1. Are there other fees or expenses involved?
2. Those fees are less expensive than I thought it would be but there must be some other hidden fees?
3. I hear American Express and Discover are not used much and is more expensive than the discount fees. Is that true?
4. Great, so it is not really an added expense to take American Express or Discover but there must be a fee from the credit card companies themselves?
5. How much should I pay for a terminal or software solution?
6 . I do not have much capital and want to save my money for marketing and other things I need to do. What should I do?
7 . What are some things I can do to reduce chargebacks not related to fraud?

Risks/Safety

1. I hear it is risky to accept checks but a lot of people do not use credit cards and prefer to write checks? Should I accept checks?
2. What else do I need to know about accepting checks?
3. Will I also be able to accept checks payments on my web site?
4. Is it safe to process credit cards over the Internet?
5. I hear so much about fraud and merchants losing money by accepting bad credit cards. What can I do to reduce the risk to me?

More Info

1. What if I already have a terminal? Can have it programmed to work with the new processor?
2. Tell me about Government, Corporate credit cards, and Foreign Issued Credit Cards. Can I take them?
3. What about debit or check cards? I hear this is a good idea if I have a retail store?
4. I keep hearing about electronic terminals, software and real time processing software on the Internet. Can you explain these things?
5. What is a virtual terminal?
6. Can I use a virtual terminal to accept checks?

1. Can you explain what a merchant account is and why I need one?

That is a great first question and a great place to start. A merchant account is a specialized account that allows a business to process credit card sales and have those funds deposited directly into a Merchants local business checking account usually within 48-72 hours.

Back to Questions

» COMPETITIVE WEAPON - Customers will buy from a merchant that offers payment by a credit card and will often look to see if a merchant accepts credit cards before shopping.

» COMPETE WITH THE BIG GUYS - Accepting credit cards levels the playing field with larger retailers.

» PEACE OF MIND - Customers feel secure in using their credit card. If the service or product is faulty, the use of credit card allows customers to dispute a charge that protects them.

» CONVENIENCE - Making it easy for your customer to pay you is probably the biggest reason to accept credit cards.

» CUSTOMER LOYALTY - Customers will often shop at merchants where they feel comfortable or have shopped before. One important thing to remember is to make sure to add credit card logos to any marketing you do. Many potential customers looking for a service or product will look at a merchant’s advertisement to identify and find the right merchant. If the customer has little cash often the deciding factor in determining which merchant to choose depends if the merchant accept credit cards. This allows the customer to finance the sale and make payments to their credit card company.

Back to Questions



4. How do I get the money from a credit card sale?

Another good question and here is how it works. When you, the merchant, want to accept a credit card for payment, the following process occurs (this is a brief summary):

You submit a Transaction to your processor using your electronic terminal or Online Processing Software. Either option works almost the same way. The terminal or Online Processing Software communicates with the Visa/MasterCard Authorization to ensure that the Credit Card is valid and that the transaction amount does not exceed the cardholder's credit limit. The authorization puts a "hold" for the transaction amount on the cardholder's credit limit. That way, the funds are available to you when you complete the transaction. To complete the transaction you will simply close your batch at the end of the day with your terminal. By doing this, you are promising the merchant account provider, sponsoring bank, and issuing bank that you are prepared to deliver the goods and services expected by the cardholder.

With Online Software, you usually do not need to close your batch as transactions are processed Real Time. From the time you close your batch, funds are directly deposited into your bank account. This process usually takes 48-72 Hours.

Back to Questions

Yes, you can but banks have tougher requirements for approval and do not generally like new businesses. I suggest obtaining a merchant account with a company that specializes in offering merchant services. These organizations, known as Merchant Service Providers (MSP), specialize in providing merchant accounts for new businesses. MSP’s usually have less stringent approval requirements, lower fees, better understanding of risk issues and customer service departments that only handle inquiries about merchant accounts. You will probably not deal directly with a Merchant Service Provider, but rather an ISO that contracts with a MSP. These independent sales organizations specialize in marketing to new businesses soliciting merchant accounts. The ISO’s focus is selling you a terminal or software that will allow you to process credit card sales. The MSP also compensates ISO’s but the focus of the ISO is usually selling equipment or Software. There are many reputable ISO’s in the bankcard industry but a few bad apples. I will explain how to choose the right MSP and ISO shortly.

Risk is the main concern of any bank or merchant service provider. Banks are more conservative and are highly regulated which gives the MSP and ISO an edge. Internet, mail, telephone or any business that does not see the credit card usually must use a MSP or ISO because banks will usually not approve these types of businesses. In addition, many MSP’s and ISO’s offer a number of associated services, especially to online businesses, such as shopping cart capabilities and website design.

Back to Questions

Remember I said ISO’s were the marketing arm for merchant account providers. Well, they will find you. You only need to ask the right questions to ensure the merchant service provider fits your business needs.

Now here is where most problems start that could adversely affect your business. ISO’s employ sales people to sell their service and like all sales people make their living from making a sale to earn a commission. Most have no interest in your success and do not receive any additional money from the ISO. The industry is competitive and sales people will sometimes not identify fees, risk issues and other important issues that can affect your ability to accept credit cards. I will not identify specific instances that I have witnessed and please do not think all ISO’s or sales people use deceitful tactics - but it is worth saying to convince you to read and understand any contracts you sign and understand how the process works because ultimately you are responsible for your business. Therefore, all these ISO’s are trying to promote their service as the best including the lowest price on terminals, the lowest discount rate and the BEST service.

It is easy to get distracted in this whirlwind of who has the lowest price and the “best deal” and base your decision on cost alone. One problem with using the lowest cost as your deciding factor to determine who you choose to be your merchant account provider and to process your credit card transactions is that the processor is also handling your money. That is right, your money. Price is important but should not be the only factor when choosing a credit card processor. Credit card processors are not all the same.

Processors may take all types of businesses but specialize in one specific field. For example, there are processors who specialize in Internet businesses while other have better expertise in retail businesses. Of course, you want to work with a processor who specializes in your type of business and will provide you the best service. Here are some good points to remember in choosing a merchant account provider.

1. Educate yourself on how the entire process works. Understanding how it works will allow you to ask the right questions.

2. Every business is unique. The credit card processor only receives information on your business that you supply. Be sure that the processor understands what you are selling, where you are selling and how you sell. Seems simple but some merchant’s have discovered the hard way that the processor did not understand their business.

3. Find a bankcard professional. Someone who asks questions about your business explains fees, how the service works, what equipment best fits your needs and why.

4. ASK QUESTIONS. There are no dumb questions when it comes to your money.

5. Read your Merchant Agreement. If you do not understand something, ask to have it explained.

6. Asked to have all fees identified and explained. Read the contract to identify all cost involved.

7. Do not decide on a processor based on the “best deal” on fees or equipment cost. All processors are very close in fees. For example, the difference between a discount rate of 1.79% and 1.89% on $10,000 in credit card sales is $10. Saving a few bucks and picking a processor that does not fit your needs could cost more in the long run.

8. When you decide that a terminal or online software program fits your needs understand that they all do one thing, verify credit cards. Do not be sold on bells or whistles that you may not need. Never lease equipment. Low cost or even free credit card terminals are available.

9. Customer Service. A professional bankcard person will provide good service and be there to help you when you need it. You will eventually need assistance with some type of issue. When you call your sales representative, will he answer the phone - or ignore your need for help?

10. Processors use guidelines in approving accounts. Sales representatives know this and will sometimes not disclose information about your business if he or she believes this may affect whether your account is approved or not. Some representatives are only concerned with making a commission and not the success of your business. Understand you are not usually dealing directly with the credit card processor. The processor only receives an application you sign filled out by a sales representative. The processor assumes the information supplied about your business is accurate. The processor uses this information in approving and managing your account. If there is information that is not correct there is a high probability your merchant account will be suspended or terminated.

11. Understand fraud and security issues. Your processor has material on these two issues. This will save you money, guaranteed. Although very important, do not be too critical in evaluating processors. You will know which one is right based on your instinct and what feels right. Aside from logic, your intuition - that voice within you - may just lead you to the right vendor.

Back to Questions
Free Credit Card Processing.com



7. What do I need to open a merchant account and get set up to take credit cards?

The only requirements to open a merchant account are the following - unless your business falls into a high-risk category. I will explain high risk in a moment but here are the basic requirements to have a merchant application approved. A. Business checking account B. A web site or physical location C. No open bankruptcy D. A product or service that is not on a restricted merchant list. Many processors will work with you if you are willing to submit to special conditions if you have less than perfect credit or a risky type of business.

Back to Questions

High monthly sales volume - Merchants who process large ticket items (those over $500) and/or have a High Monthly Sales Volume (usually over 25K per month) pose a special problem to merchant service providers and to the merchants themselves. Merchants that fall into this category need to be aware that Merchant Service Providers will be more thorough on reviewing Merchant Applications because of the high potential for fraud and potential losses. They usually ask for more documentation up front including copies of Tax Returns and Financial Statements. This additional documentation helps legitimize your business.

Derogatory credit - In the not too distant past, it was virtually impossible for a person with a poor credit history - or no credit history at all - to receive a merchant account. Heavily regulated banks are subject to strict controls over their activities; they rarely saw fit to grant merchant accounts to those without a sterling credit history. Today, it is much easier to find a company willing to give a merchant account to a merchant with a poor personal credit history or even no credit history. The requirements and terms of service may vary a little from ISO to ISO. If you fall into this category, expect to pay a slightly higher Discount Rate and be prepared for Reserve Account.

Type of business – Each merchant service provider restricts certain types of business that they have had problems with in the past. There are too many types to list here but your ISO will know if your business is restricted. Some types of businesses that may be on a MSP’s list are adult related businesses, international merchants, higher ticket items that are not sold in a retail environment, business opportunities, credit repair and multi-level organizations. MSP’s consider these types of business risky due to the high possibility of chargebacks. There are some MSP’s specialize in higher risk accounts but will charge higher rates, require a reserve and or delay fund deposits for 2-3 additional days.

Back to Questions

Back to Questions



10. Will I also be able to accept checks payments on my web site?

Yes, make sure that the merchant service provider knows your interest to offer this important payment option to your customers, and can accommodate this service. On the web page order form, you can have one section where the customer may put in his/her credit card information and another section where the customer may put in the check information required (e.g., routing number, account number, etc.). The merchant service provider can tell you all the checking information that is necessary to collect from your customers. The checking information goes through the payment gateway just like the credit card information travels.

Back to Questions



11. While I now understand the components involved with online credit card payment processing, how do I actually implement this on my web site?

If you have designed your website, you can easily add another page called the “Order Form”. If you rely on the expertise of your web designer, the designer can do this in fifteen minutes or less, unless you need special customization that may entail more time. However, an order form is relatively simple to add. Remember, you still must have a secure server with certification, a gateway, and a merchant account. The shopping cart software is optional (though highly recommended) and can be integrated into your website by you or your designer with the instructions provided by the shopping cart provider.

Here is the good news, by choosing the “right” merchant service provider; you can have access to its secure server and its gateway. There are merchant service providers who have their own secure server, their own gateway and their own shopping cart, and do not rely on other companies to fill those needs. In other words, you can find a “one-stop shop” solution. It is essential that you ask any merchant service provider if they have their own gateway or outsource it to another company. If they depend on another company for the gateway, you will be dealing with at least two organizations (i.e., the merchant service provider and gateway company), and they must work together.

Horror stories abound about the lack of coordination between service companies, leading to lots of headaches, heartaches, and possibly, financial woes for you. Use one merchant service provider that provides all the essentials.

Back to Questions