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The e-commerce.

Warning: Echo merchant accounts hostile to gift certificates


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Hi there.


I recently partnered with a friend to open a new osCommerce store, based on Ian's awesome "Loaded 4" snapshot. Since this was my partners first venture, I let her handle as much as she wanted, including the merch account, although I helped narrow down the options and follow up with companies she deallt with.


We decided to give Echo a try.


Unfortunately, for our site to be approved, they insisted that we fax them an acknowledgement that we'd make gift certificates expire after -30 days-. They said this was their policy, although they out and out refused to fax me a copy of that policy. Pushing for a copy of it (to "initial" or what have you), they told me that it was in THEIR agreement with Visa/MC, and we couldn't have a copy of that. Makes you wonder why it's not in ultraverbose agreement you sign when you apply, eh? (and, yes, I spoke to a numbe of reps about this issue, and always got the same response; my guess was that it was a recent verbal mandate, and that they indeed didn't have circulatable copies of the policy yet)


So, anyway, a customer pays for a gift cert, you keep their money, and their cert, if unused, expires 30 days later. This is obviously customer hostile, and even seems to approach a form of robbery to me!


We saw that Jim Conley of Merchantseek.com (an awesome website probiding user reviews of merchant accounts; worth a visit!) interviewed Echo's president not too long ago, so we made an inquiry with him to see if he contact him again in regards to this issue.


He was able to get their sales director to contact the higher ups...


From Jim...


"I got the following response back from the sales director:


'Jim, I spoke to Sue Woolf and to Jack, and it is our policy to adhere

a 30 day limit on gift certificates to avoid exposure to chargebacks.If

a company were to go out of business and had 500 gift certificates put

out there, we could be inundated with chargebacks. I hope this helps.' "


Now, come on...


A primary gripe we had with this was that it would increase customer chargebacks, since it's so customer unfriendly. I mean, I haven't even been pleased when looking closely at a gift certificiate to see that it expires in a year, nevermind a month! But I can understand the year, in order to tidy up the company's bookkeeping. No matter how much I try, I cannot likewise understand a month expiration date. (I once had an unsealed bag of blue nachos that seemed to last longer than that! ;))


It seems like it would be better for them to prohibit gift certs at all, until you processed with them sufficient time to establish a track record. ANYTHING other than a static 30 day expiration limit seems to be better than their current policy. Give us 90 days. Or put down a deposit or a bond or buy insurance to process certs that expire in a reasonable fashion. Whatever... There's lots of different ways to work this that won't hurt the end customer.


Recently, the holiday seasons made me remember an LL Bean gift cert I was given more than 3 years ago. Shot out to LL Bean all my old email addresses, and sure enough, they located my record and my gift cert with them is still valid. Now that's honest. That gave me a good feeling about LL Bean, and has been subsequently leading to me give them lots of positive word of mouth. And positive word of mouth is gold.


Now imagine if you bought a gift cert for a friend for Christmas, for instance, and they spend most of January, like many people do, working extra hard to make up for the excessive spending they themselves did for Christmas. Come February, they go to use their gift certificate. They can't. Expired. They call you and tell you the situation...


Wouldn't you be pissed? And upon reviewing the 30 day policy, wouldn't you feel that was unreal and hostile, and then go on and try to file a chargeback? I know I would, and I'd spread lots of negative word of mouth in the process about the horrible merchant who's a some twisted modern form of Scrooge that expires Christmas time gift cerficiates! "Thieves!", I'd yell. I'd blame it ALL on the merchant, too. After all, LL Bean honors gift certs for YEARS -- "why can't this merchant at last honor their certs for 90 days or a year??", I'd reason.


Now, even if 30 days was part of the terms and agreements in an obvious way (big font, etc.) as part of the cert product description, I don't even know if my mind would process it. It's just too ludicrous, and the mind tends to delete that which is too incongruent. That's a psychological fact.


There's a good scene in trainspotting where the crazy heroine kids get extra crazy around a set of one their parents, and everything returns to normal right after they leave, like nothing happened at all. Things that don't fit with out normal reality don't have the 'hooks' on which to hang in our minds. They don't trigger well.


Another example of how the Echo policy doesn't work effectively-- what if you buy your xmas presents right after Thanksgiving, like many people do? Heck, that's the hottest time of the year to shop. But if you did so, then your gift certs would be expiring right after Christmas! And I do mean *right* after. And if you're an even earlier holiday shopper, your gift certs would *never* be able to be redeemed; not if you hold out to give them on Christmas, anyway.


Wahoo - Echo! Yeah, this minimizes chargebacks *big time*. Rrrright!


If you process with Echo, please consider contacting them to let them know how unrealistic and customer hostile this policy is, and how it can actually lead to a greater number of chargebacks.


And if you're considering Echo and are in negotiations with them, don't fail to mention that you've never heard of such a ludicrous requirement from any other merchant account providers. (well, perhaps you haven't; I, for one, did some googling around, and couldn't find anything else like this -- nor have other merchant providers for other projects I've been involved with made a fuss)


On the other hand... other than this issue... and perhaps how they bait & switch their rates (they list 1.99% on many websites, but send apps -- without knowing you or your business from Adam -- with 2.49%-2.54% listed in the terms! i.e., that's their REAL rate)... Yes, even aside from that bit of dishonest, they actually seem pretty good overall.


No, really. I mean it. :)


For one thing, they answer their phone, and so does support -- that's one of the first things I check when considering a product. They both answer *right away*, too. Echo is nothing if not reachable (over the phone, anyway). And considering some experiences I've had with other merchant providers, well, believe me when I say that I was floored by this. Phone contact, wow!! New! Net! Novel! Heh.


Also, the developer form Echo (Alex Schultz?) that updates the osCommerce payment module, seems equally responsive to providing updates to that module. They seem to be one of the few companies that goes out of their way to actually provide contributions to osCommerce, and that's pretty darn cool. A major plus.


Another thing that's great is that there's no inbuilt processing ceiling. I know with my first merchant account for an e-book I wrote, I had a ceiling of $10k per month, and it did almost $1k a day the first few days I did some serious PR. Suffice to say that my merch provider at the time contacted me about this with threats of fines and other penalities, like reserves. This was enough for me to 'cool' my promotional efforts, which severely ameliorated my marketing efforts from then on. That's called a "chilling effect". And you don't want that kind of chilling effect for your business ventures! Do $700,000 a month with echo -- they don't seem to mind. Echo won't spank you for success, and that's important. (unless success to you depends heavily on gift vouchers, that is! ;))


Their check processing and recovery rates are also pretty low, all things considered. Nor does 2.49-2.59% lead to many more bucks spent per month per $10k processed than with other providers, especially since they nickel and dime you a little less than most do on per transaction fees, daily batching (free), etc.. The lowest 'fully qualified' discount rate is easy to get, too. You only need to ATTEMPT AVS to get it. That's not hard at all.


Also, my partner, who's the primary business owner in this case, is fairly young and green. She has some great producted related skills, but doesn't have much of a credit record yet. In fact, ebay's IDVerify program can't even find her in Equifax's records enough to qualify for that program! Yet Echo doesn't seem to mind, as long as she doesn't have BAD credit. That makes Echo a good place to start for many a younger entrepreneur, or those rebuilding credit.


Yeah, overall Echo is a bit of alright. Echo needs to severly reconsider their anti-customer gift certificate rules, however, and represent their upfront rates a little more honestly. Otherwise, they're certainly one of the better merchant providers I've dealt with. So far, anyway.


Any comments on how to progress about the gift voucher / certificate issue are appreciated.


I figure the best thing to do would be to just not offer them for now, or only offer to process them through American Express, Discover and Electronic checks (Echo, after all, is only responsible for chargebacks on the Visa and Mastercard side of the transaction -- America Express gave us no such restrictions when they issued our seperate merch # with them).


Then, at some point in the future, after this project is better established, unless Echo resolves this issue, move onto another merch provider, and retain the Echo account as a backup (they charge nothing, after all, for months when you don't process -- a nice feature; a prefect backup, really). I think the Costco Business Executive 2.03% merchant account (and most people actually GET 2.03% with the bloody thing from what I've been reading!) would be a good next step should Echo remain firm on this issue.


Comments, anyone?

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My first comment is that in certain states in America making Gift Vouchers expirable is illegal.


Second in those states where they can expire, on expiry the value of the Gift Voucher must be paid to the state.


Are Echo therefore suggesting you break the law.

Trust me, I'm an Accountant.

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My first comment is that in certain states in America making Gift Vouchers expirable is illegal.


That Which makes perfect sense.


After all, MONEY does not expire! That's sort of the whole point of currency, afer all. It doesn't go bad.


Second in those states where they can expire, on expiry the value of the Gift Voucher must be paid to the state.


Are Echo therefore suggesting you break the law.


Wow. I guess so!


Perhaps it's not just merchant's sense of decency which could influence them, but the law now, too.


I'm going to have to look into this.


Thanks for the tip, Ian. I honestly never heard of these laws before. It just makes sense to me that you should not expire a gift cert. Seems awfully shady, and I'd hate to do it to anyone or have it done to me. Expiring is a lose-lose situation, which is not what you base any good relationship on, business or otherwise.

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Right you are about those laws.


At minimum, these laws apply


In Claifornia, Conneticut, and Georgia, gift certs may not expire


In New Hampshire, gift certs under $100 may not expire


In Hawaii, gift certs may not expire in less than 2 years


In Massachusetts, gift certs may not expire in less than 7 years


By expiring early or expiring at all in some cases, you not only face the wrath of customer's and the gift recipients you've cheated, but the law, too. Unless you like negative word of mouth and being sued by multiple attorney general's offices, this is definitely not cool.


And more and more states are also considering the California model of non-expiration. This may some day, sooner than later it seems, become ubiqitous.


Some references:






"Even in states without such laws, a responsible merchant shouldn't just tear up a long-suffering mom's gift certificate. If their costs of doing business have changed drastically, one could ask them to refund the cash -- after all, they've been using it in their business for all this time, and shouldn't get a windfall for nothing. Most merchants will recognize the need to protect their business reputation, and will try to reach a compromise."


It's a sad day when your entryway into the Visa and Mastercard network advises you to sign a form agreeing to hurt suffering moms and break the laws of several states all at once. Geesh! :?

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I would reckon a word in the ear of the appropriatte authorities would certainly put the wind up echo and go some way for them to think about thier decision. After all i would imagine that they would require some sort of licence to operate as a merchant service, which might be something for echo to thin about.


just my thoughts....





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The reason why money was made from metals is that generally after years you still have the metals (which have value).


So if ten silver pieces buys you a loaf of bread today,

a year from now the person who sold you the bread will be able to use the silver for something.


Metal has no expiry date (bread has).


Someone told me that the reason our coins (in the UK) have a series of dots on the edge is due to people using files to collect a little bit of metal off the edges centuries ago. This metal was collected and melted to form new metal blocks! The edges show of if the coins have been tampered with.


Its amazing what you learn everyday , is it not !

Special Effects / 3d + Flash

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Before the Uk moved to decimalized coinage the public were asked for their opinion as to why th uk should not use deciamlized coins.


The anwser most often given was that it was to hard to work out.


Given that the coinage at the time followed the following format


1 pound = 20 shillings


1 shilling =12 pence


half a crown = 2 shillings & sixpence


sixpence = six pennies


thruppeny bit = three pennies


Mad dogs & englishmen :lol:

Trust me, I'm an Accountant.

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