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10 Things you can't buy (without difficulty) with a credit card

Wednesday, 26 October 2011 14:12 |

With all the new technological advances we have in the processing business, you can use your credit or check card to buy stuff almost everywhere these days. You can buy a soda from a vending machine, or if the person selling has the right equipment, even buy items at a garage sale with your credit card. Even so, there are still some transactions you're unable to use your credit card for. The reasons are either because the transactions are considered too high risk, they can attract large amounts of fraud, or simply because they tend to give the customers buyer's remorse, which leads to charge-backs and disputes that can become costly for credit card companies. The following list is 10 things you can't buy (easily) with your charge card.

1. Medical Marijuana. Even though medical marijuana is legal in almost a 3rd of the country, you can't buy it using an American Express card. Discover and Visa will continue to let their customers make these purchases but a spokesman for Mastercard has said that as of October, they are evaluating their policy.

2. Money Orders. Even though some merchants allow you to buy Money Orders with your debit card, you cannot do so with a credit card. You would basically be borrowing money to buy cash.

3. Online Pornography. This is another example of how conservative American Express is. They are the only credit card company that will not allow the purchase of legal adult pornography on the internet. It has made such pornography un-purchasable to its customers since 2000.

4. Lottery Tickets. Almost all states do not allow the sale of lottery tickets using a credit card. There are a small few that allow it but even in those states the retailers do not offer you the option and if they do, your credit card company can charge you a huge cash advance fee. American Express will not let you pay with credit, regardless of what state you live in.

5. Online Gambling. Hundreds of overseas based sites are currently up and running and allow Americans to gamble online even though online wagering has a federal ban. A law started in '06 makes it illegal for a bank or credit card company to make payments between gambling sites and individuals. Because of this law, most sites won't let you pay with a credit card. You have to instead send a check or wire money directly.

6. Donation to WikiLeaks. While AmEx and Discover were never accepted by WikiLeaks, Visa and MasterCard have said that they refuse to process donations sent to this website. It cites violations of their terms of service. Bank of America and PayPal are also saying the same thing. The director of a payments research facility makes note that all of the above companies still let you make donations to other groups that are considered controversial, like anti abortion activists or even the Ku Klux Klan.

7. Mortgage Payment. Even though you could earn lots of rewards by putting your mortgage on your credit card, lenders refuse to let their borrowers do this. It's a mix of them not wanting to pay merchant fees and because it's risky.

8. Mutual Funds and Stocks. There has been reports of some firms letting their "best customers" buy shares with their credit cards but almost all brokerage firms, online or off, will not allow it. An author on the subject has said the reason is because they want people to have real money at risk.

9. Chips in a Casino. Although casinos are completely legal, most states have gaming rules that keep casinos from taking a credit card for chips. You can get a cash advance at the casino's ATM for a large fee, but this is just about the only way you can use your credit card to buy chips. The hope is that this will keep gamblers from doing something impulsive, there is a psychological barrier when you run out of chips and have to actually walk away from the table.

10. Lap Dances. While you can use your credit card for drinks or food in an adult club, most only take cash for lap dances or other services from their dancers. Some of the clubs that do take credit cards for services will require a thumbprint from the customer along with their signature. This proves without a doubt that the customer was really there and authorized the charge.

Skimming is a continuous issue

Wednesday, 26 October 2011 14:07 |

For about as long as magnetic stripe cards have been around, so has skimming. For whatever reason, skimming has become much more used by thieves in recent years. Most headlines focus on the big hackings and breaches but skimming is still a huge problem and anyone with the right equipment can snag your information almost effortlessly. Some places that are targets for skimming are ATMs and unattended gas pumps.

The PCI council addressed this ongoing problem in August of 2009. Their statements state that merchants need to grasp that protecting their customers against card skimmers is just as imperative as keeping card databases and POS terminals safe from hackers. One of their examples at keeping equipment safe from someone installing a skimmer was to place a surveillance camera to watch the POS terminal, but at an angle where it couldn't record the PIN number entered. Even though this seems like a great idea to the council at the PCI DSS, merchants aren't usually willing to spend the money on monitoring systems. Most merchants don't even feel an impact by credit card skimming at their business, but arguments can be made that they lose future sales and the trust of their customers.

For more information about the PCI council's skimming prevention, please use the following link:

https://www.pcisecuritystandards.org/documents/skimming_prevention_IS.pdf

Antitrust allegations against Visa and Mastercard; NAC is the party suing.

Tuesday, 18 October 2011 13:55 |

The NAC or National ATM Council Inc has gone to the Fed District Court of the DC on October 12th to file a class action lawsuit against Visa and Mastercard. The details of the suit claim that MC and Visa's network rules are keeping ATM owners from providing lower prices on transactions for PIN-debit based networks that are not affiliated with either credit card company. It also claims that the rules limit the ATM operators' earnings and this action is a violate of the Sherman Act's prohibition of restraint of trade.

Not only is the NAC part of the suit, they are joined by over a dozen independently owned ATM operators. The lawsuit is challenging the agreement Visa and MC hold over almost every payment card-issuing bank in the USA. The lawsuit is titled "The National ATM Council Inc. et al., v. Visa Inc., et al. (No. 1:11-cv-01803). The plaintiffs are claiming that the agreement they're challenging allows Visa and MC to fix prices for ATM services and suppress competition amount these ATM networks. It also prevents operators from setting lower prices on their ATMs for the services they provide. The plaintiffs are hoping for relief from this agreement and it's also asking for a decree to eliminate the ATM restraints and award the class triple damages.

A spokesperson for both Visa and MasterCard have declined to comment on this suit.

New Encryption Requirements for PCI SSC - Fall 2011

Wednesday, 12 October 2011 19:48 |

PCI SSC has released new requirements for their P2PE (point to point encryption) on hardware or terminal based solutions. The document is approximately 100 pages and includes the requirements for terminal based P2PE solutions that have the PCI DSS compliance.

Some of the information provided in this document includes the relationship of the P2PE validation requirements and illustrations of how the encryption hardware is used.

This is only the beginning for the new hardware requirements. The General Manager of PCI, Bob Russo, has said that there is expected to be much more added to this list of requirements in the following months. There will be a new list of validated P2PE solutions released in 2012. Russo has added that all the standards of normal PCI DSS still apply. Merchants still have to maintain PCI compliancy to protect the data of its customers.

The new PCI P2PE requirements are located at the following link:

www.pcisecuritystandards.org/documents/nb59Y8Qqv/P2PE_Hardware_Solution_%20Requirements_Initial_Release.pdf.

Visa's New Interchange Rates - Fall 2011

Wednesday, 12 October 2011 02:31 |

On October 1, 2011, Visa and MasterCard put into effect their new interchange rates. Neither of the credit card companies would openly discuss the new interchange rates. It's safe to say that rates are on the rise. Visa made various changes to its rates, including setting their debit interchange rates as high as allowed under the Durbin Amendment and Consumer Protection Act of 2010.

The rate schedule for Visa included changes to 19 prepaid interchange categories and almost all of them were increases. Before the changes, the base rate was .95% plus 20 cents. Now it's up to 1.15% plus 15 cents.

The biggest hike in interchanges costs was in the petroleum category. Merchants will pay an extra .29% on an average sale. Travel, Entertainment and E-commerce saw double digit rate increases. Some notable decreases were for utilities and tax payments on debit cards.

You can see Visa's updated rates on the company's website at the following link:

http://usa.visa.com/download/merchants/visa-usa-interchange-reimbursement-fees-october2011.pdf

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