What type of application process is required by credit card processors?
In order to get approved by a credit card processor, a merchant will need to provide the company with some fairly basic data concerning his or her business. While some credit card processors require you to fill out lengthy forms and submit them through the postal service, many processors now allow merchants to apply online. Many of the top credit card processors do not require an application fee or will waive their fee at a merchant’s request.
Is it difficult to get approved by credit card processors?
Generally speaking, it is not very difficult to get approved by a credit card processor. Most credit card processors approve between 95-99% of their applicants.
Does a merchant need a business license or business checking account to obtain an account with a credit card processor?
Not necessarily. A business license is not required in order to be approved by a credit card processor, but it can help speed up the approval process. A merchant does not need to have a business checking account unless the business is a corporation.
What types of monthly fees are required by credit card processors?
There are three monthly fees that are required by nearly all credit card processors: the gateway fee, the statement fee and the monthly minimum.
What is a gateway fee?
Credit card companies partner with gateway providers to verify a customer’s data and determine the authenticity of a transaction. Most gateway providers charge a monthly fee that is billed to merchants through the credit card processor. Most gateway fees range from around $5-20 per month.
What is a statement fee?
A statement fee is simply the monthly fee charged by credit card processors for their services. Statement fees are typically $10 per month.
What is a monthly minimum?
The majority of the top credit card processors out there require merchants to process a minimum amount of money per month of $15-25. If a merchant does not meet the monthly minimum, the difference is added to the merchant’s monthly charges.
What types of fees do credit card processors charge for individual transactions?
Credit card companies charge three different types of fees for each transaction: the discount rate, the transaction fee and the address verification fee.
What is a discount rate?
The discount rate is the percentage of a transaction that a credit card processor keeps for itself.
What is a transaction fee?
A transaction fee is the set rate that credit card processors charge for all transactions regardless of their size. Transaction fees are rarely more than $0.30 cents.
What is an address verification fee?
Whenever a credit card address is verified during a transaction, a fee of $0.05-0.10 is charged to a merchant’s account. Addresses are verified in credit card transactions by an address verification service, or AVS.
Are the fees the same for both retail and internet transactions?
No, internet transaction cost merchants slightly more than retail transactions. The average discount rate for internet transactions is usually around 0.50% more than retail transactions, and the transaction fee for internet transactions often costs a few cents more than internet transactions.
What is a non-qualified rate?
A non-qualified rate is the discount rate that a credit card company charges for certain types of transactions that are not covered by a particular merchant account, such as a phone order. Non-qualified rates are commonly 5-8%, so be sure that all of your transactions are covered appropriately before you agree to a processing contract.
What types of transactions can be processed by credit card processors?
The top credit card processors can handle all major credit cards, checking cards, debit cards, gift cards and electronic checks.
How long does it typically take a credit card transaction to clear a merchant’s account?
Although there are some credit card processors that clear all transaction the following day, most processors clear payments two to three days after a customer has completed a transaction.
How does a merchant acquire a P.O.S. credit card swiper?
Many credit card processors provide merchants with a point of sale credit card swiper regardless of whether a merchant will be conducting retail transactions.
How can a merchant handle credit card transactions with a mobile phone?
Many credit card processors now allow merchants the flexibility of accepting credit card payments on the go with their mobile phone. Any mobile phone with internet access can handle these transactions. A merchant simply logs on to their account over their mobile phone and enters a customer’s credit card information, and the payment is approved a moment later. Some credit card processors even offer Bluetooth enabled credit card swipers that work with a merchant’s mobile phone.
How do credit card processors handle internet transactions?
Most credit card processors provide merchants with a virtual terminal in the form of a link to a secure webpage where customers can enter their credit card information.
Do credit card processors offer merchants virtual shopping carts?
Most types of online transactions require a basic shopping cart in order for customers to shop efficiently. While not all credit card processors offer this service to their merchants, the leaders in the processing industry general offer some sort of basic shopping cart.
What types of fraud protection are offered by credit card processors?
Credit card processors use a number of different methods to provide the appropriate level of security for merchants and their customers, including address verification, real time processing, SSL or 3DES data encryption and the three digit CVV2 number.
How does real time processing enhance a credit card processor’s fraud protection?
Credit card transactions are generally validated by a credit card processor in a matter of seconds, reducing the amount of time that a customer’s information is available to computer hackers and other criminals.
What is SSL and 3DES data encryption?
SSL, or secure socket layer, provides credit card processors and merchants with some basic security to safely complete credit card transactions without criminals intercepting a customer’s personal information. SSL consists of a 128-bit encryption. Some credit card processors use 3DES for their data encryption. 3DES encrypts information three times over 64-bit keys, resulting in a total of 192-bit encryption.
What is a CVV2 number?
A CVV2, or card verification value, is the three digit number located on a credit card that is not included on a card’s magnetic strip. The CVV2 number is located either on the back or the front of the card depending on a customer’s credit card.
How does the use of a CVV2 number reduce credit card fraud?
Credit card processors often require customers to enter their CVV2 number in order to reduce the likelihood of credit card fraud because a customer typically must have his credit card in front of him in order to provide this information.
What is a merchant account?
A merchant account is simply the individual account that a merchant has with a credit card processor. Using a merchant account that is not your own to complete a transaction is an illegal activity known as factoring that can have severe legal consequences.
What different types of merchant accounts are available?
The most common types of merchant accounts offered by credit card processors are retail and eCommerce. Other types of merchant accounts include restaurant, lodging, mail order and car rental.
What is the difference between credit card processing with a bank versus third-party institutions?
While many merchants enjoy the convenience of letting their bank process their credit card transaction and deliver payments directly to their account, third party processors offer the same services at a much lower rate.
Do credit card processors charge a termination fee if a merchant wants to switch to a different company?
Yes. Most credit card processing contracts last for one to three years, and processors charge a fee of a few hundred dollars to merchants who decide to cancel their contract early.
What types of customer support are offered by credit card processors?
All credit card processors offer some form of customer support 24 hours a day, 7 days a week through a toll-free phone number or email messages, and many now offer live chat at their website. However, it is important to find out what type of support is available, as some processors have outsourced much of the customer support oversees. Retail merchants who may need to have their point of sale equipment repaired should make sure that their credit card processor has local repairmen who are on call whenever the merchant is open for business.
How do credit card processors handle gift cards and gift certificates?
Not all credit card processors offer support for gift cards or gift certificates. However, some processors can issue merchants gift cards that are processed at a much lower fee than other transactions.
What is an Authorization?
As the name implies, an authorization is a transaction you use to: Help verify that the card is not counterfeit Verify that the cardholder has sufficient credit for the purchase Place a "hold" on the cardholder’s credit line for the amount of the transaction
Can you explain my “Pass Through Fees”?
Pass Thru Fees are charges that all Acquirer/Processors pay directly to Visa/MC for the use of their networks. Those fees are based on variables associated with your specific processing method. For example, the lowest Pass-Thru fees are typically given in a Face-to-Face swiped transaction where the card and cardholder are both present.
What is a deposit? Do I need to process a deposit for every sale?
A deposit is the transaction that withdraws funds from the cardholder’s credit line and deposits them into your sponsoring bank account (or other account you’ve designated). Every sale must include an authorization and a deposit, in that order. Usually, in a retail setting, the authorization and deposit are handled as a single "sale" transaction. In mail order or other "non-magnetic" transactions, the deposit might come hours or even days after the authorization, and is timed to the delivery of the goods.
How long do I need to wait for the proceeds of a deposit to be made available in my bank account?
Most Credit Card Processors will normally deposit your funds in 2-3 days.
Do I need to run the authorization separate from the deposit transaction?
No. When the goods or services are being delivered immediately, you will use the SALE transaction (or Authorization and Deposit transaction). So, in addition to authorizing the charge, it deposits the funds for the sale into your checking account.
I’ve already obtained an authorization. Do I still need to process a deposit?
Yes. The funds will not be available to you unless you process the deposit.
What Is an Authorization Number?
An authorization number, whether obtained electronically through your POS system, your PC processing system, the Internet, or from a representative at the Visa/MasterCard authorization center, indicates that the transaction has credit available on the card and that the transaction is not disputed by the cardholder.
Why do I sometimes get a "call voice center" response when I try to get a credit card authorized?
There are two primary reasons you might get this response. First, the automated, communications system processor uses to receive authorizations may be inoperable for some reason. This happens very infrequently, but in those cases you are advised to call the voice center. The second reason this might occur is the card-issuing bank may want to talk to you before they approve the transaction. This can be due to a reported stolen card or just a lot of transactions in a short time (holiday shopping).
What is the difference between different types of merchant accounts?
There are two main differences amongst the different types of merchant accounts. First, merchant accounts that have a higher risk of fraudulent activity like eCommerce and mail order typically charge a higher discount rate. Second, some merchant accounts provide customers with more information regarding the merchant and the transaction. For example, merchant accounts for lodging provide customers with some detailed information regarding their stay, such as check in time and room service authorizations, while retail merchant accounts simply provide customers with the basic details of a transaction.
How do credit card processors handle refunds and customer returns?
Most credit card processors allow their merchants to provide customers with a refund as long as the transaction is completed within 90 days of the original sale. However, the merchant does not receive a refund for the transaction fees that were charged on the original sale, and many credit card processors charge an additional fee for processing refunds.
How do credit card processors handle chargebacks?
If a customer disputes a transaction or there was some sort of error in the way that the payment was processed, the credit card issuer will send the transaction back to the processor. The processor will then inform the merchant of the problem, and it will be up to the merchant to either accept or dispute the chargeback.
What is the role of batching in credit card processing?
After a credit card transaction has been authorized at the point of sale, the transaction is then stored in what is known as a batch. A batch is a group of transactions that have not been settled. Most merchants submit their batches to their credit card processor at the end of their business day.