Having knowledge and understanding the credit card processing (merchant services) & POS system industries is your golden ticket to your business future success. Please feel free to read or watch all the important information on both industries. We highly suggest you gather as much information as you want before a decision is made. Happy research to you. We look forward to partnering with you in your future endeavors.
Credit Card Processing (Merchant Services):
Real Cost (interchange): Issuing bank & Brand (interchange). This is universal. Meaning any merchant processing credit cards pay the same interchange. Yes, that means if you processed $500 or a billion a month you pay the same interchange. The issuing banks come up with their pricing based on risk. A debit card, money comes out of customers checking account, is less risky than a business/corporate card. Make Cents? Interchange is public knowledge. Google visa interchange April 2015 and you’ll see all the cards sponsored by visa. You can also look up any brand (MC, discover etc.) and change the month and year to your liking. The month is either April or October.
Processor cost: This part you have control over. The processor charges you above the interchange so they can make a profit. Something for you to think about as a business owner yourself. They have a cost of doing business just like you. However, you can determine exactly how much they make profit just by knowing which type of pricing you choose. Your options are tiered, interchange plus or interchange plus a fixed fee. Let’s discover how each pricing works.
Visa interchange– This chart is what goes to the issuing bank who uses visa as their brand. This is from April 2015: Visa chart
MasterCard interchange– This chart is what goes to the issuing bank that uses MasterCard as their brand. MasterCard rates
Chargeback: These scare processing companies. The reality is the processing companies loan you, the business, money. It takes time from the start of the processing to when it is complete. If a merchant gets a chargeback the processing company can lose money. A lot of it in some situations. A chargeback is the charge a credit card merchant pays to a customer after the customer successfully disputes an item on his or her credit card statement.
BREAKING DOWN ‘Chargeback’
Customers dispute charges to their credit card usually when goods or services are not delivered within the specified time frame, goods received are damaged, or the purchase was not authorized by the credit card holder.
Types of Pricing:
Tiered or bucket pricing: the processor can determine how many tiers they want to give you. This type of pricing is confusing and gives summary statements. It is the least understandable type of pricing available. Here is why. Each card created by an issuing bank has a cost to it. It has a percentage and a transaction fee. Example: a debit card is .05% + .22 for the issuing bank and .11 percent + .0285 for the brand (VS, MC etc). The processor will charge .95% + .25 on the first tier. Do you see how much profit they make?
Interchange Plus or Cost Plus: We recommend this type of pricing. It’s very transparent. The meaning is the processor charges interchange, which is universal, then add (plus) basis points for themselves. Example: Interchange plus .30 basis points + .10 cents a transaction. This means all interchange (issuing bank & brand) is passed through to you and the processor earns $3 per thousand you produce in volume and .10 cents per transaction. Make Cents?
Interchange Plus a Fixed Fee: We highly recommend. This type of pricing is our favorite for those customers who want to know exactly were their money is going. You, the merchant, pay interchange and then choose exactly how much you feel the processor should earn. Take into consideration that the processors are a business just like you and need to make a reasonable earnings per month. The cost of the technology isn’t cheap. Example: Interchange plus fixed fee of $150. This means all interchange (issuing bank & brand) is passed through to you and the processor earns only $150. Look how easy and simple that is. Now you know every month how much the processor is making. The number you come up with is consistent every month even if your volume goes up or down. Awesome! Make Cents?
MOTO: This stands for mail order/telephone order. Fee charged by a merchant account provider for credit card transactions where the actual card is not available to the merchant (business), such as in mailed, phoned-in, or internet order. MOTO rates are higher than rates for transactions conducted with a terminal due to the increased risk of fraud or non-payment, which is called chargeback.
Terminals:
A payment terminal, also known as a point of sale terminal, credit card terminal, EFTPOS terminal (or a PDQ terminal in the United Kingdom), is a device which interfaces with payment cards to make electronic funds transfers.
There are various types of terminals available to merchants, although most have the same basic purpose and functions. They allow a merchant to insert, swipe, or manually enter the required credit card information, to transmit this data to the merchant service provider for authorization and, finally, to transfer funds to the merchant.
Most newer models not only process credit and debit cards but can also handle gift cards, checks, and so on. The majority of card terminals transmit data over a standard telephone line or an Internet connection (either wired or wireless). Some also have the ability to cache transactional data and transmit the data to the gateway processor when a connection becomes available; immediate authorization is not available at the time the card was processed which can subsequently result in failed payments. Remote wireless terminals can transmit card data using either cellular or satellite networks.
Using a personal computer (PC) or smartphone with appropriate software and reader device, a merchant can replace the functionality of dedicated credit card terminal hardware using a terminal application running on a PC or smartphone. These terminal applications usually also support manual entry of the credit card number. The applications may work with hardware readers that can transfer smart card chip information to the application, however most of the credit card readers that are available for smartphones are only able to read the older . Some smartphones offer built-in NFC technology and can be used as card terminals for contactless payment cards without requiring additional external hardware. PCI requirements also need to be considered when using unsecured and unencrypted systems based on generic or open platforms; cardholder data security is integral to mandatory merchant PCI compliance. Several high profile breaches resulting in mass theft of cardholder data have occurred in the past where people have accessed data stored insecurely on bespoke or custom systems operated by merchants.
Merchants have largely moved to using card terminals to directly capture card information instead of manually entering in card details. This provides an efficiency benefit of decreased transaction processing times. Previously, merchants could obtain lower processing costs by processing chip cards instead of magstripe cards.
EMV:
Stands for Europay mastercard visa. This technology has been around for years. Europe has used it since
NFC:
Stands for Near Field Communication. You’ll be able to accept Apple Pay, Google wallet and any other payment system that uses NFC technology.
Difference between Online (Pin-based) and Offline (credit) debt cards:
Q: The terms “PIN-based” and “signature-based” often come up in discussions about debit card acceptance. What do these expressions mean? And how do the payment options differ?
A: The terms refer to the two distinct ways in which debit payments are processed: online and offline. Online debit transactions call for customers to endorse payments by submitting their personal identification numbers (PINs) at the point of sale, while offline transactions require shoppers to sign sales receipts.
The following information can help you understand more about PIN-based and signature-based debit transactions, and how each payment option can benefit your business.
Online Debit
PIN-based debit transactions are fast, convenient and secure. In brick-and-mortar environments, shoppers initiate online debit payments by swiping their debit cards through magnetic card readers. The customers then key their secret codes into encryption devices called PIN pads. The transactions are authorized in real time, funds in the customers’ accounts are captured immediately, and money is transferred into storeowners’ accounts in two to three business days. Merchants pay a nominal transaction fee. And because the customers authorize their purchases with PINs, the risk to merchants of chargebacks is virtually nonexistent.
To accept online debit payments, you must have a merchant account, a debit processing service, a payment terminal, a receipt printer and a PIN pad. Many payment processing companies offer both credit and debit card services, but you must be approved for them separately. You can obtain a terminal and printer with an integrated PIN pad or purchase a discrete, free-standing PIN-entry device and connect it to your payment system. Just remember that your customers must be able access the device and enter their codes in private.
Practically speaking, this type of debit transaction is currently available in the physical world only, not the Internet. A number of financial institutions have introduced technology that may advance the development of PIN-based debit processing on the Web, such as digital certificates, smartcard solutions and compact disc-based systems. But no widely-accepted operating standards have yet to be established.
Offline Debit
Unlike online debit transactions, offline debit payments do not involve PINs. Offline debit cards (or check cards) are typically issued by credit card companies through their participating banks. The cards may be used everywhere credit cards are accepted, including over the Internet.
In the physical world, customers who choose to make offline debit purchases must hand over their check cards. Merchants swipe the cards through their payment terminals and complete the debit sales the same way they process credit card transactions. The customers then sign sales drafts that authorize the merchants to charge their accounts.
On the Web, customers enter check card information into browser-based forms, just as they would for credit card purchases. The data is encrypted, captured by transaction processors and sent to the credit card processing networks for authorization. Transactions normally settle in two to three business days.
Because check card transactions are processed through the same networks as credit cards, they often incur the same discount rates and transaction fees. If your business is already equipped to process credit card transactions (for instance, you have a merchant account, a credit card processing service and either a terminal and printer or payment-processing software), you should also be able to process offline debit payments.
Making the Choice
Both forms of debit acceptance let merchants offer payment flexibility to their customers, which in turn can capture impulse buying, generate higher-ticket purchases and improve customer loyalty. But PIN-based debit transactions offer added advantages, such as:
The option to provide cash back to customers, which increases store traffic.
A fast way to move shoppers through the checkout line.
Virtual elimination of chargebacks and fraud.
Higher transaction approval rates.
Potential for additional revenues from surcharges.
The benefits are clear. With minimal investment, brick-and-mortar merchants can use PIN-based debit transactions to help increase their sales and profits.
But what does the distinction between signature-based and PIN-based debit mean to your business? If you’re an Internet merchant, check card acceptance can give you access to buyers who may not qualify for credit cards, such as teenagers. Plus, you receive funds from approved transactions quickly and securely. Perhaps most important, you can accept signature-based debit payments with relative ease because they’re processed much like credit card sales.
If you own a business in the physical world, you enjoy the flexibility to process signature-based debit payments as well as PIN-based transactions, which provide increased security and opportunities to generate additional revenues.
Contact a payment service provider with experience in debit processing to learn about the payment options that best suit your business–and discover how debit card acceptance can help improve your company’s bottom line.
Written by Entrepreneur magazine
In addition, the Durbin Amendment was passed in 2010. It may cost you less to have your customers run their debt cards as offline (credit/signature). Usually the rule of thumb is to look at your average ticket. If it’s over $250 you pay significantly less running the card as offline (credit/signature).
If you would like help figuring this out. Please contact us. It would be our pleasure to help.
2. The term online vs. offline debit denotes the comparison between two distinct methods of making payment through a debit card. The former is a PIN based transaction and the later is a signature based transaction process.
Features of Online Debit Transaction
The online debit transaction is one of the popular transaction methods. This is preferred by most of the clients because the process is very fast as well as very safe in comparison to other methods of transaction. The debit cardholders use their card to pay for different kind of purchases.
For the purpose to such transactions, the magnetic card readers are used. The customer swipes their cards through the reader and the Personal Identification Number or PIN is entered in the machine.
By doing this, the exact price of the purchased commodity is transferred into the shop-owners account from the cardholder’s account. This process is safe and convenient for the shop-owners too because the shop-owners are not exposed to any kind of risk.
There are a number of requirements for the online debit transaction.
The customer should have access to the following facilities:
Merchant Account
Debit Processing Service
Payment Terminal
PIN Pad
Features of Offline Debit Transaction
These transactions take nearly three days for clearance. In this type of transaction, the cardholders are not required to provide their Personal Identification Number. There are a number of credit card companies that issue offline debit cards. These cards are accepted in all the shops where transaction through credit cards is allowed. Transaction on Internet is also allowed for these offline credit cards.
For the purpose of transaction, the cardholders give their offline debit card to the shop-owners. The card is then swiped trough the payment terminal and the transaction are almost done. After this the sales draft is signed by the cardholder and the respective shop-owner receives the transaction amount in a maximum period of three days. These transactions are subjected to transaction fees and a number of discounts that are also enjoyed by the debit cardholders.
Both these forms of debit transaction are preferred by the customers but if online vs. offline debit transactions are analyzed, the online transaction is preferred as it is more fast and convenient.
Written by: World Finance
In addition, today both online and offline transactions are included in the same deposit into your bank account when you settle your terminal for the day. Meaning you are paid at the same time from your credit card processor. Although, if the card is run as an offline debit then the process, on the side of the processor, does take up to 72 hours. Therefore, it is considered a loan just like any other credit card that is used at your business. Make CENTS?
PCI Compliance:
What is PCI?
A: The Payment Card Industry Data Security Standard (PCI DSS) is a set of requirements designed to ensure that ALL companies that process, store or transmit credit card information maintain a secure environment. Essentially any merchant that has a Merchant ID (MID).
The Payment Card Industry Security Standards Council (PCI SSC) was launched on September 7, 2006 to manage the ongoing evolution of the Payment Card Industry (PCI) security standards with focus on improving payment account security throughout the transaction process. The PCI DSS is administered and managed by the PCI SSC (www.pcisecuritystandards.org), an independent body that was created by the major payment card brands (Visa, MasterCard, American Express, Discover and JCB.).
It is important to note, the payment brands and acquirers are responsible for enforcing compliance, not the PCI council.
Q: To whom does PCI apply?
A: PCI applies to ANY organization or merchant, regardless of size or number of transactions, that accepts, transmits or stores any cardholder data. Said another way, if any customer of that organization ever pays the merchant directly using a credit card or debit card, then the PCI DSS requirements apply.
Q: How do I report an organization for violating PCI?
A: Businesses that are found to be out of compliance with PCI may be subject to fines by the entity they use to process their credit card transactions. Businesses that have a data breach where credit card data is actually stolen will be subject to much larger fines and fees from the banks, card brands, etc., and are required to report the breach, which quickly makes the news and causes further reputational damage.
We recommend you first reach out to the organization that you feel is out of compliance, so that they will hopefully resolve the issue themselves. You can even share this website with them, should they be completely unaware of the Payment Card Industry Data Security Standard (PCI DSS) and its applicability to their business.
If you fail to get a resolution and you know which credit card processor the organization uses, then you can report the violation directly to them. You can also go directly to the credit card brands (Visa, MasterCard, Amex, Etc.) to report the problematic business; each brand has a spot on their website for lodging security/compliance-related complaints.
If you believe your payment card data may have been compromised, contact your issuing bank and request a new card.
Q: Where can I find the PCI Data Security Standards (PCI DSS)?
A: The Standard can be found on the PCI SSC’s Website:
Q: What are the PCI compliance ‘levels’ and how are they determined?
A: All merchants will fall into one of the four merchant levels based on Visa transaction volume over a 12-month period. Transaction volume is based on the aggregate number of Visa transactions (inclusive of credit, debit and prepaid) from a merchant Doing Business As (‘DBA’). In cases where a merchant corporation has more than one DBA, Visa acquirers must consider the aggregate volume of transactions stored, processed or transmitted by the corporate entity to determine the validation level. If data is not aggregated, such that the corporate entity does not store, process or transmit cardholder data on behalf of multiple DBAs, acquirers will continue to consider the DBA’s individual transaction volume to determine the validation level.
Merchant levels as defined by Visa:
* Any merchant that has suffered a hack that resulted in an account data compromise may be escalated to a higher validation level.
Source: http://usa.visa.com/merchants/risk_management/cisp_merchants.html
Q: What does a small-to-medium sized business (Level 4 merchant) have to do in order to satisfy the PCI DSS v3.0 requirements?
A: To satisfy the requirements of PCI, a merchant must complete the following steps:
Determine which Self Assessment Questionnaire (SAQ) your business should use to validate compliance. See the chart at www.pcicomplianceguide.org
Complete the Self-Assessment Questionnaire according to the instructions it contains.
Complete and obtain evidence of a passing vulnerability scan with a PCI SSC Approved Scanning Vendor (ASV). Note scanning does not apply to all merchants. It is required for SAQ A-EP, SAQ B-IP, SAQ C, SAQ D-Merchant and SAQ D-Service Provider.
Complete the relevant Attestation of Compliance in its entirety (located in the SAQ tool).
Submit the SAQ, evidence of a passing scan (if applicable), and the Attestation of Compliance, along with any other requested documentation, to your acquirer.
Q: If I only accept credit cards over the phone, does PCI still apply to me?
A: Yes. All business that store, process or transmit payment cardholder data must be PCI Compliant.
Q: Do organizations using third-party processors have to be PCI compliant?
A: Yes. Merely using a third-party company does not exclude a company from PCI compliance. It may cut down on their risk exposure and consequently reduce the effort to validate compliance. However, it does not mean they can ignore PCI.
Q: My business has multiple locations, is each location required to validate PCI Compliance?
A: If your business locations process under the same Tax ID, then typically you are only required to validate once annually for all locations. And, submit quarterly passing network scans by an PCI SSC Approved Scanning Vendor (ASV), if applicable.
Q: Are debit card transactions in scope for PCI?
A: In-scope cards include any debit, credit, and pre-paid cards branded with one of the five card association/brand logos that participate in the PCI SCC– American Express, Discover, JCB, MasterCard, and Visa International.
Q: Am I PCI compliant if I have an SSL certificate?
A: No. SSL certificates do not secure a Web server from malicious attacks or intrusions. High assurance SSL certificates provide the first tier of customer security and reassurance such as the below, but there are other steps to achieve PCI Compliance. See Question “What does a small-to-medium sized business (Level 4 merchant) have to do in order to satisfy the PCI requirements?”
A secure connection between the customer’s browser and the web server
Validation that the Website operators are a legitimate, legally accountable organization
Q: What are the penalties for noncompliance?
A: The payment brands may, at their discretion, fine an acquiring bank $5,000 to $100,000 per month for PCI compliance violations. The banks will most likely pass this fine on downstream till it eventually hits the merchant. Furthermore, the bank will also most likely either terminate your relationship or increase transaction fees. Penalties are not openly discussed nor widely publicized, but they can be catastrophic to a small business.
It is important to be familiar with your merchant account agreement, which should outline your exposure.
Q: What is defined as ‘cardholder data’?
A: The PCI Security Standards Council (SSC) defines ‘cardholders data’ as the full Primary Account Number (PAN) or the full PAN along with any of the following elements:
Cardholder name
Expiration date
Service code
Sensitive Authentication Data, which must also be protected, includes full magnetic stripe data, EMV, CAV2, CVC2, CVV2, CID, PINs, PIN blocks and more.
Q: What is the definition of ‘merchant’?
A: For the purposes of the PCI DSS, a merchant is defined as any entity that accepts payment cards bearing the logos of any of the five members of PCI SSC (American Express, Discover, JCB, MasterCard or Visa) as payment for goods and/or services. Note that a merchant that accepts payment cards as payment for goods and/or services can also be a service provider, if the services sold result in storing, processing, or transmitting cardholder data on behalf of other merchants or service providers. For example, an ISP is a merchant that accepts payment cards for monthly billing, but also is a service provider if it hosts merchants as customers
Source: PCI SSC
Q: What constitutes a Service Provider?
A: Any company that stores, processes, or transmits cardholder data on behalf of another entity is defined to be a Service Provider by the Payment Card Industry (PCI) guidelines.
Q: What constitutes a payment application?
A: What constitutes a payment application as it relates to PCI Compliance? The term payment application has a very broad meaning in PCI. A payment application is anything that stores, processes, or transmits card data electronically. This means that anything from a Point of Sale System (e.g., Verifone swipe terminals, ALOHA terminals, etc.) in a restaurant to a Website e-commerce shopping cart (e.g., CreLoaded, osCommerce, etc) are all classified as payment applications. Therefore any piece of software that has been designed to touch credit card data is considered a payment application.
Q: What is a payment gateway?
A: Payment Gateways connect a merchant to the bank or processor that is acting as the front-end connection to the Card Brands. They are called gateways because they take many inputs from a variety of different applications and route those inputs to the appropriate bank or processor. Gateways communicate with the bank or processor using dial-up connections, Web-based connections or privately held leased lines.
Q: How is IP-based POS environment defined?
A: The point of sale (POS) environment refers to a transaction that takes place at a merchant location (i.e. retail store, restaurant, hotel, gas station, convenience store, etc.). An Internet protocol (IP) -based POS is when transactions are stored, processed, or transmitted on IP-based systems or systems communicating via TCP/IP.
Q: What is PA-DSS?
A: PA-DSS refers to Payment Application Data Security Standard maintained by the PCI Security Standards Counsel (SSC) to address the critical issue of payment application security. The requirements within the PA-DSS are designed to ensure that vendors provide products which support merchants’ efforts to maintain PCI DSS compliance and eliminate the storage of sensitive cardholder data.
The PCI SSC administers the program to validate payment applications’ compliance against the PA-DSS, and publishes and maintains a list of PA-DSS validated applications. See https://www.pcisecuritystandards.org/security_standards/pa_dss.shtml for more information.
Q: Can the full credit card number be printed on the consumer’s copy of the receipt?
A: PCI DSS requirement 3.3 states “Mask PAN when displayed (the first six and last four digits are the maximum number of digits to be displayed).” While the requirement does not prohibit printing of the full card number or expiry date on receipts (either the merchant copy or the consumer copy), please note that PCI DSS does not override any other laws that legislate what can be printed on receipts (such as the U.S. Fair and Accurate Credit Transactions Act (FACTA) or any other applicable laws). See the italicized note under PCI DSS requirement 3.3 “Note: This requirement does not apply to employees and other parties with a specific need to see the full PAN, nor does the requirement supersede stricter requirements in place for displays of cardholder data (for example, for point of sale (POS) receipts).” Any paper receipts stored by merchants must adhere to the PCI DSS, especially requirement 9 regarding physical security.
Source: PCI SSC
Q: Do I need vulnerability scanning to validate compliance?
A: If you qualify for certain Self-Assessment Questionnaires (SAQs) or you electronically store cardholder data post authorization, then a quarterly scan by a PCI SSC Approved Scanning Vendor (ASV) is required to maintain compliance. If you qualify for any of the following SAQs under version 3.0 of the PCI DSS, then you are required to have a passing ASV scan:
SAQ A-EP
SAQ B-IP
SAQ C
SAQ D-Merchant
SAQ D-Service Provider
Q: What is a vulnerability scan?
A: A vulnerability scan involves an automated tool that checks a merchant or service provider’s systems for vulnerabilities. The tool will conduct a non-intrusive scan to remotely review networks and Web applications based on the external-facing Internet protocol (IP) addresses provided by the merchant or service provider. The scan identifies vulnerabilities in operating systems, services and devices that could be used by hackers to target the company’s private network. As provided by an Approved Scanning Vendors (ASV’s) such as ControlScan, the scan does not require the merchant or service provider to install any software on their systems, and no denial-of-service attacks will be performed.
Q: How often do I have to have a vulnerability scan?
A: Every 90 days/once per quarter, those who fit the above criteria are required to submit a passing scan. Merchants and service providers should submit compliance documentation (successful scan reports) according to the timetable determined by their acquirer. Scans must be conducted by a PCI SSC Approved Scanning Vendor (ASV) such as ControlScan.
Q: What if my business refuses to cooperate?
A: PCI is not, in itself, a law. The standard was created by the major card brands Visa, MasterCard, Discover, AMEX and JCB. At their acquirers’/service providers’ discretion, merchants that do not comply with PCI DSS may be subject to fines, card replacement costs, costly forensic audits, brand damage, etc., should a breach event occur.
For a little upfront effort and cost to comply with PCI, you greatly help reduce your risk from facing these extremely unpleasant and costly consequences.
Q: If I’m running a business from my home, am I a serious target for hackers?
A: Yes, home users are arguably the most vulnerable simply because they are usually not well protected. Adopting a ‘path of least resistance’ model, intruders will often zero-in on home users – often exploiting their ‘always on’ broadband connections and typical home use programs such as chat, Internet games and P2P files sharing applications. ControlScan’s scanning service allows home users and network administrators alike to identify and fix any security vulnerabilities on their desktop or laptop computers.
Q: What should I do if I’m compromised?
A: While many payment card data breaches are easily preventable, they can and do still happen to businesses of all sizes.
If your small- or mid-sized business has discovered it’s been breached, there are many good resources to help you with next steps. We recommend the following:
ETA’s Risk, Fraud & Security Committee and Arnall Golden Gregory LLP, Data Breach Response: A Nine-Step Guide for Smaller Merchants: http://www.electran.org/wp-content/uploads/ETA_DataBreach_contact_2.pdf
Visa’s What to Do If Compromised, Visa Inc. Fraud Investigation Procedures: http://usa.visa.com/download/merchants/cisp-what-to-do-if-compromised.pdf
Q: Do states have laws that requiring data breach notifications to the affected parties?
A: Absolutely. California is the catalyst for reporting data breaches to affected parties. The state implemented breach notification law in 2003 and there are now over 38 states that have similar laws in place. See www.privacyrights.org for more detail on state laws.
POS System:
Is it time to start using an iPad POS system?
There’s no doubt about it, old cash registers are being replaced with newer iPad based solutions. For those of you that would rather not get left in the dust, this article will walk you through the pros and cons of the iPad point-of-sale system.
iPad POS Pros:
The only thing constant is change. Usually technology changes are the result of progress. Here are a few reasons to believe that’s the case when it comes to iPad POS systems.
Portable
Cash registers were anchored to the checkout counter. iPads are wireless and portable, so employees can check a customer out at their table (in restaurants), in the maternity section (at the department store), or at the trade show booth (in an exhibit hall). Imagine the one-on-one customer attention your employees can provide when they are able to search inventory and process credit cards without ever leaving the customers’ side.
User Friendly
Because Apple products continue to saturate the market and made touchscreens an everyday experience, there is a very small learning curve for using an iPad POS system. It functions like any other app on the iPad, so employee training time on the device is minimal. Spend that extra time talking about customer service instead! It seems to be a forgotten skill.
A Business Tool
Obviously an iPad offers more functions than a cash register, even more functions than flappy or angry birds might lead you to believe. Depending on the iPad POS system you use, you can do everything from maintaining customer records to syncing your brick and mortar store with your online store, from graphing monthly sales to maintaining inventory for multiple store locations. It’s more than a cash register; it’s a business tool.
Green
Depending on where you live, the pull for your business to “go green” is strong. Your retail store or restaurant can take a giant step towards becoming paperless by using an iPad POS. Manage inventory, email receipts, and punch time clocks using the system instead of paper and pens.
Cloud-based
Spoiler alert: this particular pro may cause sleeplessness for workaholics. Because iPad POS systems use the cloud to backup data, you can access reports, time cards, inventory lists, or the day’s receipts from anywhere with an Internet connection. The other bonus of a cloud-based system is that you don’t have to worry about the upkeep of an on-site hard drive. It’s one less thing to call in an IT expert about.
Sleek Design
Let’s be honest. Appearance and first impressions matter. It’s one thing to checkout at an antique store that uses an old school cash register. It’s something totally different to walk into a trendy fashion store and see oversized computer monitors masquerading as cash registers. iPad POS provides a sleek, modern design that compliments a sleek, modern business model.
iPad POS Cons
Nothing’s perfect. In the interest of full disclosure, here are some of the potential cons of using an iPad POS.
Dependent On The Internet
If the Internet is down, so is your POS system. Although that’s true for most anything in today’s world. Try to process a credit card without the Internet. Some apps offer a work-around, but it’s only a temporary fix.
Potential Security Breaches
Ask Target and Home Depot about the dangers of security breaches. Think that doesn’t happen in the cloud? Ask Jennifer Lawrence. Because iPad POS systems rely on the Internet, they are vulnerable to hackers who like to steal credit card numbers and other personal information. “But the data’s encrypted,” you may argue. In some cases, yes, but hackers use their genius for evil rather than good, and encryption isn’t foolproof.
Monthly Fees
It always comes back to money, doesn’t it? iPad POS systems are no exception. That being said, though, in many cases the monthly fees are comparable to what you already pay merchant services and credit card companies anyway. Do a cost comparison just to be sure.
Now you can make an informed decision. Your next step is to decide which iPad POS app you’ll use. Never fear. We have plenty of information on the site to help you.
Written by: Tiffany Marshall
POS 101: Thoughts on Your Budget.
It should be no surprise to you by now, what with my fanboy-like fawning over Cloud computing, that this shopper’s guide is going to focus pretty much on POS systems in that category. Why is that? Reread the last post, with special emphasis on the parts about how much local installs cost in money and time, and then say each of the following, out loud (not because it helps to drive the point home, but one day I hope to be sitting on a subway or something and see someone lost in reading, only to announce to no one in particular):
I own a small business. I have very little money or time.
Together, these statements should be your mantra. All decisions you make towards implementing a modern POS ought to be filtered through the knowledge of these two facts.
I own a small business. I have very little money or time. Ohm.
I’ve already saved you time by making the first decision–cloud or local?–for you. Next, I’ll try and save you money.
If you’ve done any research before ending up here, you might have found a few websites that advise you to spend roughly 1 – 2% of your annual revenue on your POS. The people who arrived at this number are not to be trusted. Not because they’re sneaky–it’s just that I suspect they might not be so bright. The recommendation to budget that specific percentage of revenue comes from the fact that it’s the average amount that businesses have spent. This is like learning that, in the past, 1 – 2% of the population contracted Scurvy, and then recommending that the same percentage of population be infected with it in the future. Granted, the percentage doesn’t seem like a lot–and it isn’t. But that’s just the cost for hardware and software; there’s also the cost of credit card processing fees, usually 2 – 3%. This is all money you need to spend just to be able to receive more money from your customers. There are already enough costs to running your business; you don’t need to add “Generate Revenue” to that list.
I say: aim lower. It’s helpful to see the spending average as a way of knowing when you’re overdoing it. But there’s no need to make it the goal.
BUT WAIT, the vendors and consultants will tell you. You can’t just consider your POS in terms of how much you spend to acquire or use it. You need to look at the ROI–the Return on Investment. The system will save you money in often unseen ways, they’ll tell you, or it has tools to help you generate even more revenue. This is malarkey of the highest order. Well, maybe not the highest, but it’s definitely up there on the old bovine scat meter. The system will save you money if it’s the right one, and perhaps—with a POS system that has integrated Customer Loyalty/Retention features—your revenue will increase. It’s just that there’s no reliable way to project what that might be. It’s too nebulous an argument to make the basis of a purchasing decision.
Back before I worked as a pro bono Philatelegal Advisor, I had an actual real job that I didn’t make up: Sales System Engineer for a hardware and software reseller (don’t spread that around, by the way–it’s a dirty secret). In my role as SSE, I assisted Sales folks as they tried to get customers to buy the latest in Information Technology. When the price was particularly exorbitant, we busted out the old ROI calculator, to show people how much their spending of hundreds of thousands of dollars meant they’d be able to save hundreds of thousands of dollars. Maybe they lowered energy costs because the new hardware consumed less electricity, or maybe they reduced their backup media costs because they’d be able to store triple the amount of data on the same available space. Everything we told them would be a true fact–up until the point where numbers were involved. Then, we’d be using averages or estimates based on all sorts of factors, not the least of which was choosing the data that presented the strongest case. If we were comparing with a competitor we’d use the highest estimates of their prices we could source. For the entire calculation, we could just as easily have used another set of legally defensible numbers that would have showed a wholly different story. Really, the only true things one could say about ROI would be:
1. There’s no way to accurately calculate ROI in advance.
2. If you’re talking about ROI, it’s because you’re not convinced that the product or service is worth the asking price.
That second one is important, because if you’re not sure something is worth the price, it’s because it either doesn’t do what you want it to, or that it does much more than you need (and you’re being asked to spend more than you planned). In either case, the ROI becomes a justification for something that’s Not What You’re Looking For. Think of your POS as an appliance: a machine that will make some part of your life easier by taking on a specific task. Have you ever calculated ROI while shopping for a dishwasher? Or did just you try and get the best price for something that suited your needs?
Finding your POS doesn’t need to be any more complicated than buying a dishwasher. Inexpensive hardware and feature rich low-cost software are ubiquitous. Make a checklist of what you need, of what would be nice to have, and of what’s an unnecessary bell or useless whistle. Find the products that match your criteria, and then compare the costs. The one that does everything you want and is closest to $0 is the one you want. Simple, right? By doing your homework, you’ll probably find there’s quite a few that fit the bill for less than the 1% recommendation for your budget.
Written By: Amad Ebrahimi
–Choosing the right POS System for your business?
Researching POS systems can be overwhelming, but making the right choice now can save you a ton of time and money later down the road. Here are some points to consider when
choosing the right POS system:
1. Ease-of-Use- Your POS system should be easy to set up and simple to use. You’ll want a POS system with an intuitive interface to process sales quickly and keep lines moving. Training cashiers and managers should take minutes, not hours.
Managing inventory should be straightforward and painless. Remember that any POS system that’s confusing to learn or complicated to use will decrease employee satisfaction and waste time that could be better spent elsewhere.
2. Customer Care- Be sure to ask about customer care when considering a POS system. Though uncommon, from time to time your POS system may experience issues. Without the ability to call someone to help you fix the problem quickly, you could lose sales. Likewise, any issues related to financial transactions may require immediate answers.
Or what if you just want more help understanding a specific feature or setting up a barcode scanner? You shouldn’t have to go it alone! As the most important tool in your store, any questions about your POS system should be answered in a timely manner without additional charges for support or troubleshooting.
3. Simple and Affordable Pricing- The cost of a POS system has historically been very high, preventing smaller businesses from replacing their cash registers. For years, POS systems typically required an initial investment of several thousand dollars, with many solutions costing well over $10,000. Add in the additional costs of required hardware upgrades, service calls, and warranty upsells and you can see why the cost was often prohibitive.
Today’s SaaS (software as a service) subscription model makes getting a POS system affordable, but the true costs are sometimes hidden in the details. Your POS system should have simple pay-as-you-go monthly pricing without long term agreements or cancellation fees. Be aware that some POS vendors may mask subscription costs by forcing you to use a certain credit card processor. Transparent no-nonsense pricing is the hallmark of a reputable company.
4. Future Proof- As technology is evolving at a breakneck pace, make sure the POS system you choose today won’t become obsolete tomorrow. Two trends fast becoming reality are mobile payments and cloud-based software delivery and data storage. Mobile payments are predicted to overtake credit card payments in less than a decade. Mobile loyalty programs are becoming more common in the retail and hospitality environments.
POS systems that expect to be relevant in the years ahead must be built on a flexible platform that supports these mobile integrations. Cloud-based POS systems eliminate the need for costly upgrades and any security concerns associated with traditional client-server systems. Frequent software updates are necessary so your system always has the latest features and security requirements. These updates should be free for the lifetime of your account.
5. Robust Reporting- While all POS systems give you sales data to some degree, the capabilities and clarity of a system’s reporting platform are not all created equally. Your POS system should be able to generate detailed sales reports that not only identify your best selling items and returns, but record margins and measure the effectiveness of your pricing.
Insist on a POS system that can track sales by department, item, and hour so you can adjust staffing accordingly and allocate floor space more efficiently. And while detailed exportable reports will be useful for accounting purposes, as an owner or manager you may prefer to use on-screen reports and charts for easy-to-grasp snapshot views.
6. Data Accessibility- Recording sales and inventory data is a given, but having that information accessible where and when you want it is a real game changer. Traditional POS systems that require reports to be run from an in-store terminal aren’t useful when you’re at home, traveling, or simply anywhere outside of your store.
The advent of cloud-based POS systems means your back office operations can now be accessible from any web browser, even if you’re halfway around the world on vacation. Additionally, the most convenient and tech-savvy POS systems will include smartphone apps that allow business owners to see real-time sales data in the palm of their hand.
7. Data Security- Data safety and security should be among the first factors you think about in the choice of your POS system. So when considering your options, you need to make sure to investigate the security of your data in every system, particularly around transactions. And with a number of recent high-profile hacking incidents, this issue is more relevant than ever.
In order to stay safe, your POS system should never store customer credit card numbers and all transactions should be fully encrypted. Also, while traditional POS systems running on PC-based computers are vulnerable to viruses and malware, a cloud-based iPad system is virtually impenetrable, allowing you to rest assured knowing your customers’ data won’t be compromised.
8. Quality Hardware- The hardware that accompanies your POS system should be functional, durable, and stylish. Some POS vendors pair their software with second-rate hardware and peripherals to piece together the cheapest package. As a small business owner, the last thing you want to do is waste time struggling with a constantly jammed printer or flimsy stand that does not withstand your daily grind at the counter.
Quality hardware will pay for itself in short order and save you time and patience in the long run. Finally, be sure not to ignore the importance of having both a supremely ergonomical and elegantly designed stand. As one of the most visible elements in your business, the physical display should match the decor of your shop and streamline transactions for cashiers and customers alike.
Written by Jason Richelson.
If you would like help researching more about POS systems and Credit Card Processors feel free to contact us, design your own program and/or call 803-220-1014.
