How to read your statement basics IRS Reporting Early Termination Fees Contract Renewals Equipment Leases & Free Equipment PCI Compliance General

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3 How to read your statement basics IRS Reporting Early Termination Fees Contract Renewals Equipment Leases & Free Equipment PCI Compliance General info Q&A 3

4 Calculate your Effective Rate Total Processing Cost Total Processing Volume = Effective Rate ($ $5, = 4%) (minus AmEx) Watch for daily settlement Next, what program are you in Retail Interchange Some combination of both 4

5 Qualified Generally debit and ordinary consumer cards Mid-Qualified Rewards Non-Qualified Keyed Corporate Processor has freedom to place card types in any category they like 5

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7 Every time a card is swiped or keyed, a percentage and transaction fee is paid to the bank that issued that card. This is called Interchange Another percentage (currently.11%) is paid to Visa /MasterCard /Discover. This is called Dues and Assessments 7

8 NABU % MasterCard (Network Access and Brand Usage Fee) APF % Visa (Acquirer Processing Fee) These costs combined (Interchange + NABU/APF + Dues and Assessments) equal the actual cost of the card There are other transaction fees in addition to these, but these are actual costs 8

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10 If you are on a true Interchange program, the actual costs will be passed on to you plus some sort of markup (generally measured in basis points (bps). This markup is profit for the provider of the service. 10

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14 Bumping Interchange Posting your preferred rate (and then nothing else!) Remember that first statement? 1.84%? Or this little trick 1.89% = , , Do the math! 14

15 Enhanced Billback (EBB) (or a way to keep you completely confused! 15

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17 NABU APF AVS Transaction Fees Pin Based Debit Fees Batch/Batch Header Visa Cross Border Fees NPCI/Non Compliant Surcharge/Breach Security Coverage Statement Fees 17

18 Know your effective rate Know what program you re on Calculate your real rates, don t just rely on a glance at your statement Read your statement messages 18

19 IRS has implemented new reporting rules Income from processing not being reported TID and Tax Return must match IRS can (and will) withhold 28% until corrected! NY, CA additional 12% 200+ transactions or $20,000 19

20 Early Termination Fees Fixed or tiered Some apply no matter when you leave Lost Profit Clauses Not unlike monthly minimums Who do they benefit 20

21 Initial term 1-3 years Automatic roll-over unless proper notice given All original terms begin again 21

22 Free Equipment Equipment Leases Iron clad Expensive Still owe $$$ at the end What benefit do you get And please don t tell me free paper 22

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24 Independent Council Formed by American Express, Discover Financial Services, JCB, MasterCard Worldwide and Visa International Purpose Manage the evolution of Payment Card Industry (PCI) Data Security Standard (DSS) 24

25 Major companies were breached and credit card information stolen Payment card industry s response to reducing the risk of it happening again 25

26 EVERYONE who takes credit cards must prove compliance annually Mandatory NOT optional Steps you must take depends on methods you use to process 26

27 Credit card information via internet Customer credit card info on your computer Payments via or e-fax You must complete the proper SAQ (Self- Assessment Questionnaire) Also must submit to quarterly scans Performed by an ASV (Approved Scanning Vendor) Reservation software 27

28 Processing with a terminal and a phone line No credit card information stored on a computer Must complete proper SAQ, but are not subject to scans 28

29 Depends on your processing bank Site created by all major card brands SAQs and FAQs are available here 29

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33 Your processor should be contacting you You can find out your exact compliance requirements only from your payment brand or acquirer. Was there a notice on your statement Did you see a charge on your statement $129 (or more) annual fee $30 (or more) non-compliance fee Cost varies depending on vendor and processing bank 33

34 Most processing companies are charging you! If processing via the Internet, remember those quarterly scans Will have to pay for scans Costs vary depending on does your processing 34

35 Original Plan: stop you from processing What Usually Happens Will likely see a non-compliance charge on your statement Your processor may do NOTHING to help you get compliant You MUST to be compliant 35

36 Only your IP address will be reviewed during scans No personal info from you or your customers 36

37 Have you had a call saying your terminal is not compliant & needs upgrading Usually a ploy to get you into new equipment, either leased or purchased. Most (not all!) terminals are compliant Remember: Information is stored in your terminal until batch, but can t be hacked 37

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39 PCI DSS required if you take credit cards MUST be done annually (but scans quarterly) Watch your statement for notifications Don t sign a lease or purchase equipment you don t need Beware of FREE terminals 39

40 Pin Pads do you need one Batch Fees First Data Chargebacks and Security 40

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42 In effect October 1, 2011 Regulated and non-regulated 1. A Card Issuing Bank is considered nonexempt from the regulated debit interchange rates when the banks assets exceed $10 billion (together with their affiliates). 2. Card Issuing Banks with assets of less than $10 billion are exempt 42

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44 International Payment Solutions, LLC 9304 Scenic Bluff Road Savanna, IL Deanna Townsend/CEO &Owner Cheryl Heldt/National Sales Manager Phone: Fax: