Credit Card Merchant Accounts

2009-07-11T18:21:00.000-07:00

By Marcus Peterson

When a merchant accepts a credit card from a customer to complete a sale, the customer’s card number, credit card information, the merchant ID and the amount received travel through the bank’s or the processor’s computer network. The merchant can receive the credit card payment from his customer in three ways: when the customer uses the credit card at the terminal; over the Internet, where either the merchant or the customer keys in the necessary credit card information; or through the phone, where the merchant puts in the information. It is the responsibility of the bank or the processor to check with the corresponding card network, to confirm the card’s validity and to see if the necessary funds are the available for the sale.

Subsequently, the customer’s bank sends the merchant an approval over the network. This formality completes the sale. However, no money will be transferred to the merchant’s bank account until the full batch – that is all the sale completed that day by the merchant - has been transferred to the merchant’s processor or bank.

At the culmination of the business day, the merchant sends over his batch to the credit card network for necessary processing. The transactions to the credit card network go through the merchant's credit card processor. Each of those transactions is then sent back to the customers’ bank for debiting. The bank then debits the customer’s account and transfers the correct funds to the merchant's bank or processor through the Federal Reserve Bank's Automated Clearing House. The bank or the processor collects the funds and sends them to the merchant’s bank account.

What is the Best Credit Card Merchant Account Service?

2009-07-03T02:25:00.000-07:00

By Joe Mears

It's a tough question and can depend on your specific requirements. However, there are certain characteristics that everybody needs to have in a merchant account.

First up is low transactions costs. Now when I say transaction costs, what I actually mean is the total fees you will be paying to process credit card orders. It sounds simple and it should be, but it's not.

Rates are a great way for companies in the industry to get a little 'creative' with their advertising campaigns and hide some of their charges that you only find when your first statements come through.

Next is the contract length, why sign a long term contract with a company you don't know? I certainly have no idea, if a company wants you to sign one it would send alarm bells ringing in my head. If they provide great service at low rates, why would you leave anyway?

Then you've got the service levels. Can a company provide for your full business needs? Maybe you are an online business and need an internet merchant account, but what if you want to expand, will your provider be able to offer different payment terminals, or even mobile terminals, to be able to take orders at a big exhibition for example.

The list goes on, but it ultimately ends with a company that will get your transactions done with no fuss, because you won't make anything if you can't take orders. That means there has to be an absolute dedication to customer and technical service and support.

Multiple Merchant Accounts May Help Save Money

2009-06-23T15:59:00.000-07:00

By Jonathan Hewitt

Getting multiple merchant accounts may seem counter-productive when you're trying to save money on merchant account fees, but for many businesses another account would actually lower credit card processing charges.

Lower processing fees due to mid and non-qualified surcharges.

The largest cause of avoidable processing expense is downgrades due to mid and non-qualified surcharges. Exactly why credit card transactions downgrade is beyond the scope of this particular article, but downgrades are unmatched when it comes to inflating credit card processing expenses. You can learn more about downgrades at merchantcouncil.org, but for now I'll discuss why another merchant account can help you avoid these costly surcharges.

Card-present and card-not-present are the two general categories of merchant accounts that the more specific types of accounts fall under. Card-present merchant accounts are used by businesses that process a credit card transaction when the customer and their credit card are present. Retail stores are the most obvious example of a card-present merchant. Card-not-present merchant accounts are used by businesses that process transactions when the customer and their card are not present. An e-commerce business is a great example of a card-not-present merchant.

Now that we've got the formalities covered, you're probably wondering what mid and non-qualified surcharges have to do with saving money by getting multiple merchant accounts. For businesses that accept a substantial number of both card-present and card-not-present transactions, having two merchant accounts will decrease surcharges due to downgrades. When a card-not-present transaction is processed through a card-present merchant account, the transaction will automatically downgrade to the mid (or most likely) non-qualified discount rate tier. Using multiple merchant accounts allows a business to process transactions through the proper type of account thereby avoiding expensive surcharges and downgrades.

Some business owners are apprehensive about getting multiple merchant accounts because they don't want to double fixed monthly fees such as a merchant account monthly minimum or statement fee. This problem can often be avoided by getting both merchant accounts through the same provider. When you buy in bulk, it's usually possible to negotiate lower fixed monthly fees for each account.

Multiple merchant accounts will help you avoid losses due to processor downtime.

Although it's not common, credit card processors and acquiring banks sometimes experience problems that cause intermittent service disruptions. For the merchants that depend on them, being unable to accept credit cards for any length of time often means lost revenue.

By getting multiple merchant accounts through different processors, you can protect yourself against service disruptions due to downtime. However, the cost of having two merchant accounts to protect against service outages won't outweigh the benefits for all businesses. Processor service outages aren't common and monthly fees will have to be paid for each merchant account that you have.

To figure out if having a second merchant account to protect your business against service disruptions would be beneficial, subtract the sum of monthly charges for the dormant merchant account from a hypothetical 24-hour period of not being able to accept credit cards.

Learn These Important Comparisons About Merchant Accounts to Improve Business Cash Flow

2009-06-16T15:22:00.000-07:00

By David Montana

Merchant accounts are contracts between an acquiring bank that extends lines of credit to a merchant, and that allow businesses to accept payment for goods or services via credit cards.

It should be known that customers are much more likely to buy from businesses that accept credit cards. Statistics show that businesses with merchant accounts will see sales numbers increase immediately. According to statistics, the average cash sale is $9, while the average credit card sale is approximately $40.

No matter what type of business you own, the availability of merchant accounts can help your cash flow in several ways. Here are some of the benefits for using merchant accounts:

- Having credit card facilities means you can offer customers the option to purchase on the spot.

- Merchant account processing fees are often lower than check transaction fees.

- Issues about debt collection will become the bank's problem, not yours.

While there are some definite benefits to having a merchant account facility for your business transactional needs, there are also some drawbacks to think about.

- Its important that you protect your business from credit card fraud.

- You may need to examine and possibly revise your policies concerning charge-backs and refunds to minimize damages.

- If your business accepts credit cards on your website, be sure to use fraud protection measures to lower the risk of fraud, theft and scams.

Instituting Merchant Accounts

Setting up a merchant account can be relatively simple. You will need to set up a bank account for your company for the proceeds of any credit card purchases to be credited to. You will also need to lease processing equipment and software that will facilitate transactions.

If you're going to be processing credit cards through your company's website, you'll need to register with a payment gateway like CyberCash or VirtualNet. Make sure that the merchant account software you'll be using is compatible with your online payment gateway.

Importance Of Comparing Merchant Accounts

Before you call your bank to get a merchant account, take the time to compare the options and offerings of several different banking institutions, in addition to merchant account providers. Fees and charges often vary greatly, so its very important to check what you'll be charged and what fees are likely for each transaction.

For instance, fees might include initial start-up costs, equipment monthly lease fees, sales volume costs, transaction and processing fees. When looking at potential merchant account providers, be sure to ask for a written list of all the fees you're likely to incur so that you can accurately compare them with other vendors.

Merchant Account Charges and Fees

Different providers may charge some type of application fee. This can range from $0 up to $100, sometimes more depending on your lender.

You may also need to purchase your software, which can range in cost around $100, or more. Once this software is installed, its possible you may have to pay a licensing lease on the software, which can range from $20-$50/month. Again, this depends on your lender or merchant account provider.

In addition to these, you will also incur transaction fees that can vary between $.20-.50 per transaction. While they don't sound necessarily high, remember if you process a large number of transactions, this can add up.

Other fees you want to make sure you ask any potential merchant account vendor include charge back fees, statement fees, minimum usage fees, annual fees, account keeping fees and close out fees.

David P. Montana has been a renowned industry expert, business consultant and author in commercial collection agencies and other business services for three decades. Read additional helpful tips and resources, including negotiating tactics, and important red flags and pitfalls to avoid when considering merchant accounts.

Types of Credit Card Merchant Accounts

2009-06-15T08:16:00.000-07:00

By Uma A Ilango

To accept credit card payments, you need to hire a merchant account service provider responsible for processing the credit card transactions. This service provider has to offer you a processing solution with features, rates, terms, service and incentives that are best suited to your business needs. A good place to start, prior to selecting your credit card processing solution, is to know the different types of merchant accounts available. Understanding the different merchant accounts and their features will enable you to understand the type of credit card processing solution you should go for.

Two-types of merchant accounts
They can be separated into two main categories:
- Card-present merchant accounts
- Card-not-present merchant accounts

Rates and fees applied to these accounts are determined on the basis of a simple rule:

Higher rates and fees are charged to merchants who accept credit card transactions that are considered to pose a higher risk.

Given this information, one can immediately deduce that rates charged on card-present merchant accounts are going to be generally lesser than those charged on card-not-present merchant accounts.

Card-present merchant account

Let us look at card-present merchant accounts a little further. The only way to qualify for a card-present transaction, which requires both the credit card and the customer to be physically present at point of sale, is to swipe the credit card in a terminal (a magnetic strip reader) that captures the data electronically. Hence, a card-present merchant account holder must invest in some form of hardware that enables the process of electronic data capture.

Card-present merchant accounts can be further sub-categorized into two, based on the selected processing solution:
- Non-portable processing solution
- Portable processing solution

Non-portable processing solution is often preferred at retail locations. Credit card processing hardware is connected to phone lines or modems. When credit cards are swiped through the hardware, data is captured and real-time authorization is obtained. The costs involved are usually less than those incurred by a portable processing solution.

Portable processing solution may or may not be able to obtain real-time authorization. For example with a wireless merchant account, you enjoy real-time authorization with a portable magnetic card reader. However, as you may guess, it involves higher hardware costs and monthly rates.

A store-and-forward merchant account also provides a portable processing solution. The hardware used is often a similar portable magnetic card reader too. However, it can store the credit card data at point of sale and the merchant can forward these transaction details for processing at a later time when a phone line is available. The rates charged on this account is less than those charged on a wireless merchant account. A store-and-forward merchant account is also more affordable than card-not-present merchant accounts as it involves less risk. It is suitable for business on the move with large sales volume and smaller ticket sales.

Card-not-present merchant account

Usually, the cheapest card-not-present merchant account is the mail order merchant account (MOTO). All you need is hardware to manually key in information of the customer’s credit card.

With an internet merchant account, you can start to accept credit card transactions over the net. The credit card processing software required for this purpose is usually affordable and comes with security features. It is essential for an online business.

The last card-not-present merchant account employs a latest innovation and is referred to commonly as telephone merchant account. It is probably the easiest to use as it requires only your mobile phone or a telephone. It gives you portability and you can accept payments on the go. With no hardware cost involved, it is truly value for money. Every business is unique and you must recognize your specific business type and needs. Find the most suitable match in merchant account and hire a merchant account service provider which will not only help you make money but also to save money. Ensure that the increase in sales brought about by your credit card processing solution is greater than the costs incurred by investing in the solution.
Most Americans own at least one credit card. And of the seven in ten who do, an amazing 34 percent do not know the interest rate of the credit card they use most often. It is very easy to get a credit card. But it's very difficult to pay back your bills in full. Our expenses are increasing month after month. Whereas our income increases only year after year. So, it's very important for us to understand what credit card means to us today. Visit our Website to get all facts and Information about Credit and Credit Card.

Do I Need a High Risk Credit Card Merchant Account?

2009-06-12T23:13:00.000-07:00

By Dianna Yvonne Smith

Owners of risky businesses are aware of the returns associated with credit card processing. For those who run these businesses, there is a way to still get the processing you need to make your business successful. You need a high risk credit card merchant account. Understanding what this is and how to get through the paperwork associated will help ensure that you have the opportunity to keep and grow your business.

Depending on what bank you choose, your business may fall under this category if it involves any of the following: offshore merchant accounts, mail order companies, adult websites, gambling sites, escort services, multi-level marketing, online pharmacies, and international markets. Statistically, these businesses have a higher rate of returns and chargebacks. This makes it inconvenient for the bank as well as yourself, so many banks will charge higher fees for these services.

With too many chargebacks and returns, many standard financial institutions will close your account. If this happens, it is even more difficult to get a new credit card service for your company.

By employing a high risk credit card merchant account service, your boundaries are increased. These credit services have experience in charge back risk factors, and merchant accounts will have built in anticipation of chargebacks. While generally more expensive than traditional credit processing companies, it is because the banks are taking more risk for your business.

Why should you consider this type of merchant account? The financial benefits include no termination of service for high volume of chargebacks and returns. It is fast and reliable. These providers will offer the same secure services. Using this type of service will allow your business to cut down on expenses such as third party checking of customers.

With the online world growing, the demand for multiple services has become increasingly high. If your business is answering the demand, while incurring certain risk factors, then you deserve the same shopping conveniences as other established businesses so that you and your customers have the convenience of shopping online. Without this feature, you already know your sales will plummet.

Investigate companies that offers a high risk credit card merchant account, and find out if they will help you with your overall return through increased sales, convenience, and consistency. Whatever type of venture you have, you deserve the same options as traditional businesses.
To learn more about Merchant Account Risk, visit http://www.MerchantAccountKnowHow.com where you will find all you need to know about merchant accounts. Dianna Yvonne Smith is a business consultant, author and expert in several areas of internet marketing.