My Merchant Account Blog

ACH Fee

Saturday, January 29, 2011

When applying for a merchant account, you might see this fee (Automated Clearing House).  If you do see this fee, take your time your while completing the merchant account application.  Basically, every time the merchant account provider deposits funds into your checking account, they will charge you this fee.

Even if this fee is 25¢, that adds up.  For example, 20 business days in a month, this is $5.00 more a month that the merchant account provider is charging you.

Automated Clearing House - ACH

When applying for a merchant account, you might see this term (ACH).  The Automated Clearing House is an electronic network for financial transactions in the United States.  Merchant account providers usually rely on this network to deposit your funds into your checking account.

Small Businesses Processing Credit Cards Like Large Corporations

Sunday, January 16, 2011

Most merchants are also customers online at one time or another.  The merchant probably goes online to purchase just about anything.  And as a merchant, you probably take notes on how that merchant's e-commerce website works - especially the check-out procedure.  When you enter your credit card number, you might notice the website will reject your order immediately if you accidentally did not enter enough or too many numbers in the credit card number field. 

This is one of the options to consider adding before trying to get approval from the merchant account provider.  Credit card numbers are determined by a specific algorithm - this is called the Mod 10 or Luhn's method (How Credit Card Numbers Are Determined).  You can ask your programmer to implement this feature.  By doing this, you prevent the transaction from going to the electronic payment gateway, saving you a transaction fee.

Also, have the developer add a feature to check the expiration date - to at least verify the credit card number has not expired.  If you use a drop down menu, sometimes the customer might click too fast and not notice.  For example, if the customer is placing an order today, and their credit card expires in December 2011.  When choosing the date, the customer might accidentally choose 2010.  This is another check that can be added to help save you a transaction fee.  Sometimes, the electronic payment gateway might actually approve the transaction, but you might get a chargeback from the issuing bank.

Once you have determined the credit card number matches the basic algorithm and the expiration date is valid, you are ready to submit the transaction to the electronic payment gateway.  Once this happens, you might get a dialog box that refers to Verified By Visa / MasterCard Secure Code (VBV / MSC, verifying ) (Verified By Visa-MasterCard Secure Code-Things You Should Know).  Implementing this feature can actually protect you from a certain type of chargeback.

Credit Card Acceptance

Friday, January 14, 2011

Whether you are just starting a business or have owned a business for years, you probably will want to accept credit cards.  Merchants who are just starting up seem to be somewhat fearful about credit card processing.  They think that it is a long ordeal.  Usually, this is not the case for most merchants.  Being approved for a merchant account is usually pretty simple, especially if you are doing less than $30,000 a month and not selling anything high risk.  North American Bancard is an example of a credit card processing company that specializes in small business.  (Each merchant account provider has its own definitions for high risk, so read through their Acceptable Use Policy and Terms of Service - this should tell you what services / product cannot be supported.)

Applying for a Merchant Account

As we previously wrote, You Are Approved for a Merchant Account in Less than 24 Hours, be wary of these companies - they will approve you for a merchant account, but after a few days of vetting the merchant, the provider might decline your application.  When applying for a merchant account, the provider will look at a lot of things and this depends on if you are a new merchant or you have been processing with another provider. 

For example, you might be on the TMF List / MATCH.  On your merchant application, you might say you are not on this list.  Once the provider finds out you are on this list, you probably will not be approved - or your account will be terminated / suspended if the provider sets you up in less than 24 hours.

Merchant Account Application

On the merchant application, you will be asked a few questions regarding your transactions and monthly volume.  If you are just starting out, it is difficult to answer these questions.  You might hope that your monthly volume will be $500,000, but depending on your business model / advertising, etc., it might take you over a year to reach this goal.  Try to be realistic in these figures when you are entering these numbers. 

Merchant applications vary, but all should ask the monthly volume.  Some applications will ask you for the highest transaction and the average transaction.  One important factor in this - if you enter $1,000 for the highest transaction, and you get an order for $3,000 - you will want to scrub / vet the transaction.  Once you have verified the transaction is legitimate (Fighting Fraud in your E-Commerce Store and Preventing Online Fraud), you will want to contact the merchant account provider to let them know about the transaction (It is My Merchandise and Services Its My Money or Is It).  Tell the merchant account provider what you did to vet / scrub the transaction and ask for a reference number (this will help you in case something happens).  The merchant account provider might also verify the transaction or put a hold on the funds for 24-48 hours while this is happening. 

Committment / Contractual Period

The last, and most important item to note in this post - do not apply for multiple merchant accounts at the same time.  Apply for one and wait.  Some merchant account providers require a contract - we have seen providers requiring anywhere from six months to three years.  If you happen to sign up with a merchant account provider (Company A) that requires a three year commitment and another one (Company B) that requires you a one year commitment - this alone might put your business at risk before opening your doors. 

For example, Company A might have a customer service / statement fee of $10.00, a monthly minimum of $25.00, and an electronic payment gateway of $10.00.  Company B charges you a customer service / statement fee of $10.00, a monthly minimum of $15.00, and an electronic payment gateway of $10.00.

If you choose to stay with Company A (since the contract is three years), you end up paying Company B a total of $420.00.  You might decide to possibly even split the transactions, using one provider the first half of the month and the other provider that last half of the month.  This might work, but again, some providers have an exclusivity clause.  If this is the case, you might be in breach of the contract. 

If you just decide not to pay Company B or use both (possibly violating the merchant account agreement), the merchant account provider could put your company on the TMF List / MATCH - causing you more problems.

This post is sponsored by North American Bancard.

PCI DSS Version 2 Announced

Thursday, January 06, 2011

Even though some merchants might already be using PCI DSS v2, they were formally published effective January 1, 2011.  Merchants can still use PCI DSS 1.2.1 until December 31, 2011.  In an effort to help merchants understand PCI DSS, it published a new website and a 61-page Navigating PCI DSS: Understanding the Intent of the Requirements version 2.

While My Merchant Account Blog appreciates it readers, we also suggest that merchants check out the PCI Security Standards Council's website for information as well.  Their website will have current information regarding the standards.  We will continue to archive their standards and you can view them anytime needed.