Credit Card Processing Leader BluePay Discusses Payment Solutions and Tokenization With MagTek

Since July 1, 2010, merchants have needed to be certain that their payment processing technology and equipment is in compliance with PCI standards. BluePay is an industry leading processing company with high security standards and recently the Director of BluePay, Kristen Gramigna, explained in an interview how BluePay’s platform can benefit companies large and small.

“We offer payment processing solutions for any business – from merchant accounts for Mom-and-Pop shops to specialized packages for corporate environments,” said Gramigna. “By integrating MagTek’s MagneSafe Centurion card reader to BluePay’s secure payment process, we bring tokenization and encryption to the retail environment and secure data as soon as a credit card is swiped.”

Data encryption and tokenization are used to lower the cost of PCI compliance. These measures transfer responsibility to BluePay for data storage via their secure servers. The company offers services from recurring billing to level 3 processing. MagTek services have been integrated by BluePay into its platform to provide advanced security that keeps data safe throughout the entirety of a transaction.

“At BluePay, our goal is to provide merchants with an all-in-one solution that not only processes payments efficiently, but secures credit card data across all points of sale,” said Gramigna. “Complying with PCI standards and keeping customers’ sensitive information safe is critical to saving money in a challenging economy.”

Gramigna also noted BluePay’s IVR services, which provide for phone payments and e-commerce solutions.

U.S. Bank and LAN Airlines Introduce LANPASS Visa(R) Card Program

LAN Airlines has partnered with U.S. Banks to introduce the LANPASS Visa Credit Card. The card is a new way for customers of both the airline and its affiliates to earn travel rewards. Travel to over 70 worldwide destinations is possible with LAN, the leading Latin America airline.

LAN Airlines, along with its affiliates, operates a modern fleet with nearly 90 passenger aircraft, plus a fleet of Cargo freighters. Recent renovations enabled LAN to increase efficiency and significantly lower CO2 emissions. The renovation reflects the company’s commitment to the environmental protection.

Pablo Yunis, LAN’s vice president of both North America and the Caribbean said, “We are dedicated to providing our customers with products and services that meet their needs, and by partnering with U.S. Bank for the LANPASS Visa Credit Card, we are giving customers in the United States a new way to earn travel rewards.”

LANPASS users get one mile for each dollar spent on the credit card, and there is no cap on miles earned. Each year a bonus ticket reduction of 10 to 20 percent is available on the first air ticket they purchase using their card. Also, new LANPASS Visa card members can kick things off with 20,000 bonus miles the first time they use the card. LANPASS Visa Signature card members are given double miles on LAN ticket purchases and 25 percent more miles on any LAN flight.

“LAN Airlines has established an extremely successful customer loyalty program with LANPASS,” said John Owens, senior vice president of U.S. Bank Retail Payment Solutions. “Drawing on our industry experience as a credit card issuer for a number of frequent flyer programs, we worked with LAN to create the new LANPASS Visa Card as a way to enhance the LANPASS loyalty program and give LAN customers even more opportunities for travel rewards.”

U.S. Bank has been a long-time supporter of the airlines industry and have been issuing consumer, corporate and business for many years. Over 80 different airlines use the services of U.S. Bank for credit card processing. In fact, the U.S. Bank Retail Payment Solutions is one of the nation’s foremost payment processing and full-service issuing providers. The company provides debit, credit, and prepaid payment solutions to businesses and consumers alike.

Merchants Win Debit-Card Fee Battle

Members of the House and Senate recently announced that debit-card fee cuts would be included in the final version of the overhaul bill—a hit to the financial industry, which had strongly opposed any such further regulation.

Retailers are thrilled though, as they stand to gain significantly from the revised legislation, and as they realize the fruits of a long and challenging battle against the big banks and credit card companies. The actual amount of reduction that will be seen is not completely clear, but there are experts that predict new fees of 50% or less than in previous practice. Big retailers and small retailers alike will be affected.

Restaurant owners, convenience store owners and other retailers have been concerned for a very long time about the so-called interchange fees charged by banks for MasterCard and Visa debit cards, such fees averaging 1% to 2% of the total transaction amount. It costs significantly less to process paper checks, and the risks of debit cards are no higher than with checks. Countries like Germany, France, Mexico and Brazil all have regulations in place and in Europe fees are half what they are here in the US.

“Every dollar we pay the credit-card companies is a dollar we can’t pass on to consumers or use to hire employees or build more stores,” said Scott Mason, vice president of government affairs for home-improvement retailer Lowe’s. “Literally you are talking about hundreds of millions of dollars.”

For their parts, banks argue against the legislation, their main contention being that they will have to make up for the lost revenue somewhere, alluding to the possibilities of raising other fees or getting rid of rewards programs.

Community banks and credit unions will be exempt from some of the regulations, but they are still siding with the big banks, as they feel they wouldn’t be able to remain competitive unless they voluntarily reduced their interchange rates to match those forced upon the larger institutions. MasterCard general counsel, Noah Hanft said, “We continue to have concerns that the ultimate outcome of this legislation would be the passing of merchant acceptance costs to consumers at a time when Americans can least afford it.”

In May the Senate approved an amendment by Illinois Senator Richard Durbin which would have the government review the fees on debit cards as part of its overhaul package. The amendment was not part of the original House bill that had already passed hearing.

The new language does clarify matters for Visa and MasterCard as it was noted that the legislation was meant to apply to only debit cards, not the fees paid in respect of traditional credit cards and the fees that the debit-card processing networks charge to banks.

The most recent deal reached will keep most of Mr. Durbin’s proposal in the final legislation to be approved by both houses, but gives the Fed the authority to look at a broader range of factors, including fraud prevention costs, when deciding what fees card-issuing banks can appropriately charge to merchants.

Retailers stand by their assertion that the fee-cut windfall will be shared with customers. Home Depot, among those lobbying most strongly for the fee cuts, said: “Any relief as it pertains to these fees will give the Home Depot the ability to reduce our cost of doing business…Such benefits are likely to include lower prices and investment in the business to better serve customers.”

Wal-Mart was not inclined to comment or be as vocal as Home Depot, but based on a Neilson Group’s estimate, roughly 17% of Wal-Mart transactions are now handled through debit cards, which means the retailer could see savings of over $250 million a year if the regulation is passed. Other industry insiders feel $250 million is actually a conservative estimate, considering the company’s reported $300 billion revenue estimate last year in the U.S. alone.

The banking industry has belabored the point that they feel the majority of any windfall would just line each company’s pockets, not result in consumer savings. A report by Congress’s Government Accountability Office found that similar reductions in countries like Australia did not evidence any clear cost savings for consumers.

Ken Clayton, senior vice president of card policy for the American Bankers Association pointed out, “Who ends up feeling the burden from this? Financial institutions lose a revenue stream that allows them to offer other services to low-income consumers.”

“We’re constantly looking for ways to enhance member benefits of our hotel loyalty rewards program,” said Lincoln Barrett, vice president, Guest Marketing and Alliances at IHG. “Leveraging conversations through our private online community, ultimately delivered a product that will get our members to their travel rewards even faster than ever before and we know they’ll find significant value in that.”

Barrett’s words come as a result of the recently introduced Priority Club Select Visa Card that was designed after receipt of direct consumer feedback about the type of product they wanted. Chase and IHG partnered with Communispace to create an online forum for ongoing conversation with customers in real time, allowing for feedback throughout the process of product development. The product is specifically designed for frequent travelers.

Members of the online community provide the companies with insights on benefits and services of the greatest value in a travel credit card program. The new card offers such benefits as a 10 percent rewards rebate feature and a best-in-class annual free hotel night certificate. It’s also easier to both earn and redeem rewards. Additionally, as part of their launch Chase is offering no annual fee the first year and 30,000 bonus points after the first purchase is made on the card.

There are multiple key features of the Priority Club Select Visa Cards, including the annual free night certificate, Gold Elite status for the life of the card which allows for late check-out and priority check-in at certain properties, between one and five points earned on every dollar spent on purchases, and an ongoing automatic 10% point rebate on all points redemptions.

Tony Glover, senior VP, Chase Card Services said, “Our goal was to create a card that delivers the strongest possible value to Priority Club members. Customers are our best resource, so we listened to them. Their candid feedback helped solidify and prioritize features and benefits. The end result is the new Priority Club Select Visa Card – by delivering exceptional value, our intent is for this new card to be first-in-wallet for our customers.”

Qik-n-EZ president supports Durbin proposal on debit-card fees

Qik-n-EZ will shortly have 12 Illinois locations. President and CEO of the company, Wendy Chronister, recently testified before the Senate Appropriations subcommittee on financial services and general government, a subcommittee chaired by Sen. Dick Durbin, D-Ill, sponsor of the widely discussed amendment to financial legislation regarding setting of credit and debit card fees.

Chronister notes that outside of the costs of inventory, credit card fees are one of the highest operating costs for her business, right after labor. Since most small businesses need to accept credit card payments to be competitive, they pretty much have no choice but to accept any fee imposed for credit or debit card processing, regardless of how outrageous such fees may seem. Chronister says that close to 200 consumer groups support the Durbin amendment, which would allow retailers to reject the use of credit or debit cards for low dollar value purchases, prevent card networks from penalizing merchants who give discounts to cash customers or customers who use specific credit cards with lower associated processing costs and would have the Federal Reserve Board direct that debit-card fees are in proportion to the related processing costs.

Trish Wexler, spokeswoman for the electronic payments coalition, has countered that credit unions, community banks, credit unions, large banks, and other payment processors have valid arguments against the proposed changes. She says that debit-card fee regulation would allow a card issuer to charge for processing a transaction but would not allow for other costs associated with running a debit-card program, including data security and fraud prevention systems. According to her, “That’s like telling Anheuser-Busch that you can charge for the can of beer, but you can’t charge for the beer inside, you can’t charge for the brewery.”

Despite Wexler’s argument, Chronister says that lower processing fees will mean lower prices for consumers in a highly competitive market. She feels that currently the real costs of high interchange fees are borne by consumers, because merchants must build such fees into product prices, and even customers who pay in cash are left paying a little more than they otherwise would.

The Senate passed a version of the Bill that included Durbin’s amendment but the House version of the Bill did not include the amendment provisions. Spokeswoman Christina Mulka says that a conference committee is working out the differences between the two bills.

Intuit Merchant Services system glitch over bills customers, creates wrong bank account numbers

A recent glitch in a supposedly limited number of accounts has left some Intuit Merchant Services customers facing frustration. System errors caused changes in discount rates charged to merchants on a per transaction basis. Intuit Merchant Services encompasses the QuickBooks, Quicken, and QuickBooks Customer Account Manager programs. The error in the default rate meant that some merchant accounts were overbilled merchant accounts, resulting in an increase to the company’s Accounts Receivables; and requiring merchant refunds.

Intuit has said that since discovering the problem they immediately took steps to correct the issue and also note that they will be issuing full refunds to customers that have been charged a higher than promised discount rate. Intuit has also issued a subscription fee waiver for the month of June for accounts affected by the error.

Some banks may require a formal notice to adjust client accounts in order to issue credits to their customers, and as Intuit may not have taken such steps, it is important that if you believe that you were affected by the error you call and speak to the Office of the President of Intuit.

Additionally, concerns have been brought to the company’s Quality Assurance Dept., whereby its system caused new accounts to be misidentified and then rejected by certain banks. This resulted from accounts which were set up online, but then incorrectly created within Intuit.