Frequently Asked Questions About Payment Processing

The digital payments market is projected to reach $16.62 trillion by 2028. All businesses should be familiar with the basics of payment processing to remain agile in a competitive industry and ever-expanding landscape. We’ve answered some frequently asked questions (FAQ) about payments and their processing to help you get started.

Payment Methods

Understanding the terms and systems that go into payment processing gives you the edge to offer your customers frictionless, secure and simple ways to pay. Here are answers to some common questions about payment methods.

1. What Goes Into a Transaction Flow?

The transaction flow consists of various participants and components, including:

  • Customer: The customer is the individual or organization paying for services or products.
  • Merchant: The merchant is the service provider or business receiving payment from the customer.
  • Payment method: The payment method is how the customer pays—via check, credit or debit card, cryptocurrency, or electronic wallet.
  • POS system: The point-of-sale (POS) system is a digital platform or physical device used for the transaction. The POS system can be on an e-commerce website, app or terminal point at a store.
  • Payment gateway: The payment gateway safely captures and sends information from the POS system to the acquiring bank or payment processor. This gateway encrypts and secures the data during the transaction.
  • Payment processors: The payment processor is a third-party company managing the technicalities of the transaction. These technicalities include validating information, receiving authorization, and facilitating communication between the acquirer and issuer.
  • Acquirer: The acquiring bank, or the acquirer, is the financial institution where the merchant’s account is. The acquirer receives payments on behalf of the merchant, processes transactions for the merchant and settles the funds in the account.
  • Issuer: The issuer or issuing bank is the financial institution that authorizes or declines the transaction on behalf of the customer. Issuers consider customer account status, the validity of the transaction and available funds.
  • Card network: The card network includes organizations like Mastercard, Visa and American Express. These organizations provide the infrastructure, rules and standards for processing transactions.
  • ACH network: The Automated Clearing House (ACH) network is used to move money between bank accounts in the United States electronically. Nacha, previously called the National Automated Clearinghouse Association, runs the ACH network and ensures the payment system is safe and efficient. Transaction types include business-to-business, consumer and government transactions.
  • Payment security: Payment security consists of a range of technologies and standards to ensure transactions are secure from breaches and unauthorized access. Security involves encryption, tokenization and compliance with the regulations set by the Payment Card Industry Data Security Standard (PCI DSS) Council or the ACH network for bank-based payments.
  • Settlement: Settlement and reconciliation are the processes of transferring funds from the issuer to the acquirer and updating the transaction records to reflect the funds transferred.

2. What Is Payment Authorization?

Payment authorization is when the issuer verifies that the customer has the available funds and confirms that money can be released from the customer’s account. The issuing bank conducts thorough checks before authorizing transactions.

3. What Are Payment Settlement and Operations?

Payment settlement starts with customer payment initiation and ends once the funds are deducted from the customer’s account and paid to the merchant.

During settlement, the issuing bank verifies the transaction details and authorizes money to be debited from the customer’s account and credited to the merchant’s account. This settlement communication operates through the payment network.

4. What Are the Needs and Considerations of E-Check and Credit Card Payments?

E-checks and credit card payments have a few key differences:

  • E-check payments: The Automated Clearing House (ACH) merchant network processes e-check payments between participating financial institutions. E-checks are categorized as electronic funds transfers (EFTs). They work like ACH transfers with routing and account numbers, facilitating funds transfer between accounts. Electronic checks can save your business on payment processing costs—they’re typically more affordable than card transactions.
  • Credit card payments: Card authorization occurs when the merchant accepts a card payment and the payment processor reaches the card issuer. The issuing bank ensures the credit card is valid, verifies the transaction amount and available funds, and does security checks. The issuer will deliver a two-digit code approving or declining the transaction. Credit card transactions are convenient for customers, especially those who prefer to have a range of payment options.

5. What Are the Top Digital Wallets and How Do They Work?

The top digital wallets in North America include:

  • Apple Pay
  • Google Pay
  • PayPal
  • Venmo

Digital payment wallets use software that links your payment details from your bank account to the vendor you’re paying. Some apps offer open wallets that allow contactless online and in-store payments.

Electronic wallets make payments easy for customers—there’s no need to keep card details on hand to pay, and the information is stored in one central, protected location.

6. What Does Accepting On-Site Payments With Devices and POS Entail?

If you want to accept on-site payment with POS systems and devices, you need the associated hardware and software. You’ll also need a payment solutions provider.

The necessary hardware includes a card acceptance machine, like a POS terminal. The hardware connects to software that processes transactions via the provider’s solution. POS terminals can accept several types of payments, including contactless payments, credit and debit cards. Customers can tap, swipe and insert cards depending on their preferences.

Processing Models

Processing models allow transactions to happen between the issuer and the acquirer. Here are the related questions answered.

1. What Is a Payment Gateway?

A payment gateway links all entities involved in a transaction and helps systems communicate with each other. Payment gateways establish secure connections to transmit data and process the transfer of funds from the customer’s account to the merchant’s to complete payment.

2. What Is an Enhanced Payment Gateway?

An enhanced payment gateway is a robust version of a standard payment gateway. This solution goes beyond processing payments, leveraging advanced fraud detection capabilities. Enhanced payment gateways may also feature subscription billing and customizable checkout options.

3. What Is an Acquired Payment Gateway?

An acquired payment gateway is a payment processing solution offered by a payment service provider. This solution lets you securely receive customer payments using online wallets, debit cards and credit cards. The gateway handles authorization, transaction processes and the transfer of secure funds into your account.

4. What Is a Payment Facilitator?

A payment facilitator (PayFac) simplifies the setup of payment processing for your business, allowing you to accept in-person and online payments. The PayFac has a master merchant account. Your business becomes a sub-merchant under the PayFac, eliminating the lengthy underwriting process. The PayFac enters a contract with the acquiring bank and manages the approval process on your behalf.

5. What Does It Mean to Be a Third-Party Sender?

A third-party sender (TPS) facilitates ACH transactions by having funds flow through its account. Third-party senders act as intermediaries, making payments on behalf of customers. This approach provides little protection in terms of risk management and adherence to safety standards. A TPS typically comes with higher transaction fees because of the higher involvement in the flow of funds.

6. What Is the Difference Between a Third-Party Sender and a Third-Party Service Provider?

A third-party sender directly receives and transmits funds through its bank account on behalf of a company. A third-party service provider does not hold funds and transfers funds to ACH network users.

When third-party senders pay on behalf of a client, the risk involved tends to raise the price. A TPS solution can also cause customer onboarding friction.

Leveraging a third-party service provider (TPSP) offers greater security, as these entities strictly adhere to regulations and don’t automatically move money. You’ll also benefit from faster processing times, better customer onboarding, flexible transaction limits and lower transaction fees.

Pricing

Payment processing pricing is also an essential consideration for your business.

1. What Is an Interchange Fee?

Interchange fees make up the majority of payment processing fees. You pay interchange fees to financial institutions that manage the customer’s card payments. These are standard charges that come with the convenience of using a specific payment method.

2. What Is Pass-Through Pricing?

Pass-through pricing includes interchange, assessment and payment processor fees. These fees are typically itemized or combined monthly on a statement for a merchant to pay. Pricing structures differ, so it’s important that your business partners with a competitively priced payment solutions provider.

3. What Is a Flat- or Fixed-Rate Model?

A flat- or fixed-rate model charges your business the same processing fee percentage regardless of the card used. The flat-rate percentage is typically based on the cards with the highest interchange rates.

4. What Is a Convenience Fee?

A convenience fee is an additional credit card or online payment charge. It’s sometimes charged by a payment processor when a customer does not pay by cash, check or ACH. It can be applied as a split charge or split fund.

5. What Is a Split Charge?

With a split charge, the payer sees two entries on their statement—one for principal and another for convenience.

6. What Is a Split Fund?

Merchants can set up predefined splits to go to different bank accounts. Split funds come in handy when your business charges convenience fees that need to go to a separate account from the transaction amount. Debit and credit funding bank accounts are usually set up this way for merchants.

CSG Forte offers split funds and handles the setup to ensure hassle-free allocation.

Integrations

Integrated payments connect your POS system to a payment processor, offering streamlined transactions.

How Does Integration Impact the Payment Experience?

Integrated solutions enable you to offer a better payment experience. Customers can pay using various methods without the need for different payment terminals or manual processes, making transactions frictionless.

With CSG Forte, integrated payments are an all-in-one solution that benefits your business and customers.

 Payment Security

No payment processing FAQ would be complete without info about payment security.

1. What Is Tokenization?

Payment tokenization is a security measure that uses unique tokens instead of transmitting sensitive payment data during transactions. These tokens protect information like banking details, primary account numbers (PANs) and credit card numbers.

2. What Is the Payment Card Industry Data Security Standard?

PCI DSS is a set of standards requiring all businesses that handle credit card or payment information to maintain a secure environment. These compliance standards apply to all organizations, no matter the size of your business or the amount of transactions it handles.

3. What Are the Top Considerations for Nacha Compliance?

Nacha offers rules and requirements for any organization leveraging ACH payments. Here’s a brief overview of what Nacha expects your business to do:

  • Secure payment transmission and storage of sensitive information.
  • Store hard copies of documents with customer information safely.
  • Validate customer routing numbers.
  • Guard against possible fraud.
  • Verify customer identities.
  • Outline and enforce an official security policy.

4. What Is End-to-End Encryption?

End-to-end encryption (E2EE) is a way to safeguard your customers’ data during transactions. This encryption prevents data breaches and unauthorized access to sensitive information like credit card or bank account details. Sensitive information is encrypted and securely transmitted from one point to the next, allowing your customers to pay you safely.

The payment gateway performs the encryption when the customer initiates the payment, and it decrypts the information when it reaches the acquirer.

5. What Is Point-to-Point Encryption?

Point-to-point encryption (P2PE) is an encryption method established by the PCI DSS Council. It offers excellent protection, using an algorithm to encrypt card information when the customer initiates payment. The unreadable code is transmitted to the payment processor with a decryption key. The decryption happens virtually, so your business never comes in contact with customer payment information.

While P2PE and E2EE are similar, the PCI DSS Council only accepts point-to-point encryption.

Ready to Streamline Your Payment Solutions?

CSG Forte will help you scale your business rapidly and make payments frictionless for you and your customers. Each year, we help process over $84 billion of payment transactions.

Contact us online to simplify and secure your payments.

ACH Fraud

The Automated Clearing House (ACH) is a network that clears funds moving from one bank account to another. When a payer transfers money via debit, credit card or EFT, the funds await authorization. Once clear, the ACH system moves the funds into the payee’s account.

The National Automated Clearinghouse Association (Nacha) oversees this network in the United States. Nacha employs rigorous security measures to guard users’ accounts. Outside its security nexus, bad actors who gain access to pertinent information can commit ACH fraud. This type of fraud is relatively common—a criminal only needs access to a few details to open the door to several opportunities for theft. Preventing access at the start is better than remedying a security breach.

What Is ACH Fraud?

ACH fraud occurs when criminals use account and routing numbers to impersonate victims and manipulate the movement of funds. Criminals can obtain routing numbers at the bottom of their targets’ checks. They might use this information to impersonate someone and steal funds through various methods:

  • Internal fraud: When an employee of a company uses legitimate credentials to make unauthorized ACH withdrawals and payments, the fraud is considered internal.
  • ACH kiting: Kiting occurs when fraudsters move funds from one company account or financial institution to another.
  • Fraudulent authorized push payments (APPs): When a customer attempts to pay you, criminals trick them into making ACH transactions prompted by scams, and the funds never reach your account.
  • Unauthorized access to personal accounts: ACH transactions render you and your clients vulnerable to unauthorized persons having access to sensitive accounts.
  • Unauthorized ACH withdrawals: Merchants and clients risk having funds withdrawn from bank accounts without authorization.

Within the ACH network, there are several steps between a payer sending funds to an account and the payee receiving the funds. This process is not impenetrable to criminals, who are using more sophisticated means of defrauding unsuspecting users. Traditional ACH systems lack proper security mechanisms, leaving you and your end users vulnerable.

ACH Fraud and Concerns

Concern is mounting over the rate at which ACH fraud is increasing, highlighting the need for more vigorous security methods. Criminals only need two data sets to successfully steal money through the ACH network—a bank account number and a bank routing number. Businesses and enterprises accepting payments need to address increasing ACH fraud to protect themselves and end users.

ACH fraud can occur from external means or inside a company. Employees don’t need to know complicated data sets or complex codes to hack a business or another person. Staff are also at risk of social engineering and phishing attacks.

How ACH Fraud Can Effect Your Business

A U.S. District Court recently found a credit union liable for not acting on several suspicious ACH transactions. If you’re a business accepting payments or overseeing financial transactions, it’s critical to be proactive in preventing ACH fraud. Nacha and the Federal Reserve Regulation E have policies that state the consumer is not responsible for ACH fraud unless they fail to report an incident within 60 days.

Financial institutions can be held liable, with the bank returning the funds to the consumer and claiming them back from the original enterprise. Successful fraud protection can keep your end users safe and protect you from the costs of fraudulent ACH activity.

CSG Forte’s Approach to ACH Fraud Prevention

CSG Forte has extensive experience in ACH fraud prevention and detection, and our robust payment platform provides reliable, secure solutions. For your convenience and safety, we adapt to the evolving digital economy to provide a unified payment solution with built-in fraud-prevention protocols using the latest technology.

Furthering your peace of mind that your funds are handled safely, we’ve partnered with Nacha, the body overseeing all ACH transactions. You’ll also benefit from:

  • Advanced security protocols: Your data stays protected with our advanced security solutions, such as Forte.js and compliance with major card brands.
  • Real-time alerts: You can remain in control of your funds by monitoring transactions in real time and receiving alerts for every activity connected to your funds.
  • Comprehensive evaluation: We thoroughly evaluate merchant accounts to prevent delays down the line and help you accept payments seamlessly. Evaluation helps ensure your payment system will have adequate ACH fraud protection, mitigating loss in the long run.

We bring you reliable, safe payment processing solutions. Our approach to fraud prevention is comprehensive, as we’ve partnered with several leading software providers to prevent money laundering and several types of sophisticated financial crimes.

Key Features of Our ACH Fraud Prevention

To secure every payment and keep your data safe, CSG Forte develops every software platform and application tool with security as the cornerstone. The key features of our ACH fraud prevention include:

  • Multifactor authentication: For your safety and privacy, we protect your data with layers of security.
  • Software to detect behavioral anomalies: You can have peace of mind knowing our behavioral analytics software detects discrepancies from your usual activity and alerts you in case of an anomaly.
  • End-to-end encryption: We use end-to-end encryption technology to safeguard all data and prevent your information from leaking to a third party.
  • Tokenization: We limit the exposure of your sensitive information through tokenization, ensuring your data remains hidden in the system throughout the payment process.

We are committed to providing you with rigorous, up-to-date security systems for your enterprise, as evidenced by our compliance with several security programs. You can rest assured your funds are protected during every transaction.

Protect Against ACH Fraud With CSG Forte

ACH is a vital payment method to offer your customers. However, its attainability makes it vulnerable to breaches. Protecting your funds and your customers takes a proactive stance. Take action by integrating an advanced, robust platform from CSG Forte.

To take the next steps with our secure platform, fill out the online form and a payment expert will be in touch. You can also contact our team if you have any questions before you get started.

Layering Login Security: The Power of Multifactor Authentication

It used to be that passwords were enough to protect your accounts. Those days are gone, and you can blame the ever-growing sophistication of cybercriminals. Organizations now need an extra layer of defense against unauthorized access and fraud. That’s where multifactor authentication comes in.

It’s a good idea to require multifactor authentication in many of the systems your organization uses every day—especially critical systems like payments operations. Read on to learn what it is, how it works and why it matters.

What is multifactor authentication?

Multifactor authentication (MFA) is a security measure that requires users to provide two or more pieces of evidence to verify their identity before they can access their account or perform a transaction. Single-factor authentication methods often rely on the traditional username-plus-password combination. MFA goes further and requires additional factors—often something the user knows (e.g., the answer to a security question), something they have (e.g., a smartphone) or something they are (e.g., biometric data like a fingerprint).

How does MFA work in payment solutions?

Payment solutions can apply MFA in various ways depending on the level of security and convenience they offer users. Common examples of MFA in payment solutions include:

  • One-time password (OTP): The user gets a code via text, email or an automated phone call, and they have to enter it along with their username and password to access their account or perform a transaction. The code expires after a short period of time and can be used only once.
  • Push notification: The user receives a notification on their smartphone or a similar device though a secure app that’s linked to their account. With that device, they have to either approve or decline the transaction or account access.
  • Biometric authentication: The user must have their fingerprint, face or iris scanned. This biometric data is usually stored on the user’s device or on a secure server, and it’s matched with the user’s account.

When might payment solutions require MFA? Those scenarios can include when you or other users in your organization log in to their accounts, add a new payment method or change settings. MFA can also be complemented with other security features such as encryption, tokenization or fraud detection to create a more robust risk management practice.

Why is multifactor authentication critical for payments operations security?

Payment fraud incidents are on the rise, increasing 88% since 2021, according to PYMNTS Intelligence research. It’s making organizations and consumers more wary about how payment accounts data is kept (the same study found that 30% of consumers don’t trust having their personal information stored on a connected platform).

Clearly, bolstering security to the systems that house consumers’ payment account data is a priority for any organization. Here’s how MFA in payments operations supports that:

  1. Better Protection: MFA makes it harder for hackers or fraudsters to access your customers’ data, even if they have your username and password. It adds an extra layer of security that deters or delays attackers, giving your organization more time to detect and respond to the breach.
  2. Fraud Risk Mitigation: MFA can decrease the likelihood of fraudulent transactions when the additional authentication requirements thwart bad actors.
  3. Brand Reputation Preservation: A data breach resulting in compromised payment accounts is a major blow to an organization’s reputation that erodes customer trust. Implementing MFA shows you’re committed to keeping customers’ information secure, and it helps safeguard your organization’s integrity.
  4. Satisfying Security Standards: MFA complies with the latest security standards and regulations, such as the Payment Card Industry Data Security Standard (PCI DSS) or the Payment Services Directive 2 (PSD2). MFA helps you meet the requirements and expectations of your customers, partners and regulators, not to mention help you avoid penalties or fines.

The new standard in payments operations security

MFA is no longer just a security best practice—it’s an expectation. A growing share of SaaS platform users consider MFA a must-have capability of the SaaS platforms they use, regardless of segment or industry. In payments operations, it can make a big difference in safeguarding payment accounts and protecting your organization from the potentially devastating consequences of data breaches and payment fraud.

This is part of what’s known as the Zero Trust strategy for information security programs, based on the principle of ”never trust, always verify.” It’s aligned with the latest industry standards, such as PCI DSS version 4.0. And it’s part of CSG Forte’s commitment to the rigorous safeguarding and protection of all customer data.

Want to learn more about how CSG Forte incorporates MFA into its solutions? Just ask us.

Empowering SMBs With Embedded Financing

Small- and medium-sized businesses (SMBs) play a crucial role in driving our economy through innovation, job creation and the contributions they make to their local communities. But SMB scan face obstacles when trying to access working capital through traditional financing sources, including high rejection rates, varying annual percentage rates (APRs) and lengthy application processes.

Enter: embedded financing, which has emerged as a powerful alternative for SMBs that may apply for capital through traditional lending methods. Embedded financing offers SMBs a streamlined approach to accessing capital by allowing them to bypass banks and other traditional lenders and instead receive needed funds through their software vendors. This fast and flexible financing option offers SMBs fair pricing on quickly available financing terms that can be seamlessly integrated into their existing business solutions.

Many SMBs are taking advantage of the ease of using embedded financing, as industry growth continues to rise. Current estimates suggest a 125% year-over-year increase, reaching $500 billion in annual originations by 2030.

An AI-Driven Solution Tailored for ISV Partners and Their Merchants

Traditional small business loans can be expensive, carrying APRs as high as 99%. But businesses may find significant savings via the reduced rates embedded finance programs offer. How? Embedded finance programs leverage private datasets and AI automation when assessing risk, facilitating more accurate and faster underwriting. Among other advantages, this innovative underwriting method cuts customer acquisition costs.

By leveraging technology, embedded finance can revolutionize the underwriting process and provide fair, affordable financing options for SMBs. The lower rates not only benefit merchants, but also foster a stronger sense of loyalty within the Independent Software Vendor’s (ISV) merchant base.

The power of artificial intelligence (AI) is at the forefront of most of today’s innovative technology, including embedded financing. AI-driven credit underwriting—which is fueled by rich, embedded datasets—offers a level of sophistication that’s unmatched.

Embedded AI lending leader Lendica and has partnered with CSG Forte to introduce a unique credit solution for SMBs: the iBranch. This innovative embedded financing offering allows merchants to connect to financing offers through their software vendors, opening a new avenue for SMBs to conveniently access credit for necessary capital investments in their business. CSG Forte and Lendica are extending this solution to ISV partners and their end-merchants.

Benefits Beyond Basics

The advantages of embedded financing extend beyond just the SMBs. ISV partners stand to gain significantly from this innovative financing model. By participating in embedded financing programs, ISVs create an additional revenue stream for their business that is often operations-free (meaning they don’t need to handle the customer support or marketing internally and can leverage an embedded financing partner). Moreover, the enhanced merchant loyalty resulting from fair and affordable financing options strengthens the bond between ISVs and their end-users.

Embedded financing also has the flexibility to cater to a diverse range of ISV partners and their merchants, spanning various industries such as field services and property management. For example, property management merchants can leverage this user-friendly solution to access capital for building repairs, procure necessary supplies, or invest in professional services to promote their business. Quick access to capital empowers merchants and fosters an environment that’s conducive to future growth and prosperity.

Game-Changing Potential

Embedded financing is proving to be a game-changing solution for ISVs and their merchants, providing fast, flexible and competitive financing options. This streamlined approach addresses some of the pain points of traditional lending, offering competitive rates and an enhanced end-user experience. The growth trajectory of embedded business financing suggests a transformative future for SMBs, fostering an ecosystem where businesses can thrive and achieve their full potential.

As we move to the future, the era of embedded financing is redefining the landscape of SMB financing, unlocking new possibilities and opportunities for growth.

Thanks to the recently established strategic partnership between CSG Forte and Lendica, an embedded AI-lending company, your software organization can provide merchants with quick access to capital, removing time delays and other barriers SMBs often encounter. Contact our team to start offering your merchants a competitive, embedded financing offering in as little as two weeks.

‘Tis the Season for Secure Payments: Protecting Your Business from Holiday Fraud

The holiday season is here, bringing with it the hustle and bustle of surging online transactions. Consumer spend is expected to rebound above pre-pandemic levels for the first time, even as 72% of shoppers anticipate higher prices.

Inflation dread isn’t enough to deter cash-strapped consumers. Credit options, such as Buy Now Pay Later short-term financing, will cover an estimated 13% of holiday purchases this year.

With the uptick of consumers embracing the holiday splurge, it’s essential to ensure that your store is safeguarded from the Grinches of the online world—fraudsters. Here are three tips to keep your e-commerce business merry and bright:

 

1. Hosted Payment Pages: A Trusted Haven for Transactions

Picture a secure fortress for your customers’ payment data—one that’s not on your servers. This is where securely hosted payment pages with a reliable payments provider come into play. By directing your online payments through these secure pages, you’re ensuring that sensitive payment data doesn’t linger in your system like a misplaced ornament.

The beauty of securely hosted payment pages lies in their ability to provide a seamless and secure transaction experience. Customers enter their payment details on a page hosted by the payments provider, keeping the crucial data away from your servers and reducing your PCI (Payment Card Industry) Data Security Standard scope. This ensures a worry-free experience for both you and your customers that leaves fraudsters out in the cold.

 

2. Digital Wallets: Security Wrapped in Convenience

‘Tis the season for giving, and what better gift to offer your customers than secure and convenient digital payment methods? Enter digital wallets. With enhanced security features, they provide a hassle-free and speedy checkout experience.

By offering popular digital wallets at your checkout, you’re not just embracing the holiday spirit—you’re also aligning with what consumers trust. Digital wallets safely store payment credentials and employ advanced encryption techniques to keep them protected. It’s a win-win—customers get a seamless payment experience, and you get the peace of mind that their data is protected.

 

3. Tokenization: Turning the Tables on Fraudsters

If you want to take your holiday defenses up a notch, consider the power of tokenization.

Tokenization involves replacing actual card and ACH payment data with generated tokens. These tokens have no intrinsic value and provide no value to fraudsters. It’s the equivalent of leaving fake presents under the tree for anyone attempting to snatch them. A reputable payments provider can assist you in implementing this robust layer of security, ensuring that even if a Grinch manages to sneak into your system, they leave empty-handed.

In the midst of the holiday season excitement, don’t let the fear of fraud steal your joy. By following these three tips—utilizing hosted payment pages, offering secure digital payment methods, and embracing tokenization—you can ensure your online business stays secure while shoppers stuff their carts.

 

CSG Forte is here to protect your payments this holiday season. Contact us to get started today.

Beat The Numbers Game: Guard Against Card Testing Fraud

Card not present (CNP) fraud has been on the rise: it’s projected to account for nearly 75% of all payments fraud by 2024, which is up from 57% in 2019. As merchants shift their focus to protect against this growing share of CNP fraud, they find themselves tackling a specific type: card testing attacks.

Payment solutions can play a major role in protecting businesses from card testing-related losses. But does yours have the right capabilities? Read on as we explain card testing and some fundamental ways to reduce its impact on your customers and your bottom line.

What Is Card Testing?

Card testing is a payment fraud technique where cybercriminals use automation or bots to guess valid credit card numbers. It’s literally a numbers game. Fraudsters submit a barrage of small transactions of just a few cents each, testing to see if a card number is valid. Once they’ve identified a set of card information that works, they then use it either to make larger unauthorized purchases or sell the card info on the dark web.

For merchants, falling victim to card testing can disrupt operations and generate costly chargebacks. But it means more than revenue loss: there’s also reputational damage to consider. According to a PYMNTS survey, 21% of consumers said that losing money due to fraud would be the most important factor that would erode their trust in a merchant.

4 Layers of Protection Against Card Testing Attacks

In the battle against card testing fraud, your strongest line of defense is a modern payment solution. It can safeguard your transactions and customer data in multiple ways. Here’s how:

1. ADVANCED FRAUD DETECTION

As we all know, the earlier fraud is spotted, the better. Payment solutions may employ machine learning algorithms that identify suspicious transaction patterns in real time. These fraud detection features can flag and report suspicious activity before bad actors “crack the code” and make a successful unauthorized charge, or before they can go on to do significant damage with the stolen card information.

2. TOKENIZATION TECHNOLOGY

Modern payment solutions typically replace sensitive card data with unique tokens—randomly generated values that are unrelated to the original card data. This adds an extra layer of security. Even if bad actors intercept the merchant’s card data, the tokens render that data useless for making unauthorized transactions.

3. 3D SECURE AUTHENTICATION

Modern payments solutions often integrate 3D Secure protocols, or “3DS,” which stands for 3 Domain Secure. This is an authentication method for online transactions that relies on three domains:

  • Issuer Domain — The bank or financial institution that issued the card
  • Acquirer Domain — The bank or financial institution processing the payment on the merchant’s behalf
  • Interoperability Domain (Card Scheme) — The payment card network (e.g., Visa, MasterCard) that connects the issuer and acquirer domains

If you’re using 3DS, a cardholder making an online purchase undergoes an additional authentication step. This typically involves redirecting them to a page hosted by their card issuer or having them provide a one-time authentication code that is sent to their phone. And it’s this extra step that adds another strong barrier against card testing attempts.

4. REGULAR UPDATES & MONITORING

Payment fraud techniques evolve, and so should your payments solution. Your SaaS provider should provide regular updates and enable round-the-clock monitoring, making sure your payment system is always equipped with the latest security features.

Take Action Today

Safeguarding your organization against card testing is a must. Do you know if your payment system has all these protections in place for you and your customers? Talk to us at CSG Forte, and we can help you ensure your payments security is up to task—even as fraudsters put it to the test.

Not Ready for Rising Card Fees? Try These 4 Payment Alternatives

Credit cards emerged from the pandemic stronger than ever. After bearing the brunt of decreased recreational spending in 2020, the industry is riding the wave of ecommerce growth to top an unprecedented $500 billion in online credit card usage. Resurgent travel spending, higher wages and generous rewards programs all bode well for credit card payments.

But as card spending stabilizes among consumers, their issuers must contend with the broader impact of economic downturn.

Credit Card Payments Under Pressure

The country is seeing record numbers of credit card debt and growing delinquency rates. Economists at the Federal Reserve Bank of New York report that credit cards are the most prevalent form of household debt and expect this trend to continue—particularly with student loan payments resuming.

Talk of congressional action to lower swipe fees and rumors swirling around rising interchange fees also loom large for merchants that rely on credit card payments. With so much uncertainty, how can businesses protect their bottom line?

Bolster Your Business Growth With More Ways to Pay

Prepare for volatility in the credit card space by diversifying your payment methods. Consider these alternatives to safeguard your cash flow and generate revenue in any economic conditions.

4 Alternative Payment Methods

1. ACH

Automated clearing house (ACH) payments are a strong solution for businesses seeking reliability. This payment method allows merchants to draw funds directly from the customer’s bank account, limiting risk and excess costs.

ACH processing expenses are generally low compared to other forms of payment. Unlike credit cards, which are subject to fluctuating fees, ACH doesn’t require merchants to make authorization requests to credit card networks or issuing banks. This means that not only does using ACH save businesses money—it also insulates them from rising interchange fees if Visa or Mastercard choose to schedule increases.

ACH is also a more secure payment option. Credit card fraud is on the rise, with global losses projected to surpass $43 billion in the next five years. What does that mean for merchants? More chargebacks, less revenue and greater overall risk.

ACH payments also come equipped with security features that protect businesses from fraud. With end-to-end encryption and tokenization, sensitive payment data is disguised during transmission. It’s one of the safest payment methods available to businesses today.

2. Same-day ACH

Businesses can further optimize their electronic payments by implementing same-day ACH transfers. This method carries the same benefits as standard ACH payments, but with the added promise of receiving funds within a single day.

Payment processors traditionally could expect to see direct transfers reach their accounts in around four business days. But those that partner with a same-day ACH provider are guaranteed usable funds much sooner, provided they initiate the transaction by the designated cutoff time.

By bypassing processing delays, businesses enjoy the following advantages:

  • Faster payments, with lower fees. The speed of same-day ACH processing is comparable to credit cards. But with lower costs involved, the former provides merchants the best elements of both.
  • Streamlined cash flow. Automated transfers and reduced cycling times simplify delivery and allow for better control of cash flow.
  • Optimized customer experience. When you enable customers to pay their bills closer to the due date, both sides benefit. Same-day ACH processing helps last-minute payers avoid penalties, while faster crediting is applied to late payments.
  • Expedited payroll disbursement. Same-day ACH can also be used to pay employees via direct deposit. Faster issuance reduces administrative burdens by providing quick resolution of late payments or emergency distribution.

3. RTP

Real-time payments (RTP) can also quickly provide your business with cash flow. Much like ACH, this method supports quick electronic transfers between banks. But the similarities stop there.

RTP transactions are instantaneous—faster even than same-day ACH. These payments are initiated, cleared and settled with virtually zero perceptible delay. The unrivaled speed of RTP is a contributing factor to its international appeal: one 2020 survey found that consumers across six different markets consider real-time payments at least as important as internet access.

Speed isn’t RTP’s only convenient feature. Year-round availability is another unique benefit. Unlike ACH, real-time payments are also available on weekends, holidays and after business hours. Because it’s processed by The Clearing House rather than banks, RTP isn’t subject to the same limitations and enables 24/7/365 payments.

However, he RTP system isn’t always the answer. Transactions are capped at $1 million, and only credit payments are supported. Its network is also smaller than that of ACH—not every bank covers RTP.

But RTP is gaining popularity, and as it does, these drawbacks are expected to shrink. The U.S. Federal Reserve recently rolled out an instant payments service of its own in FedNow. As banks push for faster fund processing, the government’s network will offer them additional high-speed coverage options, making RTP more broadly available.

By stimulating competition with this move, expect to see increased adoption of real-time payments in the U.S.

4. Alternative Methods of Payment

Non-traditional payments are also available to businesses seeking credit card alternatives. To capitalize on these options, connect your bank account to an e-wallet that is compatible with popular payment methods. These might include:

  • PayPal
  • Physical or digital gift cards
  • Loyalty points
  • Apple Pay
  • Google Pay
  • Direct carrier billing

Offering customers the capability to use their preferred method encourages on-time payments, increased revenue and a seamless CX.

Get A Consult: Find Your Payments Fit

Payment methods should be built for your business—not the other way around. Connect with CSG Forte to get expert advice on which payment processing options will work best for you. Get started.

Tips to Reduce Late Payments by Engaging Payers

Suman Chaudhuri

Suman Chaudhuri, VP, Sales & Revenue, CSG Forte

 

Late payments are on the rise, and they can weigh down your organization’s growth if they go unaddressed.

Auto loan and credit card delinquencies have bounced back to their pre-COVID rates, and late payments on consumer loans aren’t far behind. With these indicators, merchants in other industries might be right to wonder if they’ll see more missed or late payments—assuming they haven’t already.

Organizations are well aware how late payments can disrupt cash flow. As they add up, they can limit the ability to make the investments needed for growth, from purchasing new equipment, to hiring talent, to ordering inventory. Then there’s the cost of collecting late payments: sending out notices, attempting to call customers, engaging collection agencies, and so on.

Consumers often miss payments due to a lack of funds, but a large chunk of late payments are highly preventable. Among consumers who missed a payment in the previous six months, nearly half said either forgetting about the bill or mixing up the due date were factors, according to a recent survey.

So what can organizations do to help customers pay on time? By keeping them engaged with these approaches.

Make the payment experience as easy as possible

Many late payments result from transaction abandonment, which is a usually fixable problem in the customer’s payment journey. Sometimes the abandonment is accidental: think of how easy it is to get distracted in the process of paying a bill online or over the phone if it requires multiple steps. Other transaction abandonment is deliberate: perhaps the customer became frustrated to learn that they can’t make their payment online, and they put off the task for later.

To reduce transaction abandonment—accidental or otherwise—it’s important to make the payment experience as simple as possible.

Accept multiple payment methods.

You want to ensure most of your customers can use the payment method they most prefer, whether that’s credit/debit card, ACH, digital wallets, and yes, paper checks (55% of U.S. consumers wrote checks in 2022).

Offer auto-pay.

Automating regular payments is a win-win for you and your customers. Customers get to put the recurring payment out of mind, and your organization sees fewer late or declined payments. Offering and encouraging auto-pay makes a huge difference. Between April and July 2020, renters failed to make timely rent payments approximately 22% of the time. However, renters who used Rentec’s recurring payment system, powered by CSG Forte, only made late payments 1% of the time.

Allow payments in installments.

Making the payment experience easier can also involve offering a payment plan if your organization can provide that flexibility. Accepting partial or installment payments can be preferable to delinquent payments, and offering installments keeps the customer engaged. The key here is to use a payment solution that enables customers to set up their own alternative payment arrangements easily, without having to call into your call center. The payment terms, installment amounts and due dates also need to be clearly communicated to the customer through the user interface.

Send payment reminders on the customer’s preferred communication channels

The modern consumer has plenty of notifications and due dates competing for their attention. It’s easy for even your most organized customers to forget a payment unless they receive regular reminders. But reminders only matter if customers receive them on communication channels they use. Make sure you can send these automated messages by multiple methods, including email, text and outbound interactive voice response (IVR).

Also consider payment reminders that can integrate with customers’ calendar applications, increasing their visibility as part of your customer’s recurring to-dos. If you can enable seamless payments through your reminder communications, such as offering text to pay, then you’ve not only made it easier for customers to remember their bill, but also pay it in seconds.

CSG Forte Engage, a payer engagement platform, can help simplify your customers’ payment journey in these ways and more, enabling you to minimize late payments and protect your bottom line. Learn more about CSG Forte Engage and start increasing on-time payments today.

CSG Forte Engage Enables Customers to Pay Bills the Way They Want

FORT WORTH, TX, Sept. 12, CSG Forte, a CSG® (NASDAQ: CSGS) company and a leader in complete and customizable digital payments, today launched CSG Forte Engage. A multi-channel, no-code payment solution, CSG Forte Engage puts the power into the hands of the customer to pay when they want, how they want. With CSG Forte Engage, organizations can leverage NanoSite technology to create customized, secure statements and send them to customers for payment via SMS, email, 2-way interactive voice response (IVR) or the contact center. By making it easy for organizations to send branded and personalized statements, they can securely accept payment in real time, remove their exposure to sensitive data and modernize the customer experience. Recently, CSG Forte Engage helped one company reduce uncollected payments by 85% and another to increase customer engagement by 660% leading to $8M in incremental revenue.

“The payments landscape and payer behavior are quickly changing, and customers want more flexibility in the way they pay,” said Jeff Kump, President, CSG Forte. “CSG Forte Engage offers flexibility in every form to elevate both the simplicity of the payment journey and overall customer experience. By empowering customers to pay how they want, this solution will forge the path for the next generation of secure and simple payments processing.”

With CSG Forte Engage, organizations can:

  • Increase customer satisfaction and successful payment completion by providing simple payment journeys that are configured for each customer. Multiple payment options give every customer the choice on how to be communicated with and how to pay.
  • Meet customers where they are by allowing them to securely switch between channels throughout the journey from text, email, inbound or outbound IVR or live agent.
  • Maximize revenue and see immediate ROI with a no-code, quick integration that modernizes the payer experience while leveraging existing payment processing forms including ACH.
  • Have peace of mind with automated, PCI-compliant payment processes that safeguard customer data and prevent fraud.

“In order to meet consumer expectations and create positive payment experiences, organizations need to be prepared to meet consumers where they are and give them the ability to pay in whatever ways they prefer,” said Daniel Keyes, Senior Analyst at Javelin Strategy & Research. “Organizations that can offer a variety of payment methods across multiple channels, while minimizing friction for consumers no matter how they’re paying, will be able to complete more payments and drive customer satisfaction.”

CSG Forte was recently named Best API Set in The Strawhecker Group’s annual Best of Breed Awards. With the launch of CSG Forte Engage, CSG continues to be a leader in payment technology, empowering organizations to be future-forward and customer-obsessed. For more information about CSG Forte Engage, view this short video or visit our website.

7 Essential Features for a Better IVR Payment System

While no one likes paying bills, reducing consumer friction points during the bill-paying process can get your invoices paid faster. Millennials are more likely to prioritize paying bills that are easy to pay before tackling (or ignoring) bills that are more inconvenient. More than half (52%) of consumers report experiencing at least one pain point when paying bills, and 29% encountered multiple issues. Top bill-paying complaints include log-in frustration, authentication issues and a lack of autopay options. Creating convenient payment options improves the customer experience and can lead to more on-time payments.

Thoughtfully designed interactive voice response (IVR) payment systems are convenient, efficient and secure, which benefits both customers and merchants. IVR payment systems use Voice over Internet Protocol (VoIP) technology to guide customers through the payment process over the phone. However, poorly designed IVR payment solutions increase customer frustrations instead of reducing them. The best IVR systems include seven key features that improve the payment experience for customers.

Benefits of Offering IVR for Payments

Customers expect the payment experience to be quick, convenient and secure. Quality IVR services meet all three of these expectations. Customers may also expect merchants to offer an IVR payment option; according to a 2022 survey of more than 2,100 online bill payers, 26% had paid a bill via an automated phone system within the past year.

The IVR payment process is:

  • Fast. By using an automated IVR payment system, customers don’t have to wait to speak with a live agent. The average IVR payment call takes about three minutes. This can be significantly faster than other payment processing options, such as finding the merchant’s payment portal, logging in and resetting a password after multiple failed login attempts or waiting on hold to speak to an agent to complete a payment.
  • Convenient. IVR payment solutions allow customers to pay their bills 24/7—without an internet connection. Customers are also able to enter their payment reference number (e.g., invoice/account/policy number) so they don’t have to remember a password.
  • Secure. IVR payment platforms securely process transactions and reduce the risk that sensitive payment data is exposed either via unauthorized access to internal systems or through call center agents manually accepting payment details over the phone.
    • When using an IVR system, customers can enter credit card information via their phone keypad instead of reading out the information to a contact center agent. This prevents someone from overhearing the conversation and jotting down the information.
    • Merchants should select an IVR system that complies with the Payment Card Industry Data Security Standard (PCI DSS).
  • Affordable. IVR payment systems benefit merchants by increasing efficiency and decreasing labor costs by reducing payment-related calls to contact center agents, whichcost around $5 or more per call. While a few dollars per call may not sound like much, it adds up quickly. In contrast, IVR payment calls cost merchants about 50 cents each.

7 Must-Have IVR Payment System Features

IVR payment systems should provide:

  1. Multiple payment options (credit card and ACH) for full or partial payments
  2. Automated voice services offered in multiple languages
  3. Several ways for customers to connect to the IVR system
    • Call a direct number (printed on statements or included in an email or text notification)
    • Access via the IVR menu (e.g., press 1 to pay your bill)
    • Agent transfers callers to the payment IVR
  4. A variety menu options after the customer completes payment
    • Make another payment
    • Receive an email/text receipt
    • Speak with an agent
    • Store (or update) payment method(s) for future transactions
  5. An outbound IVR system that
    • Delivers payment reminders
    • Allows customers to schedule a convenient time to receive an automated call to make their payment
  6. The ability to easily make changes to your IVR system based on your business’ needs
  7. Integration with billing and accounting systems, allowing payments to be posted directly to your business in real time

CSG Forte offers an IVR payment system with inbound and outbound options for fast, convenient and secure payment processing. With CSG Forte Engage’s IVR solution, live agent calls have been reduced by up to 70% for payments, on average.

Contact us to learn how CSG Forte Engage’s IVR solution can streamline your payment processes and reduce inbound calls to your call center. Get started today.