Merchant Accounts

How To Accept Credit Cards in Online Business

If you plan to do business online, then your website will need to accept credit cards. For many, the idea of applying for a merchant account sounds like a daunting task, but the truth is that building an online store is incredibly easy these days. The major credit card processing companies have improved and streamlined the process of setting up accounts, and software companies have had several years to improve their software to the point that it is easy for non-technical business owners to create and operate an online store effectively.

3rd Party Processors ? The inexpensive way to start For the beginning web entrepreneur, the most important issue in credit card processing is how much product you think you can realistically sell in a month. If you are selling less than $1000 per month, then you will want to go with a ?third-party processor?. PayPal is the most widely known and reputable third party processor, and you can easily set up an account with them.

Unlike traditional merchant accounts, PayPal accounts are free to set up and cost nothing on a monthly basis. You will pay more per transaction with PayPal than you would with a traditional merchant account, but for low-volume start-up businesses making less than $1000 per month, you will gladly choose higher transaction costs over account set-up fees, monthly account fees, minimum charges, interchange fees, gateway fees, and perhaps worst of all, account cancellation fees (just to name a few).

Steps You Need To Take To Set Up A PayPal Account

Bank Account ? you will need a bank account for PayPal to deposit your funds into. Apply for a PayPal Account

Traditional Merchant Accounts If your processing volume will be higher than $1000 per month, then you will probably want to go with a traditional merchant account. Credit card processing companies generally charge a minimum monthly fee that is approximately equal to the amount of money you would pay to process $1000 per month. Generally speaking you can expect to pay around $50 per month in minimum charges for a merchant account. As you process more, your costs will go up, but the percentage of your gross sales that you pay for processing should go down.

Steps You Need To Take To Set Up A Traditional Merchant Account

It is not difficult to set up a traditional merchant account, but you will need to follow several steps in order to pull it off.

Get a business license Get a business bank account at your bank Make sure your web host supports your shopping cart system (you might even be able to get your shopping cart system bundled in with your credit card processing services for free). Try to determine the amount of business you will generate. Your credit card processing company will want to know how large each transaction will be, and how many transactions you expect to have per month. Negotiate with merchant account providers and establish your merchant credit card account (see list of merchant account providers).

Following are several merchant account providers you may be interested in contacting:

www.paypal.com PayPal allows you to accept payments instantly without the need to set up special accounts or sign long-term contracts. You will want to strongly consider using this one if you are processing less than $1000 per month. www.totalmerchantservices.com Total Merchant Services is one of the largest resellers of merchant accounts both on and offline, and are trusted by literally tens of thousands of businesses of all sizes. They use First Data as their back-end processor. www.merchantexpress.com This is a well-respected processor that services both on and offline businesses. www.expandyourbusiness.com CardService International provides a very helpful eBook that you can download for free

Some Issues You Want To Consider

Generally speaking you will be more concerned with up-front and recurring fees rather than the discount rate that processing companies will quote most prominently. The hidden fees generally eclipse the discount rates ? especially for low volume start-up businesses.

Try to accurately estimate your business volume when you fill out your applications. The risk department at your processing company can put a freeze on your account if your volumes move significantly outside the estimates you have provided them.

If you do experience a sudden spike in orders, you should contact the risk department of your processing company to make them aware of the spike BEFORE it hits their system. They may want to have you send them details about the orders and provide proof that the orders are legitimate. As inconvenient as this is, it is far better than getting your account frozen.

Make sure you understand what fees you will be responsible for if you need to cancel your account before the end of your contract. You may find that you need to shut down your account for a variety of reasons, and you don?t want to find out about exit fees after you get the bill!

In conclusion, you should start off your search for credit card processing by making a realistic estimate of your processing needs. If you believe you will be processing less than $1000 per month, then you will probably want to work with a third-party processor like PayPal. If you will be processing more than $1000 per month then you will want to work with a traditional credit card processing company (see list of processors above). You should be more concerned with upfront and recurring fees than with the discount rate. Once you have selected a processing company, you will want to make sure you have your business license and business bank account. Finally, you will need to make sure that your shopping cart system supports your processing company.

Merchant Account Basics - Credit Cards Processing

Did You Know?

U.S. Credit Card Penetration Rate: 81% of Households have at least one credit card

This article is provided for information purposes only. The terms and conditions of your merchant account are between you and your bank or merchant provider, and should be consulted for specific information related to your merchant agreement with your bank or merchant provider. A merchant account is a special account with a bank that is a member of the Visa and MasterCard associations. Such a bank has been certified by Visa and MasterCard associations and can provide you, the merchant, with all of the services related to your merchant account. Once your merchant account is setup and "live" on the credit card system, you can accept credit cards from customers generally as follows:

• A customer presents their credit card for payment
• Using their credit card number, you submit an electronic request to the processing network for "authorization to capture funds" from the cardholder's credit card account in the amount of the purchase. Traditionally, one would submit this request by swiping a credit card through an electronic transaction terminal provided by the bank.
• The processing network immediately receives your electronic request and determines if the cardholder's account is valid and if the funds are available. If they are, the processing network returns an electronic response to your terminal or computer. This response is called an "authorization code", and is your guaranteed authorization to capture the funds. Typically, this code is a six-digit number. The transaction and its associated authorization are stored in a "batch", where other transactions for that day reside.
• You print a receipt for the customer using the electronic terminal or your computer and the customer signs the receipt. As far as the customer is concerned, the transaction is complete. As far as you the merchant are concerned, there is one more step to complete the transaction.
• At the end of your business day (usually), you submit a final request to the processing network to go ahead and "capture the funds" that you obtained authorizations for during the course of business that day. This is called "settlement" or "settling your batch". This request is also submitted using the electronic terminal or your computer. The processing network immediately receives your response electronically and determines if the capture amounts contained in your request match the authorizations for each item. If so, the request is granted and an "Accepted" response is returned to your electronic terminal or computer. A settlement report can be printed showing the grand totals by card type (Visa, MasterCard, American Express, Discover, etc) for the settled batch. Note: any corrections to your batch, such as voiding a transaction, must be made prior to settlement.
• Within 48 to 72 hours (usually), the funds associated with the batch you settled are deposited electronically into your business bank account. Typically, the discount rate you pay to your merchant account provider are deducted from the deposit before it transferred to your bank account, resulting in a "net deposit" of funds.
• At the end of the month, your merchant account provider will mail a statement to you, detailing the credit card activity for the month and the associated fees you have been charged for such.

Understanding your merchant provider's rates and fees

All banks and merchant providers require "transaction fees" from you for accepting credit cards. Typically, these fees are broken down into 3 categories: a discount rate, a transaction fee, and monthly fees. For the bank's purposes, a transaction is usually defined as any communication between you and the processing network. A "credit" transaction is treated the same as a regular transaction. Settling a batch is usually considered a transaction as well, as it involves communication with the processing network.

Discount Rate

This is the percentage of the total transaction amount that the bank will usually deduct prior to transferring your deposit into your bank account. Typical discount rates range from 2.5% to 5%, depending on your type of business and other factors. A higher rate may be charged on individual transactions if the transaction doesn't conform to certain qualifications, as described by your bank or merchant provider. For instance, accepting a "Visa Business Card" credit card may cost you 1% more than regular transactions. The reasons for these non-qualified transaction surcharges and complete details on all transaction qualifications should be discussed with your bank or merchant provider. Address Verification (AVS) may also fall into this category when not used properly. Address Verification (AVS) is described below.

Transaction Fees

This is a flat amount that you pay for each transaction. Typical transaction fees range from 30 cents to 50 cents per transaction.

Monthly Fees

• These are fees charged for other account related services, such as customer service, your monthly statement, network access fees, and minimum monthly fees.
• All the fees and charges are required to be disclosed to you prior to your commitment to the merchant agreement between you and your bank or merchant provider, and are usually enumerated carefully to you in the merchant agreement itself.

Merchant Accounts Introduction

Credit card processing 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:

1- Business checking account (some providers set you up with one)
2- A copy of a voided check (if you use your own business checking account for funds to be deposited in)
3- 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.ѕ
4- Pictures of business office and location (this extra step can save you money in credit card processing costs)
5- Have a web site (if you want real-time processing)
6- Photocopy of your return policy information
7- Provide trade references
8- Photocopy of recent tax returns (may or may not be needed depending on monthly sales volume you expect through your merchant account)
9- Site inspection (have a photographer come in and take pictures of your inventory). Only a handful of providers still require this.
10- A photocopy of your drivers license

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 go. The 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.

Merchant Account - Frequently Asked Questions

What is a Merchant Account?
Why does any business need to accept credit cards from my customers?
How does accepting credit cards increase my business?
How does one apply for a free merchant account?
How long will it take for the applications to be processed?
What credit cards can be accepted in the business?
What type of equipment should be used to process credit cards and checks?
Is there any cost to get started for any business?
How will payment be received for each transaction?
Does your software integrate with most websites?
Are my funds guaranteed?
What is Address Verification Service?

What is a Merchant Account?

A merchant account is a commercial bank account established by contractual agreement between your business and the banks represented by your processor. A merchant account enables your business to accept credit card payments from your customers.

Why does my business need to accept credit cards from my customers?

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 30 to 100%! Millions of cards carried in the U.S. by people who take their cards where ever they go - to the mall, on vacation, to the post office, out to eat, to the dentist and surfing the Internet. These consumers enjoy the convenience, the flexibility and the security credit cards cards offer. For years, card acceptance has been expected at places like retail stores, hotels, restaurants and airlines. But today, consumers expect to be able to use their cards for a much broader range of products and services, including health care services, groceries, tuition payments, movie tickets and recurring payments such as cable or utility bills. And the list will only continue to grow. As a result, businesses who accept cards are not only gaining more customers, they are gaining more loyal customers and customers who spend more. In addition, these merchants and service providers are gaining real bottom line benefits for their business.

How does accepting credit cards increase my business?

Credit cards acceptance offers your business a wide range of benefits in terms of reduced operating costs and increased profitability, including:

• Increased Sales : Consumers can take advantage of specials, stock-up on the products and services they need most, and in the case of health care services, obtain treatment when it's needed.
• Faster Payment : With credit card transactions, you receive payment within 24-72 hours, improving your cash flow.
• Reduced Costs : You can save time on the management of billing, sending statements and tracking receivables, reducing your overhead and related expenses.
• Fewer Processing Problems : Reducing the number of checks you take in diminishes the likelihood of problems resulting from processing checks. So you'll avoid redeposit fees and the cost of processing additional transactions.
• Improved Customer Service : Consumers enjoy the speed, convenience and payment flexibility that cards provide. Card acceptance lets you accommodate these consumers and offer increased payment options with monthly, quarterly or semiannual billings.
• There are specific programs and materials targeted exclusively for your industry

How do I apply for a merchant account?

Simply Click Here to fill out an online application and submit the requested information .

How long will it take for my application to be processed?

In five working days your company will be able to accept credit cards from your customers. Free Merchant Source processing department specializes in expediting your application so you can immediately start accepting credit cards from your customers. All necessary paperwork will be sent next day via FedEx, and a next day scheduled prepaid pickup for fast return of all documentation.

What credit cards will my business be able to accept?

Free Merchant Sourcewill apply for your business to accept all 5 major credit cards: Visa, Mastercard, American Express, Discover and Diners Club. A separate application is required for American Express, Discover and Diner's Club.

What type of equipment should my business use to process credit cards and checks?

Free Merchant Source offers your business four options for processing credit card and check orders:

• QuickCommerce / Pay-Me-Now: Secure, real-time credit card and check processing for your website.
• Merchant Master Software for PC's
• Macintosh and DOS for your Mail/Phone order business.
• Swipe terminals and supplies for retail merchants.

Is there any cost to get started for any business?

NO! It is all FREE!

How will my business receive payment for each transaction?

Once the transaction has been approved your customer's charges are deposited directly from the credit card processor to your bank account. Transaction deposits range from 24-72 hours from the date of the transaction.

How does QuickCommerce / Pay-Me-Now integrate with my website?

QuickCommerce / Pay-Me-Now setup is quick and easy. The merchant or webmaster simply establishes a link between the QuickCommerce / Pay-Me-Now secure server and the merchant's website.

Are my funds guaranteed?

Any customer has the right to dispute a credit card charge from the card's issuing bank. If a charge is challenged, a retrieval request will be sent to the merchant asking for proof that a sale had been made by the customer. In addition, the merchant's credit card processor has the right to discontinue service for many reasons. And finally, a merchant should take due diligence to protect against someone trying to order merchandise with stolen cards by becoming familiar with the process.

What is Address Verification Service?

AVS is a service that is built into the authorization process to help prevent fraudulent transactions. The numerical portion of a consumer's address 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 the approval (or decline) message that indicates a match or not. Currently, a match or mismatch is simply reported back to the merchant and does NOT result in a transaction decline. The merchant then has the option to contact their customer to confirm the correct address before they ship any goods.