Three Reasons Every Merchant Needs Chip Card Readers

by Elizabeth Sherman 14. December 2016

3 Reasons Every Merchant Needs Chip Card ReasersAt the supermarket recently, I had the opportunity to chat with the manager. I noticed that the store, part of a regional chain with a huge corporate owner, had not yet installed readers for the increasingly ubiquitous chip-cards, so I asked him why not.                          

After all, chip cards are meant to protect consumers from fraud. And there’s plenty of evidence that they’re working as intended.

The manager’s response surprised me. He told me the chain wasn’t worried about the cost of upgrading, but about the prospect of losing business. He explained that transactions take longer with chip card readers. And he worried they’d lose customers if they force people to do that.

My view is that they’re much more likely to lose customers if they don’t upgrade (more on that in a moment), but the store is far from alone. According to the business management consultants at the Strawhecker Group, only about 29 percent of American merchants were ready for chip cards — also known as EMV cards, which stands for Europay, MasterCard®, and Visa® — as of September.  

That’s disappointing. Chip cards are our best defense against card fraud. According to the trade newsletter The Nilson Report, U.S. card losses for banks and retailers reached $8.4 billion in 2015. And that number is expected to reach $12 billion by 2020.  

That’s why a consortium of card issuers, banks, and others developed the EMV standard for cards and readers. These chip-enabled cards, which customers “dip” instead of “swipe,” provide greater security from fraud. That’s because swipe cards create a record that crooks can grab and use to make purchases. “Dipped” cards, on the other hand, create a one-time code that can’t be reused. 

Europe has been using this technology for a while now, but it really got going in the United States last year. So far, banks have issued about 600 million chip cards to U.S. consumers, according to the U.S. Payments Forum. And starting Oct. 1, 2015, the liability for card fraud at most merchants without chip-card readers shifted from the card’s issuer to the retailers. And many more U.S. merchants will start accepting chip cards by October 2017, when gas stations will start facing those same liabilities. 

However, many retailers still resist purchasing the upgraded reader. That’s why I want to share with you three reasons why just about every merchant should be chip card-ready: 

1. Peace of mind for you.

A store clerk recently told me that she didn’t understand the “hassle” behind chip cards. So I put my banker hat on and explained that the chip-card machine takes the liability off the merchant (her boss) and puts it on Visa® and MasterCard® if there is fraud. It’s as simple as that.

For those merchants who say, “I never had fraud before,” well, how do you know that? MasterCard® and Visa® were taking it on the nose for you before. They’re not doing that anymore. So if you’re a merchant that hasn’t installed the new card readers, you’re doing yourself a disservice. It’s an easy, inexpensive upgrade that will protect you financially.

2. Peace of mind for your customers.

Your customers know that card fraud is happening. They’re seeing odd charges pop up on their credit card statements — and then spending hours on the phone cleaning those messes up. Chip cards reduce the likelihood of fraud significantly — and your customers are learning this.

You don’t want them to be afraid to use their credit cards in your store. So, being up to date on your POS technology will give them peace of mind as well. You’ll gain their trust.

3. You'll gain an advantage over your competitors.

Staying on top of chip card equipment now means you’ll be more comfortable with the next rounds of payments technology — including chip-and-PIN cards (which allow customers to input a number instead of signing), “tap” cards (which allow them to simply tap their card against the reader), and mobile payments. The more forms of technology you’re familiar with and ready for, the more potential customers you’ll have. And that translates into more dollars coming in.

The Smart Choice

Card fraud rates are already down thanks to EMV. According to Visa®, chip card-friendly merchants recorded a 47 percent drop in card fraud from May 2015 to May 2016. That shows why every merchant should be installing EMV technology if they haven’t already. Your customers will soon be expecting it — and may choose to patronize someone else if you don’t have it.

Most community banks, including 1st Mariner Bank, provide merchant processing services. That means they can get you access to industry-leading chip card POS equipment and solutions. To set a retailer up to take EMV cards, we gather information, fill out applications, get everything through the approval process and order and install equipment. And if our equipment doesn’t fit your budget, we can even help you find better deals.

If you’re ready to get started, or for more information, just contact our business banking services department.

5 Myths Busted About Home Equity Lines of Credit

by Kathy Passman 17. November 2016

5 Myths Busted About Home Equity Lines of CreditIt’s funny how sometimes a myth can be taken as fact if it’s repeated often enough. It can even gain “conventional wisdom” status.                         

Sometimes it doesn’t matter much. It’s pretty harmless to think a tooth will dissolve overnight in a glass of Coca-Cola, and it may do some good if it keeps you away from the sugary drinks. But believing banking myths can hurt your personal finances – and there’s nothing good about that.

For example, a number of myths swirl around home equity lines of credit (HELOCs), and many of these misrepresent what is actually a safe and secure way to borrow money. With a HELOC, you can access a line of low-interest credit secured by your home’s equity – much like you would with a credit card, only the interest payments are tax-deductible and the interest rate is much lower. You should consult a tax advisor regarding the deductibility of interest and charges under the plan.

So today we want to take a few minutes to bust a few HELOC myths – and let you know the truth… 

Myth No. 1: You Can Only Use a HELOC to Pay for Home Improvements

It’s true that HELOCs were initially created with home improvements in mind. However, the fact is that you are allowed to use your HELOC to pay for just about anything – from debt consolidation to your children’s college tuition. That said, most advisors think homeowners should use their HELOCs for expenses that add value to your finances. For a list of our own suggestions, click here.

Myth No. 2: A HELOC and a Home Equity Loan Are the Same Thing

With a home equity loan, your lender will provide you with a one-time lump sum. You pay that fixed-interest loan off over time, month by month. With a HELOC, however, the bank extends to you a line of credit that you can draw upon whenever and as often as you like, within your draw period. While the interest rate is generally low (much lower than that of a credit card), it fluctuates along with the prevailing rate.

Myth No. 3: A HELOC Will Hurt Your Credit Score

On its own, a HELOC won’t do anything to your credit score. It shows up to credit scorers no differently than a credit card. But just as with any other debt you incur, late payments on your loan or maxing out your HELOC may affect your credit score. It’s wise to ensure that you do not advance your line over the approved credit limit as this also would reflect on your credit report.

Myth No. 4: You Can Pay Off Your HELOC by Making Minimum Monthly Payments

With most HELOCs, if you make only the minimum payment each month, you’ll only cover the interest. Once the “draw period” – the five- to 10-year stretch of time when you can use your HELOC – ends, the principal starts becoming due. Depending on how much you’ve used, that can be a lot of money. So the best strategy, much like with a traditional credit card, is to make much more than the minimum payment each month.

Myth No. 5: HELOCs Are Difficult to Get

Taking out a HELOC is not risk-free. But if you use your HELOC conservatively and pay more than the minimum due each month, it is among the best loan options out there.

If you’re ready to apply for a HELOC, or for more information, please contact us.

Tags:

Cut Overhead Costs, Keep the Quality: 12 Simple Ways

by Erica Starr 20. October 2016

Cut Overhead Costs, Keep the Quality: 12 Simple WaysWhenever you seek input on how to better your business – whether you’re looking to increase profits, improve cash flow, or make yourself attractive to lenders – you’ll get this bit of advice:                         

Cut your overhead.

A business that controls its overhead costs is one that’s well positioned to weather lean times while boosting its margins all the time. But cutting deeply into service costs or product development threatens to undermine the very things that make your business unique.

So here are 12 ideas that any business can pursue to reduce its operating costs without sacrificing quality. 

Low Hanging Fruit

Most businesses budget are chock full of waste and fat, and it’s incumbent upon owners to look at every line-item carefully. Consider these areas:

  • Rent: Are you using all the office space you’re paying for? There are 168 hours a week; how many hours are people actually occupying your space? If your answer is 40, you’re paying to lease space that’s being used less than a quarter of the time. Consider reducing yours by reducing your footprint. Options include downsizing to a smaller space within your current facility; subleasing unused space; renegotiating your lease; or moving. Think you need all the space you have? Consider how many of your employees are perfectly capable of working from home, at least part of the time, and would love the opportunity. Consider, also, how much space each of your employees is taking. Do you have a lot of private offices for employees who don’t really need them? If you work in a “cube farm,” how big is each cubicle – and how big does it really need to be?
  • Energy: Energy can be a big expense. Using less space is a great way to reduce that monthly bill. And with deregulation of utilities, it’s easier than ever to find ways to cut your energy costs even further. Shop around for the most cost-efficient provider. Consider energy-efficiency systems that can help you save money. State agencies and most utilities offer incentives, rebates, and other assistance to help you implement these systems.
  • Travel: Inexpensive meeting software like GoToMeeting is making it easier to have face time with clients, employees, and partners without the need to fly or drive. When you travel less, not only do you cut your travel budget, you also spend less time in transit and more time actually working.
  • "Miscellaneous": Whether it’s supplies, office parties, or something else, every company (and every department within every larger company), spends a certain amount of its budget on things that no one is really managing. Pay attention to every penny.
  • Anything that's not driving ROI: Eliminate everything that’s not producing a return on your investment: that Yellow Pages ad, for example, or a subscription service you’re not using. Dump anything that’s redundant, too. For example, it’s not uncommon for different departments or individuals to be using competing versions of the same business software simultaneously. Get everyone on the same system.

Involve Your Team

Your employees are full of ideas on how to cut overhead you’d never come up with on your own. They’re closest to the action and, therefore, the most likely to see waste and redundancies first. Of course, getting workers involved can be tough — or even backfire if it’s seen as an effort to cut staff.

Here, then, are several strategies to help you encourage a culture of employee engagement. 

  • Be credible: When you ask employees for advice, approach them with facts, not false reassurances or corporate jargon. If you need to cut overhead to make your business healthier, say so. Present them with some high-level numbers. Your employees will appreciate your honesty — and reward you for it.
  • Go beyond the survey: For businesses with more than 20 or so employees, surveys can be an effective method of gathering opinions – and simple online tools make them cheap and easy. But they’re also sometimes unwelcome. They’re a chore to fill out. Employees are often skeptical that anyone’s paying attention, but if they aren’t certain they survey is anonymous, they won’t be candid. So feel free to use surveys to gather input, but at the same time look for other platforms to solicit feedback. Private social-media groups, intranet boards, and instant messaging tools may encourage employees to share their thoughts organically, and engage in conversation.
  • Show your appreciation: Reward employees who make helpful suggestions in ways both large and small. Meaningful bonuses tied to meeting specific cost-cutting objectives; contests awarding prizes to the employee who has the best overhead-reduction idea; and even small thank-you gestures are appreciated by your team. More importantly, they’re effective in encouraging positive engagement. And make these awards in ways both expected (end-of-year banquet, employee of the month) and not (surprise gift cards and random thank-you emails).

Examine Your Payroll

Salary freezes, shorter hours, pay cuts, and targeted layoffs should never be taken off the table, especially in lean times. In fact, you need to always be examining your payroll, which is likely your largest expense.

No doubt, you’re proud of being able to provide meaningful employment for your workers while also making money for yourself. So if you do have to trim staff, you’ll want to do so thoughtfully and smartly.

  • Current employees: Start with a detailed evaluation of who’s performing essential functions and who’s not. Look for redundancies among your current team’s responsibilities, and evaluate each person’s capacity for professional growth. It may be that two employees are performing a job that could be consolidated into a single position. Instead of just keeping the more senior person, ask which employee might be adaptable to additional responsibilities. An employee who has been doing one job for 10 years may be great at that job — but it’s fair to ask why he or she hasn’t been promoted into new opportunities. In the long run, you need employees who can grow with you, and even help accelerate your growth.
  • Outsourcing: Many business owners try to keep as much in-house as possible, thinking it’s cheaper. Often, it’s not. You can cut payroll by outsourcing functions that are not core to your business, while also accessing experts in those functions — be it information technology, marketing, human resources, or something else — to do what they do best instead of forcing you to wear every hat.
  • Freelancers and independent contractors: A close cousin to outsourcing is the use of independent parties to perform services on a freelance basis. It’s tempting to reserve the use of freelancers to one-off projects, but independent contractors now perform all kinds of jobs. Indeed, before adding a new permanent position to your payroll, you should always consider whether the job could be performed just as well on a contract or freelance basis.
  • Automation: Thanks to technology, the most routine functions of just about any job can now be automated. Using business “softbots” — e.g., QuickBooks — to automate accounting, taxation, invoicing, and payroll can immediately help you reduce headcount. There’s also software that can help you cut overhead by automating, for starters, marketing, ad buying, and logistics (routing, fuel expenditures, vehicle maintenance logs, etc.).

Talk to Your Advisors

Outsourcing or automation? Engaging employees or eliminating perks? Using the cheapest vendor or the one with the best reputation? These are tough questions. Don’t try do it on your own. Your mentors, peers, lender, and banker are all valuable advisors. Use them.

For help in getting these questions answered, reach out.

Tags:



© 2008- 1st Mariner Bank