In Business, Merchant Accounts are Essential

Merchant Account

Author: Scott James

In today's fast-moving world if you run any formal business way you have to do with a customer i.e. that means every one of us it is advisable to offer your customers the opportunity to pay by card. To do this you will need a merchant account.

Yes folks that means the ubiquitous piece of plastic that most of us find time to the indispensable and if the truth be known could not survive without.

The key benefits to all of this off primarily that it is faster and easier to process orders, he seemed to saves time and could help you reduce your staff costs.

It is easier and more convenient for your customers and gives you the facility to provide your customers with instant authorized station without having to have all the worry about whether cheques will clear.

The instant authorisation and convenience aspect leads to an improved cash flow as the money is usually within your account within sometimes three to four working days. Ask any Financial Director of any business that takes payments by cheque and they will tell you it is getting more and more difficult to process cheques quickly nowadays.

The other comforting thing about all of this is that you feel safe and secure in the knowledge that your financial transactions are going to be assisted by the involvement with the well-established reputable financial company.

If your business by and large survives on telephone and a mail-order business than it is almost be sensual but you get a merchant account. You quite simply cannot survive without one.

The procedures are similar to other types of services for accepting compliments. It is false easy to setup and quite easy to integrate with existing systems as long as you have the right supplier.

A Merchant account is ideal if your business is looking to survive by taking online traffic where orders are placed and paid for by your customers and are in real time on the website. If you have orders placed in your website but handled manually by staff it still is essential to have a merchant account.

At the risk of starting to sound increasingly repetitive where a merchant account comes in to its very own is where the business handles or full lot off orders of business internationally.

The ability to be able to chop and change, swap and start business 24 hours a day makes a merchant facility essential. There are a number of facilities and services available and your partner of choice will help you grow your business by accepting international currencies, providing solutions that meet your business needs and leading to considerably lower the costs of international transactions.

The last and most important aspect of all in dealing with merchant services through a reputable financial institution is that the services will help you the customer save millions of pounds every year.

Card Fraud costs industry millions of pounds every year, if you tie yourself in with a reputable financial services or organisation that can provide 100% accurate merchant accounts and financial services then go for it.

You will find they are essential.

Article Source: http://www.articlesbase.com/business-articles/in-business-merchant-accounts-are-essential-156872.html

About the Author:

Scott James writes about a number of Finance based issues and more details about the above can be found at the following links: Merchant Accounts and also Merchant Services
Merchant Accounts

Merchant accounts can be a confusing subject. Before you jump in with both feet lets give you an introduction; What merchant accounts are, what information is needed to obtain your merchant account and rates/fees involved.

What Merchant Accounts are?

A merchant account is a special account that is setup for a business to accept and process credit card orders.  After processing a customers credit card the transaction goes through a series of complex stages  The money transferred through the merchant account is then deposited into the business's checking account within 2 to 3 business days.

Requirements for Merchant Accounts

Getting important information together ahead of time will ensure that you breeze right through your merchant account application process.  Here's what you may or may not (depending on the provider) need in order to obtain your merchant account:

  • Business checking account (some providers set you up with one)

  • A copy of a voided check (if you use your own business checking account for funds to be deposited in)

  • Articles of incorporation, business license or reseller license. (A 'Certificate of Assumed Name' from your county Register of Deeds office may be all that is required. These only cost around $8.)  The purpose of this is to prove you are a legitimate business.
  • Pictures of business office and location (this extra step can save you money in credit card processing costs)
  • Photocopy of your return policy information
  • Provide trade references
  • Photocopy of recent tax returns (may or may not be needed depending on monthly sales volume you expect through your merchant account)
  • Site inspection (have a photographer come in and take pictures of your inventory). Only a handful of providers still require this.
  • A photocopy of your drivers license

    Kudos no monthly fees full banner Explanation of Credit Card Processing Solutions

    In order to process credit and debit cards through your merchant account, you need to decide which processing solution is right for you.?

    Retail Swipe Terminal - This particular solution is for retail and storefront merchants who see their customers face-to-face.? This type of solution incurs the lowest merchant account processing fees since you actually are able to swipe the customers credit card through the terminal.? It is believed that orders that are swiped have a lower fraud risk, hence the reason for the lower processing fees.

    Real-Time Processing - This is the solution for businesses on the Internet.? Real-Time allows you to automatically process credit card orders through your merchant account with no assistance needed on your end. Everything is automated, and the funds transferred into the merchant account, from the cardholder, is deposited into your business checking account, within a few days.All Real-Time solutions are secure and the purchase of a secure certificate is not usually required.

    Virtual Terminal - If you are a merchant on the Internet and expect to receive orders via phone, fax or mail then getting a Virtual Terminal solution (along with a Real-Time processing solution) is the best route to goThe Virtual Terminal is a secure website where you login and manually type in a customers credit card information? Once the information is submitted, it is securely processed and funds are then deposited into your merchant account within a few days A Virtual Terminal can be accessed securely from any computer connected to the Internet. Most all Real-Time processing solutions also come with a Virtual Terminal at little or no additional cost. Virtual Terminals can also double as good mobile processing solutions, click here for more information.

    Merchant Accounts Rates & Fees

    These are the typical fees you will see associated with a merchant account.? Rates will vary from one provider to the other.? We have found ECHO, Inc. to offer the lowest merchant account pricing around, click here for details.

    Application/Setup: $0 - $100+ (one time fee)



  • All providers have an application fee. Some charge it right out at the beginning, while others add it into the solution purchase/lease costs.

    Hardware/Software: Purchase: $99 and up or Lease: $20/month and up

    One important note worth mentioning here, stay away from leases if all possible. It's always better to purchase from the beginning than pay a lease for the next 12, 24, 36 or 48 months. Why? With a lease you'll end up paying sometimes 3 times or more then if you would of just purchased the solution outright from the beginning. While a $29.95 monthly lease for 48 months sounds good in reality it isn't. Leases are very hard to get out of once started. If your business goes under before the 48 months are up, you still have to pay on the hardware/software costs until the last penny has been received by the leasing company. Also, the lease fee you see
    does not include your state sales tax or the amount charged for the damage/loss waiver. If you do go for the lease, always determine the lease's buyout clause, end of lease terms, and especially beware of clauses that allow the lease company to
    continue charging you even after the 48 months have passed (they say that you should contact them in writing one month prior to the end of the lease, or you can just let them keep charging you).


    Programming: $0 - $100+ (one time fee)

    This usually only applies to retail merchants who have changed from one provider to another. The programming process isn't difficult but watch out for the cost, some
    providers may nickel and dime you on programming fees. Why do they charge this fee if you use your own equipment? It's used to somewhat make up for the loss of not selling or leasing you their equipment.

    Discount Rate: 1.49% - 4% per transaction

    This is the fixed percentage amount that is deducted from the purchase cost. The lower discount rates are for retail establishments while the higher are for Mail Order/Telephone Order (MOTO) and Internet-based businesses. Why the lower
    cost for retail? The instances of credit card fraud are much lower so banks are able to charge lesser percentages for these types of businesses. A typical discount rate for US business is right around 2.49%, perhaps a little higher or a little lower.
    Non-US businesses will pay a higher discount rates closer to the 3% to 4% range.

    Don't let a few tenths of a percentage point be the deciding factor between two providers. For example, if Provider "A" charges 2.29% and Provider "B" charges 2.49% you'll only save $0.20 for every $100 processed through your merchant
    account.

    Transaction: $0.20 - $0.50 per transaction

    In addition to the discount rate a transaction fee is also deducted from the purchase cost. Also, just as with discount rates, transaction fees are lower for retail businesses while slightly higher amounts are charged for MOTO and Internet
    establishments. Address Verification (AVS) may either cost an additional fee, or may be included in the base transaction fee. The typical transaction fee for US businesses is right around $0.30 while the higher end of this fee is sometimes the case for Non-US businesses.

    Monthly Minimum: $0 - $25 per month

    The fee is based on your transaction and discount rate fees from your credit card sales each month. For instance, say your bank charged $25 as a monthly minimum, the transaction and discount rate fees collected by the bank must equal or go over
    $25 each month. If this is the case no monthly minimum will be charged. However, if the fees collected for that month do not meet the $25 minimum, you will then be charged the difference. Not all processors have a monthly minimum fee, however most do.

    Gateway Access: $0 - $25+ per month

    Since in most cases, the Secure Payment Gateway provider (e.g. Authorize.Net, VeriSign, etc.) is a separate company from the Merchant Processor, they charge extra fees. For every month that you are on their system, you pay an access fee.
    The usual fee to pay for gateway access is around $10.

    Statement: $0 - $15 per month

    The statement fee is charged because at the end of each month you will receive a statement from your processing bank that will list all the transactions that went through for that particular month. It's very much like your credit card or telephone bills.

    Daily Close-Out: $0 - $0.15 each day

    Associated with software and terminal processing solutions where at the end of every business day you close-out all your transactions. Most providers no longer charge this fee.

    Address Verification System (AVS): $0 - $0.05 per transaction

    The AVS service checks to see that the billing address given by the customer matches the credit card. If you opt not to use AVS, VISA and MasterCard will not support your transactions and will charge you an additional 0.17% to 1.25% on those sales. Most merchant accounts come with AVS at no extra charge. If there is a charge, it is combined in with the per transaction fee in most cases. The AVS service works only with US credit card holders. Currently, there is no AVS service
    in place for non-US credit card holders.

    Chargeback: $5 - $25 per instance

    A chargeback occurs when the cardholder disputes a charge that they found on their monthly credit card statement. A large number of chargebacks can cause your merchant account to be dropped totally and leave you in a bind when trying to
    get another merchant account for your business. If this is the case you may not be able to get another merchant account for several years. As a merchant it is important that you take the necessary steps to reduce and potentially eliminate the
    instances of chargebacks.

    Reserve: Varies, ask the provider for details

    Some providers will require you to have a reserve account where the amount is determined by your businesses estimated sales receipts. Usually a reserve is almost always charged to a Non-US based merchant who is trying to obtain a merchant account. Also, businesses that do a high volume of sales each month may be charged a reserve fee. Otherwise, there usually isn't a charge.? In most cases, the reserve fee is used to cover for any chargebacks on the merchants account.A reserve should be avoided if all possible.

    Annual Fee:? $0 to $100 per year

    Some credit card processors will charge this fee just as additional way to pay for maintenance and system upgrades This fee usually isn't disclosed upfront? Ask your merchant account sales representative for information.

    Tips for Merchant Account Holders

    Once you have your merchant account you will need to take necessary precautions to avoid chargebacks and fraud Here are some tips to follow:

    1.Collect CVC2 and CVV2 Verification Numbers

    This tactic alone can not only reduce instances of chargebacks by 26%, according to Visa, but also reduce any pass-through fees that may be charged when a credit card order is conducted. On the back of MasterCard, most Visa and Discover credit cards is a 3-digit security code located right after your credit card number. Requiring customers to give the 3-digit code acts as an additional verification measure. American Express cards also have a similar security code that is located on the front of the card right above the cardholder's account number and is usually 4-digits long. Most online payment processors support entering the security codes when processing credit card orders. Check with your payment gateway provider (i.e. Verisign, Authorize.Net, ECHO Inc., etc) for details.

    2. Use Address Verification System (AVS)

    AVS checks to ensure the address entered on the order form matches the address to where the cardholder's billing statements are mailed to. People ordering products and/or services using a stolen card number will never use the real cardholder's billing address, so this is your chance to stop the order before it's too late. AVS only works with orders conducted in the US. Failure to use AVS when processing
    credit card transactions will always result in paying higher credit card processing fees.

    3 Scrutinize orders from developing foreign countries

    A large percentage of fraudulent Internet purchases are made from Indonesia, Russia, and other eastern block or developing countries. Accept orders from such countries at your own risk until a worldwide AVS system is developed.

    4.? Let customers know what name will appear on statements

    Many merchants who use 3rd Party Processing companies have run into problems because the company name that appears on cardholder's monthly statements is usually the name of the 3rd party processing company and not the company name of the site the cardholder made their purchase from. This isn't always the case, but in many cases it is. If you use a 3rd party processor, and even if you don't, make sure the customer knows what name will appear on their credit card statement at the end of the month. This will help to reduce any confusion that might would otherwise occur.

    5.Handle suspicious orders accordingly

    If an order seems suspicious the best way to handle the situation is to either call or e-mail the customer and attempt to verify that they placed the order. As a rule of thumb, if in doubt, check things out. It may be a good idea that if a customer makes an unusually large volume purchase from your site to follow-up with a verification call.

    6. Watch out for orders using free e-mail addresses

    Be wary of accepting orders from people who used a free e-mail address when ordering (i.e. Hotmail, Yahoo, etc.). Tracking people who used a free e-mail address is almost impossible, it's much easier for them to get away then if they used their Internet Service Provider (ISP) or their own company web site e-mail address. To check whether an e-mail address is a freebie or not just take the part of the
    address after the "@" symbol, add "www" to the front of it and see what website it brings up (i.e. joe@yahoo.com = www.yahoo.com).

    7. Signatures on delivery

    If your business delivers products use a carrier that requires a signature on delivery, and allows you to have a copy of the signature. Retain these for your records.

    8. Request fax copies of ID and credit card

    You may want to request your customer to fax a copy of both sides of their credit card and driver's license. This tactic usually works best in a B-to-B (business to business) sales environment. While this is not a defense under Visa or MasterCard rules, it is yet another way to deter fraud.

    9  Posting a warning message

    Taking the time to post a warning message on your order page to those who may attempt to make a fraudulent order will greatly deter the number of instances of fraud. Be sure to mention that IP (Internet Protocol) addresses are being logged. IP addresses can come in handy when locating people

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