My Merchant Account Blog

Relying on Recurring Billing

Friday, April 17, 2009

A recurring monthly payment from customers can be a good source of income.  There are thousands of businesses that could thrive on using an electronic payment gateway to do recurring billing for them.  The electronic payment gateway would store the consumer's credit card number for you and complete the transaction at a set interval that you determine.

LinkPoint / First Data Global Gateway

The LinkPoint Gateway (also known as YourPay, but now known as the First Data Global Gateway) has their feature that is called periodic billing.  Through their API, you can set up a recurring monthly payment.  By doing this, you do not need to worry about storing credit card numbers and a possible breach.  You also save the Address Verification Service (AVS) fee on each recurring transaction, since the gateway has performed the service already. 

The LinkPoint Gateway however is somewhat limiting on its features.  For example, if the recurring transaction fails the next month, you are sent an email.  Unfortunately, it is then up to you to either contact the consumer to get a new credit card and possibly suspend the consumer's account.  However, you can also set up the recurring transaction to try for a couple of days - just in case the consumer was close to his limit and a payment was received to the card association.  Keep in mind though, each transaction will cost - a transaction fee, and this is usually $.15 - $.30, depending on your monthly volume and transactions.  On the plus side, the periodic billing feature is free and is available to all merchants that use the LinkPoint / First Data Global Gateway.

Quantum Gateway

The Quantum Electronic Payment Gateway is a fairly new product from CDG Commerce.  The gateway seems to pick up where a lot of the electronic payment gateways stop when it comes to recurring billing.  With their API, you can store the customer's credit card number on Quantum's secure web server and bill the credit card at a later time.  This comes as the e-commerce industry is trying to be more secure.

Developers can also apply for a test account to help mimic real world transactions.  For any new business that is considering a safe and secure method for securing credit card numbers, they should look at the Quantum Gateway.  However, this does not make you exempt from the Payment Card Industry Data Security Standard (PCI DSS).  With the API from the Quantum Gateway, there is no need for merchants to store the credit card number on their web server - all the information needed for the transaction is stored securely in the Quantum Vault.

The other electronic payment gateways and Internet Payment Service Providers (IPSPs) all offer some version of recurring billing but I don't think you will find one that is comparable to the Quantum Gateway.  As the Internet grows and more business models are online, most of the electronic payment gateways have grown stagnant as far as development.

Application Programming Interface - API

Saturday, April 14, 2007

Each gateway will offer an API to process transactions on your secure website. One of the many benefits to using an API to consistency. When checking out, the consumer does not notice any difference in the layout of your website.  The consumer is able to enter his / her credit card information on your secure website.

LinkPoint API

LinkPoint's product is called LinkPoint API.  They will provide you a free store to use to test the functionality of your script.  The LinkPoint API module can handle sales, returns, real-time authorizations (pre-authorizations), purchasing cards (Level II cards), and it will automatically set up recurring charges if needed.  LinkPoint does not charge a transaction fee for its services.  LinkPoint also does not charge a fee for its recurring billing product.

Technical Support

Level One technical support is available with 24-hours a day, seven days a week through a toll free number (888-477-3611). Level Two support is available Monday - Friday from 9 a.m. - 6 p.m. Pacific time. Sales Support is 800-931-9835 ext 3.

Paypal Payflow

Paypal bought the Payflow gateway from Verisign in 2006, but it kept it's name. Payflow calls its API Payflow Pro.  The Payflow Pro allows you to do sales and pre-authorizations.  Payflow charges $.10 per transaction after 1,000 transactions is reached each month.  Payflow Pro also offers other features as well like recurring billing, fraud support, and technical support. Payflow recurring billing is $39.95 to set up and $29.95 a month to maintain this service.

Fraud Services

Payflow offers a basic and an advanced fraud protection. Their basic plan will allow you to catch high dollar amounts, check for suspect IP addresses and ZIP codes, watch for address mismatches, and repeat buying.  The advanced plan offers everything with the basic plan plus rapid card use, and whitelisting of current customers.  There is a set up for of $29.95 for the basic plan and $89.95 for the advanced plan.  The monthly rate is $19.95 a month for basic plan and $49.95 a month for the advanced plan.  There is also a transaction cost as well - $.05 per transaction for the basic plan and $.10 per transaction for the advanced plan.

Technical Support

Technical Support is available as well via a toll-free number. Sales Support is 800-931-9835 ext 3.

Authorize.net Advanced Integration Method

Authorize.net Advanced Integration Method (AIM) is their API product. Authorize.net currently just released their periodic billing module as well.  They still charge about $19.95 a month. 

Technical Support

Authorize.net's technical support is opened only Monday - Friday from 6:00 a.m. To 6:00 p.m., closing January 1st and December 25th. Technical support's phone number is can be reached at 877-447-3938. Sales Support is 800-931-9835 ext 3.

Electronic Payment Gateway-The Start of a Transaction

Saturday, January 20, 2007

An electronic payment gateway, like LinkPoint, Payflow, Authorize.net, is the virtual connectivity between your website and the credit card companies.  These gateways will offer an API (Application Programming Interface), a secure website where you can actually direct your consumers over to process credit cards, and virtual terminal where you can actually enter credit card information to process (i.e. if you had a customer call you to place an order via the telephone).  

When the customer hit submits, the electronic payment gateway goes into action.  It sends the request to a transaction processor or platform (i.e. First Data).  First Data will then authorize or decline this transaction if they have the authority or sends it over to the acquiring bank.  The acquiring bank then sends it to the card association who takes the transaction and sends it to the issuing bank.  The issuing bank then authorizes or declines the transaction and sends the response back up the chain through the card association, to the acquiring bank, to the transaction processor, to the electronic payment gateway and then finally the response is displayed to the consumer. 

Each gateway will offer a fraud protection product.  LinkPoint has a product called LinkShield™. LinkShield™ combines the industry's top fraud-protection tools to provide an exceedingly comprehensive fraud protection service.  Since almost one hundred gateways go through First Data's Nashville Platform to process, this product is one of a kind.  First Data uses the technology from Fair Isaac® Falcon® and ClearCommerce Fraud Analyzer to provide the merchant with up-to-date information on the transaction.  Merchants are now able to fight fraud much better.  Unfortunately, this product does not seem to be offered by First Data or any of its registered agents.  And along with Verified by Visa (VBV) / MasterCard Secure Code (MSC), chargebacks can be a thing of the past.

Once the merchant gets the notification from the electronic payment gateway of a successful transaction, the merchant can begin shipping the goods to the consumer.  A batch is usually automatically ran at night and this will complete the transaction.  Batching the transaction will actually get the ball rolling for the merchant to get his / her money.  Up until this point, no money has been moved into the merchant's bank account.  For more information, please see How Does a Credit Card Transaction Get Processed.

It is My Merchandise and Services Its My Money or Is It

Friday, May 19, 2006

Chargebacks hit merchants on a daily basis. Consumers either did not receive their products or they were not happy with the services or products they did get or one that is coming up even more so now, regret. Or maybe it was fraud - from someone using a stolen credit card to Johnny using his mother's credit card to purchase that new fishing pole.

When applying for a merchant account, the acquirer must consider the credit standing of the merchant. Merchant acquirers will perform a credit analysis but this analysis entirely different from asking a bank for a loan.

For example, for the bank loan, the bank delivers the funds to the borrower. A merchant acquirer advances no funds. It actually indemnifies a third party - the card issuing bank who actually indemnifies the cardholder, in the event that a merchant cannot cover a chargeback. Thus, the acquirer is responsible if a merchant skips out on a merchant account.

If you sign up with a third party processor, you are adding another party to the scenario. Is it worth it? Most third party processors will not do a credit check, so if you are on the TMF list and you think you cannot get a merchant account, this might be an option. Cardservice though has a reputation of approving quite a number of merchants who might be on this list. Most third party processors charge a bit higher transaction rate and most will hold your money for a certain amount of time or rely on you to request your money. Your account is usually monitored a bit more closely than a merchant account because they realize this.

A perfect example of an acquirer taking the brunt of responsibility is Global Payments. During four months (October 2005 - January 2006), the acquirer processed $86 million for this merchant. They did actually hold back $47.6 million in cash reserves because they suspected the merchant was not legitimate.

Electronic Payment Gateways Explained

Saturday, January 14, 2006

An electronic payment gateway is the virtual connectivity between your website and the credit card companies (e.g. Visa, MasterCard, Discover, American Express, JCB, Diner's Club). It is similar to the point of sale (POS) terminal that you find in the grocery store or restaurant.

In the United States, there are a number of them: Quantum Gateway, LinkPoint, Authorize.net, Verisign's Payflow, Cybersource, Itransact, etc.

Authorize.net is probably the most advertised electronic gateway. A lot of people think they can sign up with them and immediately start to accept credit cards. They do not realize you need a merchant account as well. Authorize.net even uses the First Data platform to help facilitate transaction processing. Since we started using Authorize.net in September 2003, they have been down about seven times. This meant thousands of dollars lost in sales for merchants around the United States. Authorize.net's prices are usually about $15-$25 a month and each transaction is about $.10-$.15 in addition to the transaction charge imposed by the merchant account provider. They also charge $25 a month for recurring billing.

The LinkPoint payment gateway is probably one of the most deprecated electronic payment gateways out there. It is owned by the First Data Corporation. First Data has been doing electronic money transfers since 1969 and they were the first processor of both VISA® and MasterCard® bank-issued credit cards in 1976. First Data processed 12.2 billion transactions in North America alone in 2003. The last time the LinkPoint gateway went down was in January 2002. LinkPoint's charges are usually about $15-$25 a month. No other fees are charged, except for LinkShield. Recurring billing is free and no other transaction fees are imposed.

Verisign also has a payment gateway. Verisign is probably the most recognized name because they also offer other services and products for the internet (i.e. SSL certificates, domain registration, hosting, etc). You do not need to purchase everything from Verisign to have a successful e-commerce business. Verisign's prices are a little more than the others. They charge extra for their API and recurring billing.

The above gateways offer both an API and a secure website to capture your consumer's credit card data. An API allows you to capture credit card data on your secure website & process the transaction. The consumer never leaves your website and you maintain consistency throughout your website. If you wish to use the gateway's secure website, there is usually some simple HTML coding to direct your consumer over to that webpage. Once processed, they will be re-directed back to your website.

Using an Internet Payment Service Provider (IPSP) (like 2CO, Paypal, CCAvenue) means you have to use their own proprietary gateway. This helps to stay in compliance with Visa and MasterCard. This also means that your customers will be directed over to the third party processor's secure webpage. Some will allow you to co-brand this page (your logo and theirs on the page), but the consumer must know who they are paying and this page must state that.

Electronic Payment Gateways Compared

An electronic payment gateway is the virtual connectivity between your website and the credit card companies (e.g. Visa, MasterCard, Discover, American Express, JCB, Diner's Club). It is similar to the point of sale (POS) terminal that you find in the grocery store or restaurant.

In the United States, there are a number of them: LinkPoint, Authorize.net, Verisign's Payflow, Cybersource, Itransact, etc.

Authorize.net is probably the most advertised electronic gateway. A lot of people think they can sign up with them and immediately start to accept credit cards. They do not realize you need a merchant account as well. Authorize.net even uses the First Data platform to help facilitate transaction processing. Since we started using Authorize.net in September 2003, they have been down about seven times. This meant thousands of dollars lost in sales for merchants around the United States. Authorize.net's prices are usually about $15-$25 a month and each transaction is about $.10-$.15 in addition to the transaction charge imposed by the merchant account provider. They also charge $25 a month for recurring billing.

The LinkPoint payment gateway is probably one of the strongest out there. It is owned by the First Data Corporation. First Data has been doing electronic money transfers since 1969 and they were the first processor of both VISA® and MasterCard® bank-issued credit cards in 1976. First Data processed 12.2 billion transactions in North America alone in 2003. The last time the LinkPoint gateway went down was in January 2002. LinkPoint's charges are usually about $15-$25 a month. No other fees are charged, except for LinkShield. Recurring billing is free and no other transaction fees are imposed.

Verisign also has a payment gateway. Verisign is probably the most recognized name because they also offer other services and products for the internet (i.e. SSL certificates, domain registration, hosting, etc). You do not need to purchase everything from Verisign to have a successful e-commerce business. Verisign's prices are a little more than the others. They charge extra for their API and recurring billing.

The above gateways offer both an API and a secure website to capture your consumer's credit card data. An API allows you to capture credit card data on your secure website & process the transaction. The consumer never leaves your website and you maintain consistency throughout your website. If you wish to use the gateway's secure website, there is usually some simple HTML coding to direct your consumer over to that webpage. Once processed, they will be re-directed back to your website.

Using an Internet Payment Service Provider (IPSP) (like 2CO, Paypal, CCAvenue) means you have to use their own proprietary gateway. This helps to stay in compliance with Visa and MasterCard. This also means that your customers will be directed over to the third party processor's secure webpage. Some will allow you to co-brand this page (your logo and theirs on the page), but the consumer must know who they are paying and this page must state that.