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hello everyone welcome back today we're gonna talk about some payments terminology unfortunately payments can be pretty confusing and if you don't understand what you're talking about you might make a mistake at judo we do everything possible to make payments as simple as possible and we put in the background a lot of the confusion that's if we're always here to help you and so if you don't get enough out of our whiteboard session today feel free to give us a call and we'll come and talk to you about any questions you have about payments so at the end of the session when we talk about payments today I want you to figure out which one of the words up here is not relative relevant to payments and if you can figure that one out now extra bonus point for you so let's start at the beginning over here with a payment what is a simple payment and this is probably what anyone of you understand this is when a cardholder provides a card information and it's processed through the networks and immediately gets a confirmation or a failure message that happens in real time it happens over about a quarter to a half of a second that's probably the most simple one and a lot of instances though you want to do something a bit more complex with your payment and this is because your payment is either interacting with your back-end to maybe really stock or because you're not sure exactly how much to charge up front and in these situations you use something called a pre off and collect it's called pre off because your pre authorizing with the card holders card that the funds are available and then you collect that amount at a later point in time so here with that pre often collection the situation you're probably most familiar with is when you check into a hotel and they tell you we have reserved X amount of money against the card that you've provided and they'll often be a warning sign same thing with a car rental and in both instances they're doing that and doing it to a higher amount than what they expect you to charge because you may end up engaging in incidentals or in a car rental situation you might not return with the car fully fueled and that way they don't have to go back to engage in another transaction but have gotten the right to process an additional amount so there's a few things about a pre-op and collect that you want to know the first is once you've pre-authorized it's as safe as a payment what a pre-authorization does is it talks to the card networks and says hello bank of the cardholder I need to hold a hundred pounds and I might take that sometime soon or I might take a lesser amount so you know that you've got that money you're not worried that they run out of funds or that the cards not valid the second thing to remember with the pre-authorization is you can never take more than the amount you pre authorized and so let's you say a taxi ride is an example maybe you you book a ride ahead of time and it's two from your home to the airport and the quote on that ride was thirty five pounds and so if you were that business and you pre-authorized thirty five pounds the problem could come up later when the person decides can we just stop at an ATM for a minute or I'm really hungry let's get some chicken I love chicken and in that instance they need to not add another pound or five pounds on to the transaction and with that thirty five pound free off they can't do it so they would have to do either a whole new transaction or book the first thirty-five pounds of one transaction and then engage in another transaction for the remaining amount maybe they'd even say just give me a few pounds in cash but the better method is always to pre off above what you expect to take that said one thing to remember when taking money on a pre off goes back to the first piece where you're actually reserving that money against their card and so if you think you need fifty pounds don't take 500 pounds because you're actually removing that from their credit availability if it's a credit card or you're putting a hold on that amount on their bank account if it's a debit card and the customers will very quickly get angry if you do this egregiously if it's within the realm of the nature of the transaction or a reasonable margin above it it'll generally work fine the third thing to remember in a pre-alpha collection is the amount of time that the pre off is valid in a standard pre-op collection the pre-authorization will valid for three days before it automatically releases and so you have three days from the time you set a pre off until you have to collect again set I'm simplifying here because there are ways to extend the length of the pre-authorization but if you were to use judo's api or most open other payment sources the standard off-the-shelf pre optimum collection is a three-day period and again this matters because you don't want to pre out something in October and then go and try and collect it three months later and no instance would you be able to do that you're holding way too long reliability against the customer so again this is really good a pre often collect when you're doing something when there's a gap between the time of an order and the known amount of the final amount due it also works in a lot of environments where you don't want to actually collect the payment until you know that you're going to deliver the service so a lot of the e-commerce companies that we work with they able do a pre off at the time of the transaction and not do a collection until it leaves their shipping department because there's a chance along the way that their stock wasn't unable to serve that and they don't want to go through the process of having to refund everything they'd rather go back to the merchant and/or the customer and say we were unable to deliver that good would you accept an alternative and this pre often collect method allows them to do it that way so now we talked about payment trade-off and collection let's talk about PCI PCI is the payments council industry and that's usually DSS is followed by that and that is data security standards and what it is essentially is a series of rules that ensure that a card holders data is always safe and any merchant who's taken card data no matter what person they're working with always has to ensure they're being PCI compliant the risk or the burden of proof with PCI all lands with who is holding and storing sensitive card details and so with a vast majority of the people that we work with and lots of other folks we take this PCI burden almost completely off your backs by making sure that we hold onto that card data and provide you with tokens so you can safely interact with us even with that you need to state at some point of time once a year usually that you are compliant with PCI because you don't store card data and that's acceptable takes a minute or two if you do store card data then you need to be very careful that you're complying with every one of their rules if you're found to be in violation of PCI the fines very quickly run into the millions of pounds again if you have any questions about PCI you should drop us a line but if you're working with one of our standard integrations or frankly with most providers they will indicate to you that they are taking care of PCI for you so the next one I want to talk about is probably pretty straightforward but this is where we get as an industry caught up in our jargon and when we think about there's buyers and sellers which is the easiest we translate that into card holders and merchants and so somebody buying a good as a card holder somebody selling a good as a merchant the problem with that term is a merchant is meant to indicate anybody who is selling any good or service so it doesn't need to be a fully fledged business you as an individual are merchants if you're accepting card payments so any time we're talking about a merchant it's synonymous with the seller so next let's stop at a refund a refund is pretty straightforward you've all done it before for some reason you return a good or service or the service one that were delivered and you as a merchant want to refund the payment so with a refund which again is very straightforward the one thing to remember is you can only refund up to the amount of the initial payment in the instance where you've done a pre off and then a collection and then you need to do a refund you're limited by the amount of the collection on how much you can refund there's one exception to this which is in the gaming industry where they can do what's called an original funding transaction which allows them to add additional funds onto a refund above and beyond the amount that was in the original payment this is essentially how they'll pay out winning bets in all other industries this is banned and you're unable to do action that's an excess of the amount of the original payment and we have a chargeback this is something that's an unfortunate nature of doing business with credit cards but also one of the reasons why the Visa MasterCard and American Express and the few other smaller card networks are really really powerful and are unlikely to go away near-term a chargeback is the term used for when an individual or a cardholder begins a process with their bank of saying I did not purchase that good or service the most common reasons for it are I don't recognize this charge I didn't receive the good or service that I was promised or the good or service didn't deliver to the level that was promised to me there's a whole host of other codes that come through that drive drive the specific nature of the charge back but as soon as that customer contacts their bank which is called an issuing bank they will begin that process that will flow through the networks and back to a provider like Juneau and indicate to the merchant you have a charge back on your account this transaction from this date is being disputed what you then have to do is provide information that will flow back to prove that you've delivered that good or service to the cardholder who's questioning the transaction now here the most important thing to know is a truck for about charge backs as merchants is to make sure that you're keeping good records because a lot of the times the reason that customers indicating initiating a charge back is because they're not really sure what happened or they forget about a transaction so as long as you've you've kept the records of the receipt of their payment and hopefully something around shipping details if you're selling them anything or sending them anything any records and information that you can keep the support the fact that you provided the good or service you promised will help you in the event of a chargeback situation chargebacks are something that everybody really needs to think about and as you think about the process in your own service flow etc you need to know how to interact with those customers and it starts with the most simple piece at the beginning is how do you show up on that cardholder state so you'll see with judo we give you the ability to tell us how you want to show up on the cardholder statement this makes sure that when you remember doing business with Joe's coffee shop it doesn't show up as Joe's 1 2 3 7 5 the more information you provide here the more specific it is and even providing a phone number will help you prevent chargebacks which is one of the biggest drivers of costs and losses and accepting cards chargebacks are pretty much all of our enemies so we talked a little bit about before the issuing bank and so the issuer or the issuing bank is the banking institution that is on the cardholder side of the overall payments flow and if you've watched some of our earlier videos we talked through an issuing bank to a cardholder how they interact with the card schemes and then go through to the merchant account but essentially what happens is if you've got your cardholder here they have a relationship with the issuer which is the bank that provides the card to the cardholder as well as the bank that's responsible for sending funds eventually back down to the merchant so that issuer goes and sends data back and forth to Visa and MasterCard they send that data to with the acquire top cover off in a second and the acquire sends that funds to the merchant so you have this two-way communication path that goes through these channels but the issuing bank and the acquiring bank are rarely the same they can be and then summons as they are Barclays for example is both an issuing bank and an acquiring bank an acquiring bank is the bank that's behind a merchant so for all intents and purpose if you work with judo where you're acquiring Bank we provide the service that interacts with the card networks and we interact with you to help make this a seamless process you shouldn't have to worry about any of this but you need to know that you're acquiring Bank is going to be on your side when there's anything that could possibly go wrong and particularly that there like judo and I have a 100% uptime because if this acquire loses connection with this network you can't take payments so finally you'll hear the word ISO ISO is an independent sales organization and all that means is that it's somebody working on behalf of an acquiring bank I mean you'll see a lot of independent sales organizations across the UK and in first in some ways judo acts as an independent sales organization for some of our larger customers and that's beyond the scope of this discussion today but we can come back to it later so hopefully by now you've noticed that the term that we really haven't talked about at all is arbitrage so extra bonus points if you email help at judo PACOM and give us a good up definition for arbitrage thanks for spending the time to listen and feel free to call us if you have any questions Cheers