Credit Card Processing and Merchant Account FAQ's

What is a merchant account?

A merchant account is an account that a merchant, like yourself, has with a bank in order to accept credit card orders from customers. There are many different merchant account providers.

 

What kinds of typical startup costs can I expect?

You should expect to invest a startup amount of between $190.00 - $300.00 from most companies in our industry. These amounts can include application, setup, equipment rental lease deposits as well as additional costs for poor credit,
higher risk, etc.

 

What about equipment. What will it cost?

This is going to vary depending on the kind of equipment you choose. If you lease your equipment, your payments should range anywhere from $35.00 to $49.00 per month for a complete processing system including a terminal and an automatic printer, and in many cases software. If you are looking to process Online Internet Realtime transactions, and want to add on Shopping Carts, etc, amounts will increase according to the amount of customization you need.

 

Is it really worth to accept credit cards?

By accepting major credit cards you can increase your credibility, customer convenience, and best of all, your sales. Statistics say accepting credit cards can increase sales by 10 to 50%.

 

What if I already have a retail merchant account, can I use this for the internet?

No. If you want to do credit card processing on the internet, then you will have to obtain an Internet Merchant Account. Most banks and processors do not like to issue a merchant account for the Internet. If you have a retail Merchant Account, it will be necessary, by Visa/MasterCard regulations to have a separate account for the Internet.

 

As an online merchant you will be charged higher rates because the fraud issue is considered much higher online than it is in the retail world. The only rate changes you should see are in the discount rate and transaction fee. Discount rates for Internet merchants range around 2.50% and transaction fees around $0.30.

 

What kind of processing solutions are available?

Real-Time Internet processing, retail swipe terminal, and computer-based processing.

 

What credit cards can I accept?

This depends on the provider. The most common cards processed are Visa and Mastercard. American Express and Discover accounts are also widely available by almost all providers. Some can even offer Diner's Club and JCB merchant accounts.

 

When are my funds available?

It will take between 1 to 3 days for money from credit card purchases to show up in your account.

 

Are there application fees involved?

Most providers have an application fee. Some charge it right out at the beginning, others add it into the purchase/lease costs for equipment/solutions. Application fee costs can be as high as $100+.

 

Are there monthly minimums associated with accepting credit cards?

Usually the monthly minimum is around $25; for some banks it might be higher. This processing fee is collected by your transaction and discount rate fees from your credit card sales each month.

What is a chargeback and are there any fees?

A chargeback occurs when a customer has their credit card credited for a for an item they returned, etc. Fees for a chargeback are usually around $15 to $20.

 

What is a discount rate?

This is a fixed percentage rate that is deducted from the purchase cost when an order is made. A small transaction fee is also deducted in addition to the discount rate, see below for details.

 

What is debit card processing?

Debit card processing is almost like accepting credit cards except for the fact that your using a debit card to process an order.

 

What is Address Verification Service(AVS)?

Address Verification Service' is a service that is built into the authorization process to alert the merchant to potentially fraudulent transactions. The numerical portion of a consumer's street address as well as his zip code is sent along with the transaction data and is matched against the address that is registered with the consumer's credit card from their issuer's bank. A response code is sent back with a code that indicates a match, partial match or complete mismatch. this information is simply reported back to the merchant and does not, in and of itself, result in a transaction being declined. The merchant then has the option to contact the customer to confirm the correct address before deciding whether or not they want to ship any goods.

What is Electronic Funds Transfer (EFT)?

EFT is a method for transferring money automatically by using the facilities of the Automated Clearing House (ACH), an entity associated with the Federal Reserve Banks. EFT is the only system by which a merchant can initiate a transaction to collect money from the bank account of a customer located anywhere in the USA. In addition, it can be used to transfer money outwardly to pay bills.

 

When can I expect money from my credit card sales to be available in my bank account?

In most cases, the funds are available in your own business checking account within two to three business days after you have batched your daily business. Electronic processing enables the banks to more quickly and efficiently process the transactions and credit your account.

 

What is a payment gateway?

A payment gateway links your web site to the credit card processing companies and your merchant account. When your customer enters his or her credit card number on your web site, the payment gateway obtains authorization for the charge and later handles the transfer of funds into your merchant account.