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Dodd-Frank Wall Street Reform and Consumer Protection Act

Here’s a great article taken from the FTC’s website highlighting the Dodd-Frank Act (fully known as the Dodd-Frank Wall Street Reform and Consumer Protection Act). The Dodd-Frank Act is a compendium of federal regulations, primarily affecting financial institutions and their customers, that the Obama administration passed in 2010 in an attempt to prevent the recurrence of events that caused the 2008 financial crisis.

If your business accepts payment by credit or debit card, rules of the road may help you lower your costs. The rules, part of the Dodd-Frank Act, deal with interchange fees for debit card transactions, the discounts on the purchase price you may offer your customers when they pay in certain ways, minimum dollar amounts for credit card purchases, and the networks available on a debit card for routing transactions.

The Players and The Process
Every payment card transaction involves the following:

1. The cardholder, who uses a debit or credit card to pay for a product or service.
2. The issuer, which provides a payment card to a cardholder and usually maintains the cardholder’s account.
3. The merchant, which provides the product or service for a price.
4. The acquirer, which provides payment card services to the merchant and maintains the merchant’s account. Sometimes, the merchant or the acquirer may use a third-party processor for certain processing services.
5. The payment card network (PCN), which coordinates the information routing and money transfer between issuers and acquirers. PCNs may be debit card networks, credit card networks, or both.
6. Interchange transaction fees, which include fees established, charged, or received by a payment card network and paid by a merchant or an acquirer to compensate an issuer for its involvement in an electronic debit transaction.

Here’s how the players interact:

A customer who wants to buy something presents his card to a merchant. The merchant generates an authorization request with a dollar amount and information from the customer’s card. The request is routed electronically along a path like this:

Merchant Acquirer (or Processor) — PCN — Issuer

The issuer gets the request, checks its file of active card accounts, and sends an electronic message authorizing or declining the transaction:

Issuer — PCN — Acquirer (or Processor) — Merchant

The authorization process usually takes seconds to complete. Then, the issuer posts a charge for the transaction to the customer’s account, and the acquirer posts a credit for the transaction, minus fees, to the merchant’s account. The amount deducted from the transaction value is known as the “merchant discount” and includes the interchange fee and other fees for processing the transaction.

The New Rules

Interchange Fees for Debit Cards
Beginning October 1, 2011, interchange fees for certain debit cards are capped at 21 cents plus 0.05% of the transaction value. If the issuer meets specific fraud prevention standards, the fee may go up a penny. The cap applies only to large issuers — banks and other card issuers with $10 billion or more in assets (including assets of affiliates). The Federal Reserve Board keeps a list of institutions exempt from the cap.

Which fees aren’t subject to the cap?

1. Credit card fees.
2. Fees for debit cards issued by smaller issuers.
3. Fees associated with government benefit cards; with certain reloadable, general-use prepaid cards; with prepaid store cards; and with transactions at automated teller machines (ATMs).
4. Other fees charged to the merchant by the acquirer that may be included in the merchant discount.

Discounts to Customers
A PCN cannot stop you from offering your customers a discount or another incentive for using a certain method of payment, as long as you offer it to all your customers and disclose the offer clearly and conspicuously. For example, you can offer your customers a discount or a coupon if they pay with cash or a debit card rather than a credit card. But the new rules do not address other PCN restrictions that may prevent you from offering discounts or similar incentives that vary based on the use of a card from a particular issuer or a particular PCN.

* What’s new about that? In the past, PCNs may have prohibited you from offering a discount to a customer who used one kind of payment — say, a debit card — rather than another, like a credit card.

Minimum Dollar Amount for Credit Card Purchases
A PCN cannot stop you from setting a minimum dollar amount for accepting credit cards for payment as long as the minimum is the same for all credit card issuers and PCNs, and isn’t more than $10.

* What’s new about that? PCNs sometimes prohibited merchants from refusing to accept a credit card as payment if the customer’s purchase didn’t exceed a certain amount. For example, if you accepted credit cards at all, the PCNs or banks might have said you had to accept a credit card for even the most minimal purchases.

Network Availability and Routing for Debit Card Transactions
Beginning October 1, 2011, PCNs and issuers can no longer dictate the network you use for processing debit card transactions among the networks available on a debit card. You (or your acquirer) may choose to route debit card payments in a way that reduces your costs. For example, you could arrange with your acquirer to have payments routed over the network available for that card that has the lowest interchange fee. By April 2012, you must be given a choice of processing debit card payments through at least two different networks for most electronic debit transactions. Many issuers already offer a choice.

* What’s new about that? Sometimes PCNs and issuers have restricted the networks available to merchants for routing transactions. For example, some PCNs and issuers had arrangements in which a debit card could be used on only a single debit card network or a set of affiliated debit card networks. In addition, in the past, PCNs and issuers — not merchants or acquirers — generally specified the network that would be used to process a transaction when multiple networks were available on a card.

If you still have questions or need assistance with settings up a merchant account, please give us a call at 866.857.8786 and an account specialist would be happy to assist you.

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Gain New Customers | Low Cost Advertising

A proven technique to increase your customer base


If you are in any service industry, this will be an excellent solution for you:

Do the following:

1. Decide what a new customer is worth for you
2. Get 500 gift cards (no magnetic stripe necessary) and have a value printed on each card based on the value of a new customer
3. Take the printed gift cards to a non-competing business that serves the same clientele that you are seeking – example: a massage therapist for a hair stylist or vice versa
4. Ask the merchant to hand your gift card to their clients as a gift from them (a gift to their customer that they do not have to pay for and one that does not compete with their services)
5. You should receive a 30% return on these cards (150 new customers)!!
6. Do this until you have the amount of customers that you can serve well – then in order to retain your customers, reward them with loyalty cards that gives them a value every single time they use your service.
7. If you have any additional questions regarding new customer acquisition, please don’t hesitate to contact us at support@365glacierpayments.com or call 866-857-8786. Additionally, you can go to www.365glacierpayments.com. Thank you.

We take pride in helping our merchants increase their revenue! Best of luck!

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What is a Chargeback? | Who Wins?


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What is a Chargeback?

A Chargeback is the process whereby a customer disputes a credit card charge. The chargeback usually occurs after the customer receives their billing statement and does not recognize the charge, is dissatisfied with the quality or service, or did not receive what was guaranteed. Generally, the customer will call the credit card company directly to initiate the chargeback without prior notification to the merchant.

What is the Chargeback process?

The bank has a time limit by which to initiate a chargeback. Within 120 days of the transaction date, the merchant will be advised that the cardholder or bank is claiming a mistake has been made and is attempting to have the charges removed from their statement. The merchant’s account is then debited for the amount of the charge and the merchant must provide evidence that the transaction was valid and in compliance with Visa and MasterCard rules and regulations.

Typical Chargeback justifications:

  • Authorization not obtained for transaction
  • Fraudulent or Duplicate charges
  • Dispute over Quality, Service or Delivery
  • Refund credit not received

5 Steps in the Chargeback Cycle:

  1. Presentment: The Presentment is the date at which the sale or transaction occurs.
  2. First Chargeback: When the customer disputes a charge to their Credit Card Company or bank and the bank responds with a retrieval request to dispute the transaction. The First Chargeback is the point at which the merchant and their bank receive notification from the cardholder’s issuing bank. The merchant has 7 days to rebut, however, the merchants account is debited for the disputed amount until the chargeback is resolved.
  3. Second Presentation or Re-presentment:  The Second Presentment occurs when the merchant’s bank receives supporting documents from the merchant to substantiate the charge and, provided the documentation complies with Visa and MasterCard requirements, the chargeback is remedied. In some cases additional documentation may be required. If the chargeback is cleared then the merchant will be credited back the disputed amount and a letter will be sent to that affect. If the documentation does not satisfy their requirements then the merchant will receive a letter from Visa and MasterCard stating their decision and reasoning. This process can take up to 45 days.
  4. Second Chargeback: If the second presentment is rejected by the cardholder, the issuing bank files a second chargeback. At the time of the Second Chargeback the merchant can dispute the cardholders claim and, if necessary, escalate to Arbitration.
  5. Arbitration: Arbitration is the process the merchant and cardholder/issuing bank resort to when they cannot reach agreement through the chargeback process. All parties have an opportunity to present their case to a Visa and MasterCard analyst. Arbitration cases must be filed with Visa and MasterCard within 45 days of the Second Chargeback being issued. A Visa and MasterCard Arbitration form must be completed, along with a description of the grievance, and copies of all documentation submitted during the chargeback process. The losing party could be liable for fines of up to $500.00.  Additionally, there is a Filing fee of $150.00 and a Review fee of $250.00 paid by the losing party (fees subject to verification). Either party can be assessed a $100.00 fine for each technical violation against the opposing party.

Who Wins?

If you end up in Arbitration, there are several criteria the arbitrator will consider. Split decisions happen when one party offers a reasonable compromise or solution to the disputed charges. Merchants usually get an unfavorable ruling if:

  • The merchant fails to address the issues raised by the cardholder
  • The merchant fails to sufficiently prove that the dispute was unreasonable
  • The merchant fails to present sufficient documentation to support their case


If the customer or issuing bank alleges that the merchant has violated Visa and MasterCard Operating Rules then it is considered “Out of Compliance” and the merchant will not be protected by the chargeback process. The issuing bank must certify that a financial loss did or will occur as a result of the rule(s) violation. Each side has an opportunity to present their case to the Visa and MasterCard Analyst assigned to the case. Compliance cases are filed within 90 days (Visa) and 180 days (MasterCard) from the transaction date. The date of a Retrieval Request ( the date of violation) is 90 days for Visa and 45 days for MasterCard from the date the issuing bank received notice from its cardholder of a violation (Date of Discovery)

Examples of Compliance violations include:

  • Failing to properly disclose “limited refund” or “return policies” to the cardholder at the time of the transaction.
  • Preparing two or more transaction receipts to avoid authorization for a single transaction.
  • Quality of service received from a travel and entertainment merchant.

Compliance Filing Procedures, Fees and Penalties:

If you, the merchant, face a Compliance Violation claim, then you will be required to complete a Visa and MasterCard Compliance form and provide a description of the grievance, and submit copies of all supporting documentation. The issuing bank is required to provide the merchant with a Pre-Compliance letter, 30 days prior to filing, in attempt to settle the matter. As with a standard Arbitration, there is a Filing fee of $150.00, a Review fee of $250.00 paid by the losing party. Further, a $100.00 fine may be assessed for each technical violation found against the opposing party.

Criteria used for Compliance Violation Decisions:

The arbitrator will consider the following when determining financial liability ~

  • Was there a rule violation and a resulting financial loss
  • Was the cardholder’s complaint reasonable
  • Should the disputed amount be allocated between the two parties

When facing a Chargeback, Arbitration or Compliance claim keep in mind…

When a merchant is facing a Chargeback claim, Arbitration request or Compliance Violation charge, the most important thing to remember is to respond quickly and accurately with sufficient supporting documentation to defend your business. Failure to respond by the stated deadlines is an automatic forfeiture of the transaction which means you will lose the full transaction amount and could be subject to fines.

If you would like more information on digital currency, please goto www.365GlacierPayments.com or email support@365GlacierPayments.com. If you prefer, you can reach an account specialist at 866.857.8786.

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What does EMV Mean? | Why Are Chip Based Cards More Secure?

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EMV, which stands for Europay, MasterCard, and Visa, is a global standard for inter-operation of integrated circuit cards (IC cards or “chip cards”) and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions. Europay, MasterCard and Visa collaborated to adopt cards with more secure technology two decades ago.

EMV cards are also known as chip cards, because they contain computer chips that are used to authenticate each transaction. Continue Reading →

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Consumers shifting to mobile payments

Much has been made in recent weeks about where emerging mobile payments technologies stand with the restaurant industry. Apple turned up the volume with Apple Pay, leaving many in the industry wondering whether that system will lead to mass consumer adoption. Continue Reading →

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Digital cash: The new, lowest cost payment type

While many of us are accustomed to seeing a lower cash price at gas stations versus paying with debit or credit cards, differential pricing remains the exception rather than the rule with most U.S. merchants. This blog post explores cash as the lowest cost payment type and looks at how digital technologies may further impact this phenomenon in the future. Continue Reading →

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