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Is Your Business Ready for New Liability With Looming EMV Deadline?

Posted by Rachida Essadiq on Apr 15, 2015 3:04:34 PM

4593527341_f5ec747768_mIf not, by October 1, 2015 you’ll need to be...

A nationwide shift in how businesses accept credit cards in the United States is in full effect and will cause businesses to take on extra liability if they haven’t followed suit come October. The new laws shift liability from credit card companies to businesses for certain types of credit card fraud if a business is accepting credit card payments on a non-EMV ready credit card reader. Fortunately, upgrading is easy and business owners may find discounts and promotions on new hardware leading up to the deadline.

What is EMV?

EuroPay, Mastercard, and Visa (EMV) is named after the founding major credit card companies that launched the “Chip and Pin” technology years ago in Europe and elsewhere. This more secure credit card technology requires two things to be successful 1) Chip and Pin credit cards containing microchips which transfer credit card data rather than less secure magnetic strips and 2) EMV ready credit card readers equipped to read the microchips contained on the cards. This technology is designed to decrease in-store credit card fraud, one of the leading causes of credit card theft in the U.S.

On a side note, many small to midsize businesses may be happy to know that EMV ready credit card readers also come equipped with Near Field Communication (NFC), a contactless payment ability, used by Apple Pay and Google Wallet. The use of NFC devices is predicted to increase among customers in the future and having machines equipped with NFC will keep businesses ahead of the competition.

Success Rate

As frequent international travelers may have noticed, Europe made the switch to EMV years ago, with a very encouraging success rate. In the UK, for example, counterfeit card fraud fell by 56% after the switch to EMV. Fraud has actually increased in the U.S. recently (we have almost half of the world’s credit card fraud now) because of our lag in adopting EMV technology. There is a caveat, however. Although “card present” fraud is decreasing with EMV, this is causing criminals to find other means to steal credit card information. The same study that found card fraud decreasing in the UK also found “card-not-present” fraud (mainly online) increase by 79%. Online retailers, or payments made over phone, may be more vulnerable as EMV closes off easy POS breaches.

What will happen in October 2015

The liability shift taking place in October is meant to coerce businesses in to adopting the new technology to help fight fraud, not permanently shift liability in the market. Essentially this means businesses operating with non EMV equipped credit card readers will be liable for card present fraud that may have previously been covered by their processors. As banks are already beginning to issue Chip and Pin cards in preparation for the nationwide shift, your company will assume a big liability if you’re not prepared.

Businesses should take advantage of specials and promotions now in preparation for the October deadline. American Express is currently offering a $100 reward card for businesses to upgrade their credit card readers before April 30th. NTC Texas is also selling EMV ready credit card readers at a discounted rate through May 31st.

Don’t leave your business vulnerable to hackers, one single credit card breach and the associated fees and litigation will cause significant damage to your company’s finances. For more information on EMV credit card readers contact us at NTC Texas.

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About The Author
Jordan_HooverJordan Hoover is a Dallas native returned home. He graduated Summa Cum Laude with a B.A. from Loyola Marymount University. He of course loves writing, reading, playing music, and learning new things everyday. Connect with him over LinkedIn, at

Top photo courtesy of  Ben Watts @ Flickr CC

Don’t Settle for PayPal or Square

Posted by Rachida Essadiq on Apr 8, 2015 2:22:00 PM

3254923387_ca4d070d0c_mMany business owners looking for a payment processing solution, find that aggregators such as Paypal or Square seem to be the obvious choice to begin credit card processing because of the illusion of a quick and easy sign-up and set-up process. Unfortunately, after they get through the initial honeymoon, those same business owners may find aggregators are not the best choice in the long run. Traditional processing companies offer businesses much more flexibility, reliability and in many cases, better customer service than their aggregator competitors. So what are the differences between traditional processors and these so called “aggregators”?


Mainstream payment companies such as Paypal and Square are what we call aggregators; a form of payment processing that has grown substantially with the introduction of ecommerce. Aggregators are essentially wholesale brokers of credit card processing services, packaging and reselling the services with the merchants processing under the aggregator’s name through an actual processing company. That means, for example, a typical company using Square technically has a “sub” account with Square and does not have a relationship with the processing company directly – Square is a middleman. For each middleman, there is another mouth to feed, which is exactly why Square charges a standard 2.75%. This flat rate is non-negotiable and doesn’t reflect the different rates that processing companies themselves charge.

The way that aggregators are set-up can be helpful for businesses just getting off the ground or those who accept payments sparingly. With a flat rate for all businesses, it makes signing up for payment processing quick and provides a simple contract.  Once you begin to process a larger quantity and/or volume of payments, the aggregators have a harder time measuring up.

Traditional Credit Card Processors (Merchant Service Providers)

In comparison, a merchant service provider has a more individualized approach to credit card processing. Each transaction will have a different processing rate, depending on the type of card and level of risk involved. Traditional processors are better able to customize liability and rate packages for each business type and industry.

Although this means a bit more legwork when signing up for an account, it can lead to a much more affordable and more flexible option in the long run. With rates and more personalized customer service in mind, a traditional processor will create a business package that fits your individual needs. For example, if your business mostly interacts with customers using debit cards, you will be able to take advantage of a rate that is lower than the aggregator’s flat rate service.

Aggregators may seem like a convenient option. But these very conveniences may eventually cut into your bottom line. If you have a high volume of sales or sell higher-priced items, the aggregators may not be the best option for your business’ credit card processing needs.

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About The Author
Jordan_HooverJordan Hoover is a Dallas native returned home. He graduated Summa Cum Laude with a B.A. from Loyola Marymount University. He of course loves writing, reading, playing music, and learning new things everyday. Connect with him over LinkedIn, at

Top photo courtesy of Paul Inkles @ Flickr CC

5 New Trends in Business for 2015

Posted by Rachida Essadiq on Mar 31, 2015 9:13:00 AM

business-businessman-businessmen-222-12015 is set to be a good year for business, especially of the smaller variety- 58% of small businesses expect growth in 2015. Those making the most out of this rise will be following certain best practices. So what trends are important? Here are the top 5 business trends to expect in 2015:

Increased Freelancing

The nature of the workforce has changed. It is now estimated that 1 in 3 Americans are freelancers in some capacity. This number is expected to increase to 1 in 2 by 2020. Many people have become more entrepreneurial in the new economy, either resorting or thriving off freelance work. This trend is beneficial for the small business owner, who can now rely on freelancing to supplement their staff. Having a leaner workforce makes companies more flexible and lets them avoid increasing health care costs. As this trend continues, many of the experienced consultants will be in demand. Cultivating relationships with multiple freelancers in a given expertise can be an important tool for small businesses.

Peer to Peer Lending

Although bank lending is bouncing back, since the recession, many small businesses are more open to alternative sources of funding. In the last quarter of 2014, the outstanding debt capital of bank loans decreased 3% while online alternatives increased 175% according to Karen Mills of Harvard Business School. More traditional uses, such as business credit cards and equipment leasing, also increased in 2014. Mills believes that although Internet sourcing is still small, it has a potential to change capital access in the same way “ changed retail.”

Data Analytics

75% of small businesses plan to increase their use of big data over the next two years, according to an IBM study. This is a shift from just gathering data, to finding an easier way to manage it. Managers and employees need simpler ways to understand disparate data. Tools such as Power BI from Microsoft will make understanding data more accessible and user friendly.

The Cloud

New workflow use will begin to dominate business trends in 2015. The biggest of these may be cloud technology. Cloud computing has made in-office communication, with in-office messaging replacing email use. It also creates an easy way to work on various types of projects with those outside the office.

Managing Apps

App developers in 2014 churned out plenty of creative apps for businesses. In 2015, however, the focus will be on managing the multitude of apps. Finding a way to sort through the good apps from bad to create a more efficient business will be important. Like data, many businesses may be finding ways to streamline the apps they do use, looking to better dashboards or more integrated app packages.

Expect 2015 to have many trends that increase business efficiency and analytical abilities. Freelancing, cloud technology, and app management will create more agile companies. Better big data analytics and increased peer-to-peer lending will give small to midsize businesses a more even platform with the larger fish. Who knows what other unforeseen trends will develop? Overall, it looks to be a promising year ahead.

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About The Author
Jordan_HooverJordan Hoover is a Dallas native returned home. He graduated Summa Cum Laude with a B.A. from Loyola Marymount University. He of course loves writing, reading, playing music, and learning new things everyday. Connect with him over LinkedIn, at

Top photo courtesy of @ Google CC.

Seven Great Resources for Startup Businesses

Posted by Rachida Essadiq on Mar 24, 2015 12:59:00 PM

8409313926_33626e3a62_mCreating a successful startup can be a dream come true for many. Yet channeling your energy through the initial phases is no easy task. The Internet is full of tips and resources aiming to help, but how do you separate the wheat from the chaff? We’ve gone ahead and condensed some resources for the major seven aspects of the startup process.

Legal Advice
When creating your start-up, it’s extremely important to have a solid understanding of applicable laws. focuses on tips for new businesses and offers legal services. offers similar business resources. It also serves as an especially affordable means to incorporate- only $99 plus state filing fees.

Finding a Domain Name
Building a website can be a crucial step for your startup’s brand and having no domain is akin to not having a business. Start with leandomainsearch to find an available domain name for your business. Afterwards, move onto Network Solutions to register your new domain.

Read Up
Nick Taranto, co-founder of, recommends diving into the right books before taking major next steps. Taranto started with Lean Startup and Four Steps to Epiphany. Lean Startup by Eric Reis focuses on how to test the foundational idea of your new business. “Any start-up,” claims Reis, “is an organization dedicated to creating something new under conditions of extreme uncertainty.” Lean Startup provides steps to take to begin to clarify that uncertainty. Four Steps to Epiphany offers more bread and butter advice from current Stanford University professor and Silicon Valley startup creator Steve Blank.

And Continue to Read Up
In addition to books, there are plenty of updated online sites and blogs offering tips for new businesses. is one of the most reliable sources of startup resources on the net and is linked to AngelList, an investor resource listed below. Inc. offers similar content for small businesses while adding a big businesses ethos.

Connecting with investors is a critical business resource for startups. Websites such as AngelList and f6s are designed as a social network for startups and angels alike. Also check out TheFunded to see how investors have rated other startups and to learn their mindset.

Freelancers can provide a much needed service for new companies and nowadays, many freelancers can be found affordably online. Fiverr provides services of all sorts beginning at $5.

Payment Processing
If you want to begin receiving payments on your website, or turn your phone into a point of sale system, you will need to find a payment processing company. Find these and other merchant service options at NTC Texas.

There are hundreds of tips for new businesses out there, which may be overwhelming at first. Add these resources to your list as you get a grasp on what’s available.

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About The Author
Jordan_HooverJordan Hoover is a Dallas native returned home. He graduated Summa Cum Laude with a B.A. from Loyola Marymount University. He of course loves writing, reading, playing music, and learning new things everyday. Connect with him over LinkedIn, at

Top photo courtesy of Helsenberg Media @Flickr CC.

Tags: new businesses, startups, new business resources

Cultivating B2B Customer Referrals

Posted by Rachida Essadiq on Mar 18, 2015 10:14:14 AM

7975205041_7a5e4b65ff_mA recent Small Business Trends study found 85% of small businesses receive customers from word of mouth referrals. This doesn’t mean the process doesn’t require tact, however. It involves trust, relationship building, and awareness. Are you using this strategic line of marketing to the fullest? Here are six ways to shorten your sales cycle and not squander a golden opportunity for generating more business.

Ask at the Right Moment
The first step is to capitalize on peak moments in the B2B relationship. If the process has been going well, be on the lookout for positive moments. For example, the payment period is a built in opportunity to ask for customer referrals if, in fact, you felt that your client was provided excellent service. Don’t hesitate or be afraid to ask for referrals during these times, remember people like to help others. A referral is a perfect opportunity to do just that.

Be Specific
Guerilla Marketing authors suggest that when asking satisfied customers to refer someone, you need to “narrow the universe.” In other words, limit their selection to a particular group. This increases the probability a customer will have a contact in mind. It also serves as a way for your company to be in their thoughts the next time they have a relevant meeting.

Another powerful strategy is requesting feedback and testimonials, both written and verbal. Measuring satisfaction lets you improve your product or service and offers yet another opportunity to seek referrals. It’s also a great way to remind the customer that they had a positive experience with your company, creating another peak opportunity.

It’s a Two Way Relationship
In a B2B relationship, find ways to reward customers by returning the favor. This may mean featuring the company on your webpage, or granting them special status at an event. Try to be sincere, not only in regards to quality of service, but with referrals and promotional materials as well.

Stay in Touch
Even a positive B2B experience can wear off fast after the initial exchange has ended. Although small gifts are helpful, non-monetary recognition can do wonders for a business relationship as well. Be open about the process as you move forward. When emailing or starting a relationship with a new business, be sure to keep the original referee in the loop. This lets your advocate know you appreciate the lead and allows them to feel valued.

Soften the Pitch
Always have in mind your competitive advantage. Remember, however, that word of mouth referrals are not cold. When initiating a referral B2B relationship, you don’t have to full force pitch your product, but can ease into the sale.

Customer referrals can be the most affordable marketing tool for your company, so why have any excuse to lose these valuable contacts? Don’t hesitate to ask for these referrals at the right moments and be open about your referral process. Having a thoughtful, well strategized system can create a funnel of high quality leads for your business.

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About The Author
Jordan_HooverJordan Hoover is a Dallas native returned home. He graduated Summa Cum Laude with a B.A. from Loyola Marymount University. He of course loves writing, reading, playing music, and learning new things everyday. Connect with him over LinkedIn, at

Top photo courtesy of Chris Potter @Flickr CC.

Tags: Business, B2B, Business Referrals

Could You Run Your Entire Business From Your Phone?

Posted by Rachida Essadiq on Mar 10, 2015 4:25:00 PM

telephone-586266_640-1Society’s addiction to smartphones is comparable to society’s obsession with smoking in the 50’s. We can’t go a day without them and they’re especially convenient for lulls in social situations. They’ve also become a staple in modern day business. Even more radically, “10% of executives claimed smartphones were their exclusive device for day-to-day decision making,” according to Forbes. But is it really possible, for managers and entrepreneurs to manage a business effectively from a smartphone? Let’s take a look into the increasingly influential idea of a completely mobile business.

Business Focused Mobile Apps

Moore’s Law of increasing processing power is holding true. As smartphones have become stronger, app capability has increased. Business functions like tracking sales and managing inventory are now available. In December, IBM and Apple released IBM MobileFirst for the iPhone, which includes a whole slew of first-rate apps for a “business world…gone mobile,” as the press statement enthusiastically claims. These don’t even include the basics. There are apps that organize your day and email, such as Evernote or Podio, Skype for face-to-face calling, and cloud services that make data easily accessible for various employees. There are hundreds of mobile payment providers, apps such as talech, or NCR Silver. All have been revolutionary for a mobile business.

The Gigging Economy

Grabbing an Uber cab isn’t the only service that is a click away from your phone. Fiverr, a popular freelance website, is a good example of a cheap, quick iteration. Browsing the website, you can find someone willing to write you a song, create a marketing plan, or write code for five dollars. This cuts both ways for mobile businesses. It means those freelancers doing the “gigging” have the freedom to work and communicate off their phones and small businesses owners can have the same freedom in requesting the service. For both sides, it’s a big push for a more mobile business.


There are still some drawbacks to an all-mobile business. It’s harder to create and review documents. The small screens themselves may make it difficult to navigate at times. Data security could also be an issue, especially when using your personal phone. Hackers are aware that more business is being conducted on phones and are creating new malware for those less protected mobile devices. Phones also tend to get lost more often, which means it is extremely important to have apps that let you remotely wipe and lock data. Doing business from your cell also creates a double edge sword of location flexibility and twenty-four hour accountability.

While keeping these drawbacks in mind, running a business off your phone is certainly a possibility. With more powerful business focused apps, easy mobile payment options, and freelance websites running a mobile business may be in the foreseeable future.

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About The Author

Jordan_HooverJordan Hoover is a Dallas native returned home. He graduated Summa Cum Laude with a B.A. from Loyola Marymount University. He of course loves writing, reading, playing music, and learning new things everyday. Connect with him over LinkedIn, at

Top photo courtesy of Pixabay.

Tags: mobile

Beware of Phishing Tax Scams

Posted by Rachida Essadiq on Mar 4, 2015 1:34:00 PM

4894714911_42f0f50f72_mWhen dealing with the IRS, the first thing they will tell you is they won’t ever “initiate contact with taxpayers by email, text messages, or social media channels to request personal or financial information.”

This means those “official” emails you are getting from the IRS are surely scams. Specifically, an often used email scam called “phishing” that will be especially prevalent during tax season 2015. Although this kind of scam is troublesome, exploiting the power of the IRS to make a quick buck, it is also one of the easiest to spot if you are educated and mindful.

What is Phishing?

One of tax season 2015’s listed “Dirty Dozen” scams, phishing consists of fake emails or websites that are used to steal personal information. Although phishing scams can be conducted by many “phishers” using un-tax related topics, the tax season is ripe for scamming. These emails may claim you owe money or are due a refund and seek additional information as a means of “identity verification”. To encourage participation in the scam, the scammers will promise to either remove penalties or threaten an audit if their demands aren’t met. For example, in a particularly good tax scam from last years’ season, an email stated the payee’s payment was rejected and additional information was needed to remedy the situation. The end goal for the scammer is to get your payment or your personal information which will be used to create a false identity. Most emails allege they come from the IRS, although also be aware of those from related agencies such as the Electronic Federal Tax Payment System (EFTPS).

Signs to Look For

Although many phishing scam e-mails may pass as official upon first look, there are many simple ways to detect these threats. First, check from where the email is being sent and the reply-to address, do they have a .gov domain? Second, scan the email for grammar. Usually the writing will have mistakes and will seem “off”. Of course, the scammer will also be a lot pushier than you would expect from the IRS, demanding that you take a one-time, immediate action to solve your problem. Some will have links to the scammer’s websites, or will ask you to send sensitive information by following a link on the email. Finally, is there a deal that is too good to be true? If it seems too good, it is.

An example of a typical fraudulent email can be found on the IRS website.

What to do

Be aware, simply opening the scam e-mail may cause your computer to become infected with a virus. However, if you receive one of these fake emails and have already opened it, don’t reply, click on any links, or open attachments. If possible, forward the email to so that the IRS can be made aware of the scam, then be sure to delete the original, or move it to your junk folder.

Tax season is a stressful time for any business. Be sure not to give scammers a reason to make it a whole lot worse. Be aware of phishing and any of the other “Dirty Dozen” schemes. If in doubt, remember the IRS will never ask you for information over an unsolicited email, they prefer to reach you with regular mail.

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About The Author
Jordan_HooverJordan Hoover is a Dallas native returned home. He graduated Summa Cum Laude with a B.A. from Loyola Marymount University. He of course loves writing, reading, playing music, and learning new things everyday. Connect with him over LinkedIn, at

Top photo courtesy of Edwind Richzendy Contreras Soto @ Fllickr CC


Tags: security

Gaining Business Loyalty From The Elusive Millennial

Posted by Rachida Essadiq on Feb 23, 2015 5:11:00 PM

8424407891_2a321c6345_mMuch has been written about the need to find marketing strategies to the rising spending power of the elusive Millennial (ME) generation. Born from roughly 1982-2004 and representing $10 trillion in generation spending, they are increasingly having a bigger role to play as consumers. They are also redefining marketing trends, one of the biggest being their seemingly nonexistent brand loyalty. There is hope, however. Many brands from Chipotle to the Dollar Shave Club are successfully creating brand loyalty among this elusive generation. Here are some quick tips on how to keep this generation coming back for more.

Not No loyalty. Co-loyalty

Yes, MEs do trade up and trade down. Remember, they grew up in a world where the Internet and globalization have opened plenty of options of where to get a product. Don’t think this means that MEs have no brand loyalty. This new generation simply has new rules. 34% of Generation Y have a bachelor’s degree or higher, up 10% from boomers, according to Pew. Combine that with technology and tough economic times and you get a new mix.

So what do they want? According to Jeff Fromm, a Millennial Marketing expert, Millenials want to be an active participant in the brand. Loyalty comes from the uniqueness of the content and the willingness to let customers “co-create” the brand with the company. Companies that “create meaningful and unique interactions will be the most successful with Millennials,” says Fromm.


It’s a major turn off for Millenials when a company seems like they are hiding information to sell a product. Not only is it insulting to their ability to research, it makes them doubt the reliability of the brand.

The easiest way to counteract this is to embrace the wide array of Internet ready information. Use it to your advantage and let customers rate products, comment, and share messages from the brand on their own terms. Be willing to share how you run your business and create products. Advertise your corporate social responsibility efforts as frequently as possible. Millennials like companies that mirror their own values, and showing how your company is part of the community- at events, on social media, or on your website- is a big plus.

Make Your Website Easy to Navigate

Before you embrace the Internet, of course, having a great website is a must. This may seem like an obvious tip, but this is usually a MEs first real interaction with a company. A big mistake would be to assume that just because members of this generation are digital natives, they can figure out any website. In fact, the opposite is true. “Millennials expect technology to just work, so make sure it does,” points out Micah Solomon, a customer service consultant for various generations. To Millennials, the website represents the effort the company is willing to put into their image, as well as how it will treat its customers. Don’t turn them off because it is not as polished, sleek, and simple as possible.

Understand that Generation Y may be changing some of the rules, perhaps for the better. Make sure your brand is interactive and open. Have a great web presence to facilitate co-creation and shareable content… and you may find the Millennial dilemma may not seem so bad after all.

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About The Author
Jordan_HooverJordan Hoover is a Dallas native returned home. He graduated Summa Cum Laude with a B.A. from Loyola Marymount University. He of course loves writing, reading, playing music, and learning new things everyday. Connect with him over LinkedIn, at

Top photo courtesy of Francisco Osorio @ Fllickr CC

Being a Good Boss

Posted by Jackie Clews on Feb 17, 2015 11:21:00 AM

It’s safe to say we’ve all had that one boss, the one that makes you question the decision-making skills of authority figures everywhere, the one whose arrogance is only topped by his/her need to be unquestioned and respected—and the one whose actions set all the wrong examples.

So how do you avoid becoming that person? 

boss-and-leaderFewer of us have ever encountered truly good bosses, though most have probably had at least one or two good experiences. And the good ones—the truly awe-inspiring individuals that few of us have ever encountered—make it look so darn easy. But in reality, it’s a lot harder than you might think to consistently inspire respect and loyalty. We all say that one day, when we’re the boss, things will be different- right? But how do you actually make that happen?

Below are some useful tips on how to become the boss you’ve always wanted to be.

  1. Be a leader, not a boss. In reality, a boss and a leader are fairly synonymous but the words have different connotations—and that difference is an unmistakably important nuance: choice vs. force. A boss is an overlord, a dictator—someone who owns you or your time for a while and seeks to enforce a certain reality upon you. In contrast, a leader is someone whose choices and mandates you trust. Maybe you’re there because you have to be—we are all slaves to our paychecks to some extent—but the forerunning thought in your brain about a leader is that you can trust him or her to make good decisions, to lead by example, and to have your best interests at heart.
  2. Show, don’t tell. This phrase is well-known to writers, but managers, bosses, and leaders everywhere can learn a few lessons from the concept. It’s easy to tell people what you plan to do, to make big, grand speeches about a vision or a path, to attempt to inspire with presentation and gusto, but those will only take you so far. Yes, it’s important to speak and communicate effectively—for a boss, it’s essential—but actions speak best. So yes, outline your plans, but keep it brief and simple. Less is more. Observe more than you critique, ask more than you tell, and do more than you expect others to do. These are the actions of a leader who is worth following.
  3. Know your employees and their jobs. A recent study completed by researchers from three different universities found that employee satisfaction actually quadrupled when their direct boss could actually do their jobs if needed. The concept doesn’t seem all that far-fetched—shouldn’t the person critiquing and gauging your performance understand all the factors of your work intimately? Reality, however, shows that, especially with larger companies, managers often don’t know all the details of how their employees complete their work. In this case, take the time to ask. Even if it means humbling yourself down to spending a few days or a few weeks learning from each of your employees, the interaction will both improve your knowledge of the work they do, how they do it, and what skills they can offer, but also of who they are and what their needs might be. The experience will be both challenging and rewarding, for newer and more experienced managers alike.

By making these tips the principles of your foundation as a leader, you will create a work environment that is open, respectful, and positive. After all, respect must be earned and it is a two-way street. Bosses who do not respect and value their employees will always have a hard time keeping the good ones.

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AshleyAbout the Author - Ashley Choate is a native of Jacksonville, FL where she lives with her son, dog, and three cats. She graduated Magna Cum Laude from Jacksonville University with a BA in English and holds an MAED in Adult Education and Training. She lives for reading and writing, learning and teaching, and figuring out the day-to-day traumas and joys of mommyhood. .


Tags: small business, leadership, management

Credit Card Factoring is Money Laundering

Posted by Jackie Clews on Feb 10, 2015 10:26:00 AM

big court roomAccepting credit cards is smart for any business in this era; however it is important to know and follow all of the card industry rules and Federal and State laws that govern card acceptance. While the common belief among society is that money laundering is only the worst thieves moving ill-gotten funds around within the criminal underworld, there is a little known activity within money laundering called credit card factoring that can cause big problems for merchants that accept credit cards.

Below is a description of credit card factoring, how to avoid it, and some of the problems that will occur if you’re not diligent in educating your staff on how to prevent it.

What is credit card factoring?

Any credit card transaction that is processed by a different merchant than the actual merchant selling the product/service or any transaction that uses a different merchant account not directly affiliated with the business can be considered credit card factoring.

The transaction can be as simple as a business using the next-door neighbor’s credit card terminal to process a single transaction because they don’t take credit cards or their terminal is down but more commonly it is a complex series of transactions within a scam.

For example, a fraudulent telemarketer will recruit a business owner or unsuspecting employee of a business that does possess a merchant account to process transactions for them. The customer’s account is charged for the goods or service and the business who will become the victim gives the proceeds of the sale to the telemarketer. However, when the customer contests the charge on their statement as a chargeback because they didn’t buy anything from the victim, the bank will have to refund the money to the customer and processes the chargeback against the merchant account. It becomes the responsibility of the victimized business to go after the telemarketer for the lost funds. Unfortunately, the telemarketer is long gone with the money and the business owner is out of luck.

“In many cases, these companies need other merchants to process their credit card transactions because investigations and credit checks by banks and/or credit card companies revealed that these companies are bad risks and may end up having excessive charge-backs,” wrote Cheryl Linkloff in an article on credit card laundering.

How do you avoid it?

The simplest way to avoid factoring is to refuse to process any credit cards for another company—at all. This includes your neighboring store whose credit card machine is down. It may seem strict but there are serious liability issues involved and once you’ve processed a charge on your merchant account, you are legally liable to back up that charge and respond to any bank inquiries about potential chargebacks. If the banks find that you are not the actual originator of the sale, you could be in trouble.

But knowing this information and keeping it to yourself also does little good. Effective training on card processing practices and the consequences of ignoring the rules must be impressed upon any employee who processes transactions. While the issue might not come up regularly, you never know when someone who is ill-informed is asked to make this one exception, just this one time.

The Consequences

Financial liability for any losses associated with the transaction is the first, most minor, concern. Your business, as the merchant who processed the charge, would be responsible for the cost if the customer reports the charge as fraud. When it’s your own store and product, that’s one thing, but vouching for and guaranteeing the charges of another merchant is not wise.

More importantly, though, credit card factoring is considered fraud/money laundering and is a class C felony. Criminal prosecution stands as the biggest risk, but businesses might also lose the ability to work through a third party merchant for credit card processing, which can also result in serious financial losses. While criminal prosecution is mostly reserved for obvious criminal intent, small mistakes can also hurt your business because outside merchants will not want to take the risk of becoming involved in a criminal prosecution.

Bottom line: educate your employees and ensure that they are reminded regularly of the risks associated with accepting fraudulent cards or processing payments for others. Your customers will thank you for it.

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AshleyAbout the Author - Ashley Choate is a native of Jacksonville, FL where she lives with her son, dog, and three cats. She graduated Magna Cum Laude from Jacksonville University with a BA in English and holds an MAED in Adult Education and Training. She lives for reading and writing, learning and teaching, and figuring out the day-to-day traumas and joys of mommyhood. .

Tags: credit card, factoring, money laundering

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