CLARUS in the News
CLARUS is regularly featured in and sourced by online and print financial, payment and business trade media. Through press releases, articles and interviews, CLARUS positions our company's knowledge and value to customers while enhancing the visibility and stature of CLARUS as a source of industry expertise.
CLARUS makes the Inc 5000 list of fastest growing companies in America.
CLARUS Merchant Services has been revealed as one of the fastest growing private companies in America in the most recent Inc 5000 rankings.
The past three years have seen CLARUS attain a growth rate of 130%, for which it has joined the Inc 5000 select club. The ranking features independent, privately held companies with revenues of at least $2 million and up to $1 billion in the year prior to the publication of the list.
Such an achievement will not, however, come at a cost to CLARUS customer service in the mind of its CEO, Randy Tillim.
“The very reason our company model has been so successful is because we have great, sincere relationships with our merchants and buying groups; and we have managed to keep it that way, even with all our growth. We are not about to start neglecting our existing merchants in order to chase even higher growth numbers. We have some of the highest customer retention rates in the industry, because our merchants know that our customer service and the savings passed on to them will never suffer as a result of our expansion, and see no reason to leave us”
Since 1999, CLARUS has positioned itself as a specialist payment provider in the distribution and B2B sectors, and today services over 5000 merchants and processes more than $5 billion in transactions each year. CLARUS is the preferred MSP to some of the biggest buying groups and co-operatives in America, and provides its members with wholesale rates for credit card processing and equipment.
CLARUS is featured MSP in Equity Plumbing's Magazine.
CLARUS CEO and founder, Randy Tillim, has been speaking to the "Plumbing Advocate" magazine following his recent appearance as a keynote speaker at Equity Plumbing's annual meeting. In this edition of the Advocate, he sits down with Greta Cuyler to discuss the mission and unique offering of CLARUS, the company's recent move into its own offices at the historic Thomas Cannery Building, as well as the challenges that the industry faces during the ongoing EMV shift.
Slimy Sales Tactics: Not falling for it.
In this article we follow on our last installment about predatory merchant services to detail more of the tactics some merchant services companies use to milk the most profit from your business; including a real story about a dishonest attempt against one of our merchants.
July 10, 2015
Finding a company to process your credit cards can be a lot like buying a car. You’re looking at identical vehicles but Dealer A’s price is different from Dealer B’s. Why? Well, maybe Dealer A added a warranty, or gave you a better interest rate on your loan; or, he waived the tags and title fee. Or maybe Dealer A is just making more profit on the sale than Dealer B but how do you know? The great thing about buying a car is that the variables surrounding the true cost of the vehicle are transparent. You can clearly determine if you’re getting a better interest rate on your loan or if the fees for tags and title have been waived. The issue business owners face when dealing with credit card processing companies is that most make it difficult to differentiate between the cost of processing and their markup over it. In this article we follow on our last installment about predatory merchant services to detail more of the tactics some merchant services companies use to milk the most profit from your business.
As many of you may know, in Feburary 2015 American Express lost their anti-trust lawsuit when federal judge, Nicholas Garaufis, ruled that AMEX had violated U.S. anti-trust laws. As many of you probably DO NOT know this lawsuit was originally filed in 2010 with the Justice Department “arguing that American Express unlawfully inhibits competition by insisting that its merchants not express a preference for one card over another”. You also probably aren’t aware that in 2012 Visa, Mastercard, and a number of other large banks settled this same lawsuit out of court for more than 6 billion dollars in fines.
Now, I’m sure you’re wondering why this is important and how it relates to “slimy sales practices”, and the answer is the spin.
In February, before the judge's ruling, AMEX was trading at over $90 per share. Today its trading around $76 per share. You don’t have to be a financial genius to know that isn’t good for shareholders. So what does AMEX do? They launch the Opt Blue Program in March of 2015. This program lowers processing fees to the merchant and is designed to appeal to business owners who are accepting less than 1 million dollars a year in AMEX transactions. The ultimate hope is that this will increase acceptance across the board and build revenue for the company.
The launch of Opt Blue has opened the door for what we will call “creative sales tactics”.
The following is a true account of what happened to one of our merchants. For the purpose of this example we will call our merchant 123 Supply Company and the sales associate in question Roy. Last week, 123 Supply Company received an email from Roy, a sales associate claiming to be a member of the “American Express Account DevelopmentTeam”. Roy claimed he had an exclusive AMEX offer that would help 123 Supply Company reduce their credit card processing fees. Roy asked 123 Supply Company to send him a copy of a recent merchant statement for review and analysis. Now, if I may return to the earlier analogy, this isn’t the first car 123 Supply Company has purchased so they were apprehensive and reluctant to send a statement to Roy. Roy, completely understood 123 Supply Company’s reluctance and told him if he had any doubts prior to the statement reveiw, he could “visit us at www.americanexpress.com/merchant or call Customer Service at 18005285200”. Fortunately, 123 Supply Company didn’t fall for this tall tale and contacted CLARUS for clarification.
Opt Blue rates are variable dependent on the business type, the size of the transaction, and whether or not the transaction is card-present or not. Because of the multiple factors that affect the transaction rate there is more of an opportunity for processors to hide their markup. CLARUS isn’t in the business of hiding markup. We bill our fees for Opt Blue the same way we do Visa, Mastercard, and Discover as a flat rate above the baseline cost. The facts are that AMEX did recently roll out a program that could reduce merchant fees, it’s called OPT Blue, and it’s not exclusive to any processor. The “American Express Account Development Team” is an actual team but it was created by one our competitors to manipulate merchants and trick them into sending a merchant statement under the guise of saving money on AMEX. It is a classic case of how one rotten apple can ruin the bunch and how some credit card processing companies are still going to use “creative sales tactics” to solicit savvy merchants who normally wouldn’t be swayed.
*Opt Blue is only available to merchants processing > 1 million dollars a year in AMEX transactions. It doesn’t replace existing ESA programs for merchants processing < 1 million dollars a year in AMEX transactions.
Predatory Merchant Service Practices: What they are and how to avoid them
Find out how you can protect your business from predatory contracts with merchant service providers
May 10, 2015
At least once in a business’ lifetime, merchants who wish to accept credit cards have to go through the experience of signing credit card processing contracts with merchant service providers (MSPs for short). While in some cases the experiences are positive and make the lives of business owners a bit easier, in other cases, the word “experience” could better be substituted by “business ordeal”.
The industry of credit card processing is sometimes seen with suspicious eyes, and is many times blamed for throwing transparency down the drain -what with hidden fees, obscure jargon and confusing contracts. These practices are commonly known in the industry as “predatory merchant services”.
Obviously, not all MSPs are created equal, but in this instance we’d like to offer you a set of tips to avoid falling prey to practices that can seriously affect your business.
Read before you sign. Obviously.
This one seems glaringly obvious, but you’d be surprised by how many times merchants get duped by the small print (or by a lack of attention). If a merchant services provider quotes you one rate, make sure they are not adding any extra fees somewhere in the contract. Read it three times...you can only sign once!
Get some advice from your buying group or industry’s trade association and take advantage of their knowledge.
Normally, your buying group will have one or two preferred MSPs who provide payment services to them. Therefore, it’s always good to consult with them for advice. They have already done research on the MSPs that work with them and have probably been with them for some time. Thus, the chances of them being predatory MSPs are slim, as they will normally look to take good care of the buying group’s members in order to keep their existing contracts with the group itself. Referrals and reviews from trusted sources make all the difference when acquiring any product or service.
Don’t panic in the face of scare tactics
Many times, merchants are scared into buying equipment or services that they don’t need at that particular moment. This usually happens in the eve of a change in regulations or practices, where predatory MSPs put on the pretense of doomsayers and saviors alike. The EMV shift is a prime example of this “Buy these EMV terminals now if you want to avoid (insert language evoking an impending calamity)!” To avoid unnecessary purchases, do some research before you’re scared into buying new equipment. In most cases, you could wait until the introduction period has passed and prices stabilize. If in doubt, get some expert advice.
Go for interchange-plus-pricing structures and use reporting tools.
We recommend this type of processing cost structure. By going for an MSP with this type of pricing, you are avoiding remaining in the dark about the interchange rates that you are charged. This type of pricing means your MSP passes on the interchange rates to you, so you know what percentage of payments made to you go to the card companies. Some MSPs offer you reporting tools where you can keep track in real time of your transactions and avoid unnecessary downgrades and excess fees.
We hope you’ll find these tips useful in getting the best service from your MSP. For more information, get in touch.
Hate AmEx? Well, maybe you don’t have to.
There's finally good news on the AmEx front for small-to-medium businesses. If you've ever had to turn down a sale with an AmEx card, you're in for a good surprise.
April 10, 2015
“I’m sorry, but we can’t accept AmEx for that thousand-dollar purchase you want to make.” (Insert background sounds of gunshots hitting your foot).
The above is something that a lot of merchants, especially SMEs, can relate to.
On the one hand, AmEx is one of the most used card brands, and on the other hand, it rarely made business sense to accept it.
We say “made” (past tense), because there’s finally good news for merchants who have previously had to turn down sales paid with an AmEx card.
So this was the “Before Picture”…which consisted mainly of the perceptions most merchants had of AmEx:
- AmEx was just for large stores.
- It took too long to get your money.
- Its interchange rates were much more expensive than for Visa, MC or Discover.
Now, AmEx has painted the “After Picture” OptBlue.
What is OptBlue?
OptBlue is a program designed for businesses processing up to $1million in sales (as indicated by their TaxID) which makes AmEx payments just like Visa and MasterCard’s. Merchants now get all card payments under one single statement, with one settlement process and have one point of contact for any problems or queries.
If you don’t accept AmEx but want to start doing so:
Now would be the time to contact your service provider. After all, and maybe by some freak of chance, AmEx is still the most widely used card in the U.S and you won’t have to turn down any more sales due to not being able to accept AmEx.
If you already accept AmEx and are/used to be in the OnePoint program:
Then you’ll be automatically transferred to OptBlue. The costs to accept AmEx through this program are potentially cheaper to the merchant, so you should consult with your service provider to see if you are eligible for a lower rate for your AmEx payments.
Security Breach: 4 Tips to Avoid Being Target-ed amidst the EMV revolution
March 2, 2015
With EMV chips making face-to-face card fraud harder to pull off, crooks will have one extra motivation to go hunting (and phishing!) online. If the cyberattacks on Target and Sony last year taught us anything, it is that businesses need to be more proactive in deploying a data protection strategy.
Last year’s attacks on Target, Home Depot and Sony have put data security (once more) on the public spotlight. The common thread? All three heists were executed in the cybersphere. Now, with EMV chips making face-to-face card fraud harder to pull off, crooks will have one extra motivation to go hunting (and phishing!) online. Not that businesses should go on “THE END IS NIGH” mode, but this is their opportunity to be proactive and review their data protection strategy.
In more than a decade providing armor-plated payment solutions for our partners, we have noticed 4 things that the most security-conscious businesses do to avoid losing millions to data theft. Here is a quick summary of them:
1) Education, education, education.
It is in the culture of these companies to train their employees on security best practices. When done often and relevantly, security training enables insiders to identify the mistakes that lead to data theft and to avoid them. Employees in these companies are very competent in flagging possible malicious behavior and are aware of how criminals carry out their fraudulent operations. This is particularly important, given that one of the biggest causes for data breach in 2014 was human error, according to an independent report by Ponemon Institute.
2) Have an encryption policy in place - and enforce it.
Apart from the zillion pictures of food and cats, there is usually a lot of sensitive information stored in employee’s laptops, cloud accounts or mobile devices. If any of these get stolen, your company may be at risk of a security breach. One very clever thing these companies do is make sure that all files and/or drives containing sensitive information are encrypted. Also, employees are required never to connect company computers via an open wireless network (in airports or public spaces); never to reuse the same password and username on different accounts and websites; and to always notify the organization immediately if their device is stolen or lost.
3) Deploy a system monitoring program and block drive-by downloads.
Your company should be able to monitor employee’s online activity and block sensitive content from leaving your network. Data Loss Prevention (DLP) technology allows you to set security rules that get applied to every single computer on the network so you don’t have to do it one by one. More importantly, drive-by downloads should be avoided like the plague. They normally happen when employees click on a malicious link from a phishing e-mail or visit a compromised website where they end up unwittingly revealing sensitive information or getting harmful software installed. To avert this, the companies we’re talking about have a list of trusted websites and only downloads from these sites are permitted. Yes, that means less of those hilarious Frozen spoof videos, but it does make a world of difference for network security. After all, it was reported that the Target breach was caused by a phishing e-mail.
4) Make sure your merchant service provider is PCI-DSS compliant and offers tokenization for online payments.
The first bit means that any payments made by your customers must be subject to the necessary standards of data protection. The cyberattack on Target raised serious questions about its status as a PCI-compliant company, so this is something to consider. In online shopping, where a customer’s card does not need to be physically present, extra measures must be taken in ensuring no one but the owner is making purchases with that card. As we said, EMV won’t do anything to reduce credit card theft online. Tokenization is one cost-effective and secure way to protect customers from falling prey to data theft. Through this process, sensitive data is rendered unrecognizable and processed via a separate system from the one thieves normally target, and no card data is actually stored in the process.
We hope these four recommendations can help your business provide its customers the safety they deserve. If you have any questions about card data security or need assistance making your payments more secure, call our office anytime and we’d be happy to help.
What is EMV?
March 5, 2013
The days of the credit card's magnetic stripe appear numbered, with special-chip, or EMV, credit cards poised to immigrate onto America's payments landscape.
1. Transaction information is encoded uniquely every time with EMV cards.
2. Several credit card issuers currently offer EMV credit cards.
3. U.S. travelers can run into problems using a magnetic-stripe card overseas
What is EMV?
EMV stands for Europay, MasterCard® and Visa®, the developers of this technology. EMV has been used in Europe since 1992, and steps are now being taken to make it the standard payment type in the U.S. due to the significant reductions in fraud it produces.
EMV, also known as chip and PIN payments, starts with the consumer being issued a card into which a smart-chip has been embedded. At the time of the transaction, the card is inserted into an EMV-enabled payment terminal, which uses chip technology to verify the purchase and sends a signal to the point-of-sale (POS) device to complete the transaction. At this point, the customer may have to enter a PIN rather than sign the payment receipt, depending on the type of payment card they are using. Other than the insertion of the chip card, the sale takes place as normal - no special action is needed from the merchant. It's important to note that in an EMV transaction, the Payment card is not given to the merchant. It stays with the customer, providing an additional layer of security.
EMV-enabled card's, have an embedded microprocessor chip that encrypts transaction data differently for each purchase. Some chip cards require a personal identification number to complete a transaction, while others only require a signature. EMV is widely used in Europe and Asia and is steadily being adopted as the standard type of credit card worldwide. Everywhere, that is, except the U.S.
The status quo is slowly changing. In August, Visa announced several initiatives to encourage retailers to accept EMV-enabled cards. MasterCard followed up with its effort to persuade U.S. ATM owners to upgrade their machines to take the cards by April 2013. And this summer, several credit card companies rolled out chip cards to American globetrotters and business travelers to make overseas purchases easier.
Why Adopt EMV Chip Technology?
There are two key reasons that it's important to consider adopting EMV chip technology now. The first is, as a merchant, you never want to turn down a sale. Currently, chip cards will still have the magnetic stripe and will be usable in older terminals. However, soon you may find that you are losing sales without an EMV enabled terminal.
Secondly, EMV can help to reduce the incidence of fraud by scanning for counterfeit cards and rejecting them. EMV is a proven technology - chip cards have been used in Europe and Canada for years and have been shown to dramatically reduce fraud. In fact, the major payment brands, including MasterCard, Visa and American Express are planning a ‘liability shift' where merchants without EMV-enabled terminals will be responsible for point-of-sale fraud losses that could have been prevented with chip technology systems.
EMV: Better security than the mag stripe?
Proponents of smart cards brag about the security EMV cards offer versus the traditional swipe-the-stripe cards. Because the transaction information is encoded uniquely every time, it's harder for criminals to pick up useful payment data pieces and use them again for another purchase, says Randy Vanderhoof, executive director of the Smart Card Alliance, a nonprofit with a mission of advocating smart card technology.
Compare that with magnetic stripes that contain what Vanderhoof calls "static" data, or payment information that never changes. All thieves have to do is lift that information and create a fake card before going on a shopping spree. This can occur with devices that thieves use that only require them to be in close proximity to your card.
EMV cards nearly eliminate skimming scams, says George Peabody, director of emerging technologies advisory service at Mercator Advisory Group. So no more worrying about a server taking liberties with your credit card after a meal, like the Mugs 'N Jugs waitress in Florida who was arrested on charges of skimming the credit cards of bad tippers.
Unfortunately, head-to-head security comparisons are hard to come by. However, the UK Cards Association along with Financial Fraud Action UK published a report on card fraud in 2011, which found that counterfeit fraud losses in the U.K. dropped by more than 63 percent since 2004. The report attributes the steep decline to the broader usage and acceptance of chip cards in the country.
When using counterfeit mag-stripe cards overseas, criminals preferred the U.S., the study found. For the past five years, the U.S. earned the distinction of the No. 1 country for card fraud committed abroad.
Despite reducing card-present fraud, however, EMV does nothing more to prevent card-not-present fraud, such as online transactions, than the traditional mag-stripe card.
"If we are going to have a massive infusion to replace the infrastructure, card-not-present fraud needs to be addressed early in the process, so we don't have a blind spot where fraudsters have a wide open field," says Eric Lindeen, marketing director for Zoot Enterprises, a Bozeman, Mont., firm that provides credit decision and loan origination solutions to financial institutions.
Transitioning to EMV
Small businesses are always looking for cost- effective ways to adopt new technology, and we are here to help. We will keep you apprised of developments as they unfold as we look to keep our clients fully informed and to provide ways to minimize any transition issues or costs.
Have a Prosperous Day!
When Using a Debit Card
February 28, 2013
Some things you should know when using your card for reservations or authorizations.
- A hold for funds will be immediately placed on your checking account by your financial institution.
- The amount held could be up to the total of any potential charges plus tax.
- An additional hold may be placed on your account for any potential incidental charges.
- Funds can be held for up to 5 business days by your financial institution.
Our suggestion - do all reservations and authorizations only on your credit card and pay with your debit card once you know the total to avoid unnecessary holds on your checking account.
Credit Card Processing and Predatory Pricing schemes
November 28, 2012
Some Facts and Tips that can help you avoid being ripped off.
1. All Processors pay the same costs to Master Card, Visa, Discover and Amex to process their transactions on behalf of their customers. NO one gets any discounts, breaks or other cost advantages. This rate system is called INTERCHANGE.
2. The major card companies have set up rules for processing transactions. Follow their rules and you get their best rate for that transaction. The rules are all related to their view of risk not yours.
Breaking the rules costs you anywhere from 10 basis points to 95 basis points more to process that transaction.
3. Therefore the best pricing plan you can be on is one that's based on the wholesale interchange rate plus processor cost.
4. Basis points have more impact on your costs, plus or minus, than cents per transaction costs. 1 basis point equals 1/100th of 1% so this means that 1% is equal to 100 basis points.
5. Always go with a processor that is doing at least Level 2 processing. Level 2 processing helps you avoid those breaking the rule costs because it "pushes" more data to the major card companies as long as your personnel input the data.
6. The experience of your processor agent can have an impact on your costs. For instance if your business does primarily B2B transactions that's the way you should be set up so that your terminal prompts you for the data you need to avoid those breaking the rules costs.
7. Look for processors that can provide you with the funds from your transactions within 24-48 hours or even next day funding. This allows you to put your money to use in your business quicker which means that you have an opportunity to avoid borrowing costs or earn more interest.
8. Always take into consideration all your costs of doing business with that processor. Many fees such as batch header fees are just fluff and can be negotiated.
9. Make sure any analysis of your current processor by the prospective processor is done side by side and is an apple to apples comparison. If they can't explain it, it's probably just a sales gimmick.
10. And finally, look at all the factors: Is this processor associated with any groups I belong to or referred to me by someone I respect? What is my gut telling me? Are there any costs to me for getting out of my present contract or the prospective contract and if so how much? And if it's too good to be true, it probably is.
Have a prosperous day!
How to Manage your Merchant Processing Costs
October 22, 2012
As mentioned in my last blog the Interchange rate system is the basis for all transaction costs assessed by the Major Card Companies, M/C, Visa, Discover & Amex. Of the 4 Amex bases their rates on the type of business you have, not on the type of Amex card you have taken in payment. The other Card companies base their cost on the type of card you have taken from your client. For instance a card type known as CPS Retail charges 1.54% plus 10 cents plus dues and assessments of .0011. This represents the Interchange cost assessed by the Card Companies for processing a transaction based on that card type. It is not what your final cost will be. Your final cost is based on this plus what your processor (middleman) charges.
My recommendation would be to only accept a pricing program that is based on an Interchange plus cost basis. This at least gives you the opportunity to secure the best rates based on the card type mix your business takes. So for instance in the example above if your processor was charging you 25 basis points plus 20 cents per transaction to process a transaction on your behalf, the final cost of the above transaction would be 1.79% plus 30 cents plus dues and assessments of .0011.
The reason that this pricing program is more attractive than what the industry terms a Tiered program or some derivation thereof is that it specifically addresses the card mix you take at your business. You may take more debit cards than credit cards or more retail credit cards than commercial or corporate cards, all of which carry different rates.
Next time I will discuss more about the Interchange system and making sure that your business is always getting the opportunity for the best rate.
Until then "Have a prosperous day".
FANF FEE, what does this mean
July 27, 2012
You may have recently noticed some new fees on your Merchant Processing statements under the acronym FANF which stands for Fixed Acquirer Network Fees. They may also be reflected as Card Association Fees and no matter who processes your credit card transactions, your business will be impacted. Visa began charging the Fixed Acquirer Network Fee (FANF) on April 1st, 2012, while MasterCard's comparable fees will take effect in July 2012. These are fees that all merchants accepting Visa and MasterCard will be paying regardless of the processor or acquiring bank they are set up with. So that you understand what this means to your business and how you process credit card transactions, we wanted to give you an overview of how they work. ...Read article
The Green Sheet
A semimonthly resource providing complete, original coverage of important and emerging issues in the ever-evolving payments industry. Founded in 1983 by industry pioneer Paul H. Green, The Green Sheet Inc. was the first publisher to focus exclusively on the payment industry's ISO and merchant level salesperson channel.