To compile the report, Forrester distributes a questionnaire to the market to identify product capabilities, market presence, geographic focus, and an overview of primary market segments. Equipped with this valuable information, merchants can select a payments partner that best fits their needs.
“To be identified by an industry leader like Forrester is validation of our mission—to make payments simple, safe and scalable,” said CSG Forte’s President Jeff Kump. “Our goal is to tirelessly innovate and simplify payments for our customers. This report is evidence that we’re on the right track and that the best is yet to come.”
Forrester uses a brief assessment of product capabilities to have a well-rounded group of vendors that span markets and geographies with varying areas of expertise. Some the key attributes of the CSG Forte platform include:
ACH Processing—As a Nacha preferred partner, CSG Forte is known for its ACH capabilities, including real-time payment processing, ACH/eCheck origination, validation and fraud prevention.
Customizable Convenience Fees—Unlike other payment processors, CSG Forte allows merchants to set convenience fees for their customers in real-time in the payments portal.
Credit Card Processing—CSG Forte’s solution makes it simple to process debit and credit card payments in-person, online and over the phone, and to set up recurring payments.
In addition to these unique capabilities, CSG Forte also offers several differentiators that benefit our customers:
Revenue optimization—By simplifying the payments process through a unified, end-to-end solution, CSG Forte helps clients grow and optimize their revenue.With industry-leading ACH processing capabilities, clients are able to receive funds quicker than the traditional credit card process, often receiving funds the same day with Same Day ACH.
Stringent security and compliance—CSG Forte’s solutions implement cutting-edge technology and proven protocols to keep vital information secure. Through tokenization, end-to-end encryption and hosted web pages, CSG Forte allows clients to accept payments securely. Additionally, we offer built-in PCI compliance and Nacha real-time transaction compliance.
Superior support—Navigating the payments landscape can be tricky. CSG Forte simplifies the process with best-in-class client support. With a dedicated support team, comprehensive onboarding resources, a robust knowledge base and regular release notes, CSG Forte makes accepting and processing payments easy.
CSG Forte is proud to be included in Forrester’s Now Tech report. By selecting a vendor from the Now Tech Merchant Payment Report, merchants can improve how they accept and process payments—from supporting new payment methods to reducing fraud and enhancing security and compliance. Click here to read about CSG Forte’s growth into 2022.
Learn how CSG Forte delivers seamless integration through partner network to meet accelerated demand for secure, convenient digital payments.
5 Payment Trends to Watch in 2022
Human beings have an innate need to make predictions. For whatever reason, we like to make forecasts on just about everything, from Oscar winners to World Series champions, from election results to the likelihood of weather events, and everything in between.
The most effective prognosticators tend to take a 360-degree view. That is, they try to eliminate blind spots and take multiple factors into account. The recent past can give us a good idea of where things are heading moving forward.
In the payments world, the COVID-19 pandemic sent shockwaves throughout the industry that continue to reverberate. Today, we are seeing innovative breakthroughs in new digital payments technology, with rapid adoption across a wide range of industries. On the flip side, there are more opportunities for hackers and bad actors to try and take advantage.
Where is the payments industry headed? While I don’t claim to be Nostradamus, there are a few major trends I believe will dominate the payments headlines in 2022.
1) Digital Payment Methods Transform (and Explode)
The past few years have shown consumers that there are more ways to pay than just checks, cards and cash. As a result of the pandemic, contactless payments adoption has surged. Today, more than half of all Americans use at least one form of contactless payments (mobile apps, contactless cards, etc.). And consumers are letting merchants know that they expect more digital payment options—57 percent say they are more likely to do business with a merchant that offers a contactless payment option.
New payment methods will continue to attract first-time users in 2022, such as virtual credit cards, which provide consumers with alternative credit card numbers to disguise their sensitive information when making online transactions. There are a number of reasons virtual credit cards are an alluring prospect: they are environmentally friendly, incredibly secure and easy to monitor. They also empower the customer by allowing them to set spending limits and expiration dates. Just like with contactless, once buyers use a virtual credit card, they’ll demand the option moving forward.
2) Tighter Payment Security
An unfortunate byproduct of the rise of digital payments is the increase in digital payment fraud. eCommerce fraud grew to more than $20 billion in 2021. As security threats loom over merchants and consumers alike, more advanced fraud prevention will become a necessity.
In the next year, multifactor authentication (MFA) will become more commonplace. MFA has three types of authentication factors—biometric identification, device in-use and traditional password. Just as consumers are used to opening their smartphones with a quick press of the thumb, consumers will get used to using MFA for purchases.
In 2022, consumers will have the ability to set up multiple layers of security while making purchases in real-time. When a consumer is using a credit card at their local market, they can instantly receive a message to confirm their purchase. In the time it takes to glance at a screen, the transaction is confirmed to be safe. These additional levels of security can drastically reduce the risk of fraud, a tremendous benefit to both consumers and merchants.
3) Better Bill Pay
Bill payment is the one guaranteed touchpoint your customer will have with your business every month or quarter, and since these interactions are guaranteed, there’s a great opportunity to make them stand out.
In 2022, we predict that businesses and merchants will level up their bill payment processes, from offering customers payment methods like PayPal to establishing recurring payments so customers can set it and forget it. In fact, almost 40 percent of consumers prefer to pay their bills through automatic checking account deductions or credit/debit charges. By offering more convenience and choice, companies can make ordinary bill payment experiences extraordinary.
4) Companies Will Offer More Financial Flexibility
The last few years have highlighted the importance of flexibility—in how we work, interact and communicate. Now, consumers have come to expect flexibility in their payment terms. With the rise of apps like Klarna and Affirm, companies are embracing the “buy now, pay later” option, letting consumers pay off purchases in installments rather than one single payment. On the flip side, consumers can also customize when they get paid, with some prepaid debit cards and even financial institutions developing early payday options. In some cases, early direct deposit allows consumers to receive their paychecks into their accounts up to two days early.
Large financial institutions are beginning to adopt these new technologies to create a pipeline of young consumers who place a premium on flexibility, convenience and financial freedom. I anticipate the increased implementation of financial flexibility in the next year as a tech-savvy generation continues to push institutions to reinvent their business to keep pace with digital transformation.
5) Recurring Payments Will Keep Going (And Going, And Going…)
Nobody likes to waste money—especially on something as avoidable as late fees. For that reason, many consumers have embraced recurring payments for regular charges, including cable, utility and rent bills. The notion of having to pull out a checkbook and pay bills monthly is outdated—and this trend will spread to the B2B space.
Unfortunately, payment failures can stand in the way of a successful recurring payments strategy. Payment failures can lead to customer churn, bad debt and a diminishing bottom line. Businesses are increasingly embracing automation when it comes to their payments, including recurring payments. B2B companies that embrace payment modernization can avoid failure and effectively set and forget their recurring payments.
Want to learn more about how payment security can make 2022 your best (and safest) year yet? Download our 3 Steps to Ensure Payments Security here.
Power to the People: Digitized Payments Make Payments Safer and Easier
The first electronic payment may have debuted in 1871, but digital payments have really shown their worth in the last 18 months. They have presented an ultra-secure, convenient and hygienically safe way to make payments without physical contact. Recent surveys show that digital payments are here to stay— 45 percent of US adults say they are likely to use digital or contactless in-store payments regularly in a store after the pandemic.
Consumers are increasingly growing accustomed to digitized experiences. With a few taps of a smartphone, a pizza can arrive on their doorstep within a half-hour—no phone call, cash or physical contact needed. Digital experiences also offer an extra layer of safety during an ongoing pandemic. As low touch and digital experiences become more ubiquitous, consumers have come to expect them to be available, especially when it comes to payments.
Payments play a pivotal role in the customer experience—and contactless payments give consumers a safe, secure and easy way to pay. According to Forbes’ State of Contactless Payments 2021 report, when all other factors are equal, consumers will choose a store that offers contactless checkout over one without contactless. In terms of staying competitive, digital payments are no longer a nice-to-have—they are a must.
There are several benefits for both merchants and customers when it comes to digital and contactless payments.
Convenience— When asked why they wanted contactless options, 2% of respondents cited convenience as their primary reason for using contactless payments. Contactless payments remove the need for PINs or signatures.
Security— Contactless payments featuring RFID and NFC-enhanced technologies are secure, especially when paired with an enterprise-grade POS terminal with advanced security.
From managing employees to balancing the books to creating an exceptional customer experience, merchants have more than enough to worry about—partnering with a payments provider with the right solution helps. At CSG Forte, we offer a full suite of solutions to make digitizing payments scalable, secure and convenient.
Our V400C Plus device makes contactless payments easy. The device was designed with merchants and their customers in mind—with enhanced features including a color touchscreen interface, wi-fi connectivity and thermal printing, merchants can smoothly conduct transactions and provide an exceptional customer experience.
The V400C Plus can be used as a standalone device, be connected to a point-of-sale application, or seamlessly integrate with CSG Forte products. Merchants can accept every major credit card, as well as mobile wallet payments, like Apple Pay and Google Pay.
Combined with our cloud-based platform Dex, merchants can gain insights into what payments customers prefer and allow them to easily manage the entire transaction lifecycle.
Contactless payments were on the rise before the pandemic—COVID-19 has merely accelerated its momentum. When powered by the right technology, merchants can satisfy customers and boost revenues by offering secure and convenient contactless payments.
CSG Forte Ranks 1st in Payment Gateway Performance for H1 2021
At CSG Forte, we continuously strive to improve the ways we make payments smarter, faster and scalable. One area of focus is our payments gateway. Over the past year, we’ve looked at several ways to make our platform, which is fueled by modern APIs and RESTful architecture, perform even better.
A recent Gateway Enterprise Metrics (GEM) Real Transaction Metrics report by The Strawhecker Group (TSG), a recognized leader in payments analytics and consulting, ranked CSG Forte first out of 22 gateways for overall payment gateway performance from January through June 2021.
Out of over 20 payment gateways evaluated, the average gateway scored 80.18 on the GEM Index, an overall scorecard for gateway metrics based on five key areas. CSG Forte received a 95.5 overall score, placing first in a competitive field. CSG Forte also tied for first in gateway availability, gateway minute outage and gateway uptime.
GEM is the only platform on the market that measures performance from a merchant, developer and gateway perspective. To measure the robustness of a platform, TSG monitors how gateways perform through pings and real transactions from over 20 global locations. This information can be used to increase bandwidth, mitigate platform performance issues and shift data locations.
TSG uses several measures and benchmarks for their report, including gateway minute outages, gateway availability, transaction average response time and gateway uptime. To calculate the GEM Index, they assign a value to each benchmark. For example, the best possible score for gateway minute outage is 15 but 30 for transaction average response time.
A payments platform needs to be intuitive to use, secure and fast. At the heart of every robust platform is a high-performing payments gateway. CSG Forte will continue to make it easier to accept and process payments for merchants, governments and enterprises.
Scaling Digital Payments Smarter and Growing Businesses Faster with CSG Forte
From the renewed emphasis on contactless commerce to the promise of real-time payments, the business of facilitating transactions for goods and services is as hot a subsector of fintech as any other. To this end, we caught up with Jeff Kump, Head of Payments for recently rebranded CSG Forte, a unified payments platform based in Allen, Texas, to talk about innovations in payments, the power of enabling technologies, and the role played by companies like CSG Forte.
Since 2006, Kump has been tasked with leading and growing CSG Forte’s operational and cross-functional teams. Additionally, he has proven instrumental in advancing CSG Forte’s corporate development and growth strategy, serving as Forte’s COO and CFO before the company’s acquisition by CSG in 2018. During his tenure at Forte, the company was recognized by the Inc. 5000 as one of America’s Fastest Growing Companies for eight consecutive years. The company is an alum of our developers conference, FinDEVr, having hosted presentations on payment technology at events in 2014, 2015, and 2016.
What problem does CSG Forte solve and who does it solve it for?
Jeff Kump: To start, we offer one of the most complete and customizable payments solutions in the world, enabling companies to scale digital payments smarter and grow their business faster while also reducing costs.
Offered as a unified end-to-end payments platform, our technology was purposefully engineered to make it easy for companies and integrated software providers to set up, integrate, quickly adapt to changing needs and scale fast—because speed so often translates to success. We have done this by managing the entire payment lifecycle within a single platform, fueled by modern APIs and RESTful architecture that transforms their payments operations into a competitive business strategy.
This agile foundation has also helped us to succeed across hundreds of industries. It can be difficult to find a partner both competitive on price and legitimately equipped to provide the custom solutions necessary to succeed. Our team leverages deep yet specific channel expertise to support our customers’ verticals, including security, compliance, and integration.
Our unique approach to payments has enabled us to grow rapidly – outperforming larger competitors and transforming payments from an expense to a critical growth driver. From 2010 to 2018, Forte was, for example, listed on the Inc. 5000 list as one of America’s Fastest Growing Private Companies. Today, we work with over 70,000 merchants across hundreds of industries in North America.
What impact did the COVID-19 pandemic have on your business? What are some of the biggest takeaways from 2020?
Kump: When COVID hit, many companies were forced to transform how they interact and support their customers and employees. The pandemic also had a lasting impact on the payments industry, but maybe not in the way that many expected.
While contactless and mobile payments certainly received their fair share of attention, it was the rapid rally around electric payments that was critical to the success of social distancing, stay-at-home orders and bill payments. Merchants and governments across a range of verticals turned to CSG Forte to get smart in e-commerce – quickly enabling their websites to handle online orders, introducing store-specific apps that allow their customers to shop more easily from home or encouraging pay-by-phone.
We also saw a surge in self-service payments kiosks and anticipate this interest in these kiosks will increase for businesses and consumers alike who want to arm themselves against future emergencies, rely less on cash, and encourage social distancing habits post-pandemic. Kiosks are a flexible solution, offering a breadth of payment options to support both people using cash (including underbanked populations) and payers who prefer to avoid human interaction. Moving forward, you will see a rise in VR (Voice Response)-enabled and Conversational AI-enabled kiosks that minimize the number of times payers need to touch the screen or keypad.
Related to the rise of contactless payments, it has not all been hype. As consumers have returned to their normal in-person shopping habits, more and more merchants have turned to CSG Forte in the last year to put in place the point-of-sale infrastructure that supports contactless options and mobile pay.
Which of the main payment trends – digitalization, tokenization, contactless, the security/fraud challenge etc. – will have the most impact on payments in the near term? What will businesses need to do in order to successfully take advantage of these trends?
Kump: We think that digitalization is the most important trend for businesses to follow and act on right now – paving the way for the rise in virtual cards, contactless, and other payments advancements.
Reinforced by COVID, industries are shifting from paper methods to digital processes, and more transactions are taking place online. Digital payment solutions can improve security, accuracy, efficiency and profits, giving businesses a competitive advantage in a digital economy. For instance, ACH payments are more secure and considerably faster than paper checks, cost less to process, and leverage advanced technologies to protect against check fraud, data breaches, and identity theft.
The challenge of digitalization is addressing the security concerns it presents. With increasing digitalization, hackers gain more access to sensitive data, leaving individuals and enterprises vulnerable. Over half of U.S. merchants have faced a data breach at some point – in 2017, over 19% reported an incident. About 60% of consumers say they will actively avoid businesses that have experienced a recent data breach, especially when it involves credit card information.
With that in mind, businesses should invest in technologies such as End to End (E2E) encryption, EMV, and tokenization that can mitigate risk related to fraud and security breaches caused by bad actors. E2E encryption can be used alongside digital platforms that support point-of-sale (POS) transactions and IVR phone payments; the technology hides payment information and converts it into an unreadable code as it is transmitted across the payment network that is decrypted with a private key upon reaching the intended destination. Merchants who have POS devices that accept contactless payments are able to securely transmit payment data using EMV technology that works by generating a one-time transaction code. The code is unique to each purchase, eliminating the fraud risk of duplicate credit cards that often occurs with magstripe cards. Tokenization is used for eCommerce, recurring and automated transactions, and stored cardholder data. Tokens replace the payment data with a randomly generated code that can only be exchanged for real data by the payment processor that stores it. These are often used by merchants that offer automatic/recurring payments like subscription- or membership-based services. Tokens are easy to use and effective for the security they provide. Any cybercriminal that gets their hands on tokenized data will find it unreadable, as only payment processors can exchange tokens for real data, ensuring both external and internal protection.
Implementing secure technology such as E2E encryption and data tokenization can help protect businesses from enduring the negative and costly impact of fraud and data breaches that can also cause reputational harm to their brand. CSG Forte has several solutions that are out-of-box and/or easy to integrate and can reduce the scope and burden of managing PCI and Nacha compliance requirements. Businesses that do not have these protections in place should engage a trusted payment processor, such as CSG Forte, to assist with implementing these necessary security measures.
CSG Forte announced a partnership with CivicPlus this spring. This reflects one trend – government modernization – that was accelerated by the pandemic. Can you tell us more about the partnership, including how it came about?
Kump: Government modernization is a hot topic indeed. With many offices closed to the public in 2020 and into 2021, government agencies turned to CSG Forte to quickly evolve the way they do business. In response to sky-high demand, we doubled down on our partnerships and innovations that empower the government vertical in the last year – joining forces with CivicPlus, gWorks, SeamlessDocs, and Accela, to name a few. In 2020, we were also named a preferred partner by Nacha for Government Agency ACH Payment Gateways.
CivicPlus and our CSG Forte team have been bumping into each other for a couple of years now, having been involved in similar projects with local municipalities and state governments. After a few of these encounters, and one where we helped them to quickly get some new accounts deployed, the idea of a true partnership truly took root – and is what we announced this spring.
By partnering with CivicPlus, we can offer over 4,000 local governments a full end-to-end payments solution that accelerates the evolution of traditional payments services and meets the needs of today’s digital-savvy citizens while providing key capabilities needed to drive an industry-leading online payments experience. This includes:
Enhanced security: E2E encryption protects sensitive card data throughout the transaction lifecycle
Seamless payments: Secure, online payments received instantly through an intuitive, easy-to-use platform
Check processing with verification: Gives government agencies the ability to accept checks with confidence, providing checking account validation. Verification capabilities meet new requirements set forth by Nacha
Updated payment status: Automatically records the payments status to keep the system updated in real-time
What else can we expect from CSG Forte over the balance of 2021?
Kump: First off, we just rebranded the business. Previously known as Forte Payments Solutions, the holistic CSG Forte rebrand includes a new logo, website, and social pages that position CSG’s payments business for rapid growth into new regions and across the hundreds of verticals it serves.
As we look at innovation and product enhancements for the remainder of the year, our focus at CSG Forte is to simplify the customer experience and improve their journey. Consumers are increasingly interested in Apple Pay and Android Pay, among others, so we are enhancing our product roadmap to include digital wallet options for merchants. Additionally, we are transforming the way that we manage transaction monitoring to ensure a seamless processing experience for merchants.
Our customer-centric approach is also focused on developing solutions that minimize compliance burdens such as Nacha’s “Supplementing Fraud Detection Standard” mandate, which impacts many of our merchants who leverage ACH services, as well as accelerating value delivery to merchants by reducing onboarding time so they can begin processing transactions faster. We will continue to evolve our payments platform to align with the voice of the customer and ensure we are not only meeting but exceeding their expectations, making ordinary customer experiences extraordinary.
Jeff Kump is Head of Payments at CSG and leads the newly rebranded CSG Forte business, where he oversees go-to-market strategy and new opportunities in the global payments market. Kump previously served as Head of Operations for Forte, focusing on continuous business process improvement, risk and fraud management and providing an unparalleled customer experience.
Payment platforms are often rigorously designed for a number of factors, including security, speed, reliability, and more – but one of the most integral factors for any payment platform isn’t what you may think – it’s scalability.
What makes a platform scalable is its ability to handle oncoming work that grows and develops. Similar to flexibility, scalability allows users from either end of the platform to transform and change their businesses with the knowledge that the platform will react accordingly, adjusting quickly to maneuver new challenges.
A platform that is not scalable, on the other hand, will suffer. Static platforms fizzle and die, unable to keep up with the growing trends and industry challenges. Look, for example, at the mobile payments industry. The highly scalable applications like Starbucks find themselves responding quickly and adeptly to consumer wants and needs. Mobile pre-ordering, built-in rewards, music applications, and payments are all part of that ever-changing platform – and it doesn’t seem likely that Starbucks will stop anytime soon.
On the other hand, a great number of other mobile applications lay in waste. Unable to accommodate user demands and requests, these platforms failed to drive forward. As a result, they lost users and sales. The platform dies.
Payments platforms, in particular, are specifically sensitive to scalability because of the nature of the payments industry. With ever-expanding challenges and disruptions, platform creators are now required to do more than troubleshoot. They are almost asked to intuit the new big wave, creating solutions before problems occur.
But such is the life for any tech industry, including fin tech.
Payment platforms that cannot scale risk losing users on either side of the platform. Here’s why merchants and other users should consider scalability on their list when shopping for a payment platform.
Plan for business to grow
As a merchant, your aim is for business to grow, not shrink. Your payment platform should be able to adjust with you. As you increase volume, you should be able to easily move into higher processing levels without much issue. Be sure that your processor can accommodate changes in volume and speak to them about potential contract savings, as well. Many processors offer discounts the more you process.
Expect high functionality
The platform should not be disrupted no matter how little or how much you are processing. You should still be able to perform all of the functions you need regardless of your business size. There’s no reason any of the features you’ve been using at one level cannot translate to another.
Lower risk when business changes
Scalable platforms are more than just flexible. Because they can adapt, if you need to make changes because of a hardship or short-term change, a scalable system is going to help you adjust through this time period. In lieu of terminating contracts or being forced to switch processors, which is a lengthy and arduous process, a scalable platform will allow you to tighten the reins momentarily without much cost.
Increased opportunity for newer features
Scalable platforms are usually more likely to receive system updates and changes as trends come, which increases your opportunity to test out newer features as they are making waves. Static platforms are less inclined to update frequently and most likely will not adopt newer technologies. If you’re interested in the new and shiny, a scalable solution gives you a better opportunity, and it’s much easier to test out than transferring everything to an all-new system or processor.
Scalability is one of the most important features for payment platforms, landing high on the list for merchant shoppers. CSG Forte offers a scalable platform that adapts to changing business and takes both cards and eChecks. For more information, visit www.forte.net or call 866.290.5400.
What’s a payment channel?
Since all of our recent chatter about omni-channel is centered on multiple channels, here’s a quick breakdown on payment channels and what we offer.
A payment channel is basically any way that a customer might make a payment or anywhere that you (as a merchant) might accept a payment. This is slightly different from retail channels, which might include bricks-and-mortar, catalogs, and online shopping/eCommerce sites. Payment channels are generally related to these retail channels, but are more specifically how the payment might be made: physical POS systems, phone/IVR payments, online checkout solutions, and mobile payment options, for example.
So these correlate to retail channels, but leave some room for overlap. For example, at a bricks-and-mortar retail channel, you might process payments on a physical POS system (ie the cash register), as well as on smartphones or tablets within the store. Your catalog might accept payments by phone, but also integrate nicely into the omni-channel concept so that customers could walk into your bricks-and-mortar store to pay at the POS, or they could shop the catalog online and pay via online checkout. There is a relationship between payment channels and retail channels, and since you definitely want to start creating a cohesive experience via omni-channel, it’s important to consider what payment channels you might implement.
Our new Checkout is smart, speedy, and stocked with options.
You can accept both credit cards and electronic checks on any of these channels, and each channel comes with our cloud-based Virtual Terminal for transaction management and our powerful payment gateway services. All of the reports funnel into the Virtual Terminal, so you don’t have to worry about piecing things together on your own.
Payment Channel Solutions
These payment channels don’t necessarily have to correlate only to retail, as well. Government agencies could implement online payments to accept taxes on the web and build a smart physical POS system for in-office payments. Veterinary clinics, dance studios, and other businesses can all benefit from considering an omni-channel approach.
And what’s easier than setting up all of your channels with one company? Get started with CSG Forte today. Give us a call at 866.290.5400 to see what we can do for you.
Cryptocurrency: Explain it to me like I’m 5
If you were paying any attention to rumblings in the payments industry in the mid-2000s, you probably heard someone say the words “Bitcoin,” “cryptocurrency” or “blockchain.” Following these utterances, you probably met the stare of the person talking to you with either a blank look or a look of skepticism, as you probably connected these terms with the dark web and nefarious purchases.
Now, cryptocurrency, and Bitcoin in particular, is becoming more mainstream – even if many Americans are still confused by the mysterious world of digital currencies. Many skeptics consider digital currency to be a speculative bubble. Some consider cryptocurrency to be the future of payment processing. Either way, let’s hop into the discussion to explain what exactly cryptocurrency is and why it should matter to you.
What is a cryptocurrency?
Cryptocurrency is the general name given to represent different digital coins. Many people are most familiar with Bitcoin, but there are various altcoins that compete with Bitcoin in different ways. Ethereum, Ripple and Litecoin are some major altcoins you may have heard of (but there are others in the market).
Ethereum, Ripple and Litecoin operate a bit differently from Bitcoin. Bitcoin operates off a blockchain, which essentially is a digital ledger of all transactions that occur with the specified cryptocurrency. To put it really simply, the blockchain is managed by ledger-keepers, who are also called “miners.”
While trying to explain the inner-workings of blockchain gets super technical (just think really, really big computers with lots of processing power), just know the ledger-holders must all agree on any changes to the blockchain for every transaction. This keeps everything (the ledger, your transactions and so on.) accurate and secure. For Bitcoin miners, they can earn a specific number of Bitcoin just by keeping track of the transactions that occur – also commonly called “mining.”
How does cryptocurrency work (and why do people like it)?
Cryptocurrency is founded off the idea of decentralization. Unlike most payment options to-date, cryptocurrency has no general need for the intermediary, i.e. the banking system. This intermediary system has been integral in maintaining the integrity of our monetary system.
Banks, especially when it comes to digital transactions such as stocks and non-cash transactions, help validate transactions. This is especially helpful in preventing “double-spending” in which a transaction is replicated, primarily through error or from a matter of hacking. The claim that Bitcoin makes, however, that that the blockchain system is more secure than any banking system, processes transactions faster than any bank can dream and gives the transactional authority back to the person who holds the money.
Cryptocurrency in its essence is a peer-to-peer method of transacting business – and it’s for this reason that cryptocurrency got a bad rap in some circles. People who have been in-the-know about cryptocurrency remember the coins being used to fund dark web transactions and other (sometimes illegal) enterprises. No longer is this the main use case, however. Now, people who own Bitcoin and other altcoins can use their money to purchase items found on the common market.
Whether you believe that cryptocurrency is just a flash in the pan of the payments industry, or you believe cryptocurrency to be the future of our global economy, most can agree that it’s an exciting time to witness the volatility and growth of these digital markets.
SEC Code Glossary: A Quick Guide to Entry Class Codes
In the world of electronic payments, NACHA (National Automated Clearing House Association) governs and dictates the regulations for processing electronic transactions through the Federal Reserve. The regulations are very serious, utilized in legal proceedings regarding transactions and relied upon by banks, payment processors, and both federal and state governments. NACHA keeps the order for the industry, and it’s important to abide by every one of their regulations.
Whenever a transaction is submitted, NACHA needs an SEC code along with it.
What is an SEC code?
SEC stands for “Standard Entry Class,” and is basically a code that denotes the way a customer authorized a payment. When you apply for payment processing, sometimes you will find that certain types of payment methods are associated with lower costs.
For now, we’re going to give you a quick glossary of SEC codes for easy reference.
POS (Point-of-Sale) and POP (Point-of-Purchase) entries refer to single debit payments made in-person via credit/debit card (POS) or converted check (POP). Both the card and/or the check are used to record the account information in association with the payment, and the original method of payment is then returned to the customer.
PPD (Prearranged Payment and Deposit Entry) refers to Direct Deposit entries and any Preauthorized Bill Payment applications. In this way, these payments can be both debits or credits (meaning funds can be removed or deposited into an account) and either single or recurring (occurring as a one-time payment or scheduled multiple payments).
A WEB (Internet Initiated Entry) is simply any debit via the Internet. These entries may be single or recurring.
These debits must be authorized by the receiver via the Internet. In other words, if the authorization itself was actually received in person, via U.S. Mail or by phone, for example, even to actually suffice for a payment from the Internet – it’s not really a WEB entry. However the authorization was received is how the transaction must be classified via the SEC code.
Also bear in mind you may only initiate a credit here as a reversal of a WEB debit. You can’t submit a credit using the WEB entry code.
TEL (Telephone Initiated Entry) entries are single debit entries authorized via the telephone. In this oral authorization entry there must be a pre-existing relationship between the receiver (person authorizing the payment) and originator (person/entity receiving the payment). If there is no relationship already in place, then the receiver has to make the phone call.
Additionally, all TEL transactions have to be recorded and kept on file for a minimum of two years from the date of the transaction. If the transaction is not recorded, then the originator needs to provide the receiver with a written notice that confirms the oral authorization before the payment settles.
A CCD (Corporate Credit or Debit) is also known as “Cash Concentration or Disbursement.” These entries can be either a credit or debit – and occur specifically between corporate entities. It can be a single entry or recurring.
All business bank account transactions are listed under this SEC code. A signed authorization has to be obtained either separately or included in the contract between the businesses prior to the transaction date.
An ARC (Accounts Receivable Entry) is defined as a check conversion that is originally received via the U.S. Mail. This includes the USPS (United States Postal Service), as well as courier services like FedEx and UPS. According to NACHA, this does not include personally delivered or night drop-box items. Corporate checks are also not included.
There’s also a slight change you’ll run into these less common SEC codes:
CTX (Corporate Trade Exchange) entries are initiated by originators to pay or collect their obligations. The funds are transferred to other organizations and so mirror the same business entity requirements as the CCD entry code. Both credits and debits are allowed.
The RCK (Represented Check Entry) entry refers specifically to single debits that occur as a result of check representment. Check representment occurs after an item is returned NSF (Non-Sufficient Funds), or is bounced. The service will simply represent the check at a later, scheduled date after it is returned. Some businesses choose to initiate check representment in order to attempt to recollect their funds. For merchants that use RCK entries, a notice must be displayed visibly at the POS.
BOC (Back Office Conversion Entry) entries are single debit entries that are initiated by source documents (checks) received at POP or manned bill payment locations (in-person). These checks are collected first then converted to ACH during back office processing.
A CIE (Customer Initiated Entry) is a credit initiated usually through a bill payment service by an individual. These are meant to pay an obligation.
The XCK (Destroyed Check Entry) refers to a replacement entry that is initiated when an original check is unreadable, lost or destroyed and cannot be processed.
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