What is Check 21? (Does that mean it can drink?)

So more and more people are saying Check 21, but what does it mean?

Well it doesn't mean checks are legal now, but it does mean that they are all grown up. Known originally under several names such as the Check 21 Act or the Check Clearing for the 21st Century Act, or any one of a dozen other names that did not launch; Check 21 was signed into law by Bush on Oct. 28, 2003 and launched exactly one year later in 2004. It allowed for a paper 'substitute check' to be the legal equivalent of the original. However since then the second clone check which was greatly speeding up the process and was being used for presentment and returns has had it's paper buttocks been dumped like a girlfriend after graduation. This is because the speed and usefulness of the scenario has led to the ability to simply have the check's image. Not a second paper check, but a second digital check in image or soft copy only. That's why more and more people do not get their check's back at the end of the month, but a copy of the check on the back of their statement. The amount of money this saves in paper alone is astounding, but what it really has been doing goes sight unseen.

First of all, with the faster clearing of checks, fraud has been dropping like a... (insert some plummeting mental image here). Secondly, there are less issues with the fact that one no longer has to transport the check physically, but if the image is bad the original bank is able to resend and correct the data. However, the biggest impact this has on the individual depositor is this and this alone: extended deposit deadlines. Haven't you been wondering why you don't have to have the check in the bank by 2:00 o'clock anymore? Well the faster clearing times, and the ease of presentment and representment have made the deposit time not such a factor anymore.

All in all, what Check 21 means is that the modern check has had a digital face-lift. That process is easing tensions on a lot of us, speeding up the process, eliminating a lot of costs, making banks more green, and in the end, continuing to provide a real niche for checks in the modern world.

There's only one drawback: I don't get the same float I used to...

Wireless Can Mean More Money

What used to be a very expensive and more difficult option is really starting to wade into the deeper areas of the pool. A couple of years ago, wireless had about 10% of new shipment revenue, whereas today it commands about 30%. Why the jump?

Cost
Cost has helped. It has gone down precipitously and many groups that offer their sales teams and MLS's free terminal options, now are offering free wireless terminal options as well. This evening of the playing field helps move what used to be a beast in a niche market to a streamlined trick pony that can do multiple sets of chores.

Technology
Simply put, the machine is more advanced than it was back in the day. Basically these guys are normal terminals + a battery + a cell phone. The battery is charged daily by plugging it in at night and going home. The cell phone half works on either GPRS or CDMA formats that deliver Internet Protocol (IP) connectivity to merchants that can put it to good use. Some have Wi-Fi options as well, but most importantly, Pinocchio's strings are cut in both instances, and yet he is still dancing.

Safety
Along with the IP ability, merchants are also getting their security needs met. This is done through SSL or the industry's standard for safety in a Secure Socket Layer allowing them secure transactions though encryption on both public and private networks.

Sprint
Sprint was the first wireless carrier to put a cellular base station in one's business or home. This not only helps the wireless advance, but is clearly showing a demand for the technology. In all fairness though, that technology has been around for a while. It's called a repeater. Ever been to Vegas? In Vegas I get five bars on my Sprint phone. Odd, as I can't get five bars if I am standing at the counter of a Sprint store. In Vegas, in a casino, I can be at the bottom of a lead-lined vault and get all five bars. Repeat after me... Repeater.

I consult for businesses all the time and I often suggest wireless. Here in Savannah, Georgia's historic district we have the Savannah River and all the shops a tourist could want. On first Saturday's many of those shops set up booths so that people do not need to come in, but simply walk through and hopefully purchase. Many of these merchants have moved to wireless as they can walk right out their door with no strings attached and sign up right there. Same goes for the guys that have to go to trade show floors. They take a wireless with them and as long as they can get a signal or a Wi-Fi, they're in business.

Contactless Makes Contact

One credit card to beam up, Scottie.

Yes, the future is here, kind of. But it will take a little while for us all to catch up making it really sometime in the ...well, future.

Just what is Mr. Black talking about today? Contactless systems and they are available now. These do not require your customers to actually swipe their card and this is part of a long progression. First you had the old knuckle-buster where one would put the card in, lay over it a receipt and carbon copies built in, and manually run the card over. Then came the old black box terminals. You hand the card to the cashier, they swipe it, and hand it back. However with fraud on the rise and the presence of credit card processing software and even the gateways and their advances and woes, the terminal had to buck up and get with the program.

First what they did is started making self checkout kiosks which are especially popular in supermarkets. No longer does one hand a credit card over, but they swipe it themselves. Next was simply contactless. This means that the customer no longer swipes the card but waves it in front of the contactless reader and the reader 'pulls' the information like Luke Skywalker desperately trying to reach is lightsaber which has been conveniently thrown just out of reach.

Pros
Here's what I like about this. First of all, it's pretty neat. The gear is all very Star Trekkie and looks good on the counter. This is good for business especially for smaller businesses because people like shiny, new things. When they see something of this nature it gives one's business more credibility as the customer assumes you have a larger infrastructure in place whether you do or don't. Not to mention, it has a small footprint leaving your business more counter space.

Best of all, it preserves the credit card. Cards these days simply cannot take the strain that once they could. This is because they are used multiple times a day instead of once a week, and they are coming apart at the seams after the first year. It's not because they're cheaper, but it's like a football player with a bad knee. The player is healthy. Heck, the knee is still healthy. It just cannot take the continual strain of burst speed runs carrying a 250 lb. man for on and off intervals over a two hour period. Like Indiana Jones once said, "It's not the years, it's the mileage..."

Cons
We ain't there yet, Skipper. The real problem here is that this really requires a contactless card. This means a card that has a smart chip in it. Some do today, more will have it in six months, and in two years it should be on the way of a pandemic. Fortunately what will boost smart chip style cards which in turn will push contactless ability is the fraud issue. Smart chip cards carry data on them which makes them safer and often has more and more of the customer's data held on it in a highly encrypted little vault making forgery very difficult.

In fact, we should all be looking towards the day when you swipe your card, and your name and picture pops up on a screen at the business where you are making the purchase. I think that will be just before we get the flying cars and his boy Elroy has an automatic dog walker for Astro.

But it's coming.

Discover Changes With Your Merchant Account

OK, some good news for all of you that keep saying I'm all doom and gloom. Sadly in this industry, it will often seem as if I am because of all the issues out there to be faced. At least I am trying to do something about it, so don't judge me. You should be sending me birthday cards instead.

Discover has now changed it business model. Formerly, when one wanted to accept credit cards, They would get MC and Visa, then opt for Discover and/or American Express. The problem is that though they could negotiate low fees for MC and Visa. They could not do so for Discover and Amex. In fact those two set their own individual prices, which were non negotiable, and they were very high for industry standards. The main reason Discover was always so high was that it was a cash back card that paid the card holder a bonus to incentivize them to always use that card. Well someone has to foot the bill and it's always the merchant (for more painful truths on this read about Rewards Cards).

Well with all the changes in the cards out there and everyone getting rewards back one way or another, Discover just about got priced right out of the industry. What to do? Become a third link in the MasterCard/Visa chain. They dropped their rates to be the same as the main two and even if you already take Discover your rates have recently dropped. However, don't take that on faith. Pull a merchant statement from last month. If you do not see Discover's rates in line with MC-Visa, call your MSP (merchant service provider) and tell them that they will drop your Discover rate to MC-Visa levels, or you will find someone who will.

Beware the Buyout

In your merchant account agreement there is an option for you to cancel your contract before its due date and there is no fee of course, right? Of course there is! This ain't the March of Dimes, baby. You want out early, you pay them. It's part of the convenience principle which means to make it easier it costs you more.

Take care. There are many groups out there that will say they will buyout your cancel option (they will pay whatever fee is charged). This may be true and it may be bogus. Unfortunately I hear of too many cases where it is bogus. As for the ones who will pay the fee, do not expect this unless you are doing some kind of great numbers every month.

Now for those that say they will and do not, there are plenty.There is an industry magazine that I do not suggest you read. If you are not in the industry and attempt to read this periodical, you will spontaneously hemorrhage from your eyes out of boredom. We who are in the business are inoculated against this, but the reading still hurts. Anyhoo... There are often cases cited where some group said they would pay the fee for the customer and never did. Unfortunately, this leaves the customer with two sets of bills every month and not a lot to do about it. It is a big industry no-no, and legal clamps can come down upon them for doing so. The problem is that those clamps take far and long to activate and they have to have done it to a bunch of customers.

In the end, just be very wary of such an offer, especially if you are not doing a lot of credit card sales each and every month.

QuickBooks Can Mean Quick Mistakes

No, no, this is not another doom and gloom article. However its is a "You better have your eyes open" article. I have no real beef with QuickBooks. As a whole I think it is a fine product, it just has a major issue when it comes to credit card use on your merchant account. Namely, if you have QuickBooks with a merchant account, and you run a credit card on it, you're fine as long as you NEVER have a declined card.

OK, so that's not the end of the article. I would like to be able to leave you just with that single tidbit, but I guess it needs some explaining. You see QuickBooks is a little over eager. If you run a credit card, it posts the sale to your ledger. Now here's the rub: it posts it whether or not it was accepted or declined as if it were accepted. Now I do not know about you, but here in the business world, the real business world, cards get declined, and that right often. If every time I got a decline card my ledger balance falsely stated that I had the money, my business would bounce more checks than I would know what to do with.

All in all, QuickBooks is still not a bad deal, and is a competent product. However, until such time that it is fixed, I would not use it with a merchant account. I would have a merchant account that is not automatically tied to it and manually post entries.

Is Paypal Your Pal?

Where to start, where to start?

This is really such a topic as I could give real meat and sustenance for days. Rather than do that let's just jump in and hit some of the basic points. Please do not raise your hands if you have any questions. This is a blog so I couldn't see them any way...

Rates
Seriously, Paypal's rates are through the roof. Unless you merely have a personal account which is highly limiting, getting paid through Paypal starts at a 1.9% Discount Rate and a $0.30 per transaction fee. That's if your customer pays you with a Paypal Balance. If they use a credit card your Discount Rate shoots to 4.9%. 4.9? If any of you are used to reading my blog, then you would know that I wouldn't pay 4.9% to keep my mother out of the hospital. OK, maybe Mom because of all those times I was sick, but Dad would have to fend for himself.

Security
What security? They are plagued by spam and phishers and all of them are better at it by the day. Not to mention the fact that the biggest thing you are not secure from is Paypal themselves. Paypal can retroactively go back and yank money from your account. They become judge, jury, and profitability executioner in all matters and there is no arguing. In fact, their Terms of Service basically says that you waive all rights to credit card consumer protection laws. Here's an example: a chargeback. A Charge back is when you say there is a fraudulent charge on your credit card. If you do this, Paypal can terminate your account.

Account Freezes
This is part of the last discussion, but it's a really big issue. Again they make themselves the only deciding factor and can terminate or freeze your account (and the money) for almost nothing and hold it indefinitely.

There is so much to discuss here that several avenues should be looked at. One is to go online and look at some of the resources such as NoPaypal.com which has been used by government agencies such as the NY Attorney General's office for evaluating complaints against unfair Paypal practices. They have an entire forum of people that discuss the issues. However, they and I warn that some of the language is very emotionally based and therefore gets rather colorful. But then, it does deal with people's money.

Another is to get the book the Paypal Wars. They go so in depth on this issue that once you're convinced to not use Paypal, the only reason to read the book is to see how bad it really is. Kind of like rubber-necking at your local car wreck.