final line of Windows command failure code when they realized that their actions had been detected and they couldn’t hack a system. The word aptly described both the frustration and shock felt by not only the hacker, but also Fox-IT techs who realized that the system and others had been hacked in such a rare fashion.

How Did They Do It?

Cloud-Based Business App For Merchants This specific group typically uses the most basic hacking tools combined with the software already present on their victims’ systems. Two-factor authentication is incredibly difficulty to bypass since it uses unique forms of identification. Fox-IT has stated that APT20 found a way, currently unknown, to compromise the 2FA for virtual private networks possibly via vulnerabilities in the the corporate and government enterprise application platform known as JBoss. Essentially, they found a way to bypass the credentials necessary to access their victim’s VPN accounts and the computer systems attached to those networks. APT20 then focused their efforts on locating and hacking additional linked systems that held the credentials necessary for them to find and retrieve additional private data. The attack was designed to help them find higher and higher levels of authentication to access higher and higher levels of information. For example, they targeted password managers/vaults and then used the passwords they found to continue their data search and retrieval. Once they were finished, they did everything possible to delete all footprints of their actions to prevent detection.

What About Payment Processing?

APT20’s rare bypass of 2FA shows that hackers might be able to access any system in a similar fashion, including networked computers owned by merchants using point-of-sale software and/or customer databases. A hacking group could potentially mine merchant systems for customer names, credit card numbers, expiration dates and secure CVV codes. If the system also has a customer database, hackers could also retrieve private details, such as customers home addresses and product likes and dislikes. Hackers might use this data to learn more about specific individuals, such as politicians or military leaders, or create false identities.

We recommend that all merchants focus on improving not only their computer and network safety, but also their employee-based vulnerabilities. It’s important to train employees to recognize the many techniques used by hackers and how their actions can help these bad government-funded actors gain access. Merchants can also protect their systems by blocking employees from checking private email or downloading software on these systems.

Our team at Host Merchant Services goes beyond securing our own payment processing systems against these types of attacks: Host Merchant Services Data Breach Security Program. Click that link to download a PDF explaining the value-added service HMS provides its merchants that goes above and beyond just simple PCI Compliance and helps ensure a merchant’s peace of mind.

Grow Your Merchant Services Agent or ISO Business

In the competitive world of merchant services ISO, you need to leverage every aspect of your skillset, your schedule, and your merchant servicer to grow your business. Independent sales organization (ISO) agents have the potential to make a significant income – but only when they stay focused and disciplined. Follow these steps to grow your ISO business:

1. Find the Right Partner

Customized Merchant Services Sign on to a processing partner where they provide outstanding training and support. You’ll need to not only learn their products inside and out, but you’ll also need marketing tools to get the word out. Your partner’s customer service has to be there for your merchants – otherwise, you know who will also be customer service. And, of course, they need to pay you what you deserve with expediency and transparency. This is even more important in the current climate. You want a partner that is going to find ways to help you win new business and to close every opportunity. With options for physical prospecting being more limited, a partner like Host Merchant Services can help you find new customers and win a higher percentage of new opportunities.

2. Know Your Product

Now that you have your merchant services partner with all of its training, take advantage of it! Learn your business so thoroughly that you can turn around and educate your current and potential merchants. Not only will your knowledge build your confidence, but it will increase your sales. Merchants want to work with credit card processing agents who can expose them to new trends and products, as well as explain to them the details of fees. Understand what merchants are looking for now, and how that may have changed over the last few months. Merchant needs in 2020 are not the same as 2019. Many are looking to survive, and programs such as reducing monthly fees and costs might be very attractive. But merchants also need to adapt, so online ordering and new business tools may be the right angle to win new business. Know your prospective customer and partner with Host Merchant Services to meet their unique and changing needs.

3. Stick to a Schedule

Make a plan and stick to it. How can you demonstrate and provide value to your prospects? Plan your day and stick to your schedule. Understand how the landscape has changed and phone and email may replace some of your in person prospecting. Make appointments by phone, as merchants may not be as receptive to surprise visits. Just understanding when your prospects are open and how their businesses have changed can be an important first step to forging a lasting relationship.

4. Decision Point

When visiting with merchants, your aim is to create a decision point, not make a sale. If a merchant eventually decides to make a switch in merchant service providers, they will choose you because you triggered the need for their business. Don’t underestimate the power of planting the seed. And remember this when you’re feeling like you’re not getting anywhere. You’ve already done the work. Keep following up and be patient. Persistence matters now more than ever, and if you build relationships you will be top of mind when merchants are ready to make a switch. Maybe they aren’t ready today, but when they are ready you want to be the first person they think of.

5. Special Offers

Always have a special offer on hand when meeting with merchants. Create a limited time offer. Sometimes cash back or reduced monthly fees can work for small cash-strapped businesses. If they qualify, remind them you can provide a free terminal or other equipment. Maybe you’re providing a new technology that is alleviating a pain point or streamlining operations. When you’re demonstrating how much you can save their business, always multiply the savings by 12 to show them their annual savings.

6. Social Media

Take advantage of social media, especially now when it’s free or very cheap to advertise. Connect to your entire network, including friends, family, and colleagues on LinkedIn and build upon your presence by posting articles, commenting on discussions, and joining groups. Facebook and Instagram advertising are still relatively inexpensive. In addition to building your business profiles on both sites, post frequently for free, and test out their paid advertising. Leverage your current personal and professional network on all social media sites to grow your online presence and attract new merchants to your business.

7. Retention & Referrals

Keeping a merchant is a lot easier than finding a new merchant. While it is great to have a reliable partner like Host Merchant Services to support you, don’t rely on that entirely. Follow up with all of your current merchants, and while you’re at it, ask them for referrals. Make it part of your routine to schedule a meetings with your merchants. It’s a valuable aspect of your business and helps build long term value in your merchant portfolio.

Host Merchant Services & Merchant Services Agents

Host Merchant Services equips its merchant services agents and ISO’s with the tools necessary for success. We approve your deals quickly, never leaving your merchants waiting. Once your merchant is signed on, HMS further supports our agents with our top-rated customer service. We make PCI compliance a quick and easy process for both agent and merchant.

HMS, with its account management portal provides unmatched transparency into residuals, allowing HMS to pay its ISO sales agents on-time and accurately. And with online reporting and marketing support, HMS helps agents track merchants and activity, as well as help agents build skills to further grow their business. HMS and its agents are in a position to offer a wide range of products and services to merchants, including the elite Bonsai Point of Sale, Clover, Vital, and much more. Host Merchant Services supports its agents and their merchants in every way possible. With the current business landscape and challenges facing merchants in 2020, choosing the right partner – Host Merchant Services – can make an even bigger impact on setting your business on a path for success.

How Should I Choose a Credit Card Processor for My Restaurant?

Because restaurants operate on thin profit margins, restaurateurs must leverage every payment type to attract every type of customer while simultaneously leveraging the support of their credit card processor. Business owners don’t have time to waste on deciphering complex credit card processing fees during their monthly reconciliation. Nor do they have the luxury of refusing payment types in the digital age when customers are trying out every new payment trend available. Restaurants must weigh several factors in choosing a merchant service provider.

Great Customer Service

The owners and employees of restaurants are in the business of customer service. Their priority is creating the best dining experience possible for their clientele. They can’t be bogged down with complicated point of sale technology that slows the process and frustrates the end user. If they do experience technical challenges, they need support pronto in a 24-hour business cycle.

Knowledgeable Point of Sale Support

Restaurants have unique business needs regarding their credit card processor. In addition to round-the-clock support, a business needs restaurant merchant services that offer solutions that fit various business models. Depending on the restaurant, point of sale solutions may need to accommodate both a traditional style of service, as well as catering service and beyond, including mobile flexibility to allow a restaurant to meet the customers in multiple locations under a variety of circumstances.

Point of Sale Options

A restaurant needs a payment processor that can synchronize current processing systems with their solutions or provide a whole new solution to fit the restaurant’s circumstances. Keeping both security and convenience in mind, restaurants need a merchant service provider that can help the business to accommodate as many customers as possible in a secure fashion while also making transactions easy for restaurant owners and staff.

Low Rates & Transparent Pricing

And while customer service, ease of use, and processing simplification are ideal goals for a restaurant, none of it matters if the cost eats into the restaurant’s profits. Restaurants need a merchant service provider that offers interchange plus pricing, the pricing model merchants can rely on to offer the lowest cost interchange fees on the market. With a low markup over the wholesale cost, the interchange plus pricing model provides flexibility in equipment and payment options while keeping costs as low as possible.

Host Merchant Services: What Your Restaurant Needs in a Payment Processor

HMS provides customer support for restaurant credit card processing 24 hours a day, 7 days a week, 365 days a year. We know we need to work as much as you do to properly support an industry that can operate nearly 24 hours a day. That’s why we have operators standing by to answer your call any time of day.

HMS also explains how payment processing works. Providing a comprehensive package including credit card processing and financial transaction services to restaurants, we will custom design a flexible credit card processing solution to fit the needs of your restaurant.

And when we do demonstrate your payment processing scenario selections, HMS also offers your restaurant several point of sale options, including Clover, Vital, Bonsai, SwipeSimple, and more to fit your specific operation. If your restaurant is already equipped with hardware, HMS provides an easy point of sale integration.

Whether you need an entirely new point of sale system or a solution for your current system, HMS offers a suite of services to suit your restaurant’s needs. From wireless equipment, payment by check, recurring billing, to online payment gateways, HMS has everything a restaurant needs for serving customers in both traditional sit-down establishments and catering services.

With our low rate guarantee, HMS provides a Free Rate Analysis to show where you can save on your restaurant payment processing. If HMS can’t save your restaurant money, we will give you a $50 Gift Card. The best pricing model on the payment processing market, Interchange Plus Pricing will help your restaurant’s bottom line.

Host Merchant Services will even provide your restaurant free equipment via our free equipment program to qualified merchants along with receipt paper at wholesale prices. We are your restaurant’s credit card processing solution.

Frequently Asked Questions

What factors should I consider when choosing a credit card processor for my restaurant?
When selecting a credit card processor for your restaurant, consider factors such as transaction fees, processing rates, contract terms, and equipment compatibility. It’s also important to assess the processor’s reliability, customer support, and security features. Ensure that the processor can handle the volume of transactions your restaurant typically processes and offers features like tip adjustments and split payments to accommodate your needs.
How do transaction fees and processing rates impact my restaurant’s profitability?
Transaction fees and processing rates can significantly affect your restaurant’s bottom line. Higher fees or rates can eat into your profits, especially if you have a high volume of credit card transactions. Compare the fee structures of different processors, including flat-rate pricing, interchange-plus pricing, or tiered pricing, to determine the most cost-effective option for your restaurant’s transaction volume and average ticket size.
What should I look for in terms of contract terms and hidden fees?
Carefully review the contract terms and conditions offered by credit card processors. Look for transparent and flexible contract terms without long-term commitments or early termination fees. Be cautious of any hidden fees, such as statement fees, PCI compliance fees, or monthly minimums, as these can add up over time and impact your restaurant’s profitability.
How important is equipment compatibility for my restaurant’s credit card processing?
Equipment compatibility is crucial for smooth credit card processing in your restaurant. Ensure that the processor’s hardware and software options integrate seamlessly with your point-of-sale (POS) system. Consider whether you prefer traditional countertop terminals, mobile card readers, or online payment gateways. Assess compatibility with contactless payment methods like NFC and digital wallets, which are increasingly popular among customers.
What role does customer support and security play in selecting a credit card processor?
Customer support and security are vital considerations when choosing a credit card processor. Look for processors that offer 24/7 customer support to address any technical issues promptly. Additionally, processors that prioritize data security, comply with Payment Card Industry Data Security Standard (PCI DSS), and provide advanced fraud protection measures. Protecting your customers’ payment information is essential for maintaining trust and avoiding potential liabilities.

Related reading on choosing a credit card processor for your restaurant: Restaurant Payment Resources.