Posts filed under 'Rules and Regulations'
Now You Have A Little More Time To Fall In Line.
Good news. The deadline for complying with the IRS mandate related to the Housing and Economic Recovery Act of 2008 has been extended a full year, until January 2013.
In an effort to ferret out underreported or unreported business income, the IRS devised a plan within the Housing and Economic Recovery Act of 2008 that requires payment processing networks to report a merchant’s monthly processing volume along their TIN (taxpayer identification number) and legal name. To ensure this reporting system is functional and accurate, the IRS requires that the TIN & legal name on the merchant account matches the data they have. If the IRS records and merchant account information do not match, the merchant has to complete Form 1099K and the processor must submit it to the IRS.
The penalty for not complying with this new Act is the imposition of backup withholding to the tune of 28% of the merchants gross credit card revenue. Backup withholding is similar to the payroll tax withholding all merchants with employees are familiar with. The difference here is that the IRS would order the credit card processor to hold back 28% of the merchant’s credit card processing receipts and turn it over to them.
The mandate for compliance began at the beginning of 2011. While the IRS still requires reporting on Form 1099-K by the end of 2011, they are delaying the enforcement of the backup withholding aspect of the plan until January 2013. The IRS decided to extend the deadline after numerous complaints from the processing industry citing problems with consistency in the form as well as difficulties in collecting these forms from merchants.
So, if you have completed your 1099K and returned it to your merchant services provider, good for you- you are in the clear. If you have not received notice or a form, contact your provider right away. Otherwise you may find 28% of your credit card sales zapped after 2013.
Here is a link to the original IRS publication concerning this requirement: http://www.irs.gov/pub/irs-news/reg-139255-08.pdf
October 31st, 2011
As a self proclaimed “industry guru”, there are certain things I come across in everyday life that as a consumer really irritates me.
While many consumers may unknowingly think its protocol or just good business, I suspect there are a lot more consumers that find having to fork over an ID when presenting a credit card is just plain annoying. Not to mention, in our fast paced society, a giant waste of time.
The fact is, as a consumer we are protected against all unauthorized transactions, so I have little concern about my card being stolen. What’s worse is when I challenge the clerk and refuse to provide my ID; they state “It’s for your protection”. Well… no… it’s not. I’m already protected, but thanks 
. Really, they are attempting to protect themselves from fraud–i.e. a stolen credit card.
So you say “Wait a minute there Mr. Guru—who’s side are you on here? Isn’t this blog for merchants? I want to prevent fraud. I don’t want to accept a stolen credit card and lose my money and merchandise. As a credit card processor, don’t you want your clients to stay safe?”
To which I say, I am on your side. I want your customers (which could include me) to have a great experience at your business and I want you to stay safe and follow the rules set forth by Visa and other card issuers.
As you will note on page 30 of Rules for Visa Merchants—Card Acceptance and Chargeback Management Guidelines prepared by Visa:
“In most cases, merchants may not ask for an ID as part of their regular card acceptance procedures, either when a valid card is first presented or to complete a sale.”
By “most” they mean there are certain circumstances in which you can ask for ID, which is outlined within the guide, but normal sales do not apply.
So you may be wondering how you stay safe. Well, that’s the good news. You already are. As a retailer, your obligation is to verify the card appears valid, swipe the card, ask the customer to sign the receipt, and verify the signature on the card matches the signature on the receipt. That’s it! Congratulations—you are protected.
“But wait; what if the card isn’t signed or says See ID”, you ask? Well, for that you will either need to consult a future post or read Rules for Visa Merchants—Card Acceptance and Chargeback Management Guidelines.
In all my years as a Merchant Service Provider, this is one of the best and easiest to read guides for merchants I have ever seen. It covers all the basics including, accepting cards safely, minimum charge requirements, charging for accepting cards, handling chargebacks and retrieval requests and so much more. This is a very fast read that any owner or manager of a retail store should carefully review from cover to cover.
Hopefully you will find it as informative and helpful for your business as it was intended to be. Let me know what you think!
July 19th, 2010
If you charge your customers a fee to pay by credit card, you are in violation of a heavily pursued rule of Visa and MasterCard. Find out just how costly this mistake can be, and find out legal ways to recoup your processing costs.
Continue Reading January 13th, 2009
With the amount of stores declaring bankruptcy, and store closings, people are becoming weary of purchasing gift cards. Should you avoid buying that gift card for your loved one this Holiday season?
Continue Reading December 4th, 2008
Earlier this month, the Department of Justice announced 11 people from the U.S., Estonia, Ukraine, Belarus, and China are being charged for hacking into retailers’ computers and stealing more than 41 million credit card numbers. The perpetrators supposedly drove around in their vehicles with laptops, looking for unsecured “Wi-Fi” network connections, a technique called “wardriving.” Is your business protected?
Continue Reading August 21st, 2008
If you are a merchant, vendor or service provider reading this information for the first time, and have not heard about PCI compliance it might be time-or past time-to question and contact your merchant service provider, acquirer or credit card issuer.
Continue Reading August 12th, 2008
It is the merchant’s responsibility to ensure that they are in compliance with the laws of the states in which they process. Do you know your states rules on credit card truncation?
Continue Reading June 9th, 2008
If you pay attention to a few of the key factors affecting costs and put measures in place to prevent them, you can save thousands of dollars in annual processing fees. Review these factors to better understand and in return save a few dollars!
Continue Reading May 29th, 2008
Chargeback and retrieval requests can be complicated to understand. To give you a better idea of what the reason codes really mean, and some ways to avoid receiving retrieval requests we have provided a brief description of some of the most common reason codes.
Continue Reading May 22nd, 2008
We believe it is best to prevent chargebacks in the first place. Instruct your staff to follow the procedures listed on this page to help prevent losses due to chargebacks!
Continue Reading April 24th, 2008
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