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How to Pick a Secure Password

Written by Mike Seidle

One of the most common questions VPS gets from our users is: "How do I make a password secure?"

Despite the last 10 years of groupthink, it isn't making a password like this: aw3s0ME!

Credit Card Fraud Targets Lawyers, Too

Written by Mike Seidle
The phone rings. Mr. Gomez, a 10 year client is on the phone with a problem. It seems like he was overcharged $230 on his last bill and paid it with his credit card. Mr. Gomez would like a refund check sent. The receptionist quickly promises Mr. Gomez a refund and has a check sent. Weeks later, the law firm's controller discovers the refund was for a payment that was never made to the firm.
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More Information on the New IRS Merchant Reporting rules (IRC 6050W)

Last year, the IRS adopted a new rule regarding the reporting of electronic merchant processing income. Credit card processing companies now have to report to the IRS all payments made to merchants. Third party processors have to report all payments made to merchants who process a minimum of 200 transactions and a volume over $20,000 for the year. So, for companies having a merchant account, you will be getting an IRS form 1099K from your processor. If you use a third party service where the processor uses their own merchant account to process payments, you will get a 1099K if you are over 200 transactions and $200K. The new rule is effective starting January 1 of 2011.

In short, the new IRS rules are increasing costs for merchant processors, and ultimately, this will result in an increase in monthly rates for most companies that accept credit cards.

Two Ways to Take Credit Cards

Written by Mike Seidle

When it comes to taking credit card processing there are two ways to go:

Traditional Merchant Processing

Payments are accepted using a card swipe terminal, point-of-sale (POS) system, cash registers, website, or a smartphone (iPhone, Android or Blackberry)
Merchants pay a monthly and annual fee and "processing fees" are charged to the merchant for each payment.
Processing fees are hidden from the customer.
Chief advantages: familiar to payers, compatible with most existing retail and ecommerce systems, mobile device convenience.

Payment Portal

Payments are accepted by either the merchant's staff entering them on a website or the customer making their payment through a website.
Merchants pay a monthly and annual fee.
The customer (payer) is charged a convenience fee at the time of purchase.
Chief advantages: Up to 95% savings, enables credit card payments in industries with regulated prices or accounting rules, allows for card payments for pre-negotiated prices after a contract is signed.

What's Right For Your Business?

The important thing is to do what will be best for your firm, and your customers. Usually the answer depends on three factors:

Can you accept less than 100% of the amount being paid to you? (If you take a $1000 payment, are you ok with getting $960-980?)
If yes, go with traditional merchant processing.
If no, go with a Payment Portal solution.
Do you want to offer credit card payments as an option to customers, but would prefer to get cash or check payments?
If yes, go with a Payment Portal solution as the convenience fee will provide incentive to pay you using a lower cost method like a check or credit card.
If no and you are okay with a larger number of credit card payments, go with traditional merchant processing
Is your industry a highly competitive retail business?
If yes, go with traditional merchant processing as that is what customers will expect.
If no, then your customers may be more open to paying a convenience fee as opposed to a 3-5% price hike across the board.

Virtual Payment Systems offers both traditional merchant processing and an innovative payment portal service called VPS Portal.

Merchants: Beware of Fraudulent Refund Requests

Written by Mike Seidle
When I say "credit card fraud" you think about stolen card numbers and identity theft. There's another kind of fraud, and if you accept credit cards you need to be highly aware of it. Here's how it works: You get a call from someone with a common name. Think John Smith, Jenny Jones or Hector Sanchez. The caller claims that his bank asked him to call your law firm to get a check refund for a debit card transaction dated the "15th". Sounds legit. Except the caller never bought anything from you. If you issue the refund, you can bet that if you cut a check, you'll never get your money back. Seems obvious? It's not, and incidents of "refund fraud" are rapidly increasing for service businesses like law firms who are often easy marks for scammers because either they are new to taking credit cards or simply aren't used to dealing with fraudsters. Fortunately stopping refund fraud is easy. By following a few very simple rules you can save your firm thousands in lost money and time:
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Three Ways Companies Fail to Get Paid

Written by Mike Seidle

1. Assuming that businesses don't use credit cards to buy from other businesses

Yesterday, I got a call from a local IT provider -- one with a great reputation, and some of the best clients you could ever want. The IT provider had a problem: one of their customers wanted to pay a $50,000 bill with a credit card. After a brief conversation about the problem, we learned that there were actually four different clients that had tried to pay big bills with a credit card. The National Small Business Association does a periodic survey onsmall business funding, and in 2008 discovered this gem:

59% of US Small Business Use Credit Cards for Funding.

If you don't offer a credit card option, you may be setting yourself up for problems getting paid:

2. Failing to Take Electronic Payments

Five Blogging Secrets for Attorneys

Written by Erik Deckers
Guest Blog by Erik Deckers of Professional Blog Service We speak to a lot of lawyers about how they can use blogging to help promote their practice without violating their state’s marketing guidelines. Many attorneys are realizing that social media is a great legal marketing tool, and many of them are trying to learn how to use it. The problem a lot of attorneys have in their marketing is that they are not allowed to use “competitive” language — we’re the best, we’re better, or ranked number onein our field — and they can’t offer guarantees. This means they have totread carefully on their TV and phone book ads. That’s why you hear/read things like “tell them you mean business,” “we fight for you,”and “we don’t handle anything except personal injury.”
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Credit Cards and Law Firm Trust Accounts

There's a reason that many lawyers do not take credit card payments. Bar association rules governing law firm trust accounts usually are not compatible with traditional merchant processing. Even if your merchant processing is compatible with the rules, taking a 2.2%-3.8% haircut on trust account payments just is not good business. We started VPS to provide a compliant way for lawyers to accept both trust account payments and operating payments. Recently in a review of credit card processing solutions, The Lawyerist pointed out:

"If you want to take advances that need to go into your trust account, VPS is the only legitimate option on this list." -- Sam Glover, March 17, 2011, The Lawyerist

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