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Merchant Account General Information
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Credit card processing and merchant accounts can be an overwhelming topic. We want you to be educated on your decision and want you to understand
1) What Merchant Accounts Are
2) What are payment gateways
3) Why you need a Merchant Account
4) What the fees and rates are for processing
5) What information is needed to apply
Merchant Accounts
A merchant account is a contract with a financial institution that is setup for a business that sells goods or services to process and accept debit or credit cards. The account essentially extends the merchant a line of credit until the funds can be delivered electronically from the customers bank or credit card provider. 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.
The type of business you run or service you provide dictates the kind of merchant account you apply for. There are three primary types of merchant accounts – Retail, Internet and mail/ telephone orders. Retail merchant accounts are for those businesses that operate from physical storefronts and deal with customers in person. The processing fees for retail merchants are the lowest, because personally swiped orders have the least risk of frauds and chargebacks. Internet merchant accounts are for those who operate in the online storefronts and provide additional security measures to manage the potential for fraud in the environment.
Payment Gateways
A payment gateway is an e-commerce application (such as Authorize Net) service that authorizes funds for physical storefronts as well as e-businesses and online retailers. It is the same as a physical point of sale terminal located in most retail outlets. Payment gateways protects credit cards details digitally encrypting private information, such as credit card numbers, to ensure secure transmission between the customer and the merchant and also between merchant and payment processor.
Why You Ned a Merchant Account
In these times many consumers prefer the ease and security of using their credit/debit cards to cash and check, You don't want to turn down customers just because of their inability to pay in cash, so your business needs the ability to accept payment from todays popular credit card providers including Visa, Master Card, Discover and American Express.
Merchant accounts allow for a safe and quick transaction, additionlly they drastically cut back on paper work, phone calls, marketing and operating costs. They also help you save on labor costs for endless entry of data from cash transactions and protect from check fraud.
Merchant Account Fees and Rates
A Merchant Account has a variety of fees and others charges on a per-item or percentage basis as well as monthly. Some fees are controlled by the merchant account provider, but the majority of the per-item and percentage fees are controlled by the credit card issuing bank according to a rates schedule called interchange fees, which are then set by Visa and Mastercard. Interchange fees change depending on card type and details of the transaction. A transaction keyed in manually will have different rates from a transaction from a swiped card or performed from an online store front.
The general fees associated with almost all merchant accounts include:
Authorization fee
The Authorization request fee is charged every time a transaction is sent to the card-issuing bank to be authorized. The fee applies whether or not the request is approved.
Statement fee
The statement fee is the monthly fee that comes in accordance with the monthly statement that is sent to the merchant at the end of each months transaction cycle. This statement shows how much processing was done by the merchant during the month and what fees were incurred as a result.
Monthly minimum fee
The monthly minimum fee is a way to ensure that merchants pay a minimum amount in fees each month to cover costs from the provider to maintain the account and to create minimal profits.
Batch fee
A batch fee may be charged to a merchant whenever the merchant settles their terminal or online account. Settling a terminal, also known as batching, is when a merchant sends their completed transactions for the day to their bank for payment. Some merchant providers perform this automatically.
Customer Service fee
The customer service fee or maintenance fee may be charged by some providers to pay for the cost of customer support and service.
Merchant Account Requirements
Preparing important information together ahead of time will ease you through your merchant account application process. Here's most of what you will need depending on the the type of account you are applying for in order to obtain your merchant account:
Checking account, A copy of a voided check , Articles of incorporation, business license or reseller license, Your Web Site Url, List of Prices On the Site, Return policy information, Photocopy of Your Drivers License if you are a sole proprietor
Not sure which option is best for you? Simply signup for a 30 Day Risk-Free Trial and one of our knowledgeable merchant consultants will assist you.
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