Merchant911 Blog

Last week, President Bush signed the Housing and Economic Recovery Act of 2008 into law. Sure, another law will fix it. Hidden in the 700-page bill are a couple of totally unrelated provisions. One relates to hurricane recovery and gives tax breaks to a Canadian railcar manufacturer in Alabama. Of course, in true government style, this has nothing to do with housing relief but after all, someone had their hand out and got their hand-out.

There’s also some provisions in the bill for home buyer credit; provided that you’re a first-time home buyer between April 8, 2008, and July 1, 2009, and make under $150,000 ($75,000 if you’re single.) And there’s an additional $1,000 standard deduction against property taxes ($500 if you’re single.)

You wouldn’t think any of this has anything to do with E-commerce merchants that accept credit cards, but you’d be wrong. You’d be wrong because there’s also something in the law for us lucky merchants. Starting in 2011, banks or other companies that process credit cards must report the amount of the payments a merchant receives on card transactions to the IRS. The law will not apply to merchants doing less than 200 transactions totaling less than $20,000. We can all thank PayPal (thank you PayPal) that the exemption amount isn’t $600. Yep - they tried to make it $600, a whopping $50 per month, but PayPal successfully lobbied to raise it to the current level.

So, starting in 2011, even some smaller e-Bay sellers will have their income reported to the IRS.

Just thought you should know.

I found another one of these companies jumping on the band wagon to suck more money out of e-Commerce merchants. They think their service is useful to help prevent credit card fraud. I submit to my loyal readers that ReduceFraud.com has no more value than the others of their kind. Just my opinion, of course. They should be happy that I’m giving them a link.

I won’t rehash my arguments or the pathetic, meaningless rebuttals that the other company spewed. You can see them all here. I love it when they try to make a case and dig themselves a deeper hole.

Of course if you want to pay an additional $.20 per transaction to verify that the person placing the order on your website - good guy or bad guy - actually has a telephone, then be my guest. I don’t tell people how to run their business. Then again, maybe knowing that the guy scamming you has a telephone is worth something to you, but here’s my opinion and I’m sticking to it:

Unless the phone call is made to the number that is verified by the issuing bank, the call will only provide the e-Commerce merchant a false sense of security.

Got it?

The UK press is abuzz with reports that CNP (Card Not Present) fraud is at an all-time high and growing at an alarming rate. We can all thank Chip and PIN cards for that. Chip and PIN cards did exactly what I believe it was supposed to do - move the fraud liability away from the issuers and onto the e-Commerce merchants.

So now Visa Europe is scrambling to get still another fraud fighting tool out the door. You know, like Chip and PIN, VbyV, CVV2, and the others. This one is a one-time-number generator built right into the card. Can you imagine how much this one will cost to replace after the next Hanaford-type incident?

According to Heise Online Visa is touting this as “milestone in fraud prevention.” Sure, just like all those others I mentioned. Still, If the PIN can be recorded surreptitiously, the card will prove no more secure than its predecessors. Instead of cloning the card, the fraudster would then merely need to steal it. So what’s the point? That’s pretty much the way it is now.

Visa is developing still another dubious, if not down-right worthless, technology just for the sake of showing cardholders that they are doing something. However useless that something might be, at least Visa can advertise that they are doing something. You know - kind of like advertising the fact that credit cardholders’ money is safe if their cards are stolen. Sure enough that’s true, but it’s not Visa’s doing. It was mandated by the FTC many years ago.

I love to see rebuttal comments like we had on the telephone call-back service but I doubt that Visa or MasterCard will respond. Come on folks - no guts or no rebuttal? Which is it?