MERCHANT ACCOUNT INFORMATION
In order to accept credit card payments, you are required to apply for a merchant account and online payment gateway.
There are several merchant account terms to familiarize yourself with:
Bank A bank or financial institution is needed to set up a Visa or MasterCard merchant accounts. Preferably this would be your own bank where you already have a checking account. Banks provide this service in exchange for processing fees. Assuming that you have decent credit, setting up this merchant services account is easy. If your bank or financial institution won’t set up a merchant account to allow you to accept payments online you should consider the following alternatives.
Merchant Account Providers There are many many merchant card service companies on the Internet that are willing to help you set up a merchant account- for a fee. In Industry terms, these companies are called merchant account providers or Independent Sales Organizations.
Credit Card Processing Clearinghouse When you have chosen a bank or a merchant account provider you will find that they usually “contract out” processing the credit card processing / transactions to a clearinghouse. When your website finalizes the credit card payment process in your shopping cart or online store, the Transaction Processing Clearinghouse is the organization that authorizes and validates the card (making sure the number matches the card and that sufficient funds are available).
Gateway The final piece to setting up a merchant account to accept online payments is the gateway that connects you to the transaction clearinghouse. There are three common gateways:
Credit Card CardSwipe Machines The machinery next to nearly every checkout register in the country. After the card is swiped, an authorization code displays, and is usually printed on a credit card transaction slip. The authorization comes from the clearinghouse that the store’s bank contracts with, and it effectively assures valid payment to the merchant when the customer signs on the dotted line. This method is not needed for dot-com businesses.
Desktop Software For e-businesses, desktop software can be used as the transaction gateway. Once you receive the credit card number via phone, mail or email, the merchant manually enters the credit card numbers and payment amounts into the computer software, and transmits the list over the Internet to the clearinghouse designated by the bank. In a few moments, the clearinghouse responds with a list of good card and bad cards to allow the merchant to proceed as necessary. This software solution works better than the cardswipe machine, but may not work for large volume stores. It also requires re-keying data from each order into your computer, which can lead to user errors and can be time consuming.
Real-Time Web Gateways There are several payment gateways to the transaction clearinghouse that can authorize and validate credit card payments while the customer is still online. These gateways provide a walkway from your website to a different modem channel to check the credit card status in real-time, a very complicated process if you were to do it on your own from step one. If you wish to use a real time gateway, which is most common with ecommerce shopping cart software, make sure it is compatible with the system you are going to use. The ecommerce shopping cart we highly recommend is Miva Merchant, www.miva.com and www.7designavenue.com/website_design/overview.htm Miva Merchant is compatible with all the major merchant account providers as well as PayPal.
Costs The cost of setting up and maintaining a credit card merchant account depends on who you choose to provide your merchant account services. We highly recommend Total Merchant Services for your merchant account needs. They are fast, professional and your merchant account is usually approved and set up within a week.
More information on Total Merchant Services
MERCHANT ACCOUNT FEES AND BUZZWORDS
Merchant Account – An account setup by a bank which allows you to accept credit cards. Your merchant account will deposit collected funds into your business’s checking account every 24 hours.
Discount Rate – A percentage that is paid to the credit card company on each transaction. If a customer makes a credit card purchase worth $10.00 and your discount rate is 2.4%, you pay $0.24 for the $10 sale. A competitive discount rate is roughly 2.40%. Keep in mind that discount rates on the web are higher than that of brick and mortar stores. Make sure the rates that are quoted to you are for INTERNET sales.
Gateway Processor – A gateway processor charges your customers’ credit cards via the web and sends the funds to your merchant account.
Monthly Processing Minimum – The monthly processing minimum is the MINIMUM monthly fee you must pay to the credit card company. A competitive monthly minimum is approx $30. Example: If you sell $1000 in goods over one month, your total Discount Rate (see explaination above) would be $23.90. This amount does not meet the $30 minimum so the credit card company will round your charge up to $30. If the discount rate and transaction fees exceed $30, then you have met the Monthly Processing Minimum and the fee does not apply.
Real-Time Processing – This method of credit card charging authorizes and charges the customer’s credit card at the time of purchase.
Offline Processing – This method of credit card charging allows you to capture your customers’ credit card information for charging at a later time. If you have an existing offline merchant account, this may be a good option for you.
Secure Socket Layer (SSL) – SSL is a secure web protocol that uses 128 bit or higher encryption to keep your customer’s card number and personal information secure.
Statement Fee – This charge is exactly as it sounds. The fee you pay for the bank to generate and mail you a statement outlining your transactions. Statement fees usually cost between $10.00-$15.00/month.
Transaction Fee – The amount charged per transaction. Most companies charge around $0.30. If you make 50 sales per month… the total transaction fee would equal (0.30 x 50 = $18.00).
MERCHANT ACCOUNT
INFORMATION
In
order to accept credit card payments, you are required to apply
for a merchant account and online payment gateway.
There
are several merchant account terms to familiarize yourself with:
Bank
A bank or financial institution is needed to set up a Visa or MasterCard
merchant accounts. Preferably this would be your own bank
where you already have a checking account. Banks provide this service
in exchange for processing fees. Assuming that you have decent credit,
setting up this merchant services account is easy. If your bank
or financial institution won’t set up a merchant account to allow
you to accept payments online you should consider the following
alternatives.
Merchant
Account Providers
There are many many merchant card service companies on the Internet
that are willing to help you set up a merchant account- for a fee.
In Industry terms, these companies are called merchant account providers
or Independent Sales Organizations.
Credit
Card Processing Clearinghouse
When you have chosen a bank or a merchant account provider you will
find that they usually “contract out” processing the credit card
processing / transactions to a clearinghouse. When your website
finalizes the credit card payment process in your shopping cart
or online store, the Transaction Processing Clearinghouse is the
organization that authorizes and validates the card (making sure
the number matches the card and that sufficient funds are available).
Gateway
The final piece to setting up a merchant account to accept online
payments is the gateway that connects you to the transaction clearinghouse.
There are three common gateways:
Credit
Card CardSwipe Machines
The machinery next to nearly every checkout register in the country.
After the card is swiped, an authorization code displays, and is
usually printed on a credit card transaction slip. The authorization
comes from the clearinghouse that the store’s bank contracts with,
and it effectively assures valid payment to the merchant when the
customer signs on the dotted line. This method is not needed for
dot-com businesses.
Desktop
Software
For e-businesses, desktop software can be used as the transaction
gateway. Once you receive the credit card number via phone, mail
or email, the merchant manually enters the credit card numbers and
payment amounts into the computer software, and transmits the list
over the Internet to the clearinghouse designated by the bank. In
a few moments, the clearinghouse responds with a list of good card
and bad cards to allow the merchant to proceed as necessary. This
software solution works better than the cardswipe machine, but may
not work for large volume stores. It also requires re-keying data
from each order into your computer, which can lead to user errors
and can be time consuming.
Real-Time
Web Gateways
There are several payment gateways to the transaction clearinghouse
that can authorize and validate credit card payments while the customer
is still online. These gateways provide a walkway from your website
to a different modem channel to check the credit card status in
real-time, a very complicated process if you were to do it on your
own from step one. If you wish to use a real time gateway, which
is most common with ecommerce shopping cart software, make sure
it is compatible with the system you are going to use. The ecommerce
shopping cart we highly recommend is Miva Merchant, www.miva.com
and www.7designavenue.com/website_design/overview.htm
Miva Merchant is compatible with all the major merchant account
providers as well as PayPal.
Costs
The cost of setting up and maintaining a credit
card merchant account depends on who you choose to provide your
merchant account services. We highly recommend Total
Merchant Services for your merchant account needs. They are
fast, professional and your merchant account is usually approved
and set up within a week.
More
information on Total Merchant Services
MERCHANT ACCOUNT FEES AND BUZZWORDS
Merchant
Account - An account setup by a bank which allows you to accept
credit cards. Your merchant account will deposit collected funds
into your business’s checking account every 24 hours.
Discount
Rate - A percentage that is paid to the credit card company
on each transaction. If a customer makes a credit card purchase
worth $10.00 and your discount rate is 2.4%, you pay $0.24 for the
$10 sale. A competitive discount rate is roughly 2.40%. Keep in
mind that discount rates on the web are higher than that of brick
and mortar stores. Make sure the rates that are quoted to you are
for INTERNET sales.
Gateway
Processor – A gateway processor charges your customers’ credit
cards via the web and sends the funds to your merchant account.
Monthly
Processing Minimum – The monthly processing minimum is the MINIMUM
monthly fee you must pay to the credit card company. A competitive
monthly minimum is approx $30. Example: If you sell $1000 in goods
over one month, your total Discount Rate (see explaination above)
would be $23.90. This amount does not meet the $30 minimum so the
credit card company will round your charge up to $30. If the discount
rate and transaction fees exceed $30, then you have met the Monthly
Processing Minimum and the fee does not apply.
Real-Time
Processing – This method of credit card charging authorizes
and charges the customer’s credit card at the time of purchase.
Offline
Processing – This method of credit card charging allows you
to capture your customers’ credit card information for charging
at a later time. If you have an existing offline merchant account,
this may be a good option for you.
Secure
Socket Layer (SSL) – SSL is a secure web protocol that uses
128 bit or higher encryption to keep your customer’s card number
and personal information secure.
Statement
Fee – This charge is exactly as it sounds. The fee you pay for
the bank to generate and mail you a statement outlining your transactions.
Statement fees usually cost between $10.00-$15.00/month.
Transaction
Fee – The amount charged per transaction. Most companies charge
around $0.30. If you make 50 sales per month… the total transaction
fee would equal (0.30 x 50 = $18.00).
