Waste Payment Systems Evolve with the Times

Cloud technology and mobile applications are changing the way the waste and recycling industry manages billing and processes payments, with the biggest change in payment services technology being how firms are storing and transmitting sensitive card information.

“Years ago, many waste companies had local installs for their software programs that connected to the phone lines to send and process transactions,” says Andrew Caine, vice president of Card Payment Services (CPS). “However, with the rapid rise of the cloud-based software systems and using the internet to process transactions, companies have had to implement many more complex security protocols.”

These enhanced protocols include no longer storing sensitive data and, instead, relying on random tokens—a process called tokenization—that, even if accessed or intercepted by hackers or thieves, does not provide any useful information.

“This is a vital shift is protecting our industry from breaches. Tokenization also helps reduce the PCI (payment card industry) scope which simplifies the PCI questionnaire that merchants need to fill out,” says Caine. “Also, as mobile applications get better and better. More haulers will be able to accept payments from one‐time customers in person with mobile devices that drivers can keep in their trucks.”

McKinney, Texas-based CPS is part of Cayan, a payment technology company.

With the rise of secure technology has come the opportunity implement payment solutions that not only reduce the back office workload, but also improve the customer experience. Sensitive customer credit card or bank information can now be processed and stored more securely than ever before, according to Zach Turner, business development manager for Tiger Payment Solutions.

“We live in a digital world. Although many businesses have the capabilities to process electronic payments, industry reports suggest two-thirds of invoices still arrive from vendors on paper,” Turner says. “I think businesses that choose to go paperless by implementing an electronic payment system realize enormous process efficiencies and cost-savings benefits.”

Tiger, based in Kingston, Mass., provides payment solutions specifically designed for the waste and recycling industry, including credit and debit card acceptance, ACH/e-check transactions, and automated recurring payments.

Processing payments for the industry is multifaceted, with rules and regulations pertaining to merchant categories and rate structures. This includes interchange fees, a term used in the payment card industry to describe a fee paid between banks for the acceptance of card based transactions. In a credit card or debit card transaction, the card-issuing bank in a payment transaction deducts the interchange fee from the amount it pays the acquiring bank that handles a credit or debit card transaction for a merchant.

One way to reduce the cost for the waste industry is by educating haulers on unique Visa and MasterCard programs that allow waste removal companies to qualify as a utility provider.

“By qualifying for this status, many waste removal businesses can reduce the overall acceptance costs from an industry average of about 3 percent down to below 2 percent—but in most cases closer to 1 percent,” says Caine. “Many credit card processors lack the knowledge and understanding to establish these low rates. And some providers intentionally withhold these rates from the haulers they work with.”

Turner says that while the trend in processing payments is leaning toward many people paying their bills online, the options can be confusing.

 “I think customers want the ability to not only pay online but to place new orders and view account information; and maybe take advantage of any loyalty or rewards programs that are offered,” he says.

One of the biggest changes in payment services is that consumers are abandoning checks in favor of card and electronic (ACH) transfers, says Caine.

According to the Federal Reserve’s Payment study, in 2000 consumers made an average of 19.3 check payments, 6.6 debit payments, 12.4 credit payments and 2.0 ACH payments per household per month. In 2015, consumers were making only making 7.1 check payments per household per month while making 45.0 debit card payments, 19.3 credit card payments and 7.1 ACH payments.

“This clear shift in payment preferences means that businesses in the waste industry need to evolve how it takes payments to meet changing consumer demands,” says Caine. “The trend also could result in merchants paying less in total for taking payments since ACH payments tend to be less expensive than other methods. There will always be a certain subset of customers who want to pay by check, but to ignore the shifting payment preferences of consumers, risks alienating current customers and losing new customers to competitors.”

The high-profile credit card security breaches at major U.S. retailers over the last few years emphasize the prevalence of data theft and spotlight the risks to a merchant caught unprepared for such crimes.

“The first step for any merchant is to establish and fortify their defenses against a potential data breach by complying with the Payment Card Industry Data Security Standard (PCI DSS),” says Turner.

The PCI Security Standards Council was established in 2004 by the leadership of all four major U.S. credit card companies; VISA, MasterCard, Discover, and American Express. The council’s mission is to create an additional level of protection for card issuers by ensuring that merchants meet minimum levels of security when they store, process and transmit cardholder data.

“Protecting sensitive cardholder data is a powerful, two-pronged differentiation tool, delivering peace of mind to customers and driving new sales to the door as well,” says Turner.

According to Caine, CPS also meets all PCI DSS.

“Some of the tools that we use to keep card data safe include, encryption, tokenization, vault data storage and other cyber security measures to prevent hackers and thieves from getting sensitive card information,” he says.