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What Is PCI Compliance And Does It Apply To Me?
Over the past year, a lot of merchants have been hearing more and more about PCI compliance but they are unsure as to what it is. The term PCI DSS stands for Payment Card Industry Data Security Standard. It is a set of requirements that every merchant accepting credit/debit cards needs to be in compliance with to help protect the data being transmitted during a transaction. Every merchant must comply with these standards whether they accept payment through a terminal at a store, through an ecommerce setup or anything in between.
All merchants are now given a PCI questionnaire when signing up for a merchant account. They must complete this questionnaire and return it to their processor within the specified time period (often 90 days) to make sure that their account is deemed to be compliant. If a merchant does not return the compliance paperwork or does not pass the compliance test, they could be subject to charges ranging from $5,000 to $100,000 per month because of the security risk that they are causing.
To find out more about PCI compliance, you can visit the following website. They have a pretty in depth faq that should be able to answer most questions.
http://www.pcicomplianceguide.org/pcifaqs.php
Visa/Mastercard Interchange Rate Changes
Visa and Mastercard have an “Interchange Board” that meets at least once a year to set new rates for different types of credit and debit transactions. In April, they set new rates for many of their transaction types. You have received a couple of statements since those changes which makes now the perfect time to study your rates. These rate changes are applied to all processors so many processors have increased rates for their merchants to make up for any transaction types that had rates increased.
How can you tell if your rates have increased?
Many processors will have a “fine print” section on the front page of each statement that serves as a notice for any rate changes that they will be applying to your merchant account. Any rates changes will often be listed in this “fine print” section on March’s statement so that you know the increase is coming for April. Most merchants don’t read that section because the information usually seems irrelevant to them and that is why most merchants don’t even realize that their rates have been increased. You most likely had your rates increased if you are in a tiered pricing structure. If you are in an interchange pricing structure, you will see all of the rates changes. That means you will actually get certain rates lowered because some categories were decreased in April.
As always, if all of this sounds a little too complicated for you, feel free to give us a call and have us do a free analysis of your statement to let you know if your rates have been increased.
How To Select The Proper Transaction
The following guide will help you understand when it is appropriate to complete certain types of transactions.
Debit vs. Credit – Debit cards always have a lower fee in terms of the percentage paid on the total volume of the transaction. Credit cards always have a lower per transaction fee which makes them the better choice for very small transaction volumes. The easy way to know which is better to accept is to figure out your break even point. On average, a good rule of thumb for a break even would be $10 as you see below:
Credit < $10 < Debit
Swipe vs Key Enter – Swiping a card instead of key entering it is always the better choice. Swiping the card will decrease transaction time, create a less risky transaction, and lower the costs associated with the transaction.
Offline Debit vs PIN Debit – The term offline debit refers to accepting a debit card without having the customer enter their PIN. PIN debit refers to the occasions in which the customer enters their 4 digit PIN code to complete the transaction. Offline debit will traditionally have a slightly lower per transaction fee while PIN debit has a lower percentage paid on the total volume. The break even point for PIN vs offline debit is not always the same but the easiest way to know which is better to accept is to remember a break even point of $15 as you see below:
Offline debit < $15 < PIN debit