Archive for November, 2011

New IRS Reporting Laws for Merchant Services | IRS Code Section 6050W

Monday, November 28th, 2011

For the past few years, the IRS has been working on a new law requiring all merchants to provide reports on their merchant account processing volumes. These new requirements under IRS Code Section 6050W are likely a simple attempt to catch a few businesses in the practice of grossly underpaying their taxes, however, the new requirements will be far from simple for merchants and processors.

Under the new rules, the merchant account provider or processor will be required to submit a 1099-K for each merchant.  The difficulty in this lies in the exact matching of the merchant’s business information on file with the IRS and information listed with the processor.  Types of discrepancies may include missing tax id numbers, social security numbers, or differing business names. It will be up to the merchant to make sure all information is matching.

It’s already obvious that there will be issues with merchants and the new law. In order to enforce compliance, the IRS is mandating that the credit card processor withhold 28% of all credit card sales of any merchant with discrepancies until all information is updated and accurate. When the merchant fixes all discrepancies, the 28% will be returned, however, not until year’s end. This backup withholding could cause financial stress for the business.

One of the biggest concerns is the fact banks and processors will be reporting gross receipts. The merchant’s transactions may be less than this amount when they include charge backs, refunds or debit card transactions where customers receive cash back. It will be up to the merchant to keep track of these items separately to be reconciled accurately with the IRS in order to avoid fees and penalties.

There are two exceptions to the requirements in which the processor will not have to file a 1099-K:

1.    The merchant’s total annual transactions do not exceed $20,000
2.    The merchant’s total number of transactions does not exceed 200.

Although credit card payments will be reported at yearend 2011, as a gesture of good faith, the IRS is allowing merchants additional time to fix discrepancies. The IRS will not begin assessing penalties for non-compliance until January 2013.

Call your current processor when you have a few moments and make sure your information is up to date.

Early History of Transaction Processing Services

Tuesday, November 15th, 2011

The credit card has become a simple and convenient way of buying products and services worldwide, yet most of us rarely consider the “behind the scenes” aspects of transaction processing services and how it has evolved over time.

As far back as the early 1900’s, department stores began issuing credit to certain customers in order to extend an additional level of customer service and gain loyalty from these valued customers.

The debut of the “Charg-It” card in 1946 was the first bank-sponsored card, issued by Biggins Bank in Brooklyn, New York. The customer would use the card for purchases, the merchant would bill the bank, and the bank would intern bill the customer. This type of transaction processing service, known as a “closed loop system”, was convenient, yet had drawbacks such as only being available to Biggins Bank account holders and only able to be used locally.

After an embarrassing situation in which he forget to bring his wallet to a business dinner he was hosting, Frank McNamera decided there should be an alternative to paying by cash and a better solution to local bank issued credit. In 1949, McNamera created the 1st “members club” card and called it the Diners Club Card. Though technically a credit card, the balance had to be paid in full every month. The Diners Club grew in popularity throughout the 50’s, and in the early 60’s the Diners Club Card became the 1st actual plastic card on the market.

In 1966, Bank of America first introduced the BankAmericard, later to become Visa. About the same time, the Interbank Association (ICA) was created through a cooperative of other credit issuing banks. The ICA was the predecessor to MasterCard Worldwide. These two services became the first “open system” credit card processing services, requiring interbank cooperation and fund transfers.

Throughout the 70’s, Visa and MasterCard standardized the rules and procedures for credit card transaction processing, and were successful in handling exchanges of funds while also keeping fraud to a minimum. Together, they simplified the system, reduced the cost for financial institutions to issue their own cards, and greatly expanded the card payment industry internationally. Both remained the dominant force until the Sears Corporation launched the Discover Card Services brand in 1986 in to compete in the credit services marketplace.

Today, transaction processing services are more sophisticated than ever. Advances in technology ensure protection of both merchants and consumers, yet the simple plastic card with the magnetic strip has changed little in half a century. Although the plastic card is not likely to go away any time soon, there is a lot of time and money being spent on developing the next generation of transaction processing services via the use of a smart phone chip or application. Sooner or later this type of transaction processing will come to fruition. After all, it all began by simply being a convenience to the customer.

Credit Card Processing for Non Controlled Pharmacies | Drug Stores

Friday, November 4th, 2011

Traditionally businesses considered to be high risk by banks have a difficult time securing a merchant account. Credit card processing for non-controlled pharmacies fit this bill perfectly. Although non-controlled pharmacies are one of the fastest growing online businesses, getting up and running with credit card processing is not so fast. Newly established non-controlled pharmacies are finding out quickly that the road can be rocky.

Regardless of the fact that these businesses are legal and the medication for sale has been deemed safe by the US Food and Drug Administration, non-controlled pharmacies are listed in a special category and face many restrictions and specific terms. In addition, banks are wary of charge backs, scam sites, and safety in protecting personal and financial information.

Click here to apply now

The Transaction Group (TTG) has been providing merchant account solutions for high risk businesses since 2004. We have banking partners throughout the world and are able to provide the best solution and best rates for your business. Credit card processing for non-controlled pharmacies is one of our specialties. We can help your non-controlled pharmacy reduce charge back liability and fraud through a variety of fraud protection and charge back prevention methods.

TTG can provide virtually unlimited monthly volumes. We provide our high volume merchants with a proprietary load balancing gateway that allows us to load multiple MID’s, or merchant accounts into one gateway. Your transactions will be automatically spread out across multiple merchant accounts, which allows for higher volume and reduced liability for funds being held in risk and reserve.

We also provide a “soft call” verification program for our online pharmacies that can virtually eliminate fraud issues. Our processing department will contact every customer and verify the shipping and billing addresses. The simple, non-intrusive verification process ensures that your online pharmacy will not be the victim of fraud.

If you are just starting your non-controlled pharmacy, facing challenges obtaining a merchant account, or simply looking for better rates, TTG can help.

Questions? Need additional information?

Call us at 888-383-8056 OR fill out our online form and we will contact you immediately.

Apply online by clicking here.

MMJ Dispensary Merchant Services | Medical Marijuana Processing

Wednesday, November 2nd, 2011

Banks nationwide are struggling with the dilemma of offering vendors of medical marijuana credit card processing.  Not only do such businesses find it difficult to get needed credit card services, they also face challenges opening simple bank accounts.  Due to the conflict between state laws, which have legalized the sale of medical marijuana, and federal laws, which prohibit it, both banks and merchants are left in limbo.

Illegal or Not?

The question of legality is one that is currently being addressed in Colorado and California.  Rep. Jared Polis, D-CO and fourteen other members of Congress have appealed to Timothy Geithner, Treasury Secretary, to provide reassurance for financial institutions.  Additionally, Ron Paul, R-TX, and Barney Frank, D-MA, have cosponsored a bill to repeal laws making the use of medical marijuana illegal.

No statement has been issued by the office of the Treasury in response to the letter and the bill has not yet made it to the floor for debate.  As such, federal law remains in place, leaving both banks and businesses waiting for a resolution.

Looking Beyond the Banks

Of course, no niche is left untapped for long.  Even if banks aren’t willing to step out on a legal limb, there are other solutions available for businesses that are considered too high risk.

At The Transaction Group, we have a solution in place for medical marijuana credit card processing, allowing dispensaries to accept card payments.  The many dispensaries that we have already set up with this solution love it for the low rates, no credit check, and easy approval and set up.

Customers enjoy the convenience of paying with a card. Keep this option available to them at your dispensary.

Call us to find out more. 888-383-8056

With our online application getting set up is fast and easy.  Apply today here!