DirectPayNet

Category: PAYMENT PROCESSING

  • 8 Ways to Recession-Proof Your Business

    8 Ways to Recession-Proof Your Business

    The economy is undoubtedly heading towards the next recession, and worse that the great recession of 2008.

    With the ever-changing nature of how we do business, there is no doubt that with the volatility of the current economy (due in no small part to the coronavirus pandemic), we will have to deal with something similar to another financial crisis. So what can you, as a small business owner, do to ensure your business goes unaffected—or grows?

    The main answer lies in the backend technology you utilize. Today, we’re sharing the top tips and tech you should incorporate into your own tech stack to recession-proof business operations.

    Use a Modular Tech Stack

    A business is only as good as the technology it uses to run. But what happens when the economy takes a dive?

    In the early 2000s, a recession hit and businesses were forced to cut costs wherever they could. One of the biggest areas that suffered was IT. Many companies slashed their tech budgets and sometimes even laid off their IT staff. This led to long periods of downtime, slow service, and general instability in their systems — all of which scared away customers.

    Fast forward 15 years later, and we’re facing another economic downturn. But this time, you don’t have to be caught off guard like so many other businesses were before.

    A modular tech stack allows you to use different services without having to worry about integration or compatibility issues between them.

    It also makes it easy for you to swap out old technology with new, more effective solutions without having to change any other components of your system.

    This helps reduce the amount of time it takes for new technologies and capabilities to reach customers’ hands, which is especially beneficial during hard economic times when people are less willing (and able) to spend money on new products and services they may not be familiar with yet.

    Track ROI for Each Tool You Use

    In the midst of a recession, old and new businesses alike are expected to cut costs wherever possible. But that doesn’t mean you should stop investing in your company’s future.

    In fact, now is the perfect time to reevaluate your business and make sure you’re using the best tools for your needs.

    Make sure that you’re getting the most out of all of your investments by leveraging them together with other solutions that work together seamlessly — like accounting software and marketing automation software.

    These integrated solutions allow you to save time by automating repetitive tasks and streamlining processes so that they take less time than they would if done manually (or not at all).

    Monitor the ROI of each tool you use. ROI can be measured in cash flow, time, and productivity. So if you have tools that either overlap in functionality or don’t greatly benefit you, then consider removing them and investing that money elsewhere. Times may get tough, but that’s not an excuse to ignore the metrics.

    Invest in Customer Service Tech

    One of the most important ways to make your business recession-proof is by investing in customer service technology. This will help you better serve your clients and ensure that you con

    The first thing that many small businesses do when they’re struggling with sales is to stop engaging with their customers. This is a big mistake because it leaves them out of touch with what their customers want and need.

    Instead, entrepreneurs and business leaders should be using tools like live chat software or chatbots so they can engage with customers in real time and provide them with the best possible experience when they’re shopping online or on social media channels like Facebook or Twitter.

    You want to ensure every interested customer is taken care of in the way they prefer. It’s the best way to keep customers connected with your store and guide them toward making a purchase.

    Increase Customer Lifetime Value (CLV)

    It’s important to understand how much it costs to acquire a new customer versus how much it costs to keep an existing one.

    If you’re looking at a situation where it costs $5,000 for every new customer but only $1,000 per year for each existing one, it makes sense to put more effort into encouraging repeat business from your existing customer base rather than trying to bring in new ones.

    The longer you keep customers around, the more money you make from them over time. It’s also easier to sell additional products to existing customers than it is to find new ones and convince them that they need what you have to offer.

    A lot of businesses that do well during an economic recession include some type of credit score repair or credit building. Folks are worried about their credit and will do what they can to ensure they maintain good credit or don’t let their credit decrease even when they make large purchases. This is a great way to make your business recession-resistant and offer customers in your target market something of great value on top of what you already offer.

    Provide More Up-Front Value

    In tough times, consumers are looking for deals and discounts on everything from clothes and electronics to travel and entertainment — so make sure you’re offering them plenty of incentives when they first sign up for your service or buy from your store. If they know they’ll get something extra right away, they’ll be willing to pay more later on down the road when times are better again.

    You can offer bundles to provide more items for less (at least less than if each were purchased separately), or you can start a rewards program to offer significant discounts to regular customers. There are many ways to provide more value upfront. The best method depends on your business model and who your customers are.

    Set Up Automations for Payment Decline Codes

    Automate as much as possible.

    Automation can help keep your sales pipeline full even when there are fewer leads coming in because it means you don’t have to manually follow up with people who aren’t responding. It can also help you scale your business by freeing up time so that you can focus on larger projects and improving revenue streams.

    But, possibly most importantly, setting up automations when a decline comes in will help you retain the customer.

    For example, if a customer attempts to make a $100 purchase but gets declined due to insufficient funds, you can automate the next steps to give them a coupon code and sell the the item at a discounted price.

    Offer Payment Plans

    These days, people are more likely to buy things that they can pay for in installments rather than all at once. You can offer this option by making partnerships with a company like Klarna, AfterPay, or other lenders. Or developing your own software tool for it. The latter option can cost thousands of dollars, but the former is much cheaper.

    And consider that offering a service that people are familiar with, like AfterPay, can generate more trust in your company.

    This ties into the decline automations we mentioned earlier. If a customer’s transaction is declined, you can provide a discount, charge then a fraction of the price up-front, and offer a payment plan.

    This gives your customer plenty of opportunity to get the product they want and ensures you make the sale.

    Set Up the Right Payment Gateway for Your Users

    In addition to accepting credit cards, consider accepting other forms of payment such as gift cards and debit cards that are tied to a checking account. These alternatives will help ensure that customers will be able to purchase from your store even if they don’t have enough cash on hand.

    It’s also a good idea to implement payment gateway tech that offers one-click checkouts. This streamlines the checkout process, giving consumers a faster way to get the product they want as well as less time to reconsider and abandon the cart.

    The payment gateway you choose is only as strong as the payment processor you work with. If you’re in direct response, dropshipping, or other high-risk industries then you need a high-risk merchant account to secure your business and your bottom line.

    You’ll need at least 2 MIDs (for two payment processors) to offer customers the type of diversification necessary to stay above the competition. This is one of the best ways to recession-proof your business and conquer a difficult economic situation.

    In a recession, the last thing you want to worry about is if your cart works. Get in touch with DirectPayNet today to open your merchant account and secure your business for the future.

  • Received “Issuer Declined MCC” Message? Here’s What It Means.

    Received “Issuer Declined MCC” Message? Here’s What It Means.

    The message being displayed on your account reads: “Received issuer declined MCC. Please contact your gateway and/or acquirer.” What does this mean? Does it really matter? And why is it in all caps?

    We’ll break down what it means and what you can do to prevent it from happening again in the future.

    Remember, every decline you receive comes with a fee. Don’t ignore the message because it can harm your business financially in the long run.

    What You Need to Know About Decline Messages

    What is a decline message?

    A decline message is a response from the credit card processing network that informs you that the transaction did not go through because there was a rejection by the customer’s card issuing bank.

    The decline message will often provide you with the reason for the decline and in some cases, a possible solution to correct the issue. A decline message only indicates one of two things, either that the cardholder’s bank has refused to approve the transaction, or that the card number used is invalid.

    However, once you better a good understanding of what each decline code means (especially the ones you see most often), you can make the necessary changes to avoid having them pop up again.

    What is an issuer and what is does MCC mean?

    The issuer is the bank or financial institution that issued the credit card that was used to attempt the purchase. Essentially, it’s the customer’s bank. It could be Chase, Bank of America, American Express, or anything else.

    MCC stands for Merchant Category Code and is used to classify all businesses by their type of service or product offered so that payments can be processed correctly. It’s also a key deciding factor in whether a merchant service provider can serve you. Your MCC is a codified representation of your business and is used all over the payments industry.

    What does “issuer declined MCC” mean?

    There are some standard response codes that all credit cards use. That way if you try to use your card and the merchant can’t authorize the transaction, they will tell you why.

    When someone tries to process a payment on their credit card and gets this message, it means that the card was declined by the issuer because of your MCC. The issuer (customer’s card issuer/issuing bank) denied the transaction because of your MCC (type of business).

    Why did I receive “issuer declined MCC” message?

    Depending on the business model or industry, certain merchant category codes can be considered high-risk.

    In terms of payment processing (as opposed to merchant accounts), it could mean one of two things:

    1. That issuer doesn’t support your MCC.
    2. Your MCC doesn’t match your business.

    Many merchants are seeing this as a 204 error code, which means there is a hard decline for the transaction by the issuer.

    Ensuring you have proper security on your checkout page and payment gateway will help, in general. You need a PCI-compliance gateway with AVS (billing address verification), CVV (3- or 4- digit security code), and some other form of authentication like 2FA or 3DS.

    Why would an issuer not support an MCC?

    Merchant category codes are four-digit numbers assigned to every business that accepts credit cards. Every time a cardholder swipes their credit card at a merchant, the transaction is coded with the corresponding MCC.

    Issuers are constantly monitoring the activities on their cards to ensure that cardholders are not engaging in risky behavior. This includes canceling merchants or MCCs that tend to be high risk.

    Issuers will monitor transactions and cardholders who spend a lot at certain merchants. If they see that a lot of their customers are getting into trouble with a particular merchant, they will block those merchants from accepting their cards. This is often the case with casinos, adult entertainment venues and even gas stations, which have been known to have higher incidents of fraudulent transactions (stolen card, invalid card, limit exceeded, insufficient funds, etc.).

    In short, an issuer will refuse a transaction based on the MCC because of the risk associated with it.

    What should I do to continue the sale with that customer?

    Here’s what you can do to help that customer along. And you can use this information to set up an automation for instances like this in the future so it becomes part of the checkout flow.

    1. Ask the customer to contact their bank and unblock the transaction. This method doesn’t always work because it’s dependent on whether the bank supports your MCC or not.
    2. Offer another way to pay. You can ask the customer to pay with a different credit card from another bank or on another card network (Visa, MasterCard, Amex, Discover), a debit card, ACH, or something else. You may need to go into your payment gateway and turn on the method they prefer.

    These are the two best ways to continue the sale, though the absolute solution would be to open up a new merchant account with the correct code.

    Otherwise, you can analyze the pattern of credit card issuer declines and block cards from that bank on your gateway so customers are forced to use another payment method.

    What can I do about my MCC not matching my business?

    There are a few things you can do. The first is understanding the mismatch.

    The MCC chosen or provided on your merchant account application doesn’t match your actual business. This also applies to Stripe and other services that sometimes choose the MCC on your behalf.

    There are many possible MCCs that can match your business.

    One of the trickiest things is choosing which code represents your business best. Usually, there’s a clear-cut option. But some merchants (and some filers) want to reap the benefits related to another MCC.

    Depending on the code you choose, your risk value, rate, and a few other things are affected. So it’s logical that some high-risk merchants want to squeeze their way into a low-risk MCC. But it doesn’t always work out in their favor.

    Always choose the MCC that fits your business best. If you have to put in the effort to circle around one code, then that’s probably the code you need to choose. You’re not fooling anyone.

    And it’s unfortunate when this happens to Stripe customers who haven’t chosen their code. Stripe’s onboarding is super simple, but to a fault.

    If your business truly does fit into multiple categories, then make a list and outline the benefits of each and work closely with the merchant account provider to select the best one.

    Open a new merchant account with the correct MCC to avoid the “issuer declined MCC” message.

    The simplest way is to open a new merchant account.

    There are over 300 codes to choose from, so we do understand the task might be daunting. However, it’s something you need to do and something a seasoned merchant account expert can help you with.

    Ask your current merchant account provider to change your MCC.

    You can call or email your current provider about changing your MCC, but it’s not always possible. In fact, it’s highly dependent on how much processing history you have under that MCC.

    That’s why it’s better to open up a new account with the right code, because a lot of providers won’t be able to change it. Still, it’s worth asking.

    Something to note: if your current MCC does match a particular product line you offer, then you can set it so it’s active only on that line. Or even for a particular credit card type.

    You can set up separate business entities or bank accounts for each distinct category of products you sell. That way, if an account gets shut down because of a problem with one category of product, it won’t affect other lines of business. While you’re there, you can set transaction limits so your credit card processor doesn’t flag the transaction amount as fraudulent.

    What are the consequences of getting repeat decline messages?

    Account Under Review

    Some banks might consider multiple declines a sign that something is wrong with your account, and this could result in an account review. If there are no other suspicious signs, though, they probably won’t take any action. If you’re seeing repeated declines, though, it’s a good idea to call and check on your account just to make sure everything is OK.

    Fees

    Every time you process a payment, you’re charged a fee whether it goes through or not. Those fees can add up and really hurt your e-commerce business in the long run.

    Flagged or MATCH-listed

    Repeatedly receiving decline messages can eventually get your business and account flagged. That could lead to getting your merchant account terminated and your business on the MATCH list, which is a blacklist that merchant account providers use approve or deny applications.

    Fix Your MCC, Offer More Ways to Pay, and Open a New Merchant Account

    No online business wants to deal with declined transaction messages, but it’s part of the game. The sooner you take care of it the sooner your customers can happily swipe their cards freely.

    The best solution is to open a new merchant account, especially for high-risk businesses who are selling under an invalid merchant code with the wrong account type.

    DirectPayNet can help. We excel at providing high-risk merchant accounts to businesses who need a payment processor that backs their business model. Get in touch with us today to open your account and start doing business right.

  • Your Payment Gateway Is a Powerful Fraud Prevention Tool

    Your Payment Gateway Is a Powerful Fraud Prevention Tool

    Fraud is something most e-commerce business owners are familiar with – whether it be chargebacks, false orders, or other methods. There are many different tools that can help your business prevent and protect against fraud – however payment gateways are one of the most powerful and understated tools.

    Payment Gateway Fraud

    You might think that you only need a payment gateway to process and accept credit card payments. But, your payment gateway can do way more than that. It can actually help you prevent fraud as well.

    What is Payment Gateway Fraud?

    Payment gateway fraud happens when a customer uses a stolen credit card to make a purchase from you. The fraudster will make the purchase, but the real credit card owner will report the charge as fraudulent. If a chargeback is filed, you’ll have to return the money. You also may be on the hook for other penalties and fees.

    Chargebacks aren’t the only downside of payment gateway fraud either. You’re also going to have to deal with unhappy customers dealing with theft from their accounts and poor reputation from negative customer reviews.

    Your payment gateway is a powerful fraud prevent tool. When configured properly, it can halt fraudsters in their tracks and save your reputation.

    Not all gateways are the same, though. Some actions you can do on your own, some require a 3rd-party developer, and others can be done by contacting your provider.

    Is Stripe a Payment Gateway?

    Yes, Stripe is a payment gateway. While Stripe does connect you with payment processing services, those services aren’t their own. Stripe offers you a sub-merchant account beneath their own and allows you to process payments via the relationship they have with credit card payment processors.

    This is why we call company’s like Stripe, Shopify, PayPal, and Square payment aggregators or 3rd-party processors.

    How can I make changes to my payment gateway?

    If you have your own merchant account, then there are two ways to make changes to your payment gateway:

    Log in. Simply log into it and you’ll see options, messages, and more. Every gateway is different, so we can’t say definitively what you’ll see, but there will be areas for viewing messages in the gateway, data, options, code, plugins, etc.

    Contact your provider. Some providers don’t allow such easy manipulation to the gateway. But if you want to make changes, you can simply call or email your provider and ask them to turn features on or off as well as add in addition items from plugins or APIs.

    Depending on what you want to do, the level of difficulty when implementing features on your payment gateway varies. Some things are literally a flip of a switch. Others require developers to program in the new feature.

    Can I make changes to my Stripe gateway?

    Stripe generally only allows cosmetic changes to their gateway. There are some other things you can do, but they all require a developer to implement the approved integrations.

    Stripe doesn’t offer direct access to their gateway, but they do allow you to perform some actions when it comes to fraud. For example, if a card gets declined then you can have the gateway automatically send that customer an email asking for a new card or new payment method. You can also read decline codes from the gateway.

    If you’re looking to up your game against fraud, then it’s probably best to look for gateways beyond Stripe. That’s not to say Stripe is a bad gateway—on the contrary, it’s one of the world’s leading payment gateways to date. But it doesn’t offer the customization a lot of businesses require, especially when faced with specific types of payment gateway fraud.

    Why Use Your Gateway for Payment Fraud Prevention

    If you’re not using your payment gateway for fraud prevention, you’re leaving money on the table.

    By taking advantage of the tools that come with your payment gateway, you can easily set up a few simple rules that will help you prevent fraud and reduce bad transactions.

    Preventing fraud is important for several reasons. First and foremost, it’s important to protect your business against chargebacks and disputes. These are very costly and they can quickly eat away at your bottom line. Second, it’s important to protect your customers from having their cards stolen or their accounts taken over.

    While there are many ways to defend against fraud (even friendly fraud), leaving it up to solutions past your payment gateway is a huge risk. Once that fraudulent payment reaches the payment processor, eyebrows start getting raised, approval ratios get lowered, and banks get suspicious about your business. You don’t want any of that.

    Ways to Prevent Fraud in Your Payment Gateway

    Here are some really simple things you can do right now using your payment gateway as a fraud prevention tool.

    AVS

    The Address Verification Service (AVS) is a system used to verify the identity of the person claiming to own the credit card being used. This system checks that the billing address provided matches the address on file at the bank that issued the credit card.

    AVS is a good preliminary security measure, matching card information with customer input, but it doesn’t protect you from everything especially if you feel your business is under attack.

    CVV/CSC

    Card Verification Value (CVV) or Card Security Code (CSC) is the three or four digit code on the back of the credit card. CVV helps protect against fraudulent transactions by verifying that the person using the card has physical possession of it.

    Again, this is a great preliminary security measure and should be turned on no matter what, but it won’t entirely protect you from fraud.

    3DS

    3D Secure (3DS) is an important security protocol used by Visa and Mastercard (it’s sometimes called Visa Secure or Mastercard Identity Check). It helps prevent fraud by allowing the issuing bank to verify that the cardholder is the same person making the purchase.

    Every time you make a purchase with your credit or debit card, the merchant must ask the issuing bank whether your card is eligible for the transaction. The issuing bank will then authorize the transaction, or decline it if it suspects fraud.

    The 3DS process takes this one step further by adding an extra layer of authentication for both parties: the consumer and the merchant are given a “proof of ID” to complete the transaction in an added level of fraud protection. Consumers can verify their identity directly through their online banking account or via SMS verification, while merchants can use 3DS to generate a unique code that they can use in their anti-fraud system. This ensures that they know exactly who they’re dealing with and reduces their liability if something goes wrong with the payment.

    This process makes it more difficult for criminals to use stolen credit card details, because even if they have access to someone’s financial information, they won’t be able to perform the security check.

    You can think of 3DS as 2 Factor Authentication (2FA) for transactions.

    Transaction Limits

    One of the cool things about payment gateways, when you have access to them, is the ability to set limits based on time of day, card number, and amount. You can really get into the specifics and customize it depending on the type of fraud you’re experiencing.

    Transaction limits can be set at a specific hour, on certain days, for holidays, specific weeks, and even months.

    You can also set a maximum number of transactions per card based on either the credit card number, the BIN (which is the first 4-6 digits of the card), or even the customer’s IP address and email. BIN is the most useful, based on our experience, because fraudsters like to bombard gateways with hundreds of attempts using the same BIN.

    reCAPTCHA

    This free tool from Google allows you to block automated attempts to use stolen credit card numbers by requiring visitors to take an extra step to prove they’re human before submitting their information.

    This tool is usually used before submitting forms, logging in, and other non-financial activity. Having said that, it’s still a good tool to use that can take you one step forward in preventing fraud.

    Void Transactions

    As a final layer of security, you can void transactions if the email receipt bounces.

    Many gateways allow you to set up rules that automatically void transactions that do not provide an email address or phone number. If no contact information is provided, there’s no way for you to reach out to the customer later and warn them of a fraudulent purchase or ask them to confirm the purchase was legitimate. Consider setting up rules to reject these orders as well.

    Fraud Scoring

    While it’s not a gateway manipulation, fraud scoring tools use data to create a risk score for each transaction, which can be used to determine whether to accept or reject the transaction. They use algorithms and machine learning to analyze thousands of data points, including IP address, geo-location, device type and ID, email address age, proxy usage, payment history and more.

    A fraud scoring tool is a software layer between your checkout and gateway, and can also help prevent you from paying gateway fees for fraudulent transactions. However, these tools do add their own fee for every transaction they score.

    Stop Fraudulent Activity Before It Reaches Your Processor and Keep Your Approval Rating High.

    If you’re struggling with fraudulent activity on your online store, follow these steps to keep your business protected. Most payment gateways like come with fraud detection and some level of fraud management (like decline messages) as well as PCI-compliance. But there’s always something more you can do to protect yourself.

    DirectPayNet can connect you with a gateway that allows all the features mentioned and more, as well as a payment processor that won’t shut you down the second someone tries to scam you.

    Get in touch with us to get started.