China UnionPay, a world leader in credit card payment processing

In the U.S. Visa and Master Card are household names.  But have you heard of China UnionPay? Due to its affiliations with Visa, Master Card and American Express, it is accepted in more than 135 countries and regions, China UnionPay is a world leader in credit card payment acceptance and processing.  The Shanghai based China UnionPay is owned by 85 Chinese banks including the Chinese government and is the world’s second largest credit card processor behind the Visa card.  China UnionPay was founded in March of 2002 and it is the only interbank network in China.  China’s credit card processing is expected to increase to $397 billion by 2015.  In the U.S., Citibank ATMs accept the card for withdrawals in dollars.

The recent rise of UnionPay has been a boom for those merchants that offer luxury goods such as Italian leather handbags and French perfumes.  Chinese customers are the world’s number one for luxury items.  The Chinese government requires all automated tellers in China as well as all Chinese merchants to use UnionPay electronic payment system for local payments.  Because of that Visa, Master Card and American Express pays a certain percentage of their transactions to UnionPay.  The U.S. government considers this as unfair trade practice.

Monitor your credit report and watch your credit score

Three major credit bureaus, Equifax, Experian and TransUnion, keep a close watch on your financial dealings.  They not only keep your credit history, they calculate a score for you.  Better known as the FICO (Fair Isaac Corporation) score, it is the widely used measure by all major financial institutions before considering you for a mortgage loan, issuance of any credit card or store card, and many other things.  If your score is low or you have derogatory comments on your credit report, your application for new credit or credit line increase could be denied.  The law allows you to obtain a copy of the credit report once a year free of charge from each credit bureau.  One good strategy is to obtain a copy of your credit report once every four months from one of the three credit bureaus.  However, the law doesn’t require them to provide a score, so they may charge for it.  If an agency denies an application for credit, they are required to provide you with reasons for denial.

Your credit score is calculated based on your payment history (35 percent), credit utilization (30 percent), length of credit history (15 percent), credit mix (10 percent), and applying for new credit (10 percent).

What to Do if You Are Placed on the Terminated Merchant File

Getting placed on the Terminated Merchant File is one of the worst things that can happen to you if you are a business accepting credit card payments. It means that you have had your account terminated by a merchant bank and have now been placed on a list shared by merchant banks such as Solid Trust Pay. This could be for any number of reasons including suspicion of credit card fraud, not fulfilling orders or paying refunds and a high percentage of chargebacks.

No matter what the reason, being on the Terminated Merchant File is a disaster for businesses. Once you are on the list, almost all other merchant banks won’t take you on as a customers. This means that you either have to set up a merchant account with a disreputable merchant bank or simply not accept credit card payments. For many businesses, not being able to take credit card payments is a death sentence.

So what can you do if your business is placed on the Terminated Merchant File for reasons you don’t think are legitimate? The only way that you can get off of the list is through the same merchant bank that originally placed you on the list. So if you had an account with SolidTrustPay that was closed and led to you being placed on the Terminated Merchant File, you’ll need to go back to Solid Trust Pay to convince them to remove you from the list.

As you can imagine, this is a very arduous process — merchant banks usually don’t place a business or business person on the Terminated Merchant File unless they have a very good reason. So you’ll need to give the merchant bank some good reasons why you should be off the list. If you believe you were placed on the list by accident, you can ask the bank to open an investigation. This might take some time but you’ll eventually be able to get off the list. If you are suspected of fraud, your chances of getting off the list are very low; they are better for issues such as excessive chargebacks that can be corrected over time as the chargebacks are resolved.
The bottom line is this: you don’t want to be on the Terminated Merchant File. If you do get on the list, fight your case if you think the listing is unjustified but be prepared for a long process in order to clear your business’ name.

Who is processing credit and debit cards?

Credit and debit card purchases accounts for 30 percent each of retail transactions in the U.S.  Visa and Master Card dominates the retail sector credit and debit purchases while American Express, Discover Financial Services and VeriFone fills the remainder.  Both Visa and Master Card are much popular in overseas and international transactions generate more than 60 percent of Master Card revenue and about 45 percent of Visa revenue.  Ample growth opportunities exist in the overseas markets for all card processors because more than 85 percent overseas transactions are still in cash.

Visa and Master Card gets about 10 cents of each $100 transaction.  They do not hold any credit risk and collects fixed per-transaction fees, service fees based on transaction size and cross-border transaction fees.  Banks who issue cards under Visa and Master Card licenses collect funds from the customer accounts.  However, American Express and Discover provide financing to their customers and therefore, hold more risk.

In the U.S., most cards still use the magnetic strips which are more prone to fraud.  Both Visa and Master Card are pushing retailors to use the global standard, a “chip and pin” system.  With the “Chip and pin” system it is harder to steal card numbers.

About Chargebacks

Credit card chargebacks happen when a customer, for any number of reasons (ranging from fraudulent use of a card to dissatisfaction with the good or service received), disputes a credit card transaction through her issuing bank.

The chargeback process is designed to increase consumer confidence — it’s very easy for credit card users to dispute charges, while merchants and banks have to do all of the legwork to figure out whether or not a transaction is legitimate.

From a business’s perspective, however, chargebacks can often be a costly hassle. The burden of proof to show that a customer has been rightfully charged falls on the merchant, and when consumers successfully dispute charges, the merchant loses both the product sold and the revenue from that sale.

Even when a dispute is unsuccessful, a merchant’s acquiring bank will withhold payment for any chargebacks until the matter is resolved. Add in the fees charged by banks and processors, and even disputes which turn out in a merchant’s favor can be expensive.

If a merchant has too many chargebacks that they loose, they could also use their merchant account and be placed on Terminated Merchant File (TMF), which means that they may not be able to open another merchant account under their own name.

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