My Merchant Account Blog

First Data Might Be Over Charging Merchants

Thursday, December 31, 2009

Unlike the post Some Basic Merchant Account Fees, I am not referring to First Data charging a merchant extra fees (like a cancellation fee, ACH deposit fee, mid-qualification rates, etc), I am actually referring to your transaction fee.  Most First Data resellers are posting 25¢ on their websites and quotes this fee on the phone.

However, when Mile High Merchant Accounts started offering their current merchants this First Data Special, they contacted us with this unfortunate discrepancy.  They noticed that merchants were not being charged 2.19%, but 2.199%.

This might not seem like a big deal, but if you are a current First Data merchant and processing 1,000 transactions a month - this comes to $9.90 extra than what your merchant account reseller explained to you and what was on your contract.  What's more - they took a look at the contract the merchant signed with First Data and saw the discount rate being listed at 2.19%.

As Mile High Merchant Accounts was pretty familiar with the First Data contracts and how they changed over the years, we contacted them to ask how First Data is being able to charge merchants than what is listed on the contract.  They explained that First Data changed the procedures how paper contracts were being prepared by its agents because some untrusting agents would change the price of certain things, like changing the monthly $10.00 to $20.00.  This would ensure the agent would make $10.00 extra each month.  The merchant could not do anything about it, since the merchant signed the contract.  We are not saying all First Data agents were doing this, but you can see how this would give First Data a bad impression on how it was handling its business.  We are hoping that attorneys will be able to review irregularity and possibly have a class action lawsuit against First Data. 

Not knowing how many merchants are paying this extra fee and guessing at a low rate of just 10,000 merchants, First Data is overcharging those merchants $99,000.00 a month.  This also makes us wonder if this is happening with other merchant account providers that rely on the LinkPoint / YourPay / First Data Global Gateway.  If so, a very small estimate would be 100,000 merchants, totaling $990,000 - almost $1 million a month.

My Merchant Account Blog is hoping that ALL First Data merchants will review their contracts and statements from First Data.  Consider changing to a provider like CDGCommerce, who is more understanding of small to medium sized businesses when it comes to these matters and sign up with a merchant account with Mile High Merchant Accounts.

First Data Terminates More Employees

Friday, December 25, 2009

Are you still using First Data to help you accept credit cards in your retail business or on the Internet?  If so, chances are you might have noticed more problems with their services.  Last month, First Data terminated more employees that have been in working with them for years, these employees having thousands of hours of irreplaceable experience.  First Data does this usually every November.  Unfortunately, most large companies do this to hire new employees at a lower pay grade to save money.  However, this process brings the company employees with less knowledge of this ever-changing industry.  This will create problems sooner or later with your merchant account - you might notice that your deposit is a day late or it takes longer for customer service to answer the phone (and then once you get a representative on the phone, it usually takes longer to handle your business). 

Yes, these are little things, but they build up.  Your time is wasted on the phone, trying to get a simple answer to your question.  At what point do you consider changing merchant account providers?  Changing merchant account providers can be easy for some merchants and difficult for others.

I understand that businesses are in business to make money, but aren't you tired of paying more money for your merchant account and not getting anything more (like added fraud features)?  First Data reported $2.4 billion for the third quarter in 2009, up 13%.  This was contributed to Bank of America Merchant Services alliance as well. 

First, take a look at what First Data and their electronic payment gateway (LinkPoint / Your Pay / First Data Global Gateway) offers to its Internet merchants to help prevent fraudulent transactions and chargebacks.  If you compare this electronic payment gateway to another, like the Quantum Gateway, there is no comparison.  The First Data Global Gateway offers you  Basic Fraud Prevention Tools - Address Verification Service (AVS) and CAV2 / CVC2 / CID / CVV2 verification.  Unfortunately, these days, an Internet merchant needs a lot more to help prevent fraudulent transactions and chargebacks, for example:

• GeoIP - One provider is MaxMind and this utility is built into the Quantum Gateway.
• DialVerify - A utility that can automatically call your customer to help scrub the transaction.  This fraud prevention tool is built into the Quantum Gateway and offered at no additional charge.
• Verified by Visa (VBV) / MasterCard Secure Code (MSC) - Another feature which can prevent certain chargebacks from some card associations.  Since this is built into the Quantum Gateway the checkout process is easier than having to add this feature on as a third party application.  (Verified By Visa (VBV) - MasterCard Secure Code (MSC): Things You Should Know)

For the past three years at least, First Data has been talking about new product development and one has to wonder when this will take place?  They have offered a few new features, but of course, these features come with a price.  Other electronic payment gateway will offer these features at no extra charge to the merchant.

It has been rumored that Wal-Mart is very unhappy with First Data.  Some people have been looking to start a processor just for Wal-Mart alone.  In the meantime, consider what your time, products, and services are worth the next time you have an issue with your First Data merchant account.

First Data and The Future

Friday, August 28, 2009

Back in June 2009, Charles Fote announced he was going to start a new, "complete package" of payment product.  Mr. Fote was the CEO of First Data from 2002 to 2006.  One first has to wonder if starting another company will be worth it.  He has a management team already and some private investors.  I am sure the management team consists of individuals who were laid off from First Data.

Changing merchant account providers and electronic payment gateways can be very difficult for some merchants.  For others, it can be as simple as changing a few lines during the checkout process. 

For years, First Data was a giant in the industry - able to withstand a buyout and usually the ability to buy any company it wanted.  But in 2005, the LinkPoint gateway was moved from Burbank, CA to Denver, CO.  Unfortunately, First Data decided to basically build the LinkPoint gateway from scratch.  This caused a strain on a lot of merchants.  The development team built the gateway, basing it on LinkPoint's features.  However, most of those features were deprecated.  The only fraud prevention LinkPoint had to offer was Address Verification Service (AVS) and CAV2 / CVC2 / CID / CVV2 verification.  They did have a product called LinkShield™, but neglected to develop a billing procedure, so they don't offer it.  However, if you want something very similar (but better), the Quantum Gateway offers MaxMind at no additional charge.

In 2008, First Data decided to re-brand the LinkPoint gateway as First Data Global Gateway.  Nothing was changed then, the gateway was still the same. 

If Mr. Fote is successful, First Data might have to re-consider its business plan.  When the LinkPoint gateway was first developed, it provided merchant with fantastic tools.  Years later, most of those tools are standard with most electronic payment gateways.  For a merchant to switch, the merchant account provider and the electronic payment gateway, must be able to provide the merchant with tools to help prevent chargebacks and fraudulent transactions.

Mr. Fote might have approached a few electronic payment gateway companies to buy them out.  Or he took his knowledge to build another electronic payment gateway.  He will probably vie for Wal-Mart, since Wal-Mart paid over $1 billion last year for credit card transaction costs.  If Wal-Mart's discontent continues, I am sure it would be easy for Mr. Fote or another provider to make a case to Wal-Mart to consider switching.  Plus, there might be another contender for that business already.

Switching Merchant Account Providers

For merchants to switch to another merchant account provider, the provider must make a case why their company is better.  Usually this is done by telling the merchant how much money they can save.  If the merchant does make the switch but keeps the same gateway, usually the switch will be easier.

However, switching to another electronic payment gateway is a bit more involved.  The above though is true - they must explain to the merchant why their service is better.  Most gateways are somewhat the same, but the Quantum Gateway does stand out. 

Besides offering the "basics", the Quantum Gateway offers merchants extra tools at no extra charge.  As a matter of fact, the Quantum Gateway is free.  Unlike other electronic payment gateways that charge from $10.00 to $100.00 a month, Quantum Gateway does not have a monthly fee or transaction costs.

The Quantum Gateway goes above the other gateways by providing the merchant numerous tools to help reduce chargebacks and fraudulent transactions.

So one has to wonder if First Data can keep up with the times?  They had a great opportunity in 2005 to add extra fraud prevention tools but did not use it.  Will merchants keep waiting or will chargebacks make merchants re-consider another electronic payment gateway?

Stores and Carts Master

Tuesday, August 11, 2009

	coreybryant

Experts Exchange is a collaboration of experts and IT professionals from around world helping to solve problems and share knowledge. Experts Exchange has over 900 zones currently. They recognize the experts on a point-based system. One of the writers on this blog, Corey Bryant, has achieved master status for Stores and Carts category.

Certified E-Commerce Guru

Wednesday, January 21, 2009

	coreybryant

Experts Exchange is a collaboration of experts and IT professionals from around world helping to solve problems and share knowledge.  Experts Exchange has over 900 zones currently.  They recognize the experts on a point-based system.  One of the writers on this blog, Corey Bryant, has achieved guru status for E-Commerce Guru.

As noted last month, the had also achieved the Payment Processing Recommendation and Integration Guru.

Payment Processing Recommendation and Integrating

Thursday, December 04, 2008

	coreybryant

Experts Exchange is a collaboration of experts and IT professionals from around world helping to solve problems and share knowledge.  Experts Exchange has over 900 zones currently.  They recognize the experts on a point-based system.  One of the writers on this blog, Corey Bryant, has achieved guru status for Payment Processing Recommendation and Integrating.

First Data Named as Global Cards Processor of the Year

Friday, May 26, 2006

London, May 24 2006  First Data has been named Cards Processor of the Year in Cards International's 2006 Global Awards. The prestigious industry award was presented to First Data, a global leader in electronic commerce and payment services, at the Cards International Awards Dinner in Milan last night.

First Data won the Global Cards Processor Award following shortlisting with eFunds Prepaid Solutions and TSYS. First Data was also shortlisted for the Best Merger & Acquisition Award, in recognition of a number of significant acquisitions made by the company in Europe and South East Asia over the past 12 months.

The award was accepted on behalf of First Data by David Yates, President, Europe, Middle East and Africa, First Data International. Addressing judges and dinner guests, he commented: "I am delighted to accept this award and, in doing so, to thank our clients for the trust they place in us and our staff for their efforts in delivering service excellence to our clients. I believe our success tonight reflects First Data‘s single-minded focus on client delivery. We know that we can only serve our clients effectively if we combine robust global capabilities with breadth of service and a real understanding of the markets in which we operate."

Pam Patsley, President of First Data International, adds: "This award provides powerful endorsement for our focus on executing a global strategy with local impact. In this way, we can ensure that our scale and solutions translate into real benefits for our clients in terms of increased competitiveness and operational efficiency."

Cards International award winners were selected by a panel of judges which included Gerard Lysaght, Editor, Cards International; Joanne Robinson, Director, Cards & Payments and Consumer Finance, VRL Publishing; Ken Howes, Director Edgar, Dunn & Company; Jayne Barber, Advisor to the Board, Experian International; and Francesco Burelli, Principal Consultant at CAPCO.

About First Data

First Data Corp. (NYSE: FDC) is a leading provider of electronic commerce and payment solutions for businesses and consumers worldwide. Serving 4.6 million merchant locations, 1,600 card issuers and millions of consumers, First Data powers the global economy by making it easy, fast and secure for people and businesses around the world to buy goods and services using virtually any form of payment.

First Data serves a diverse range of markets, leveraging global scale through a local presence and maintaining focus on individual client needs. The company operates across the USA, Europe, Middle East and Africa, Latin America, Canada, Australia and Asia Pacific.

First Data's portfolio of services and solutions includes credit, debit, private-label, gift and other prepaid card issuing and merchant transaction processing services; money transfer services; money orders; fraud protection and authentication solutions; check guarantee and verification services through TeleCheck; as well as Internet commerce and mobile solutions. Western Union, Vigo and Orlandi Valuta together make up one of the world's largest money transfer networks with approximately 274,000 Agent locations in more than 200 countries and territories. The company's STAR Network offers PIN-secured debit acceptance at 1.9 million ATM and retail locations. For more information, visit www.firstdata.com.

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