Follow-up: EMV Credit Cards and AmEx OptBlue


This is a followup to two topics that I addressed previously on credit card processing: EMV chip cards and the American Express OptBlue program. I explained earlier this season the changes impacting EMV cards, whereby certain kinds of liability for […]

This is a followup to two topics that I addressed previously on credit card processing: EMV chip cards and the American Express OptBlue program.

I explained earlier this season the changes impacting EMV cards, whereby certain kinds of liability for fraudulent losses is changing in the card issuers to the merchants. EMV cards and the associated equipment to process them apply mainly to physical, brick-and-mortar merchants.

Before the EMV series, I reviewed the new AmEx OptBlue program, which enables merchant account providers to determine AmEx processing charges, thus potentially decreasing the prices for ecommerce merchants. I discussed OptBlue at a 3-part series, in July, August, and September of 2014.

EMV Chip Cards

My January and February 2015 articles were dedicated to the EMV chip cards and the choices brick-and-mortar merchants will need to make before the October 1, 2015 change in accountability, wherein the card businesses force merchants to assume the risk of fraudulent losses in certain cases.

As I predicted, some salespeople-providers are using the October 1 date for a scare tactic to sell processing solutions or to sell or rent equipment at absurd prices.

I have heard of some suppliers selling PIN pads for around $600. I continue to hear stories of salespeople seeking to rent terminals for over $100 a month for up to four decades. A fundamental PIN pad may cost the supplier $125 — maybe $190 for one with near field communication that incorporates into a software system. Terminals generally cost the supplier less than $300 each.

EMV Credit Cards

Bear in mind, one of my important rules when dealing with credit card salespeople is this: When the salesperson attempts to rent equipment to you, walk that individual to door. He’s not the salesperson you need to your account for more reasons than simply attempting to rent the equipment.

Merchants using a software system that’s proprietary to a provider can be in a greater risk of being overcharged for EMV chip card equipment. I’ve seen providers attempt to sell PIN pads for a couple of times what it cost them. Unfortunately, merchants can not simply shop online for PIN pads since they are encrypted apparatus as well as the encryption is unique to the supplier or processing support.

This is a fantastic time for brick-and-mortar merchants to reassess their processing scenario, as some suppliers are offering free EMV gear for as long as the merchant procedures together. Unfortunately, a few of the providers offering free equipment aren’t the most reputable. Nonetheless, merchants have regularly done well with these programs.

Merchants should read the posts I have written during the past few years to ensure they’re receiving a great processing worth — combined with the free gear. Especially, make sure there’s not any early termination fee as some of these free gear offers include punitive early termination fees.

American Express has established a program to assist modest merchants better manage EMV equipment. Eligible merchants that update to an EMV terminal can ask for a one-time $100 reimbursement from American Express.

American Express OptBlue Program

My July, August, and September 2014 posts were dedicated to American Express OptBlue, a new processing program provided by the business. But, merchants likely won’t hear that name –“OptBlue” — by their salesperson-provider. Rather, providers may refer to it as an immediate processing program they need for American Express transactions.

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Ahead of OptBlue, American Express set the merchant prices and serviced the account. Under OptBlue, the supplier receives a wholesale rate from American Express. The supplier then sets the retail rate and services that the account. This is extremely similar, but less complex, to the way suppliers sell and service Visa, MasterCard, and Discover. The last rate you pay your supplier for American Express is negotiable, as is true with another card companies.

As I said in my posts, American Express has done a fantastic job with this app. It also needs to cost the typical ecommerce and brick-and-mortar retail merchant less to process American Express transactions with this app. In actuality, I provided an example in my September article of a merchant who had been processing American Express transactions for less than it cost him to process Visa and MasterCard reward cards.

Exactly like with Visa, MasterCard, and Discover, what merchants ultimately pay for American Express processing is up to their awareness and discussion skills. Regrettably, a lot of merchants still think in terms of Visa and MasterCard when negotiating their fees and rates. Here’s an actual, recent case. The rates/fees below are from a merchant’s February 2015 statement.

AmEx OptBlue Example

To begin with, this merchant is paying far too much for processing generally. However, what’s most important is the way the merchant has been overcharged for American Express. Notice the Discover, MasterCard, and Visa rates at 0.17 percent over interchange and pass-through fees. But, note the American Express speed at 0.74 percent over American Express wholesale prices and pass-through fees.

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There’s absolutely not any reason why this merchant should pay a greater mark-up for American Express compared to other cards except the merchant was not paying attention to the American Express rate. Furthermore, this merchant is paying more for American Express processing under the OptBlue program than he would under the preceding American Express program.

Did you get a notice from your chip during the past few months saying it had been automatically enrolling you into a brand new American Express program? Did you check to determine whether you were being billed correctly and getting any cost savings under the OptBlue program? If you didn’t, do not be surprised if your chip is maintaining the savings. Even worst, some suppliers may now be charging merchants more for American Express processing.

I like what American Express has done using the OptBlue program, which should save the ordinary ecommerce merchant money. Unfortunately, reasonable implementation of this program is left up to your salesperson-provider.

My September article on OptBlue comprised a PDF form for your salesperson-provider to finish, to make certain you’re being priced correctly. In the event you were automatically enrolled in this program, you might want to discover how you’ve been priced.