Blog – Merchant Services & Online Payment Insights

Fighting False Declines With Artificial Intelligence

June 5, 2017 By ArJay Data Leave a Comment

One of the most pressing issues for anyone using a credit card, processing a credit card or accepting a credit card is fraud. Massive institutions from Target to Arbys to Holiday Inn and more have fallen prey to widespread data breaches.

With technology continually getting more and more sophisticated and nefarious hackers expanding by the day, technology has to battle to keep pace with those looking to hack into accounts.

However, in addition to fraud there is another issue plaguing merchants that accept credit cards. Many cards are declined for one reason or another when they should not be. Credit card fraud is damaging, but estimates project that merchants lose approximately $118 billion annually due to credit card declines where the potential customer is not actually over their limit. That’s roughly 15% of all transactions. Of these cardholders, nearly 40% abandoned their card after the false decline.

When a customer is falsely declined there is a strong chance that the merchant has lost that customer forever. After all, having a card declined in public is embarrassing and certainly makes customers want to take their business elsewhere.

Below we take a look at some of the technological breakthroughs in place to combat false declines and other issues affecting credit card processing.

MasterCard has recently instituted artificial intelligence to mitigate issues of false credit card declines. Traditionally MasterCard’s parameters for declines have been exceedingly rigid and slanted toward declining so as to be sensitive toward potential fraud. However, the downside has been the rash of false negatives.

The new artificial intelligence instituted by MasterCard has a decision intelligence engine programmed into the technology to help eliminate false declines and enable merchants to process more transactions and keep their customers happy.

MasterCard processed nearly 14.5 billion transactions in its most recently reported quarter. That should provide more than sufficient data to properly educate its machine-learning technology. It is also a large enough sample size to point out issues and improve areas that need improvement.

As the technology improves, competitors like Visa, Discover and American Express will hopefully also adopt strategies using machine learning and artificial intelligence to combat the issue of false declines.

This technology is most certainly a boon when it comes to limiting false declines but it is certainly not an end-all solution for merchants. While the artificial intelligence is designed to root out the false declines it certainly is not the answer when it comes to eliminating fraud.

Hackers are still working overtime to hack into systems to abscond with credit card numbers. However, the success of artificial intelligence and machine learning in helping to cut down on false declines show that the same technology can be effective when comes to reducing hacking and fraud.

Smart technology that can adopt changes on the fly and make decisions to thwart malicious attacks in real time is the future of putting a permanent stop to credit card fraud, which enables merchants to collect more money and keep their customers happy and purchasing products and services for years to come.

How Can I Be Sure a Check is Real?

March 3, 2017 By ArJay Data Leave a Comment

As a business owner you always want to provide your clients or customers with as many payment methods as possible. At the same time you need to protect yourself against any possible fraudulent activity, never mind the fact that your bank will charge you a fee if the check bounces.

Checks can be difficult to accept because there is no standard printing method and different banks issue a variety of different checks. For this reason many business owners do not, or reluctantly do, accept checks.

Not accepting checks could cause you to lose out on significant additional revenue each month. Below we examine a couple of check verification methods that will enable you to accept good checks that will get you paid and improve convenience for your customers or clients.

Look at the Check

As part of the check verification process, one key issue that may seem obvious to some, but is not obvious everyone is what is actually written on the check. You need to make sure that the dollar amounts written on the legal line match what is written in the box.

In viewing the check there are a couple of things to keep in mind to ensure its legitimacy. Some of those considerations are:

Where is the bank logo or address?
Following the legal line, is there a security padlock?

Is that a Real Phone Number?

If the phone number of the bank is printed on the check, calling may just be a ruse as many fraudsters print phone numbers on checks that go to false “bankers” who are eagerly awaiting your phone call. If you do make the call make sure that you pull up the bank’s website and that the number on the check matches the number on the website.

Use Databases to Your Advantage

Partnering with a check service company that has access to a check writer database is well worth the cost and can give you piece of mind when it comes to the legitimacy of checks. The check service proactively works on your behalf to verify the quality of the check writer and the chances that the dollar amount written on it will come to fruition.

The MICR Line

The Magnetic Ink Character Recognition Line, or MICR line, is the information that appears at the bottom of a check that includes the bank’s routing number, the customer’s account number and the check number. All legitimate checks have MICR lines that are printed in a low-key manner with un-raised ink. MICR lines have very specific fonts that only certified check processing equipment can verify. Changing the MICR line in any fashion is the root cause of 62% of all counterfeit checks. The two most recognized font types that meet international standards are E-13B and CMC-7. Reviewing the MICR line is critical when it comes to determining the veracity of a check.

The Future

Technology is slowly pushing out the need for printed physical checks and even cash. Many experts feel within in the next decade all payments will be done digitally. However, while they are still around there is still a way that you can accept checks safely.

How to Speed Up Your Checkout Process

January 19, 2017 By ArJay Data Leave a Comment

Every customer has been there in a long line behind other customers being held up by one customer whose credit or debit card just won’t seem to work. The clerk is fiddling with the card, sliding it in and out of the chip reader, yet it just doesn’t seem to want to go through. The idea of accepting credit and debit cards is to make paying for items faster, simpler and more secure. A scene like the one described above is counter to that whole premise.

Long wait times at the checkout line can discourage customers and simply limit the success of your business. By the time they reach checkout customers have already committed to parting with their hard-earned money and the last thing you, as a retailer, want to see is an issue with payment.

Below we have outlined steps to greatly increase your credit and debit card processing so as not to recreate the havoc that checkout bottlenecks can create.

· Mobile Devices and Wireless Terminals – Depending on the design of your store and what types of products you carry, mobile devices and wireless terminals are a great way to rid your store of customer pileups in the checkout line – not to mention they present a modern innovative appearance to your customers. Wireless terminals run off WIFI or a GPRS signal meaning there are no clunky cords or cables to get in the way. In environments like clothing stores or electronics stores where sales associates work closely with customers prior to the sale, wireless terminals are a great way to provide customers with convenience.

· Access to Multiple Point of Sale Terminals – If the environment of your location or the makeup of your staff does not lend itself to mobile devices and wireless terminals another route to consider is the implementation of a broad range of point of sale terminals. The more terminals you add, the more options your customers will have and the shorter the lines will be. Simple case of supply to meet demand.

· The Speed of Your Internet Connection – The problem of those checkout bottlenecks can actually be as simple as a poor Internet connection causing your terminal to lag uncontrollably. To mitigate this problem it is always best to invest in the latest and greatest hardware and ensure you are working with an Internet provider that has the capability to handle the volume of activity that you need. It is also important to check that your network infrastructure has been set up correctly and is working at maximum speed. This is a problem that is easily fixable.

· Automatic Recurring Billing – Payment problems can occur in a virtual setting as well as at brick-and-mortar locations. If there is an issue with the payment gateway or the shopping cart on a website it can halt your business all-together. If the product or service you sell allows for it, setting up your customers on a recurring automatic payment plan is a great way to ensure that you are paid regularly. This setup works very well for software companies, gyms and other subscription based entities.

· Card Readers That Require No Contact – Implementing a contactless reader on top of your payment terminal is a great way to speed up the payment process. Many consumers are leaning toward using the tap-and-go feature on their credit cards more regularly and this is something that is only going to increase in regularity. Tap-and-go is much faster than inserting a chip or relying on a terminal that may have difficulty reading a magnetic strip. It also provides your customer base with yet another option so that they can pay you quickly and move onto to their next mission.

The key to a successful retail environment is to make life as enjoyable and convenient as possible for your customers so that they can pay you quickly and efficiently, which will make them want to return again and again. Part of this is ensuring you’ve exhausted all the possible measures to speed up the checkout process. After all, the faster your customers pay the faster the money is in your account.

Considerations When Partnering With a Merchant Services Provider

January 6, 2017 By ArJay Data Leave a Comment

Accepting credit and debit cards is a major component to revenue for most businesses these days. This is especially the case for e-commerce operations, but everything from food trucks to mom and pop brick and mortar outlets rely on merchant services (credit and debit card acceptance) as a way to provide convenience for customers and, more importantly, get paid.

While accepting credit and debit cards streamlines things in many ways for both you and your customers it is not without its headaches. From merchant fees to lack of reliability, there can be a number of issues when it comes to dealing with your merchant services provider. Below is a look at a number of issues all businesses should consider when looking to partner with merchant services provider.

Payment Options

As a provider of services or products you want to make it as easy as possible for your customers or clients to pay you using their credit or debit cards. This entails accepting as many different cards as possible, which is not something that all merchant services providers are capable of doing.

It also entails providing an easy gateway to integrate card acceptance in your process. This includes things like ensuring that your online merchant solution is properly integrated into your website or making sure there are available wireless terminals for your brick and mortar location. It also includes having virtual terminals available for all of your service reps.

The idea is to give multiple options to your customers so that paying you using their credit or debit cards is simple and straightforward. Making this process difficult for customers and clients is a surefire way to risk losing their business.

Customer Service and Support

There is nothing more maddening as a business owner than having an issue accepting credit cards or debit cards and not being able to speak to someone from your merchant services provider that is capable of providing you with support. If there an issue accepting credit cards or debit cards for even a short period of time it can negatively impact your business in a significant way.

When shopping for a merchant services provider the level of support is certainly a major consideration. Of course, ideally there will not be much of a need to rely on the support but team but it is a necessary safety measure to have in place. When meeting with different merchant services providers ask for customer references so that you can get an idea of what the customer service and support will be like.

Flexibility

A key component for a merchant services provider is the ability to provide flexible options that work best with your business. Merchant services is not a “one size fits all” prospect. What works for large companies that process thousands of transactions per day does not necessarily work for a mom and pop business processing less than 50 transactions per day. A merchant services provider that is focused on you and truly understanding your business is a partner that you can grow with and depend on as your business shifts.

Migrating to EMV

If you accept credit or debit cards at a brick and mortar location simply relying on the swipe of a magnetic stripe is no longer good enough. Customers have come to expect to use the chip on their card and they view it as a much more secure way to go about spending their hard earned money. Plus, if you don’t offer the chip your business is at a greater risk for fraud. It is best to work with a merchant services provider that is current with the latest technology ensuring your business operates in a modern and secure manner.

Understand customer patterns and behavior

Your merchant services provider can be a great resource for tracking and understanding the actions of your customer base. This is especially the case if you operate an online business. The benefit of an omnichannel business is having data to see how your customers behave in the different channels that you operate within. A good merchant services provider will provide this data and all the metrics it entails in an easy-to-understand presentation that can be useful in your marketing efforts and attracting repeat business.

These are just a few of the factors to consider when selecting a merchant services provider. There are plenty of them out there and it is imperative to select one that can help maximize your business for years to come.

Avoiding Bad Checks – Merchant Check Verification

December 7, 2016 By ArJay Data Leave a Comment

A customer walks in with a large check asking you, more specifically your business, to cash that check. The opportunity is there for you to receive a nice transaction fee, but how can you be certain the check is not counterfeit?

You finally make that sale you’ve been working on for the last few hours and the seemingly trustworthy patron would like to pay with a check. What do you? Can you accept it?

This age-old dilemma is something business owners across this country continue to struggle with: How do you verify a check?

Below are a few methods you can use to ensure you’re not falling victim to the “Catch me If you Can” scenario.

First, take a look at the check and see which bank it is issued from. This may be obvious to some, but the next move is to call the bank and ask for assistance telling them you are calling to verify a check to ensure that there are enough funds in the account to keep it from bouncing. Do not call the number printed on the check if there is one. This is any easy way for counterfeiters to route a number to a fake banker. Rather, look up the bank online and call the number provided on the website. This gives you an added layer of certainty.

The customer service representative at the bank can easily verify the check’s validity with two simple pieces of information – the account number and the routing number. These two critical pieces of information are enough to tell if the check is real. If they match the name on the check and the name and picture on the identification card provided but the customer, you should be good to go.

There are some banks that will not verify checks over the phone. Rather, forcing you to go into a branch to verify the check in person. While the bank may not verify the check’s validity over the phone it will more than likely tell you whether or not the account exists. If it does exist, you may just have to take your chances. At that point, it comes down to a judgment call.

Still, even with all these ways to verify a check, there are still plenty of ways for people to pass off phony checks as real.

The check writer could have sufficient funds in the account at the time of verification, but if you don’t cash or deposit the check expediently, there is the risk that the check writer could spend the funds in the account prior to your deposit leaving you holding a worthless piece of paper. The only way to “reserve” the funds – ensure they are there no matter the timing of deposit or cashing – is to accept a cashier’s check.

Of course, if you receive a high volume of checks verifying every check on your own is inefficient and could be inaccurate. The best remedy in these instances is to use a check verification service. These services use technology to flag suspicious accounts and suspicious individuals. They are not fool-proof, but they provide a strong layer of defense.

There is no 100% fail-safe when accepting checks, but there are ways to limited the chances that you fall victim to fraud.

Merchant and Check Services for SMB’s in Under-Banked Markets

October 17, 2016 By ArJay Data Leave a Comment

We are living in an era where the bulk of Americans pay bills and purchase products and services with a few keystrokes and the click of a mouse or, even easier, a swipe on their smartphones.
However, what many of those people don’t know is that there is still a broader segment of the population in often lower-income urban areas like Detroit, Miami and Newark that are under-banked and simply unable to take advantage of these technological advances.

That under-banked segment of the population, while often an afterthought, makes up a significant share of the market and many small retail businesses in the inner city areas of places like Miami, Newark and Detroit survive by selling into that group.

According to data published by the Federal Deposit Insurance Corporation (FDIC):

7.7 percent (1 in 13) of households in the United States are unbanked. This proportion represents nearly 9.6 million households.
20.0 percent of U.S. households (24.8 million) are under-banked, meaning that they had a bank account but also used alternative financial services (AFS) outside of the banking system.
Among households that recently became unbanked, 34.1 percent experienced either a significant income loss or a job loss that they said contributed to the household becoming unbanked.
Among households that recently became banked, 19.4 percent reported that a new job contributed to their opening a bank account.

Still, there unfortunately are those in this segment of the community take advantage of small business owners by writing bad checks in the hopes that some merchants have no way to verify the legitimacy of their accounts.

As a business owner with a significant portion of customers in unbanked or under-banked communities in places like Detroit, Miami and Newark, the dilemma is trying to serve the market by giving customers payment options beyond cash while still protecting the interests of the business. After all, the FDIC reported that under-banked adults receive more than $1 trillion each year in payments from employers and government agencies.

For business owners that receive checks from the under-banked and worry about their legitimacy the best option is to use a check verification service with a track record that can be trusted.

The use of check verification services significantly reduces returned transactions, saving business owners money on payment processing while protecting their accounts. Check verification gives the business owner a clear view into the trail of money. It can be used to check the history on a bank account or confirm if the account is open, in good standing and if there is a history of bad checks being written on the account. Check verification services can also confirm if there is actually money available in a bank account.

ArJay Data’s Bank Network and Check Verification service helps business owners in inner city regions such as Detroit, Miami and Newark ensure that the checks they receive will not bounce. ArJay has been serving retailers in more than 100,000 locations over the past two decades and we continue to help fight check fraud’s effect on small businesses.

ArJay Data’s technology enables it to accesses the leading check databases in the country – over 13 million current unique records from over 71,000 locations across the country. Data from ArJay’s Bank Network and Check Verification databases lets merchants know if their customers have any bounced checks as well as their customer’s bank account status. In addition, merchants can contribute their own bad check data to the databases.

Rather than continuing to question the legitimacy of every check or, worse, stop accepting certain forms of payment all together, ArJay is a good alternative to serve the under-banked in a legitimate and safe way for all parties.

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