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2018

Next week, Money20/20 is putting on the best Fintech hackathon in the world, and Worldpay is sending 5 of our own to compete. The challenge: to design solutions for a simpler, fairer, and more inclusive financial system for businesses and society as a whole. 

 

The team will be competing for $100k in cash prizes as well as for fame and glory.

 

Meet our team: 

 

The Worldpay ONE Money20/20 Hackathon team

 

(From left to right) 

 

Arjun Balaji, Worldpay Senior Software Engineer, and Francophile

 

Specialty: Clean coding enthusiast

 

What are you looking forward to at the Hackathon? 

I'm looking forward to the exciting discussions and all the crazy ideas that come out of it.  

 

What is your favorite thing in the world right now? 

I'm trying to learn French, so most things French. 

 

Andrew Harris, Worldpay Senior Product Marketing Manager and flaky pastry fanatic

 

Specialty: the developer experience

 

What are you looking forward to at the Hackathon? 

This is THE hackathon for finTech and payments - My fifth year participating at some capacity and I really get stoked watching the finalist on stage present their ideas at the end of the event with little to no sleep. The passion and technical talent wafts though the air and energizes me, making me realize payments is far for boring. I guess that is what I look forward to the most from this event, oh and I can’t wait to get a pastry for Paris Baguette in The Venetian. 

 

What is your favorite thing in the world right now? 

My favorite tech thing in the world right now are chatbots. I know, most consider them wack but I think bots will turn the virtual corner and be in the face of all of us before we know it. I remember a time when people didn’t like Amazon either. Bots can come in many forms and as a designer, no-UI has always intrigued me.

 

Alec Paulson, Worldpay Senior Software Engineer and Ghost Protocol team member

 

Specialty: Full Stack Man

 

What are you looking forward to at the Hackathon? 

Getting some sleep since I ain't gonna be there #ghostprotocol

 

What is your favorite thing in the world right now? 

My favorite thing right now is find amazing ideas in emerging areas of tech like AI, machine learning and blockchain. 

 

Scott Sievers, Worldpay Database Administrator and team player

 

Specialty: Purveyor of Data

 

What are you looking forward to at the Hackathon? 

I look forward to ideating through new product/app ideas with teammates and seeing what we can come up with.

 

What is your favorite thing in the world right now? 

Spending time with family and cycling. 

 

Jeremy Buikema, Worldpay Software Engineer and miniature donkey rider

 

Specialty: Writing simple and clean code

 

What are you looking forward to at the Hackathon? 

I'm looking forward to learning/creating something new and hanging out with the crew.

 

What is your favorite thing in the world right now? 

My favorite thing right now is hanging out at home with all 7 of my animals (2 cats, 2 dogs, a bunny, a horse, and a miniature donkey). We just got a new cat and he has fallen in love with our bunny. Watching them play is terrifying and one of the cutest things I've ever seen.

 

Will you be at Money20/20? Let us know in the comments!

Congrats to the winners of the Developer Survey drawing!

 

We randomly selected 3 winners from our Developer Survey participants. These lucky, lucky winners will receive a sweet $100 Amazon gift card!  

 

Congrats to:

ajohnstone

frank

jodi@vinbalance.com

 

Haven't entered the survey yet? There's still a chance to win $500. Increase your odds by taking all 3 surveys: 

 

Stay tuned to this space for the survey results! 

Naysayers never built a great enterprise.

 

A conversation I had with the owner of a Worldpay ISV partner three months ago went something like this:

  • ISV: “There’s this great salesperson I’ve known for years – he’s the kind of guy who could open lots of doors for us. I’ve been trying to convince him to join our team for six or seven weeks now, but he’s still not sure.”
  • Me: “Wouldn’t you prefer to have someone who might have less relevant experience but really wants to work for you? Wouldn’t you prefer to have someone who’s excited about the job and your company? If you’re begging someone to join you, you’re probably going to have to beg them to stay.”
  • ISV: “I hadn’t thought of it that way. I’ll have to think about that.”

 

I reconnected with that same ISV executive just a few weeks ago, and our chat went something like this:

  • ISV: “I hired a salesperson. I’ve known her for a while and she always spoke highly of our company, but I hadn’t considered her because her experience wasn’t in our industry. But when I mentioned the job, she jumped at the opportunity. She said, ‘I would love to sell software. I would love to work with you guys.’ What was supposed to be a dinner turned into a four-hour conversation about strategy and growing my business.”

 

Because passion can’t be found on a resume, many hiring managers don’t go looking for it. But if you hire someone without a passion for your company, your values, your culture, your product, your industry, etc. you’re likely going to be disappointed in their performance and will be looking for their replacement soon.

 

Instead of me haranguing you more about passion, let’s hear from former Starbucks CEO Howard Schultz in excerpts from his book Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time:

 

(Note: These 36 excerpts have been whittled down from the original list of 120 quotes I highlighted in the book when I first read it in 2010. In other words, the summary below is a Tall, not a Venti.)

 

  1. Care more than others think wise. Dream more than others think practical. Expect more than others think possible.
  2. If people relate to the company they work for, if they form an emotional tie to it and buy into its dreams, they will pour their heart into making it better.
  3. My story is as much one of perseverance and drive as it is of talent and luck. I willed it to happen. I took my life in my hands, learned from anyone I could, grabbed what opportunity I could, and molded my success step by step.
  4. I’d encourage everyone to dream big, lay your foundations well, absorb information like a sponge, and not be afraid to defy conventional wisdom.
  5. Every company must stand for something. Starbucks stood not only for good coffee, but specifically for the dark-roasted flavor profile that the founders were passionate about. That’s what differentiated it and made it authentic.
  6. You don’t just give the customers what they ask for. If you offer them something they’re not accustomed to, something so far superior that it takes a while to develop their palates, you can create a sense of discovery and excitement and loyalty that will bond them to you.
  7. As boss, if you close your ears to new ideas, you may end up closing off great opportunities for your company.
  8. Naysayers never built a great enterprise.
  9. If you stop being the scrappy underdog, fighting against the odds, you risk the worst fate of all: mediocrity.
  10. Even the world’s best business plan won’t produce any return if it is not backed with passion and integrity.
  11. Whether you are the CEO or a lower level employee, the single most important thing you do at work each day is communicate your values to others.
  12. If you share your mission with like-minded souls, it will have a far greater impact.
  13. If I sense that a person lacks integrity or principles, I cut off any dealings with him.
  14. A business plan is only a piece of paper, and even the greatest business plan of all will prove worthless unless the people of a company buy into it. It cannot be sustainable, or even implemented properly, unless the people are committed to it with the same heartfelt urgency as their leader.
  15. Who wants a dream that’s near-fetched?
  16. People are not a line item.
  17. When companies fail, or fail to grow, it’s almost always because they don’t invest in the people, the systems, and the processes they need.
  18. What I tried to do was honor the individuals around me, let them paint colors and make mistakes without telling them they were wrong.
  19. Whenever I’m hiring a key executive, I look for integrity and passion. To me, that’s just as important as experience and abilities.
  20. Wall Street cannot place a value on values.
  21. The same pace and passion that made us great also at times burned people out.
  22. Sometimes what’s hardest – for me and strong-minded leaders like me – is restraining myself, allowing other people’s ideas to germinate and blossom before passing judgment.
  23. Many entrepreneurs fall into a trap: They are so captivated by their own vision that when an employee comes up with an idea, especially one that doesn’t seem to fit the original vision, they are tempted to quash it.
  24. It’s demoralizing, I know from experience, to get fired up about a great new idea only to have it dismissed by higher-ups.
  25. When things are going well, why change a winning formula? The simple answer is this: Because the world is changing.
  26. At Starbucks, we discovered along the way that sustainability is directly linked to self-renewal. Even when life seems perfect, you have to take risks and jump to the next level, or you’ll start spiraling downhill into complacency without even realizing it.
  27. Any product-oriented company has to keep reinventing its core product if it expects to prosper, let alone survive.
  28. We believed the best way to meet and exceed the expectations of customers was to hire and train great people.
  29. So much of the retailing experience in America is mediocre.
  30. When you meet with an experience at a higher level, where you are treated positively, where someone goes out of her way to make you feel special, where you’re welcomed with a smile and assumed to be intelligent, the experience stands out.
  31. Authentic brands do not emerge from marketing cubicles or advertising agencies. They emanate from everything the company does.
  32. I left the top marketing position empty for 18 months while we searched for the right person.
  33. We set out to win, no doubt about that, but our goal is to win with integrity.
  34. Even more than their stock options, baristas told us they cared about the emotional benefits they got from their jobs.
  35. The more heartfelt our commitment, the more these setbacks will hurt, but the more we’ll be capable of devising solutions that reflect our values.
  36. In the ethical vacuum of this era, people long to be inspired.

 

For more On the Edge content, please visit the Worldpay Partner Advantage website.

 

Jim Roddy is a Reseller & ISV Business Advisor for Worldpay’s PaymentsEdge Advisory Services. He has been active in the POS channel since 1998, including 11 years as the President of Business Solutions Magazine, six years as a Retail Solutions Providers Association (RSPA) board member, and one term as RSPA Chairman of the Board. Jim is regularly requested to speak at industry conferences and he is author of Hire Like You Just Beat Cancer and On The Edge with Jim Roddy.

gjsissons

Interchange for Dummies

Posted by gjsissons Oct 3, 2018

A Primer on Card Processing Fees

 

For developers who have worked mostly with gateways, coding to a payment processor can be a different experience. The interfaces can feel a little more complicated, but it turns out that understanding arcane topics like interchange fees, assessments and discount rates vs. interchange plus is worth the effort - especially as payment volume scales. If you’re wondering why this is, read on - you’ve come to the right post!

 

Interchange

 

interchange

 

In payments, interchange refers to the fees that are paid by the merchant’s bank (or the acquirer in industry lingo) to the cardholder’s issuing bank. These fees are set by the card brands and compensate the issuer for going to the trouble of qualifying consumers, issuing cards, handling transactions and taking on the risk involved in offering a line of credit.

 

The money moves from the acquiring bank (the bank handling the front-end of the transaction) to the issuing bank (the bank issuing the card), but fees are ultimately passed on to the merchant.

 

The card brands usually update interchange rates twice per year, and at the time of this writing, the links to latest fee structures for VISA and MasterCard are provided below:

 

 

A casual look at these schedules will confirm what you probably suspect – the policies are complex, and every transaction is potentially different subject.  Rates charged by the card brands depend on a variety of factors:

 

  • Card present vs card not present
  • Type of card, and nature of associated reward programs
  • Merchant performance thresholds – minimum volume, chargeback ratios and the like
  • Industry, type of business, purchase location
  • Various fee programs (Commercial Level III, Commercial CNP, GSA Large Ticket)

 

Swiping your basic VISA card at a large, well-known supermarket (at the time of this writing) costs 1.15% plus 5 cents per transaction.  Swiping your VISA Infinite card at a restaurant results in interchange fees of 2.4% + 10 cents per transaction (more than double). Interchange rates can dramatically affect a merchant’s costs.

 

Assessments

 

In addition to the interchange fees described above, card networks charge an assessment fee for each transaction.  The point of an assessment fee is to provide a source of funding for the card networks to maintain their infrastructure.  A quick Google of “VISA Assessment Fee” shows an assessment rate is 0.13% for credit and debit cards. Assessment fees can change with time, vary by jurisdiction and be different for different card brands. Assessments are paid by the payment processor/acquiring bank, and like interchange fees, these costs are passed onto the merchant.

 

Payment Processing Fees

 

As you’ve probably realized, interchange fees and assessments don’t benefit the payment processor.  They only benefit card companies and card issuing banks.  Typically, payment processors contract with the merchant for additional  processing fees. Usually these fees are per-transaction and may vary by transaction type.  The processor may also include additional fees for value-added services you elect to use, such as account updating or enhanced security offerings that can benefit merchants in other ways, such as reducing chargebacks, or minimizing declined authorizations.

 

Discount Rates vs Interchange Plus

 

Most of us are conditioned to appreciate a good discount, but in payments the story is more complicated. Processors determine discount rates by examining a number of factors, including MCC, average ticket price, and risk factors among others. From this info, processors negotiate with you a discount rate that accounts for the mix of interchange, assessments, and other fees, along with their profit margin. For example, imagine an internet gateway charging a discount rate of 2.9% + $0.30 per transaction  On a hypothetical $100 card purchase, this would cost the merchant $3.20 as shown below:

 

gateway_pricing_model.PNG

Now imagine the same transaction subject to an interchange plus fee structure.  In interchange plus, the processor passes through interchange, assessments, and other network fees without change. The processor then adds a per transaction fee, as well as any fees for value added services you elect to use. In this second scenario, the actual costs of interchange fees will vary with every transaction, but a typical transaction might look like the following:

 

processor_pricing_model.PNG

This is not to say that one pricing model is better than the other, or that an interchange plus fee structure will always be less expensive, but the approaches are different.  Payment providers who offer a discount rate, are providing merchants with simplicity and predictability, but arguably at the price of transparency.  Interchange fees and assessments still apply behind the scenes, and the payment provider is taking a risk because they could potentially lose money on some transactions. When offering a discount rate, the payment provider earns their margin on the difference between the discount rate offered to the merchant and the actual underlying fees they pay to facilitate the payment including interchange, assessments and processing fees.

 

While discount rates are simple, they are not transparent to the merchant. The merchant understands their total cost, but they don’t have visibility to how much of the cost is due to interchange, assessments or earnings retained by their gateway providers or processors.

 

To gain transparency, larger merchants often prefer interchange plus pricing schemes.  While they can be more complex to understand, they do allow merchants to analyze their payment transactions and understand the cost components of each transaction in detail.  With visibility to all sources of cost, merchants can take steps to avoid excessive fees including understanding what types of transactions are the most or least costly and taking steps (including coding applications differently) to reduce costs where possible.

 

Processing fees matter

 

To state the obvious, processing fees matter. For a small business transacting $5M annually, a 50-basis point reduction in average fees can yield $25K to the bottom line – enough to hire a part time employee or lease a couple of vehicles.  For a national retailer, analyzing and understanding fees is even more consequential.

 

Because the amounts are so substantial, larger merchants will often negotiate for lower discount rates, or prefer interchange plus pricing where they have visibility to their fees.  With visibility to fees, merchants can take steps to address sources of cost including coding transactions differently.

 

How does this impact the developer?

 

the way you code payment transactions can affect your business's bottom line.

 

Basically, how you code payment transactions matters because decisions you make can affect Interchange rates for a particular transaction.  Following card brand rules is essential to not only minimizing fees, but reducing instances of fraud and chargebacks as well. As examples:

 

  • For card not present transactions always perform an AVS (Address Verification System) check. Simply performing an AVS check can result in better interchange and also acts to deter fraud.
  • Providing detailed metadata in payment transactions (like industry types, terminal types, electronic indicator codes and commercial card IDs) can also help merchants obtain more favorable interchange rates. If this information is not provided, card brands will err on the side of caution, defaulting to higher rates.
  • For B2B applications, collecting and passing data fields required for Level II or Level III transactions can help reduce interchange rates further.

 

For developers, to minimize merchant costs, it is important that their payment SDK or API provide the ability to accept and pass on as much of this supplementary metadata as possible. Worldpay’s triPOS and Express APIs for card present transactions are good examples, as both allow for extensive metadata collection including things like freight, duty, taxes, ship-from and destination zip codes, and a variety of other items that affect interchange fees.

 

To learn more about Worldpay APIs for point of sale developers including the triPOS and Express platforms described above, visit our Point of Sale Integrations resource page.

 

For similar resources for card not present and mobile payment integrations, check out our developer eCommerce resources.

 

Thanks to Tom Boumil and Dan Ourada for their valuable contributions this this article.