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Merchant Accounts Merchant accounts can be defined as a relationship between a merchant and credit card processing banks, allowing the merchant to accept and process credit cards. A Merchant account can be established in the name of an individual or a corporation. Each location of a business with a single ownership must have its own merchant account. In addition, each ecommerce website operated by a merchant that either, has a different name or sells different products must have its own merchant account as well. The ISO(Independent Service Operator) or MSP(Merchant Service Provider) is a bridge between the processing bank and the merchant. There are several different processing banks, and some are definitely better than others, not just in fee's but in customer service, and the way the processing bank handles any problems that may occur with a merchant account. Most merchant account providers have similar prices and service, but some offer lower prices and rebates as incentives to their customers. Iso's are able to buy at a lower processing rate and offer the savings to their clients. If you were to go straight to the processing bank to process, you would experience a much higher rate than from an ISO. There are a variety of fees associated with any merchant account no matter where you process. These fees may change names or be attempted to be covered up by an unethical ISO, but they are always there in some form. Here are some of the fee's shared by most processing banks: Processing Fee, Processing Rate, Qualified Discount Rate: This is the standard percentage rate charged on all credit card transactions that you process as long as the transaction meets the qualifications and does not downgrade. Downgrading is discussed lower on this page. This fee varies by the type of merchant account that the charge is being processed through. Transaction Fee: This is a flat rate per transaction charge that is applied to all transaction. Usually $.20 - $.30 per transaction, but can be higher for some types of merchant accounts. Statement Fee: This is a once a month charge that the processing bank charges to issue you, the merchant, a paper statement of the complete monthly history for your credit cars processing. Most processing banks also include or have the option for online viewing of a statement at an additional charge. The paper statement is not an option because the processing bank is required by law to give you a monthly statement, and a paper statement is the only way that they can verify that every merchant is issued a statement. The statement fee ranges from $5.00 - $15.00 per merchant account, depending on the processing bank that is being used. Monthly Minimum: This is a monthly minimum processing amount for a merchant. This fee is usually $15.00 - $25.00 per merchant account depending on the processing bank that is being used. The monthly minimum is the minimum amount that a merchant will be charged per month regardless of how much processing that they do. To figure out how much you would have to process to meet the monthly minimum you would take the processing rate and multiple by the amount in dollars of credit card transactions that were processed. So if you processed $1000.00 in a month and the processing rate was 1.71% and the monthly minimum was $15.00. $1000.00 x 1.71% = $17.10. Since the monthly minimum is $15 then you would pay the $17.10. If in the same situation you only processed $500.00 in a month. $500.00 x 1.71% = $8.55. $8.55 is less than the monthly minimum so you would pay the monthly minimum of $15.00 for this month. AVS Fee: This is a fee that only applies to a merchant account where the merchant is keying in transactions on a terminal or over the internet on a virtual terminal. This is a fee charged to verify the zip code of the person's card against the billing address of the card. This is done electronically at the same time that the transaction is taking place. AVS is an extra security measure that should always be used by internet merchants and when keying in transactions. AVS fees are usually $.05 / transaction and are occasionally included in the transaction fee on keyed merchant accounts. Downgrading: Downgrading is the term that is used when a transaction does not meet the requirements for the transaction to be qualifies. There are 2 levels of downgrading, Mid-Qualified, and NON- Qualified. There are a variety of reasons for a transaction to downgrade, and it would take an entire website to list every possibility for downgrading. But, the most common reasons for transactions downgrading is: accepting foreign, business or corporate credit cards, keying in a transaction if using a retail merchant account, not using AVS when keying in transactions, failing to batch out a terminal within 24 hours of processing transactions. There are many more reasons for downgrading so, refer to your processing bank service agreement or service guide for other reasons for downgrades. Many times merchants stumble onto really cheap merchant accounts. If it sounds too good to be true, it probably is. This applies to Merchant Accounts as well. These are usually 1.48% and $.18 per transaction or less. Or possible no transaction fee is stated. There are no ISO's or MSP' s that have any special relationships with Visa or Mastercard so don't fall victim to one of these traps. Since Visa/Mastercard charge more than these fee's why would an ISO sign an account that would cause them to lose money. Make sure that the rates that you are signing for are set, and get it in writing. Visa and Mastercard charge an interchange fee to all processing banks, the processing banks then pass this and their own fee to the ISO, or MSP. All MSP's and ISO's are charged a very similar rate, and none are low enough to offer these rates unless they are planning on raising the rates later on or making the money up somewhere else. Types of Credit Card Processing Retail - Swiped Merchant Accounts (card is swiped through a credit card machine) MOTO - Keyed Merchant Accounts (card is keyed into a terminal or virtual terminal) Mobile and Wireless - Mobile Swiped and Keyed Merchant Accounts(card is swiped or keyed) Internet - Internet Merchant Accounts (card is processed through an online store or manually keyed in over the internet) Common Merchant Account Fee's
Retail Merchant Account
Mail Order / Telephone Order Merchant Account
Internet Merchant Account
ARU Merchant Account - Cellular Phone
Wireless Merchant Account
Offshore Merchant Accounts: If you would like to speak with a represenative about opening a merchant account you can call, email, visit our office or apply online right now.
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