In other words what you’re going to find is that when the time comes to look at the goals that you’re setting for your business, there are a number of benefits that will come from accepting credit cards (or, in some cases, by choosing to contract with a different merchant account provider).

When you have a merchant account set up for your business, you’re going to find yourself in a position in which you will be able to borrow against your future earnings. In other words, when you need to be able to access funding for your  business - to pay taxes, to remodel or relocate or to expand into an additional location - you will be able to work with your merchant account provider to look at your average earnings and to develop an arrangement that will let you borrow against the money that you expect to make over the next few months.

With this sort of arrangement with your merchant account provider, you’re going to find that you are in a great position to get the money that you need without explaining everything about why you need the cash and how you’ll pay it back; and you won’t have to worry about interest rates that could dramatically increase the amount that you need to repay.

Despite increasing credit card interest rates, you’re going to find that paying by credit is increasingly common for those who want or need to make purchases. Simply put, if you aren’t accepting credit card payments, you’re going to find that you are - in effect - closing the door on them.

In other words, when you are looking at merchant accounts and credit card processing, what you are really going to be doing is making it easier for your customers to keep doing business at your shop/restaurant/online store. The more that it’s easy for your customers to shop at your business, the more likely that they will keep coming back.

Ultimately, making it easier for your customers to pay with credit cards is going to enable you to grow your business even when the economy isn’t at 100%. After all, the last thing that you want is to risk having your most loyal customers decide to shop elsewhere just because that’s going to be more convenient for them. With the right merchant account, you’ll be there for your customers and they will continue to be there for you.

For example, if all you are seeing is that you can avoid merchant account fees by choosing an online payment processor, you need to be willing to take a step back. Rather than just thinking about the monthly fees, look too at the costs of processing each individual transaction. Rather than just looking at set up fees, take the time to understand how the customer support is going to be if you need it; look too at the policies that are put into place to protect your customers from fraud and think about the way in which customers respond to services like Paypal.

In other words, when you’re trying to decide whether or not to skip a merchant account, you’re going to want to make sure that you are looking at all of the elements and information rather than just the upfront promise of savings.

While there are many things that you should be keeping an eye out for when you open a merchant account so that you can be sure you’re choosing the right services for credit card processing, the key elements can be narrowed down in the following way.

If you are looking for just the quick points of accepting credit cards and choosing a merchant account, you’ll want to look for:

• No application fee
• No set up fee for the account
• No licensing fee
• Free programming for your credit card terminal
• Payment gateway included if you’re going to do business online as well as integration with your shopping cart software
• Online reporting
• Direct deposit into your business account
• Free customer service and technical support

In other words, if you are only looking for the basics - the key points - of credit card processing and merchant accounts, make sure that you’re getting the best deal. Ultimately you’re going to  need to be sure that you’re looking at the fee structure associated with the account as well to be sure that you won’t be paying more for the service down the line, but the above points can help to get you started.

Rather than simply offering credit card processing through a third party source, merchant accounts for credit card processing will help your business to establish credibility:

(source)Every online store needs to be able to securely process credit cards online. The inability to do so instantly damages a company’s credibility and causes many customers to shop elsewhere. Offering customers the option to pay via a third-party payment processing systems such as PayPal can increase sales; it should not serve as your primary method for processing payments. Processing payments through your own credit card merchant account not only saves you money (5 percent or more per transaction), it also enhances your credibility since your company name appears on the customers’ credit card statement.

Rather than leaving it to chance that your customers won’t question the transaction, shouldn’t you be sure that you are focusing on credit card processing that immediately makes it clear that they have shopped through your store? Rather than questioning whether or not your customers will feel comfortable going to a third party site to make a payment, wouldn’t you rather be sure they completed the sale?

When you are going to apply for a merchant account to authorize transactions electronically and - as a result - expand your customer base and grow your business, you’re going to want to develop an understanding of the process and a sense of what is involved.

You are going to want to understand whether your business will be considered high-risk or low-risk. High risk merchants are going to be travel agencies, legal gambling companies - casinos and betting tracks - collection agencies, online pharmacies and adult businesses as well as offshore companies; these are the businesses that have the highest probability of fraudulent transactions. Low risk merchants, on the other hand, will be retail shops, restaurants, mail and phone order businesses and home based business that will be processing transactions that carry a low risk of fraud - in most cases, the card will be presented to you, the merchant, for processing.

You’re also going to want to be sure that you’re thinking about the type of processing services that you’ll need for your business:

• Internet credit card processing will allow you to process transactions online, but will require a bit more security and fraud controls to be put into place because you will primarily be processing card not present transactions.
• Phone and mail order businesses will find that they are able to take advantage of merchant accounts that offer a virtual terminal service that allows them to batch process credit card transactions online with card not present transactions.
• Touch tone phone processing will enable merchants to call in from any phone, enter a personal identification number (PIN), the credit card number and sale amount and to get approval for the transaction.
• Retail merchant accounts enable those businesses with brick and mortar stores to process transactions just from their store.
• Wireless mobile credit card processing allows those businesses that are on the move to accept credit card payments from their customers.

Because of the different types of businesses that are out there, it makes sense to know - while you are looking into merchant accounts - what type of credit card processing services you are going to need.

When you take the time to consider the big points of merchant accounts and credit card processing, you’re going to find that it’s much simpler to compare merchant account providers and the “fine print” characteristics.

Merchant Account Terms A-C
Merchant Account Terms D-I
Merchant Account Terms K-Q
Merchant Account Terms R-Z

Merchant Account Terms A-C

Acquiring Bank
The provider of your merchant account who processes all of your merchant transactions.

Address Verification Services (AVS)
AVS is a tool for merchants to reduce the risk associated with card not present transactions (mail order, telephone order or Internet). The billing address given by the customer is passed in the transaction and it is checked against the billing address on file at the customer’s card issuing bank.

Annual Fee
A fee charged to merchants, which can be used to lower the discount rate and the overall costs of processing credit transactions.

Application Fee
A fee for processing the paperwork and setting up your merchant account.

Authorization
The process whereby a transaction is approved by an issuing bank, authorized agent, or Visa/MasterCard on behalf of that issuer, before the transaction is completed.

Authorization Code
This code is given by the credit card issuer and authorizes a specific transaction.

Authorize.net
A payment gateway service provider allowing merchants to accept credit card and electronic check payments through their Web sites.

Automated Clearing House (ACH)
A processing organization networked with others to clear and settle electronic debit/credit transactions.

Average Ticket Size (AVT)
The average amount of each transaction the merchant anticipates processing or actually processes over time.

Batch Processing
This occurs when a merchant transmits the “batch” of daily sales for processing. An “open” Batch is one that is not yet “closed.” Batching generally occurs at least once per day and ensures that all of the transactions will be completed.

Card Issuer
The financial institution or company that has provided a card to a cardholder.

Card Present
A transaction evidenced by the action of swiping a card through a terminal or by an imprinted and signed credit card draft.

Charge Back
A charge back is the result of an action taken by a cardholder who disputes a credit card transaction through their credit card issuer.

CVV2
CVV2 is a three digit security code that is printed on the back of most credit cards. The CVV2 program is designed to reduce fraud in the card not present environment by validating that a genuine Visa/MasterCard credit card is being used during a transaction.
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Merchant Account Terms D-I

Discount Rate
A fee taken by the bank as a percentage of all sales transactions.

Doing Business As (DBA)
The DBA is the name the public sees, whether on a physical storefront or on the web. If the merchant has another business, a separate application for both would be needed while setting up merchant accounts.

Electronic Ticket Capture (ETC)
An ETC system reaches out and “grabs” sales ticket information electronically. Buyer information is contained on the magnetic strip on the back of the credit card. The merchant “swipes” the card through a terminal, and the buyer information is “read” by the computer system and merged with the sales information.

Gateway Fees
The fee for the use of a real time processing system (payment gateway).

Guarantor
Guarantor agrees to personally guarantee (make good on) any processing losses Merchant bank incurs as a result of the business relationship with this merchant.

Holdback
A portion of the revenue from a merchant’s credit card transactions, held in reserve by the merchant account provider to cover possible disputed charges, chargeback fees, and other expenses.

Imprinter
The now old fashioned manual, slide type device used to produce an image of the raised (embossed) characters on a credit card, to a transaction slip.

Integrated Point of Sale (IPOS)
This acronym refers to conventional terminals that are “smarter” and more sophisticated in that they may be setup to communicate with like terminals owned by the same merchant even if they are located at different locations and with different merchant numbers.

Internet Merchant Account
A relationship between a retailing company and a Merchant Bank, which allows the retailer to accept credit card payments from customers via the Internet.

Issuing Bank
A member bank that enters into contractual relationships with cardholders for the issuance of cards.
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Merchant Account Terms K-Q

Keyed
A transaction is “keyed” when the information from a credit card is manually typed into a terminal or computer.

Monthly Minimum
The minimum amount of discount fees charged by a Merchant Service Provider in a given month.

Monthly Volume
The maximum dollar volume a merchant is approved to process in credit card transactions within a month’s time.

Non-Qualified
A card not present transaction, which does not include the billing address being passed for an authorization or sale transaction.

Payment Gateway
This is a service which connects the shopping cart with the card processor.

Point of Sale (POS)
The physical location where a sale is completed.

Programming Fee
A fee charged for programming the terminal or card reader.

Qualified
These transactions are card present, a retail transaction that is card swiped and the merchant batches out at the end of the day.

Questionable Merchant
A merchant location at which an excessive number of confirmed fraud transactions have occurred within a specified period.
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Merchant Account Terms R-Z

Refund Policy
Merchant account providers require a written refund policy for each applicant, as a liberal refund/return policy may encourage the reduction in the number of chargebacks that a merchant receives.

Reserve
A practice in which a percentage of the sale amount is retained by the Merchant Bank to protect themselves against catastrophic losses.

Retrieval Request
When the cardholder’s bank request retrieval of information.

Secure Server
All Web servers that handle credit cards should use SSL (secure socket layer) encrypted communications to protect the purchaser’s credit card information.

Setup Fee
An initial fee paid to the merchant service provider to establish an account and for processing and reporting tools.

SSL Certificate
A certificate which is installed on a secure server. It is used to identify the merchant using it and to encrypt the credit card data and customer information.

Statement Fee
A monthly fee that entitles the merchant to customer support, and a statement to be mailed to the merchant.

Swipe
The action of physically sliding a credit card through a terminal or magnetic stripe reader that “reads” the magnetic strip on the back of all credit and debit cards.

Terminal Identification Number (TID)
Unique number assigned to each point of sale terminal that tells the Host which merchant a transaction came from and where an authorization is to be sent.

Trade Reference
A trade reference is a business that extends credit or otherwise has a business relationship with the applicant.

Transaction Fee
A per item fee charged for each transaction between your terminal or software and the processor’s network.

Unique Transactions
A transaction that cannot be categorized as a retail sale or a cash advance, and for which there are special merchant classification codes.
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When you’re choosing a merchant account provider and credit card processing services for your business, you’re going to want to be sure that you’re opening the right merchant account. You’ll find that it’s a lot easier to choose the right merchant account provider when you know what you should be looking for.

What should you be looking for when you open for a merchant account?

• Flexible terms. When you’re looking into merchant accounts for your business, you should choose an account that will grow with your business. You’re also going to want to be sure that the annual fee structure and the overall plan fit your needs.
• Real time authorization. The biggest reason for looking into credit card processing services is to know that, when your customers are paying for your products or services, the money will make it to your account. Real time authorization allows you to know before the transaction is complete whether or not the payment will be approved.
• Detailed reports. When you’re able to take advantage of merchant accounts and credit card processing for your business, you’ll be able to look at each customer’s billing history and order history, add them to mailing lists and keep track of the times during which the most sales were made; in other words, with detailed reports you will find that you are able to take full advantage of your merchant account.
• Customer service. When you’re choosing a merchant account provider for your business, there are going to be times when you have questions; there are also going to - from time to time - be issues related to your equipment or particular transactions. Knowing the customer service benefits of a merchant account provider can help to ensure that you make the right choices for your business.

By looking for the above characteristics while choosing a merchant account for your business, you will find that you have clear comparison points and that you will be able to choose the best account for your needs.

When you’re looking into online merchant accounts - or you find that you’re taking your brick and mortar business online and want to be able to accept credit card payments - you need to be sure that you have an understanding of what a payment gateway is and how it works.

Ultimately, what a payment gateway does is simple: it facilitates communication between your bank and that of your customers’ or clients’ credit card provider. While it happens nearly instantaneously, it’s the process of what a payment gateway does that can become a bit more complicated.

When a customer or client places an order through your web site and will be paying by credit card, the following takes place with regard to merchant account payment gateways:

1. Once your customer’s credit card information has been entered into your web payment page, the details will be encrypted by the customer’s web browser.
2. The encrypted customer credit card information will be forwarded from your web server to your payment gateway.
3. The payment gateway will establish a connection with your acquiring bank - the bank account that is associated with your merchant account.
4. The payment gateway will establish a connection with the processor that is connected to your customer’s credit card - most often, the bank that issued the credit card.
5. The encrypted credit card information is sent to the appropriate card association - Visa, Mastercard, etc. - unless the customer is paying with a Discover Card or an American Express.
6. The transfer of funds from the customer’s account to your merchant account will be approved or declined and the response is sent to the acquiring bank either confirming the approval or stating a reason why the transaction was denied.
7. The response from your customer’s credit card company will be sent through the payment gateway to the customer’s computer browser that will interpret the data and let them know whether or not the sale went through.
8. As a merchant, you’ll go on to arrange for the shipping of the customer’s purchases.
9. You’ll batch your approved transactions and settle them at a later point in time so that the funds can be transfered to your acquiring bank - which will then deposit the funds into your business account.

Ultimately, the process of a transaction being filtered through the payment gateway for your online merchant account takes a matter of seconds (to have the process completed and the money in your bank account takes only a matter of days).

As payment gateways for online merchant accounts become more advanced, additional tools are included for the merchants - these tools can be used to detect fraud, calculate taxes and shipping charges and to identify the customer’s computer so that you can be sure that the credit card transactions that you process are legitimate.