Transaction Fees

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These are the ones account providers are most open about. They have no reason to hide it anyway, considering it is usually chump change – a fixed charge of $0.15 to $0.30, depending on the account provider and the card used for payment. This is irrespective of the total transaction value.

Set-up fees

If a merchant account provider promises a $0 set-up fee, turn around and run as fast as you can (or just navigate to another site). More often than not, these are scammers out for your money. If they are not, they will recover the money via other hidden fees anyway. Set-up fees can go up to $200.

Credit Card related fees

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These include fees for application, yearly membership, gateway access, monthly statements, etc. Besides, there are penalties for cancellation/termination of your account, something you don’t usually realize till the time you really want to close the account. There are transaction fees (discussed above) and reversal fees. Reversal fees are charged when a customer issues a chargeback. There is also a (usually hidden) fee for Address Verification Service, something that cross-checks your customers’ credit card number with the mailing address. And then there’s the non-qualification transaction fee, something that is levied on payments not made by credit cards accepted by the merchant account provider (usually Visa, MasterCard and American Express).

Assessment fee

This is levied by Visa/MasterCard and conveniently passed on to the account holders by merchant account providers. Thankfully this is a small fee, usually about 0.1% of the transaction amount (so for a $10,000 transaction you pay just $10). MasterCard is a little more evil, though, and levies up to 0.8% of the total transaction as assessment fee for cross-border payments.

Discount Rate

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Probably the worst offender when it comes to looting you of your money, but not really a hidden fee. Usually hovering around the 3% mark, it is the amount of total transaction value that you will pay to your merchant account provider.

Minimum monthly discount fee

This is the least amount of discount fees you will be paying to your merchant account provider. If the total value of your transactions (received payments) in a month is less than this floor value, you will need to cover for it from your own pocket. So, for example, if your minimum monthly discount fee is $100 and, continuing with the previous example, your discount fee is 3%, you will need to sell about $3350 worth of goods/services in a month. If you manage to sell $3000 worth of goods/services (discount fees of $90), you will need to pay an additional $10 to your merchant account provider for failing to meet the minimum monthly discount fee.

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With this information in hand, you are much better prepared to open your own merchant account. Remember, if any provider promises you ridiculously low fees, the provider is going to cover for it with hidden fees.

It is always desirable for a business that it increases its operations and tries to incorporate high-end items in their product base so that ultimately the sales can boost significantly. For that, one step is to slot in the different payment options that should be available to the customers so that the number of returning customers as well as unique visitors increases. The best option to do this is to open a merchant account credit card processing so that you can accept different credit cards such as VISA, MasterCard, American Express, etc.

Why Credit cards?

The acceptance of credit cards for any kind of online business is a kind of necessity and not a voluntary luxury as it has been seen that more than 95% people who love shopping online tend to pay via credit cards as this is a far better and convenient option for payment other than COD (Cash On Delivery) or internet banking facilities. Hence it is suggested that merchant account be used for all kinds of transactions. Moreover, with credit cards you don’t have the fear of losing money after the item has been delivered as usually payment is taken from the credit cards as soon as the order is placed. The merchant account which allows you to purchase the Point of Sales (POS) is a better option when applied with a credit card.

What are the advantages?

The advantages are many as compared to the other payment option. Let’s list a few of them:

• First of all, by accepting credit cards through your merchant account you can reach a larger group of people. Thus you can move on from domestic sales to international sales. You just need a shipping account with it and then off you go.

• With a merchant account credit card processing for online auctions also becomes available to you. You just need to fix the minimum balance in your account and after you provide valid proof of your reliability you can easily start your online auction business.

• With most merchant account you get a trustworthy and efficient Management Information System (MIS) with which you can plan and manage your online sales and get a combined throughput.

• If you are having a small business and want to go online, you can apply for a small business merchant account. Such a merchant account has low transaction fees with some reduced features, yet solving all your problems.

• You don’t need to worry about the payment Gateway. It is usually given by the merchant account credit card processing company. So the trustworthy connection does not allow your money to launder. The Secure Socket Layer (SSL) connection has many layers in it to protect your money.

How to apply for a merchant account?

The application process for a merchant account is very simple too. All you need to do is keep in hand your past credit history, at least for a year as also the various details of your business such as the Operating Costs, Gross Margins, product line, etc. If you are in business for a year then you are sure to get approved for the merchant account within a few days and you can start accepting Payment through credit cards.

Any business that connects with online payments and fund receptions through credit or debit card must avail merchant account to confirm safe and secured business. Merchant account is quite similar like a contract which you deal with the bank as an administrator of a business, where the processing will be carried out in a week or two. Since merchant accounts differ in categories and types, you can find the one matching your business standards. Over the counter, shortly termed as OTC is a kind of merchant account that is meant for retail stores and business. Besides these, you can also avail eCommerce merchant account, high risk merchant account and internet merchant accounts too.

Having a merchant account for credit card processing is a must have thing in any online business these days. Without a merchant account carrying out transactions from credit cards is simply impossible and hence the reach of your online business gets restricted only to the domestic market. But, when you are using a merchant account, it should be kept in mind that you are subjected to quite a number of fees which can be a huge burden at the end of each month, if not taken care of.

What are the different kinds of fees?

To start with, there is the transaction fee levied by every credit card processing company on the merchant for each and every credit card transaction. This fee varies from a few cents to a few dollars per transaction depending on the amount of the transaction. If a service provider is chosen based on the minimalistic rate of transaction fee then one can have good savings at the end of the year. Then there are the other fees such as the chargeback fee, minimum balance fee, processing fee, mid and non-qualified charges, etc. If these fees are taken care of and measures are taken to reduce them then a credit card transaction proves to be the best payment option.

Measures to be taken:

Here are some of the few measures that you may take to have a fair amount of savings on your merchant account.

• First of all, always try to process your transaction the same day it takes place. In general most of the companies charge an extra processing fee for a delay of about 24 hours from the time when the transaction took place.

• Now, this point is by far the most important point to be kept in mind. The maximum loss a business accepting credit cards suffers is from the chargebacks. A chargeback is something by which a person can get back the amount paid by him for the item. Now, this should be avoided. For that, when deducting the amount from the customer’s account be sure to provide a legitimate address and billing information. A genuine business will always be away from chargebacks.

• Fraud credit card processing in merchant accounts is also very common. For that you can double-check the credit card number with the issuer as well as inform the merchant account credit card processing company to take necessary steps in case you are not convinced. This thorough scrutiny of the card can save you a good amount.

• When making payments follow the terminal direction of your transaction properly as it can help save you much transaction fees.

• If required, as and when you business requirements change, you can opt for a different plan with your merchant account credit card processing company so that you don’t need to pay for those services that you don’t need any more.

These are very easy to follow steps to avoid skyrocketing costs on your merchant account. If followed carefully and implemented properly, they can save you approximately $1000-$2000 per year based on your sales volume and purchase amount.

If you are into online business, your credibility is proven only if your business facilitates an uninterrupted payment transaction through credit and debit card. If you own a retail store and execute eCommerce business on the internet, it is obvious that many visitors come towards your way to shop their desired goods. To complete the process, they hand out credit payment or debit payment for getting their products delivered. Imagine, how weird it would be when the process and execution goes wrong? This is why, online merchants are always recommended to get a merchant account that works competently well in every phase of business deals.

Whatever be the genre of your online business, a merchant account with any of the credit card processing companies is a must have these days so that one can reach a more global audience of customers and can boost their sales significantly. Rarely do the customers buying something from the internet have a PayPal or Xoom account, but 90% of them have a credit or a debit card from which the payment can be very much easier and more convenient. Therefore, a merchant account credit processing company comes into play and solves the problem of payment processing whereby anyone can now accept credit cards as the main mode of payment. But there are some moral and legal duties that these merchant account holders should follow so that they can carry out their business in a smooth manner.

Some common mistakes of merchants:

Applying for and getting accepted by the merchant account credit card processing company is very easy if you have been in online business for quite some time, preferably more than a year. But after you start operating with such a merchant account you should be careful regarding some aspects. Some common mistakes by the merchants are:

• Not keeping records of all the transaction in their own account files
• Delay in payment of some fees such as mid-qualified and non qualified surcharges
• Non-issuance of proper billing note or receipt of the transaction amount
• Not keeping track of the Point of Sales transaction

Simple steps to keep your account running smoothly:

If you are subjected to too many disputes during a month or during a certain period, as specified by the terms and policies of the merchant account credit card processing company, then your account may be suspended any time without any prior notice. These are some of the simple steps you should follow so that you can retain the membership with the organization:

• Keep proper track of your monthly sales volume. Try to incorporate the kind of transaction such as VISA or MasterCard in this account. Though not strictly obligatory, the number of transaction generally can’t exceed a certain number after which you need to contact the company to increase the limit so as there are no cases of losing customers due to non-availability of payment mode.

• Keep a good note of the chargebacks you receive per month. The credit card processing company generally calculates this on the basis of a ratio of the number of chargebacks to the number of transaction per month. If this is greater than 2-3% there is a tendency of the credit card issuing company to fine the merchant account provider which in turn tends to load the fine on you.

• Avoid delay in payments of monthly fees. Try to keep sufficient funds on your account so that they can deduct the specified fees the next month. If there is paucity of funds, the company may fine you which in turn increase you operating costs.

• Always follow the rules and regulations laid down by the merchant account provider. If you often violate them and if there are fraudulent transactions taking place now and then, you may be subjected to tough jurisdiction.

On creating an internet merchant account, you’ll completely be facilitated to receive uninterrupted credit card payment from your fellow customers. With lowest competitive rates and new businesses being accepted, one can create his internet merchant account easily without any hassles. All you should do is to fill-in the application form that requests you to share some information and details. Once after the particulars are shared, your merchant account will be set forth in active. As this merchant account is open to all business class, any small-sized or medium sized or large-sized business can easily get the merchant account.

These days, without a merchant account for credit card processing, one cannot even imagine of managing an on line business, be it of a service provider or sales. Hence one usually does not hesitate even a bit to apply for a merchant account. But, it is to be kept in mind that this account does not come to you free of charge and hence there are quite a few charges such as mid-qualified and non-qualified surcharge, chargeback fees, transaction fees and minimal monthly maintenance fees. But the maximum revenue loss in an online business accepting credit card transactions is generally attributed to chargebacks or chargeback fees. Hence one should be completely armed with the tools as to how it should be avoided.

Since knowing the negative impacts of chargebacks, you should be sure about finding the ways to keep down your chargebacks. Besides your loyalty towards the customer, you must first be ensured to get saved from the deceptive ones. When researched over, you can find some sure-to-work tips which will help you preventing credit card chargebacks. As a basic start, you should use AVS and CVV system for every online orders dealt. AVS is the address verification system, whereas the CVV is the credit card id verification which ensures you to be safe from counterfeit transactions. When you are demanded to deliver overnight delivery for huge orders, ensure that you make a clean verification prior before shipped. Do not ship the goods, until or otherwise you get verified notes with respect to credit card info, personal details and address too.

What exactly is a chargeback and how it can be done:

In the common terms, a chargeback is a kind of a nightmare for the merchants. It is the simple reversal of the transaction amount back to the customer. It usually takes place after the delivery of the product has been done and there are some disputes with the product or the delivery. The customer simply charges back the amount to you via the credit card issuing bank which in turn channels the request towards your merchant account credit card processing company. After that generally a mutual agreement is sought for, which if does not take place will deduct the specified amount from your account.

What are the situations when you face a chargeback?

The situations when you face a chargeback to your merchant account can be any of the following:

• The item delivered is not as promised and the customer wants to get back the amount paid and does not want an exchange. Sometimes, this may so happen after the mutual agreement phase.

• The delivery of the item does not take place on time and hence the customer raises a dispute.

• Recurring billing which by chance takes the attention of the customer. These kinds of chargebacks are generally seen in membership websites, health insurance, subscription websites, etc. Some health products also have these kinds of recurring billing which when seen by the customer in their monthly credit card statement, lures a chargeback.

Insecurity within the customer as to who has charged the specific amount. This may so happen when there is not a proper DBA (Doing Business As) issued from the side of the merchant. Merchant accounts thus should always include a proper billing address and name of the company.

• Non-fulfillment of copy requests and error in processing of the order. This may take place in case of server breakdown at the time of billing, which may deduct unnecessarily from the customer account.

• Transaction taking place with stolen cards also invite a chargeback after sometime. It is thus very important to verify the identity of the credit card.

Whatever be the case of a chargeback, it is suggested that it is better to prevent a chargeback rather than pay for it later on after you face it. Some of the steps include issuing proper DBA, proper billing information and maintaining proper communication with the customers.