The push of many work from home programs is the idea that an individual can sell products that he or she does not own, and the promise is that they can make a profit doing this. This idea seems to defy human logic, as one questions how a profit can be generated when there is nothing to sell. In most cases, the idea that one can sell things that are not personally owned is an allusion to affiliate marketing, the process of selling products that other people own and earning commissions from the product owner. In this process, the sale is generated by the affiliate, and the merchant takes it from there. When the sale is completed, the affiliate earns a commission. Many people make money doing this, as it is a very good business model if one is able to perfect the strategies involved. However, there is another way to make money selling nothing of your own, and it includes the process of drop shipping. Drop shipping, which existed long before the internet, breathed a new type of life once eBay and the internet turned e-commerce on its head. Drop shipping is simply the process of selling a product that is owned by someone else at an inflated price. For example, if an individual is able to find products at a wholesale price, he or she can place it on eBay or their own store and sell it at a premium. In the process, one can avoid having to own anything, and the shipping is taken care of by the company that manufactures the company. While this process is similar to affiliate marketing, it differs in the fact that the product actually passes through the hands of the individual. Furthermore, affiliate marketing is often applied in the digital product industry, while drop shipping can only be done with physical products. And, while the product does pass through the hands of the individual, it does not do so physically. Because the manufacturer handles the shipping, the middleman does not need to package the item, ship it, or store it anywhere. Instead, he or she simply completes the order and earns the profit that is taken on the sale of the item. This type of a business model is very simple, easy to understand, and repeatable. For these reasons, people flock to study this strategy to see if they can make money by implementing it. While not everyone finds it to be a profitable venture, many in fact are able to generate solid income streams from drop shipping.Article Source: http://www.articlesbase.com/ecommerce-articles/selling-nothing-of-your-own-234071.html
-------------------------About the Author:To learn more about the strategy of drop shipping, read more in the Dropship Crash Course. Then, check out one of the best drop ship sources around, Worldwide Brands.
Friday, July 17, 2009
Steps To Accept Credit Cards In Your Business
1. What Are You Selling?
The reason for this is because VISA/MASTERCARD does not accept every type of business there is. Because of high return and charge back risks, each sponsored bank has a criteria of what kinds of business they will and will not accept. That is why when you check with your local bank there is a very good chance that your application will be denied if you are anything but retail.
2. What Is The Criteria For Acceptance?
The less risk your business is to the bank, the greater your chance of acceptance. If you were operating a retail store selling stationary, your chances for approval is many times greater than if you were operating the same business from your home or over the Internet. To the bank the retail store is far more secure than your home based business.
3. What Do I Do Then To Accept Cards? I Am Not A Retail Store.
The answer is that you need to work with a company or a bank that can approve these kinds of businesses. They have met the criteria and the requirements from VISA/MASTERCARD to approve businesses other than your standard walk in Retail store such as Mail Order, Phone Order, and Internet related businesses.
4. What About The Costs? Are They Any Different For A Retail Vs. Home Based Business.
The answer to this goes back to the "Greater The Risk, The Higher The Cost." In almost every case the cost (discount rate) to process a transaction is going to be more to you than if it was done in person. Most home based businesses process sales over the phone, through the mail, and over the Internet. There is no signed sales receipt in all of these types of transactions. This invites the high possibility of chargebacks. Hence, more risk, higher cost than if it was retail.
5. What Kinds Of Typical Startup Costs Can I Expect?
You should expect to invest a startup amount of between $190.00 - $300.00 from most companies in our industry. These amounts can include application, setup, equipment rental lease deposits as well as additional costs for poor credit, higher risk, etc.
6. What About Equipment. What Will It Cost?
This is going to vary depending on the kind of equipment you choose. If you lease your equipment, your payments should range anywhere from $35.00 to $49.00 per month for a complete processing system including a terminal and an automatic printer, and in many cases software. If you are looking to process Online Internet Realtime transactions, and want to add on Shopping Carts, etc, amounts will increase according to the amount of customization you need.
7. Is It Really Necessary To Accept Credit Cards To Be Successful?
Yes, it is. Here are just a few reasons why:
The average cash sale amount is $9.00. The average credit card sale is $40.00. That is a 450% increase per transaction. Is it any wonder why you do not see VISA/MASTERCARD signs disappearing from store windows? This is no different in a home based, and more importantly an Online business.
Another factor is this. Without giving your customers the convenience of accepting payment via credit cards, your sales are going to be far less than your competitors that do accept credit cards. This is a basic fact of business.
The bottom line?... If you are going to be in business, it is vital to the success of your business to offer your customers the convenience of paying by credit cards.
The reason for this is because VISA/MASTERCARD does not accept every type of business there is. Because of high return and charge back risks, each sponsored bank has a criteria of what kinds of business they will and will not accept. That is why when you check with your local bank there is a very good chance that your application will be denied if you are anything but retail.
2. What Is The Criteria For Acceptance?
The less risk your business is to the bank, the greater your chance of acceptance. If you were operating a retail store selling stationary, your chances for approval is many times greater than if you were operating the same business from your home or over the Internet. To the bank the retail store is far more secure than your home based business.
3. What Do I Do Then To Accept Cards? I Am Not A Retail Store.
The answer is that you need to work with a company or a bank that can approve these kinds of businesses. They have met the criteria and the requirements from VISA/MASTERCARD to approve businesses other than your standard walk in Retail store such as Mail Order, Phone Order, and Internet related businesses.
4. What About The Costs? Are They Any Different For A Retail Vs. Home Based Business.
The answer to this goes back to the "Greater The Risk, The Higher The Cost." In almost every case the cost (discount rate) to process a transaction is going to be more to you than if it was done in person. Most home based businesses process sales over the phone, through the mail, and over the Internet. There is no signed sales receipt in all of these types of transactions. This invites the high possibility of chargebacks. Hence, more risk, higher cost than if it was retail.
5. What Kinds Of Typical Startup Costs Can I Expect?
You should expect to invest a startup amount of between $190.00 - $300.00 from most companies in our industry. These amounts can include application, setup, equipment rental lease deposits as well as additional costs for poor credit, higher risk, etc.
6. What About Equipment. What Will It Cost?
This is going to vary depending on the kind of equipment you choose. If you lease your equipment, your payments should range anywhere from $35.00 to $49.00 per month for a complete processing system including a terminal and an automatic printer, and in many cases software. If you are looking to process Online Internet Realtime transactions, and want to add on Shopping Carts, etc, amounts will increase according to the amount of customization you need.
7. Is It Really Necessary To Accept Credit Cards To Be Successful?
Yes, it is. Here are just a few reasons why:
The average cash sale amount is $9.00. The average credit card sale is $40.00. That is a 450% increase per transaction. Is it any wonder why you do not see VISA/MASTERCARD signs disappearing from store windows? This is no different in a home based, and more importantly an Online business.
Another factor is this. Without giving your customers the convenience of accepting payment via credit cards, your sales are going to be far less than your competitors that do accept credit cards. This is a basic fact of business.
The bottom line?... If you are going to be in business, it is vital to the success of your business to offer your customers the convenience of paying by credit cards.
Real-Time Credit Card Transactions
When customers press the 'Purchase' button on an order form, the information is transferred to the server. But, what happens after the server receives the information? The diversity of technical solutions is enormous. The solutions differ by price, security features, level of automation, and many other factors. This article discusses which solutions are better.
The major difference between solutions is real-time processing versus deferred processing. With real-time processing, credit cards are immediately approved and the customer sees the results immediately. With deferred processing, the order is forwarded to the merchant who then processes the order. Both methods have advantages and disadvantages.
Real-Time Processing
The most important advantage of real-time processing is that the customer sees the results immediately. If you sell software or information that you can deliver electronically, this feature is priceless because it lets you fill the order within minutes. This is a strong selling point,and you can conceivably sell more of your product if you can fill your orders immediately. If you have to ship your product through the regular mail, this feature probably won't make any difference.
Real-time processing also makes your customers more confident because they know that their card has been approved. So, if there is a mistake, like a wrong expiration date, they can correct it immediately. Half of the Internet buyers are impulse buyers, and they may not re-order if they are told about the mistake the day after they place their order. However, the probability of this kind of mistake is small. The credit card number is checked by the software, so the customer cannot enter an incorrect number. However, the expiration date and the address can be entered incorrectly in 1-2% of the orders.
The possibility of seeing immediate results may also attract hackers. The hackers may have some incomplete credit card information. For example, they may pick up a discarded credit card slip, which contains almost all of the information they need. They can then use your order form to guess the rest of the information. If you do not give them an answer right away, this will not work. So, real-time processing may have a higher percentage of fraudulent transactions.
If you use real-time processing, you can leave the system unattended. All you need to do is to receive e-mails that will inform you about the orders made and the products sold.
There are two ways to do real-time processing. The most common way is to use processing providers (the largest is CyberCash) who specialize in Internet transactions. These companies usually provide you with a set of scripts to build your storefront so you can easily integrate their processing with your storefront software. However, their services are expensive. You usually have to pay a setup fee between $200 to $800 plus 10 to 30 cents per transaction and/or $20-$50 per month. All of these costs are in addition to your bank charges. This solution is easy to transfer if you change your ISP.
The other solution is to install your own credit card processing software on your server. Most processing software vendors have solutions that let you integrate their processing with your storefront software. If you prefer this solution, you will have to install a modem on your server and connect it to a dedicated phone line. You can expect to pay $50 for a modem (you do not need a fast one) and about $300 to your ISP to install this system. The credit card processing software will cost another $350-400. However, since you paid to have the system installed on your server and bought the processing software, your only recurring cost will be the phone line.
Some Internet Service Providers already have a credit processing software installed on their servers, so you will be able to easily plug in your store. But, you will have to pay about $200 for the setup and a per-transaction or per-month fee for using their system. With this solution, you won't be able to transfer your system if you change your ISP.
If you use real-time processing, make sure that the software does not keep the transaction log on the server, because the log containing all the credit card numbers, may become a target for hackers. If your Internet Service Provider hosts several merchants, it may store thousands of credit card numbers. If hackers break into their system, the merchants will be responsible for card numbers' loss.
Deferred Processing
If you defer credit card processing, you cannot fill the orders immediately. So, this processing method is more suitable for businesses that cannot deliver their goods over the Internet.
The advantage of using deferred processing is that you can inspect your orders manually, and correct them before you ship the order. For example, a customer called you and told you that he is from a non-profit organization, and arranged a 20% discount on his purchase. He can still use the order form, and then you can correct his order. You can do any discounts or surcharges for any orders, or otherwise edit the orders, before you process them. Real-time processing doesn't provide this convenience.
When order cards are processed, the credit card issuer's network may be down. This is especially true, if your customers are in China, Brazil, or other distant countries. In these cases, the credit card processor returns the 'CALL CENTER' answer, which means that you must call the center to authorize the transaction. If you do real-time processing, these transactions will be reported to the customer as declined. Not only do you loose a sale, but the customer may be confused by the answer.
Deferred processing is much cheaper than real-time processing because you do not have to pay anybody for any special processing. All you need is a credit card processing software, which you can buy for $350-400. You can use this software for both Internet and phone orders, which is a big advantage. You do not incur any additional costs for processing. The orders are delivered to you by your storefront software and then processed. However, deferred processing requires daily attention because you need to download your orders and process them every day. This may be just a single mouse click, but it needs your attention every day.
If you use deferred processing, the orders stored on the server must be securely encrypted. If the orders are just e-mailed to you, then anyone with administrative privileges on the server can read the orders and steal card numbers. So, before you use the system, ask your ISP or storefront software vendor how the orders are encrypted to secure the orders against hackers.
It is not easy to decide which method is the best for you because you have to choose a storefront software consider integration issues. at the same time, and We will talk about storefront software in one of our next issues.
The major difference between solutions is real-time processing versus deferred processing. With real-time processing, credit cards are immediately approved and the customer sees the results immediately. With deferred processing, the order is forwarded to the merchant who then processes the order. Both methods have advantages and disadvantages.
Real-Time Processing
The most important advantage of real-time processing is that the customer sees the results immediately. If you sell software or information that you can deliver electronically, this feature is priceless because it lets you fill the order within minutes. This is a strong selling point,and you can conceivably sell more of your product if you can fill your orders immediately. If you have to ship your product through the regular mail, this feature probably won't make any difference.
Real-time processing also makes your customers more confident because they know that their card has been approved. So, if there is a mistake, like a wrong expiration date, they can correct it immediately. Half of the Internet buyers are impulse buyers, and they may not re-order if they are told about the mistake the day after they place their order. However, the probability of this kind of mistake is small. The credit card number is checked by the software, so the customer cannot enter an incorrect number. However, the expiration date and the address can be entered incorrectly in 1-2% of the orders.
The possibility of seeing immediate results may also attract hackers. The hackers may have some incomplete credit card information. For example, they may pick up a discarded credit card slip, which contains almost all of the information they need. They can then use your order form to guess the rest of the information. If you do not give them an answer right away, this will not work. So, real-time processing may have a higher percentage of fraudulent transactions.
If you use real-time processing, you can leave the system unattended. All you need to do is to receive e-mails that will inform you about the orders made and the products sold.
There are two ways to do real-time processing. The most common way is to use processing providers (the largest is CyberCash) who specialize in Internet transactions. These companies usually provide you with a set of scripts to build your storefront so you can easily integrate their processing with your storefront software. However, their services are expensive. You usually have to pay a setup fee between $200 to $800 plus 10 to 30 cents per transaction and/or $20-$50 per month. All of these costs are in addition to your bank charges. This solution is easy to transfer if you change your ISP.
The other solution is to install your own credit card processing software on your server. Most processing software vendors have solutions that let you integrate their processing with your storefront software. If you prefer this solution, you will have to install a modem on your server and connect it to a dedicated phone line. You can expect to pay $50 for a modem (you do not need a fast one) and about $300 to your ISP to install this system. The credit card processing software will cost another $350-400. However, since you paid to have the system installed on your server and bought the processing software, your only recurring cost will be the phone line.
Some Internet Service Providers already have a credit processing software installed on their servers, so you will be able to easily plug in your store. But, you will have to pay about $200 for the setup and a per-transaction or per-month fee for using their system. With this solution, you won't be able to transfer your system if you change your ISP.
If you use real-time processing, make sure that the software does not keep the transaction log on the server, because the log containing all the credit card numbers, may become a target for hackers. If your Internet Service Provider hosts several merchants, it may store thousands of credit card numbers. If hackers break into their system, the merchants will be responsible for card numbers' loss.
Deferred Processing
If you defer credit card processing, you cannot fill the orders immediately. So, this processing method is more suitable for businesses that cannot deliver their goods over the Internet.
The advantage of using deferred processing is that you can inspect your orders manually, and correct them before you ship the order. For example, a customer called you and told you that he is from a non-profit organization, and arranged a 20% discount on his purchase. He can still use the order form, and then you can correct his order. You can do any discounts or surcharges for any orders, or otherwise edit the orders, before you process them. Real-time processing doesn't provide this convenience.
When order cards are processed, the credit card issuer's network may be down. This is especially true, if your customers are in China, Brazil, or other distant countries. In these cases, the credit card processor returns the 'CALL CENTER' answer, which means that you must call the center to authorize the transaction. If you do real-time processing, these transactions will be reported to the customer as declined. Not only do you loose a sale, but the customer may be confused by the answer.
Deferred processing is much cheaper than real-time processing because you do not have to pay anybody for any special processing. All you need is a credit card processing software, which you can buy for $350-400. You can use this software for both Internet and phone orders, which is a big advantage. You do not incur any additional costs for processing. The orders are delivered to you by your storefront software and then processed. However, deferred processing requires daily attention because you need to download your orders and process them every day. This may be just a single mouse click, but it needs your attention every day.
If you use deferred processing, the orders stored on the server must be securely encrypted. If the orders are just e-mailed to you, then anyone with administrative privileges on the server can read the orders and steal card numbers. So, before you use the system, ask your ISP or storefront software vendor how the orders are encrypted to secure the orders against hackers.
It is not easy to decide which method is the best for you because you have to choose a storefront software consider integration issues. at the same time, and We will talk about storefront software in one of our next issues.
Accepting Credit Cards Online
Accepting online credit card orders is a must for everyone who does business on the Internet. If you do not accept credit card orders you could lose at least 85% of your potential orders. Most online businesses report that 95% of their orders are through online order forms.
Accepting online credit card orders is easier than it appears. To accept online credit card orders, you need three basic things:
Merchant Account
Software
Internet Service Provider
Merchant Account:
A Merchant account is a special account that you have with a financial institution in order to accept credit cards. Even if you already accept credit cards for your offline transactions, that may not be enough. Credit card companies consider Internet transactions to be riskier than other standard transactions; so, not all accounts permit Internet transactions. If your current account does not allow Internet transactions, you have to contact your financial institution to correct this.
There are many brokers available who can open a Merchant account for you. Their conditions for opening an account may vary drastically, which can make it difficult for you to decide which account is best for you. Most brokers will offer to sell or lease expensive equipment to you, when they open your account. Do not be fooled; That is how they make their money. You do not need any software or equipment to open a Merchant account. . To open an account, all you should have to do is pay is processing fee, which should not be more than $100. That should be enough for you to start accepting credit cards.
To maintain your merchant account, you must pay the following monthly fees:
Discount fee - For Internet sales, this fee should be between 2.5% and 2.9%. You should be suspicious of any discount rate that is less than that.
Transaction fee - This fee should be between $0.20 and $0.30 per transaction.
Address Verification Fee (AVS) - This fee should be $0.05 per transaction. Some (very rare) financial institutions may not require this service, but it is a must for you because it helps to prevent fraud.
Statement fee - This fee is usually between $10 and $15 per month.
For example, if you sell software applications for $20 , and you sell 20 applications per month, your fees are only $25-30 per month, which is approximately 7%. So, even with a small sales volume of $400 per month a Merchant account is not expensive. We will discuss how to select the best account in one of the next issues of our newsletter.
Software:
Most brokers who open Merchant accounts offer software or hardware to process credit cards. If you want to accept credit cards over the Internet, you need a software solution, not a hardware solution. Even though a hardware solution saves you $50-$100, you will have to enter all your transactions manually. With a software solution, you will never have to enter your transactions manually.
Be aware! Some brokers offer software solutions for as high as $2,000, which is way overpriced. The software should cost about $400. Sometimes, brokers may also offer you programming or software setup services at an additional cost. Do not pay for these services. All of the software comes with technical support from the manufacturers, and the bank will give you all the information you need.
Instead of selling you a processing software, you may be offered a processing software lease at a certain price per month. The lease may seem like a good solution, but it's not. For example, if you pay $29.95 during 3 years (sometimes 4), you will pay $1,078.20. Isn't that too much to pay for $400 software?
You don't have to lease or buy your own software if you decide to do real-time processing by plugging into an Internet Service Provider (ISP) that has the processing software on its server. However, you may end up spending too much on an ISP. You must calculate all of the costs and benefits carefully before making that decision.
Internet Service Provider:
Choosing an Internet Service Provider (ISP) is not easy. Some providers will provide you full service and all of the software to process your credit card orders, while others will provide only basic services. Some providers will charge $150-200 per month, or even more, while others will charge $9.95 per month.
What are the basic things that you need from an ISP? The first thing you need is a Secure Server. Many people believe that you must have a Secure Server for security and they will not place an order unless you have a Secure Server. Yet, a Secure Server is not expensive. You do not have to pay $100 a month to use a Secure Server. Many ISPs provide this server for free. In any case, you should never pay more than $10 per month for this service. The best way for you to gain access to a Secure Server is through the ISP that hosts your Web site, which is usually the least expensive; however, you may use any ISP that you want. If you have your own domain name and you want to use it as a secure server, you must buy your own certificate, which costs between $100 and $350 per year. We will discuss Secure Servers and certificates in detail in the next issue of our newsletter.
After you have your Secure Server running, you need the software to display order forms, store orders etc. You can use anything from homemade scripts to sophisticated shopping carts. The price for this kind of software ranges from $30 to $20,000, or more. The price depends on what you need. There are thousands of products available, which makes choosing the right product for your needs very difficult. When we were looking for a software to process our orders, we did not find a product that would meet our needs, so we developed our own software, and we are planning to make it available by the end of 1998.
However, you do not have to have any software to process your orders. You can easily find an ISP that will process your orders for you, but it will cost you more money. Instead of paying $20-30 per month for an excellent Web Site with a Secure Server, you may have to pay $100-200 per month. This processing service is a waste of money. For example, if you buy a software for $500 and then only pay your ISP $20 per month for Secure Server services instead of paying $100 per month for Secure Server and processing services, your initial software investment will be paid off in six month, and the software is yours. That way, if you decide to change your ISP, you will not have to invest again.
There are two methods that you can use to process credit card orders. The method you use depends on what happens when the customer presses the 'Purchase' button on the form. With the first method, the credit card is authorized immediately and the customer receives an immediate answer. With the second method, the information is delivered to you, so that you can process the order later. Both methods have their advantages and disadvantages; however, they are not in the scope of this article. We will discuss these topics in one of the next issues of our newsletter.
Accepting online credit card orders is easier than it appears. To accept online credit card orders, you need three basic things:
Merchant Account
Software
Internet Service Provider
Merchant Account:
A Merchant account is a special account that you have with a financial institution in order to accept credit cards. Even if you already accept credit cards for your offline transactions, that may not be enough. Credit card companies consider Internet transactions to be riskier than other standard transactions; so, not all accounts permit Internet transactions. If your current account does not allow Internet transactions, you have to contact your financial institution to correct this.
There are many brokers available who can open a Merchant account for you. Their conditions for opening an account may vary drastically, which can make it difficult for you to decide which account is best for you. Most brokers will offer to sell or lease expensive equipment to you, when they open your account. Do not be fooled; That is how they make their money. You do not need any software or equipment to open a Merchant account. . To open an account, all you should have to do is pay is processing fee, which should not be more than $100. That should be enough for you to start accepting credit cards.
To maintain your merchant account, you must pay the following monthly fees:
Discount fee - For Internet sales, this fee should be between 2.5% and 2.9%. You should be suspicious of any discount rate that is less than that.
Transaction fee - This fee should be between $0.20 and $0.30 per transaction.
Address Verification Fee (AVS) - This fee should be $0.05 per transaction. Some (very rare) financial institutions may not require this service, but it is a must for you because it helps to prevent fraud.
Statement fee - This fee is usually between $10 and $15 per month.
For example, if you sell software applications for $20 , and you sell 20 applications per month, your fees are only $25-30 per month, which is approximately 7%. So, even with a small sales volume of $400 per month a Merchant account is not expensive. We will discuss how to select the best account in one of the next issues of our newsletter.
Software:
Most brokers who open Merchant accounts offer software or hardware to process credit cards. If you want to accept credit cards over the Internet, you need a software solution, not a hardware solution. Even though a hardware solution saves you $50-$100, you will have to enter all your transactions manually. With a software solution, you will never have to enter your transactions manually.
Be aware! Some brokers offer software solutions for as high as $2,000, which is way overpriced. The software should cost about $400. Sometimes, brokers may also offer you programming or software setup services at an additional cost. Do not pay for these services. All of the software comes with technical support from the manufacturers, and the bank will give you all the information you need.
Instead of selling you a processing software, you may be offered a processing software lease at a certain price per month. The lease may seem like a good solution, but it's not. For example, if you pay $29.95 during 3 years (sometimes 4), you will pay $1,078.20. Isn't that too much to pay for $400 software?
You don't have to lease or buy your own software if you decide to do real-time processing by plugging into an Internet Service Provider (ISP) that has the processing software on its server. However, you may end up spending too much on an ISP. You must calculate all of the costs and benefits carefully before making that decision.
Internet Service Provider:
Choosing an Internet Service Provider (ISP) is not easy. Some providers will provide you full service and all of the software to process your credit card orders, while others will provide only basic services. Some providers will charge $150-200 per month, or even more, while others will charge $9.95 per month.
What are the basic things that you need from an ISP? The first thing you need is a Secure Server. Many people believe that you must have a Secure Server for security and they will not place an order unless you have a Secure Server. Yet, a Secure Server is not expensive. You do not have to pay $100 a month to use a Secure Server. Many ISPs provide this server for free. In any case, you should never pay more than $10 per month for this service. The best way for you to gain access to a Secure Server is through the ISP that hosts your Web site, which is usually the least expensive; however, you may use any ISP that you want. If you have your own domain name and you want to use it as a secure server, you must buy your own certificate, which costs between $100 and $350 per year. We will discuss Secure Servers and certificates in detail in the next issue of our newsletter.
After you have your Secure Server running, you need the software to display order forms, store orders etc. You can use anything from homemade scripts to sophisticated shopping carts. The price for this kind of software ranges from $30 to $20,000, or more. The price depends on what you need. There are thousands of products available, which makes choosing the right product for your needs very difficult. When we were looking for a software to process our orders, we did not find a product that would meet our needs, so we developed our own software, and we are planning to make it available by the end of 1998.
However, you do not have to have any software to process your orders. You can easily find an ISP that will process your orders for you, but it will cost you more money. Instead of paying $20-30 per month for an excellent Web Site with a Secure Server, you may have to pay $100-200 per month. This processing service is a waste of money. For example, if you buy a software for $500 and then only pay your ISP $20 per month for Secure Server services instead of paying $100 per month for Secure Server and processing services, your initial software investment will be paid off in six month, and the software is yours. That way, if you decide to change your ISP, you will not have to invest again.
There are two methods that you can use to process credit card orders. The method you use depends on what happens when the customer presses the 'Purchase' button on the form. With the first method, the credit card is authorized immediately and the customer receives an immediate answer. With the second method, the information is delivered to you, so that you can process the order later. Both methods have their advantages and disadvantages; however, they are not in the scope of this article. We will discuss these topics in one of the next issues of our newsletter.
Ecommerce Solutions Compared
There are dozens, perhaps hundreds of businesses and organizations eager to assist you sell your product online. Basically, they fall into four categories: credit card transactions, digital cash transactions, electronic fund transfers and telephone billing systems. No solution is perfect and each comes with its own set of pros and cons. The right choice for you depends upon your specific business requirements.
1. Merchant Internet Accounts.
If you have a merchant status, you will need to consider the following factors:Pros:
Consumers are familiar with credit cards
With credit card transactions, consumers don’t have to download and install special plugins.
Credit card sales lends itself to impulse buying.
You have the customers' contact information for follow up sales and marketing purposes. (This is a pro for the merchant but a con from the point of view of many customers, who prefer anonymity.)
Cons:
Consumers still have concerns regarding providing financial information online.
Not everyone has a credit card.
This method does not lend itself well to the purchase of down loadable soft goods, such as software, art, graphics, etc. Vendors wanting to sell down loadable soft goods will will need to find a way to ensure the product is paid for, once downloaded.
You will have to deal with chargebacks.
If you can’t or won’t get a merchant account through your regular banking institution, you still have the broker option open to you. Brokers can often arrange merchant accounts for businesses who are deemed high risk. Setup fees and discount fees apply.
2. Electronic Cash Transactions
Electronic money is an arrangement whereby the customer pays for the merchandise using, well, electronic money. Examples of this are the well known DigiCash, Cyberbucks, CyberCash, etc. As consumers become more comfortable providing credit card information over the Net, these methods are less utilized.
The Pros
No credit card transactions are required.
No concerns re chargebacks.
Lends itself well to micropayments.
Cons
Many people are unfamiliar with the concept and shy away from unknown entities.
The process is perceived as "a hassle" to some shoppers who prefer to simply give credit card information.
Both merchant and customer must be participating in the same scheme before this method of ecom can be used.
Eliminates the possibility of impulse buying, unless both customer and merchant are already in same scheme.
May not be available globally.
Check out Digicash and Cybercash
3. Electronic Fund Transfers
Funds are transferred electronically from the customers bank account to yours. (This is a highly simplified explanation, and is accurate in the most general sort of way. However, the bottom line is that the customer buys, and at some point the funds are removed from his or her account and ultimately deposited into yours.)
The best known method is the issuing of electronic checks
Customers pay for merchandise by writing an electronic check that is transmitted by email, fax or phone. The "check" is a message that contains all of the information that is found on an ordinary check, but it is signed digitally, or indorsed. The digital signature is encoded by encrypting with the customer’s secret key. Upon receipt, the merchant or "payee" may further indorse by encoding with a private key. When the cheque is processed, the resulting message is encoded with the bank’s secret key, thus providing proof of payment.
NetCheck or Cybank are examples.
Pros
No credit card worries
Available to persons who don’t have credit cards
Cons
A very new technology that some perceive as being less secure than other forms of ecommerce.
Many customers aren’t set up to issue electronic cheques; time required to make the arrangements eliminates impulse buying.
May not be available to international consumers.
4. Telephone Billing Systems
A very new approach, telephone transactions allow the customer to purchase an item or service, and the amount is billed to his or her telephone bill. To date, this is being used for the sale of soft items such as downloads, time measured services (i.e. time spent at a Web site) or for making charitable donations online. eCharge Corporation is a pioneer in the use of this technology.
Pros
Eliminates worries about credit cards (for both consumer and merchant)
Safeguards soft merchandise – no possibility of theft or pirating.
Available to customers without credit cards
Coverage includes the US and points in Europe. Canadian coverage is expected soon.
Cons
Customer is required to download and install a plugin.
Currently only available for soft merchandise but can do some limited transactions for hard goods.
Not currently available for Mac users.
Currently available for sales using telephone modems, and will not work for transactions over cable modems and ISDN lines.
5. One-Stop Shops
More recently, with the huge interest shown in ecommerce, a multitude of services and products have become available. It's now a possibility to find a service that will broker your Internet Merchant Account, as well as providing web site storage, a template for designing your site, shopping cart software, a form generator, a secure line for safe online ordering, and more. IBM, ICAT and Vantage are examples of businesses offering these all-encompassing services. They are excellent starting points for the entrepreneur who wants to delve into ecommerce.
1. Merchant Internet Accounts.
If you have a merchant status, you will need to consider the following factors:Pros:
Consumers are familiar with credit cards
With credit card transactions, consumers don’t have to download and install special plugins.
Credit card sales lends itself to impulse buying.
You have the customers' contact information for follow up sales and marketing purposes. (This is a pro for the merchant but a con from the point of view of many customers, who prefer anonymity.)
Cons:
Consumers still have concerns regarding providing financial information online.
Not everyone has a credit card.
This method does not lend itself well to the purchase of down loadable soft goods, such as software, art, graphics, etc. Vendors wanting to sell down loadable soft goods will will need to find a way to ensure the product is paid for, once downloaded.
You will have to deal with chargebacks.
If you can’t or won’t get a merchant account through your regular banking institution, you still have the broker option open to you. Brokers can often arrange merchant accounts for businesses who are deemed high risk. Setup fees and discount fees apply.
2. Electronic Cash Transactions
Electronic money is an arrangement whereby the customer pays for the merchandise using, well, electronic money. Examples of this are the well known DigiCash, Cyberbucks, CyberCash, etc. As consumers become more comfortable providing credit card information over the Net, these methods are less utilized.
The Pros
No credit card transactions are required.
No concerns re chargebacks.
Lends itself well to micropayments.
Cons
Many people are unfamiliar with the concept and shy away from unknown entities.
The process is perceived as "a hassle" to some shoppers who prefer to simply give credit card information.
Both merchant and customer must be participating in the same scheme before this method of ecom can be used.
Eliminates the possibility of impulse buying, unless both customer and merchant are already in same scheme.
May not be available globally.
Check out Digicash and Cybercash
3. Electronic Fund Transfers
Funds are transferred electronically from the customers bank account to yours. (This is a highly simplified explanation, and is accurate in the most general sort of way. However, the bottom line is that the customer buys, and at some point the funds are removed from his or her account and ultimately deposited into yours.)
The best known method is the issuing of electronic checks
Customers pay for merchandise by writing an electronic check that is transmitted by email, fax or phone. The "check" is a message that contains all of the information that is found on an ordinary check, but it is signed digitally, or indorsed. The digital signature is encoded by encrypting with the customer’s secret key. Upon receipt, the merchant or "payee" may further indorse by encoding with a private key. When the cheque is processed, the resulting message is encoded with the bank’s secret key, thus providing proof of payment.
NetCheck or Cybank are examples.
Pros
No credit card worries
Available to persons who don’t have credit cards
Cons
A very new technology that some perceive as being less secure than other forms of ecommerce.
Many customers aren’t set up to issue electronic cheques; time required to make the arrangements eliminates impulse buying.
May not be available to international consumers.
4. Telephone Billing Systems
A very new approach, telephone transactions allow the customer to purchase an item or service, and the amount is billed to his or her telephone bill. To date, this is being used for the sale of soft items such as downloads, time measured services (i.e. time spent at a Web site) or for making charitable donations online. eCharge Corporation is a pioneer in the use of this technology.
Pros
Eliminates worries about credit cards (for both consumer and merchant)
Safeguards soft merchandise – no possibility of theft or pirating.
Available to customers without credit cards
Coverage includes the US and points in Europe. Canadian coverage is expected soon.
Cons
Customer is required to download and install a plugin.
Currently only available for soft merchandise but can do some limited transactions for hard goods.
Not currently available for Mac users.
Currently available for sales using telephone modems, and will not work for transactions over cable modems and ISDN lines.
5. One-Stop Shops
More recently, with the huge interest shown in ecommerce, a multitude of services and products have become available. It's now a possibility to find a service that will broker your Internet Merchant Account, as well as providing web site storage, a template for designing your site, shopping cart software, a form generator, a secure line for safe online ordering, and more. IBM, ICAT and Vantage are examples of businesses offering these all-encompassing services. They are excellent starting points for the entrepreneur who wants to delve into ecommerce.
Facts About Accepting Credit Cards Online
Before you can accept credit cards (either online or offline), you must have a Merchant Account, which is a special arrangement with a banking institution. Small and home businesses often experience difficulties qualifying for a merchant account, and Web based businesses run into even more problems.
The situation is this: Online transactions don’t take place at the point of sale (POS). They are considered to be "non-face-to-face" transactions. Since there is no way of ascertaining the customer’s identification, there is no way to be sure that the customer is the legitimate card holder. Therefore, financial institutions are leery about the high potential for fraud.
Moreover, the major credit card companies offer their card holders the right to contest charges on their statements that may be the result of theft, fraud or error. A contested charge is referred to as a chargeback. When a chargeback occurs, merchant will end up paying the charge to the issuing bank, in addition to a chargeback fee that can be as high as $30 or more. For example, if you sell a book for $20 through a credit card transaction, and the cardholder later contests the sale, you will end up paying your bank the $20 PLUS a chargeback fee of $10 to $30 dollars.
Consequently, many banks require a reserve fee when issuing merchant status. Typically, face to face sales have a chargeback rate of 1% of all sales. The potential for chargebacks is greater when it is an online sale, so the risk to both bank and merchant increases.
To minimize their risks, most banks have stringent requirements that a business must meet to establish eligibility for merchant status. Factors considered include cash reserves, length of time in business, tax returns, credit history, debt load, refund policies, volume of business, cost of item being sold, and other sources of income.
High Risk Processors are merchant acquirers that specialize in high risk business. They offset their risks by charging you higher transaction fees and higher rates. In the US, the Electronic Card Systems Inc. and Card Service International are two of the better known examples. Merchants living outside the US will be required to find a service that works with their own banking institutions.
Other Associated Expenses
The chargeback expense is the first and foremost concern for a merchant hoping to acquire a merchant account. Chargebacks can result in serious financial loss to the would-be merchant. Also, merchants who encounter too many chargebacks are at risk of losing their merchant account.
However, there are other charges and expenses to factor into the budget as well. Merchants will need to investigate hidden equipment costs, setup fees, line charges, bank transactions fees, holdbacks, and discount rates, etc. These vary considerably among service providers, so compare, compare, compare!
The situation is this: Online transactions don’t take place at the point of sale (POS). They are considered to be "non-face-to-face" transactions. Since there is no way of ascertaining the customer’s identification, there is no way to be sure that the customer is the legitimate card holder. Therefore, financial institutions are leery about the high potential for fraud.
Moreover, the major credit card companies offer their card holders the right to contest charges on their statements that may be the result of theft, fraud or error. A contested charge is referred to as a chargeback. When a chargeback occurs, merchant will end up paying the charge to the issuing bank, in addition to a chargeback fee that can be as high as $30 or more. For example, if you sell a book for $20 through a credit card transaction, and the cardholder later contests the sale, you will end up paying your bank the $20 PLUS a chargeback fee of $10 to $30 dollars.
Consequently, many banks require a reserve fee when issuing merchant status. Typically, face to face sales have a chargeback rate of 1% of all sales. The potential for chargebacks is greater when it is an online sale, so the risk to both bank and merchant increases.
To minimize their risks, most banks have stringent requirements that a business must meet to establish eligibility for merchant status. Factors considered include cash reserves, length of time in business, tax returns, credit history, debt load, refund policies, volume of business, cost of item being sold, and other sources of income.
High Risk Processors are merchant acquirers that specialize in high risk business. They offset their risks by charging you higher transaction fees and higher rates. In the US, the Electronic Card Systems Inc. and Card Service International are two of the better known examples. Merchants living outside the US will be required to find a service that works with their own banking institutions.
Other Associated Expenses
The chargeback expense is the first and foremost concern for a merchant hoping to acquire a merchant account. Chargebacks can result in serious financial loss to the would-be merchant. Also, merchants who encounter too many chargebacks are at risk of losing their merchant account.
However, there are other charges and expenses to factor into the budget as well. Merchants will need to investigate hidden equipment costs, setup fees, line charges, bank transactions fees, holdbacks, and discount rates, etc. These vary considerably among service providers, so compare, compare, compare!
Beginner's Guide to Ecommerce
Whether you call it Internet commerce, or ecom, or ecommerce, or immerce, it basically means the same thing. These terms mean buying or selling something electronically, and the time has never been better to jump in. If you have something you'd like to sell on the Net, new technologies have opened up an array of ecom options -- there's one to suit every need and requirement. Most importantly, ecom is safe. Experts tell us that online transactions are every bit as safe as face to face transactions-- although neither can be guaranteed to be 100% risk free. You're just as likely to be mugged on your way to the Bank Machine as you are to run into security problems with Internet commerce!
But ecommerce can be a confusing subject and many of us need a little help sorting it all out. If some of the jargon is confusing you, read on and I’ll explain some of the basic concepts. This document contains three categories of information:
Definition of Terms
Facts About Accepting Credit Cards Online
Ecommerce Solutions Compared
Definitions
Commerce Service Providers (CSP)
CSPs are business or web sites that provide ecommerce solutions.
Digital or Electronic Cash or E-cash or Ecash or Digital Money
These terms are also used interchangeably, and they refer to any of the various methods that allow a person to purchase goods or services by transmitting a number from one computer to another. The numbers are issued by a bank and represent sums of real money. Digital cash is anonymous and reusable. Unlike credit card transactions, the merchant does not know the identity of the shopper. Yahoo’s Listing of Companies Providing Digital Cash Cybercash and Digicash are two well known methods.
Electronic Checks or Cheques
Customers pay for merchandise by writing an electronic check that is transmitted electronically by email, fax or phone. The "cheque" is a message that contains all of the information that is found on an ordinary cheque, but it is signed digitally, or indorsed. The digital signature is encoded by encrypting with the customer’s secret key. Upon receipt, the merchant or "payee" may further indorse by encoding with a private key. When the cheque is processed, the resulting message is encoded with the bank’s secret key, thus providing proof of payment.
Various companies are selling Electronic Check software and services.
Electronic Wallet
Electronic Wallets store your credit card numbers on your hard drive in an encrypted form. You then make purchases at Web sites that support that particular type of electronic wallet . By clicking on a Pay Button, customers initiate a credit card payment via a secure transaction enabled by the electronic wallet company’s server.
Electronic Commerce or Ecom or Emmerce or EC
These terms are used interchangeably, and they all mean the same thing — the paperless exchange of routine business information using Electronic Data Interchange (EDI) , email, electronic bulletin boards, fax transmissions and Electronic Funds Transfer. It refers to Internet shopping, online stock and bond transactions, the downloading and selling of "soft merchandise" (software, documents, graphics, music, etc.), and business to business transactions.
Extranet
An extranet is an extension of a corporate intranet. It connects the internal network of one company with the intranets of its customers and suppliers. This makes it possible to create e-commerce applications that link all aspects of a business relationship, from ordering to payment.
Disintermediation
Disintermediation is the process of bypassing retail channels or mail order houses and selling directly to the customer.
Hard Goods vs Soft Goods
Hard Goods are items that exist in the real world, as opposed to soft goods, which exist virtually or electronically. For instance, an Internet merchant selling a book that is shipped to the customer in a print version is selling hard goods; a merchant offering a book for download in electronic format is selling soft goods.
High Risk Processors
High risk processors (or brokers) are financial institutions or companies that that issue merchant status accounts to high risk businesses. They offset their risks by charging higher transaction fees and higher rates than traditional banks do. However, the initial outlay of cash that you will be required to put up is usually much less than the large deposits required by traditional banking institutions. Some brokers may offer other added features such as shopping cart software, web site templates, forms or secure lines for ordering.
Immerce
Immerce is the new term being used for commerce that is transacted totally over the Internet.
Merchant Account
A Merchant Account is a relationship between a business (i.e. a merchant) and a merchant bank which allows the retailer or merchant to accept credit card payments from customers. Many banks or financial institutions, especially in Canada, have stiff requirements and regulations regarding the issuing of a merchant account. Many small or home based businesses report that they have great (sometimes insurmountable) difficulties acquiring Merchant Status. If Merchant Status is obtained, the merchant then rents or buys special software that is used to process the transaction. In some cases, depending on the bank and depending on the type of business that you are operating, you will also need to purchase or rent a piece of hardware known as a processing terminal.
An Internet Merchant Account is a special account that permits the acceptance of credit cards online. Transactions are processed online, in real time. While the customer waits, the system checks the credit card to be sure that it has not been reported stolen, has not expired, and is listed to the same address that the customer has given. If the card is approved, the customer and the merchant are both automatically notified that the sale has transpired. This type of account is a stricter banking relationship than one involving face-to-face transactions. Web transactions do not gather signatures from purchasers and therefore there is a higher risk of fraud.
Merchant Brokers specialize in obtaining credit card accounts for online businesses. Brokers charge a setup fee and lease or sell the software and hardware as needed. Expect to pay a discount rate, which is the percentage you pay for each transaction processed, as well as various other charges that differ among services. If obtaining a merchant account through a traditional bank is proving to be a problem, merchant brokers are a good alternative. Yahoo’s List of Credit Card Merchant Services
Microtransactions or Micropayments
Microtransactions are transactions of tiny amounts – a few cents or a few dollars, typically made in order to download or access graphics, games, and information.
Phonecash
Still under development at the time of this writing, Phonecash allows customers who prefer not to use credit cards to buy items on-line by having the value of the purchase transferred from their account to another account within the Internet Banking System. For details, visit Cybank
Telephone Billing Systems
A very new approach, telephone transactions allow the customer to purchase an item or service, and the amount will be billed to his or her telephone bill. To date, this is being used for soft items such as downloads, time measured services (i.e. time spent at a Web site) or for making charitable donations online.
But ecommerce can be a confusing subject and many of us need a little help sorting it all out. If some of the jargon is confusing you, read on and I’ll explain some of the basic concepts. This document contains three categories of information:
Definition of Terms
Facts About Accepting Credit Cards Online
Ecommerce Solutions Compared
Definitions
Commerce Service Providers (CSP)
CSPs are business or web sites that provide ecommerce solutions.
Digital or Electronic Cash or E-cash or Ecash or Digital Money
These terms are also used interchangeably, and they refer to any of the various methods that allow a person to purchase goods or services by transmitting a number from one computer to another. The numbers are issued by a bank and represent sums of real money. Digital cash is anonymous and reusable. Unlike credit card transactions, the merchant does not know the identity of the shopper. Yahoo’s Listing of Companies Providing Digital Cash Cybercash and Digicash are two well known methods.
Electronic Checks or Cheques
Customers pay for merchandise by writing an electronic check that is transmitted electronically by email, fax or phone. The "cheque" is a message that contains all of the information that is found on an ordinary cheque, but it is signed digitally, or indorsed. The digital signature is encoded by encrypting with the customer’s secret key. Upon receipt, the merchant or "payee" may further indorse by encoding with a private key. When the cheque is processed, the resulting message is encoded with the bank’s secret key, thus providing proof of payment.
Various companies are selling Electronic Check software and services.
Electronic Wallet
Electronic Wallets store your credit card numbers on your hard drive in an encrypted form. You then make purchases at Web sites that support that particular type of electronic wallet . By clicking on a Pay Button, customers initiate a credit card payment via a secure transaction enabled by the electronic wallet company’s server.
Electronic Commerce or Ecom or Emmerce or EC
These terms are used interchangeably, and they all mean the same thing — the paperless exchange of routine business information using Electronic Data Interchange (EDI) , email, electronic bulletin boards, fax transmissions and Electronic Funds Transfer. It refers to Internet shopping, online stock and bond transactions, the downloading and selling of "soft merchandise" (software, documents, graphics, music, etc.), and business to business transactions.
Extranet
An extranet is an extension of a corporate intranet. It connects the internal network of one company with the intranets of its customers and suppliers. This makes it possible to create e-commerce applications that link all aspects of a business relationship, from ordering to payment.
Disintermediation
Disintermediation is the process of bypassing retail channels or mail order houses and selling directly to the customer.
Hard Goods vs Soft Goods
Hard Goods are items that exist in the real world, as opposed to soft goods, which exist virtually or electronically. For instance, an Internet merchant selling a book that is shipped to the customer in a print version is selling hard goods; a merchant offering a book for download in electronic format is selling soft goods.
High Risk Processors
High risk processors (or brokers) are financial institutions or companies that that issue merchant status accounts to high risk businesses. They offset their risks by charging higher transaction fees and higher rates than traditional banks do. However, the initial outlay of cash that you will be required to put up is usually much less than the large deposits required by traditional banking institutions. Some brokers may offer other added features such as shopping cart software, web site templates, forms or secure lines for ordering.
Immerce
Immerce is the new term being used for commerce that is transacted totally over the Internet.
Merchant Account
A Merchant Account is a relationship between a business (i.e. a merchant) and a merchant bank which allows the retailer or merchant to accept credit card payments from customers. Many banks or financial institutions, especially in Canada, have stiff requirements and regulations regarding the issuing of a merchant account. Many small or home based businesses report that they have great (sometimes insurmountable) difficulties acquiring Merchant Status. If Merchant Status is obtained, the merchant then rents or buys special software that is used to process the transaction. In some cases, depending on the bank and depending on the type of business that you are operating, you will also need to purchase or rent a piece of hardware known as a processing terminal.
An Internet Merchant Account is a special account that permits the acceptance of credit cards online. Transactions are processed online, in real time. While the customer waits, the system checks the credit card to be sure that it has not been reported stolen, has not expired, and is listed to the same address that the customer has given. If the card is approved, the customer and the merchant are both automatically notified that the sale has transpired. This type of account is a stricter banking relationship than one involving face-to-face transactions. Web transactions do not gather signatures from purchasers and therefore there is a higher risk of fraud.
Merchant Brokers specialize in obtaining credit card accounts for online businesses. Brokers charge a setup fee and lease or sell the software and hardware as needed. Expect to pay a discount rate, which is the percentage you pay for each transaction processed, as well as various other charges that differ among services. If obtaining a merchant account through a traditional bank is proving to be a problem, merchant brokers are a good alternative. Yahoo’s List of Credit Card Merchant Services
Microtransactions or Micropayments
Microtransactions are transactions of tiny amounts – a few cents or a few dollars, typically made in order to download or access graphics, games, and information.
Phonecash
Still under development at the time of this writing, Phonecash allows customers who prefer not to use credit cards to buy items on-line by having the value of the purchase transferred from their account to another account within the Internet Banking System. For details, visit Cybank
Telephone Billing Systems
A very new approach, telephone transactions allow the customer to purchase an item or service, and the amount will be billed to his or her telephone bill. To date, this is being used for soft items such as downloads, time measured services (i.e. time spent at a Web site) or for making charitable donations online.
Merchant Account Basics
Boost Your Business With A Merchant Account
It's a fact. Companies who accept credit card payments for goods and services tend to generate higher revenues than those who only accept cash. According to industry statistics, the average credit card sale is $40 versus just $9 for the average cash sale.* If that isn't enticement enough, consider the disadvantage you may face if competitors offer credit card payment options and you do not.
"These days, the credit card payment option is a must, whether you have a physical retail outlet, take telephone orders or sell products over the Internet," says Diann Joblonski, a relationship manager, at Michigan Bankard Services, a leading merchant card processor serving over 30,000 businesses nationwide. Besides the potential revenue boost, credit cards may well be a cheaper alternative to cash and checks. In a case study prepared by Coopers & Lybrand, credit card processing costs average 2.7% of any transaction, checks 4.0% and cash 4.8%.** These figures make sense when you consider how many times paper money and coins must be counted and recounted by different individuals. While each business would vary in that respect, cash and checks still require more handling than plastic alternatives.
Establishing A Merchant Account
To offer the credit card payment option, you need to set up a merchant account-a bank account established by your company to receive the proceeds of credit card purchases. Typically, along with the account, you will also need to lease equipment and software to facilitate the transactions and ensure payments flow to your operating account. The process is slightly more complicated if you wish to accept credit cards online. In particular, you will need to sign-up with a payment gateway such as CyberCash or VirtualNet. These services allow for real-time credit card authorization for online transactions. It is essential that the payment gateway you choose is compatible with your software and financial institution so transactions flow properly.
Any number of financial institutions offer merchant accounts, but you should look for a provider who has demonstrated expertise in working specifically with small and growing businesses. These organizations can often structure accounts faster and at better rates than those who cater to larger companies. As you shop around, you should also look for institutions that work with customers to combat fraud and reduce chargebacks. And if you are conducting online transactions, you will want to work with a provider who has expertise in setting up and processing Internet merchant accounts.
The next step is the application process which can take anywhere from 48 hours to two weeks or more. Your chances of being approved relate to the nature of your business and the credit rating of your business and/or its principal owner(s). While existing retail establishments are the easiest to be approved, mail order and Internet businesses, with their higher rates of chargebacks and fraud, pose more of a challenge. "We look at the merchant, the nature of the business or the product, the refund policy, and the business financials or a sole proprietor's own credit history," states Joblonski. The cost of a merchant account will vary based on the perceived risk a business poses.
A Word About Costs
As you shop for a merchant account provider, you should be mindful of the costs involved with establishing and processing a merchant account. "You can expect to pay between $190 to $300 in start-up costs which includes the application, setup and equipment and rental lease deposits," notes Joblonski. Processing fees can range from around 2.0% of annual sales volume for a retail establishment to 2.75% of annual sales volume for online transactions. Additional fees may also apply. Ask your merchant account provider for a complete list of fees so there are no surprises.
Putting It All Together
Congratulations, you can now accept credit card transactions. But are you maximizing the benefits of those proceeds? Maybe not, if those funds are being routed to a bank account that pays no interest on that money. Worse yet, you may have to wait a full month to get details on those credit card transactions, and have to pay for the privilege.
Is there a better way? Yes. Some financial institutions specialize in providing value-added merchant account services. For example, OneCore, a leading provider of online financial services for small business, pays money market rates on credit card proceeds. You can also view batch transactions (and transaction details) online by the next business day, free of charge.
*Source: "Jumping Through the Merchant Account Hoops," Khera Communications.** Source: United States Postal Service, Coopers & Lybrand as quoted in Credit Card Management, August 1997.
It's a fact. Companies who accept credit card payments for goods and services tend to generate higher revenues than those who only accept cash. According to industry statistics, the average credit card sale is $40 versus just $9 for the average cash sale.* If that isn't enticement enough, consider the disadvantage you may face if competitors offer credit card payment options and you do not.
"These days, the credit card payment option is a must, whether you have a physical retail outlet, take telephone orders or sell products over the Internet," says Diann Joblonski, a relationship manager, at Michigan Bankard Services, a leading merchant card processor serving over 30,000 businesses nationwide. Besides the potential revenue boost, credit cards may well be a cheaper alternative to cash and checks. In a case study prepared by Coopers & Lybrand, credit card processing costs average 2.7% of any transaction, checks 4.0% and cash 4.8%.** These figures make sense when you consider how many times paper money and coins must be counted and recounted by different individuals. While each business would vary in that respect, cash and checks still require more handling than plastic alternatives.
Establishing A Merchant Account
To offer the credit card payment option, you need to set up a merchant account-a bank account established by your company to receive the proceeds of credit card purchases. Typically, along with the account, you will also need to lease equipment and software to facilitate the transactions and ensure payments flow to your operating account. The process is slightly more complicated if you wish to accept credit cards online. In particular, you will need to sign-up with a payment gateway such as CyberCash or VirtualNet. These services allow for real-time credit card authorization for online transactions. It is essential that the payment gateway you choose is compatible with your software and financial institution so transactions flow properly.
Any number of financial institutions offer merchant accounts, but you should look for a provider who has demonstrated expertise in working specifically with small and growing businesses. These organizations can often structure accounts faster and at better rates than those who cater to larger companies. As you shop around, you should also look for institutions that work with customers to combat fraud and reduce chargebacks. And if you are conducting online transactions, you will want to work with a provider who has expertise in setting up and processing Internet merchant accounts.
The next step is the application process which can take anywhere from 48 hours to two weeks or more. Your chances of being approved relate to the nature of your business and the credit rating of your business and/or its principal owner(s). While existing retail establishments are the easiest to be approved, mail order and Internet businesses, with their higher rates of chargebacks and fraud, pose more of a challenge. "We look at the merchant, the nature of the business or the product, the refund policy, and the business financials or a sole proprietor's own credit history," states Joblonski. The cost of a merchant account will vary based on the perceived risk a business poses.
A Word About Costs
As you shop for a merchant account provider, you should be mindful of the costs involved with establishing and processing a merchant account. "You can expect to pay between $190 to $300 in start-up costs which includes the application, setup and equipment and rental lease deposits," notes Joblonski. Processing fees can range from around 2.0% of annual sales volume for a retail establishment to 2.75% of annual sales volume for online transactions. Additional fees may also apply. Ask your merchant account provider for a complete list of fees so there are no surprises.
Putting It All Together
Congratulations, you can now accept credit card transactions. But are you maximizing the benefits of those proceeds? Maybe not, if those funds are being routed to a bank account that pays no interest on that money. Worse yet, you may have to wait a full month to get details on those credit card transactions, and have to pay for the privilege.
Is there a better way? Yes. Some financial institutions specialize in providing value-added merchant account services. For example, OneCore, a leading provider of online financial services for small business, pays money market rates on credit card proceeds. You can also view batch transactions (and transaction details) online by the next business day, free of charge.
*Source: "Jumping Through the Merchant Account Hoops," Khera Communications.** Source: United States Postal Service, Coopers & Lybrand as quoted in Credit Card Management, August 1997.
Plastic Fantastic - A Beginner's Guide to Accepting Credit Cards
Face it, the cash economy is winding down. Credit cards are ubiquitous, and if you're selling anything more than gum and newspapers, you probably should be accepting plastic. If you're ready to enter the world of "merchant acquiring", (the strange name for the process of merchants accepting credit cards), we've put together a little introduction here.
Credit Card processing starts at the point of sale. Say your customer wants to buy a new widget. She hands you a Visa card. The store clerk swipes the card through the electronic terminal, maybe punches some numbers, and waits for "authorization." After a few seconds, the authorization is received, a receipt is printed, the customer signs, and off she goes with her widget.
Here's how Authorization works: after swiping a card, the card number and related data go through an Acquiring Processor (who handles the merchant's side of a credit card transaction), which channels the transaction to the credit card company (e.g., Visa). The credit card company requests authorization from the Issuing Bank (the bank that issued the card). After the Issuing bank approves the transaction, it transmits an approval code back through the credit card company to the Processor and the Merchant at the point of sale.
It's a long electronic trip, but it takes only seconds. And the story isn't over yet — the merchant hasn't been paid! That doesn't happen until "settlement" takes place.
Settling usually happens at the end of the day by either taking paper sales receipts to the bank (common in ancient times) or transmitting the receipts electronically from the card terminal in a batch. The receipts go down the line to the Acquiring Processor, which plays traffic cop, routing the transactions to the different credit card companies. The credit card companies funnel the transactions to the Issuing Banks for posting to cardholders' accounts. At the same time, the Processor credits the merchant's account and a processing fee is deducted, better known as the "discount rate" (typically 1.75% to 3% of the sale).
There's more to credit card processing than our point-of-sale example. What about phone orders, mail orders, e-commerce orders? These are known as "MO/TO" or mail order/telephone order transactions, and the dynamics are different, the risks higher. These orders don't have the benefit of signature verification to ensure the customer's identity. Many financial institutions require that such transactions be covered under separate "Card Not Present" merchant accounts. Expect discount rates to be higher for MO/TO.
Avenues of Pursuit
When you're shopping for a merchant account, spend some time and ask the right questions. Understand the whole package — don't just look at at the discount rate, for instance.
Here are some things to look for, in addition to the discount rate offered:
Check to see when settlement occurs. After all, this is when you get your money. You might get a discount rate advantage, but if you don't get your money for days, you lose the value of the cash flow.
What kind of technical and customer support does the processor offer? (Anyone remember Murphy's Law?) Is support available 24x7?
Some processors offer customized services for certain businesses: retail, hotels, restaurants, doctors and lawyers, telephone sales, etc. In some cases this can reduce administrative and operational costs substantially. See what the specialized offering is, look for the fine print, and compare it to a generic offering.
Keep an eye peeled for hidden costs such as statement fees and voice authorization charges. Many of these fees are a part of doing business, but they can vary a lot, and if you need extra support, you don't want to be paying excessively each time you use it.
Above all, read and understand the terms and conditions before you sign up. Merchant processing is a complicated endeavor, and you need to know exactly what you're signing up for.
Even if you're starting out simple, make sure your merchant provider is flexible enough to accommodate transactions. Even though you may just have a simple store today, tomorrow even simple stores may turn out to be e-commerce players.
COSTS AND RISKS
Chargebacks
If there's a downside to accepting credit cards for payment, it can be encapsulated in one word — chargeback. A chargeback occurs when a transaction is reversed, and the amount of the transaction, previously credited to the merchant's account, is then deducted.
Chargeback rules were originally created to protect cardholders from erroneous transactions, which were more common when transactions were processed using little slips of paper. Now chargebacks occur for many reasons: unauthorized credit card user, no signature on the receipt, double-charging errors, credit card expired, bank error and customer disputes. Be careful with chargebacks; too many will risk losing your merchant credit card account.
Precautionary tactics are the best preventative medicine. Make sure you follow the rules set by the bank/processor. You need a routine for processing credit cards, and your sales staff must follow it religiously. For phone and Internet orders, get the customer's home and work phone numbers, and verify that info before sending merchandise.
A great way to head-off customer disputes (and chargebacks) is to provide a liberal return policy. In those cases where you can't avoid a customer's attempt for chargeback, you'll need to provide suitable documentation (sales and shipping receipts) to refute any claims.
Up-Front and Hidden Costs
Yes, there are costs associated with credit card processing — no gain without a little pain. Below are typical costs you might face, with some ballpark estimates. All of these should be taken into consideration when you're comparison shopping for a merchant account.
Application fee ($0 — $300) Installation/setup fee ($0 — $100) Bank setup fee ($0 — $75)Terminal costs ($200 — $2000)Statement fee ($0 — $10 per month) Minimum account billing (varies...often not required) Chargeback fee ($0 — $25) Voice authorization fee ($0 — $1 per call) Transaction fee (Varies, usually around .20 per transaction) Daily close-out fee (Varies...often not required) Discount rate (1.75% to 3% of sale)
Despite the costs, consider the upside: credit card sales are a customer-centered service; they'll love you for the privilege of paying by plastic. Plus, customers tend to buy more per sale when paying by credit than cash.
And don't forget, there are also costs associated with handling cash — counting, trips to the bank, the hassle of keeping adequate change on hand, and even potential losses through mishandling currency.
A PLAN TO BUILD ON
1. Understand the credit card process before making any decisions. Apply new knowledge to your unique circumstances — ask questions, network, e-mail your colleagues, explore the links on BizzedSM and other websites.
2. Shop around, and keep a running list of the features and benefits of each provider, plus the costs. Start with the costs on the previous page, but be sure to dig deep to uncover any potential costs with each provider. Don't overlook the benefits of working with a world-class full-service provider (like Express Merchant Processing Services, a BizzedSM partner). The added operational and technical support you might receive can be well worth a slightly higher discount fee.
3. If you are a small home or mail order business, you might have some difficulty getting approved. If so, you might start with your existing bank, or another small to medium-sized bank. When you apply for an account, expect to be asked for full financial disclosure — banks are quite sensitive to credit card fraud.
4. If your bank or another processor turns down your request for a merchant account, never give up! Try other banks/processors — there are lots to choose from. You could also opt for an Independent Service Organization (ISO), which shoulders the risk and contracts with a bank on your behalf. Buyer beware though — always explore all the costs, fees, and charges associated before entering into any agreements.
5. Keep your eye on where you're headed and where you want to grow. The goal with credit card processing is getting the infrastructure in place so you can sell smoothly, conveniently, affordably, without glitches and holdups — a process scaleable to your aspirations.
For instance, currently you may run a cash-only business and want to grow into point-of-sale credit card transactions. Fine. But where do you want to be in a six months, a year? Do you foresee accepting orders over the phone or setting up an e-commerce store on the net? This kind of forward-thinking will help you make the right up-front decisions.
When You're Up and Running
When you get your merchant account and begin accepting cards, be sure to establish and follow good operational procedures. Your provider will assist you in understanding required procedures. Key items are signature verification, authorization procedures, and physical card inspection.
Be careful — different cards may require different procedures (e.g., American Express v. Visa/Mastercard), and there will be different procedures per transaction type (point-of-sale, phone, mail, and e-commerce orders).
More than anything else, following the correct operational procedures will protect your business against chargeback losses. Make sure everyone handling transactions for your business knows the procedures. Training is key, although posting reminders and "cheat sheets" at the point-of-sale can be very beneficial as well.
Credit Card processing starts at the point of sale. Say your customer wants to buy a new widget. She hands you a Visa card. The store clerk swipes the card through the electronic terminal, maybe punches some numbers, and waits for "authorization." After a few seconds, the authorization is received, a receipt is printed, the customer signs, and off she goes with her widget.
Here's how Authorization works: after swiping a card, the card number and related data go through an Acquiring Processor (who handles the merchant's side of a credit card transaction), which channels the transaction to the credit card company (e.g., Visa). The credit card company requests authorization from the Issuing Bank (the bank that issued the card). After the Issuing bank approves the transaction, it transmits an approval code back through the credit card company to the Processor and the Merchant at the point of sale.
It's a long electronic trip, but it takes only seconds. And the story isn't over yet — the merchant hasn't been paid! That doesn't happen until "settlement" takes place.
Settling usually happens at the end of the day by either taking paper sales receipts to the bank (common in ancient times) or transmitting the receipts electronically from the card terminal in a batch. The receipts go down the line to the Acquiring Processor, which plays traffic cop, routing the transactions to the different credit card companies. The credit card companies funnel the transactions to the Issuing Banks for posting to cardholders' accounts. At the same time, the Processor credits the merchant's account and a processing fee is deducted, better known as the "discount rate" (typically 1.75% to 3% of the sale).
There's more to credit card processing than our point-of-sale example. What about phone orders, mail orders, e-commerce orders? These are known as "MO/TO" or mail order/telephone order transactions, and the dynamics are different, the risks higher. These orders don't have the benefit of signature verification to ensure the customer's identity. Many financial institutions require that such transactions be covered under separate "Card Not Present" merchant accounts. Expect discount rates to be higher for MO/TO.
Avenues of Pursuit
When you're shopping for a merchant account, spend some time and ask the right questions. Understand the whole package — don't just look at at the discount rate, for instance.
Here are some things to look for, in addition to the discount rate offered:
Check to see when settlement occurs. After all, this is when you get your money. You might get a discount rate advantage, but if you don't get your money for days, you lose the value of the cash flow.
What kind of technical and customer support does the processor offer? (Anyone remember Murphy's Law?) Is support available 24x7?
Some processors offer customized services for certain businesses: retail, hotels, restaurants, doctors and lawyers, telephone sales, etc. In some cases this can reduce administrative and operational costs substantially. See what the specialized offering is, look for the fine print, and compare it to a generic offering.
Keep an eye peeled for hidden costs such as statement fees and voice authorization charges. Many of these fees are a part of doing business, but they can vary a lot, and if you need extra support, you don't want to be paying excessively each time you use it.
Above all, read and understand the terms and conditions before you sign up. Merchant processing is a complicated endeavor, and you need to know exactly what you're signing up for.
Even if you're starting out simple, make sure your merchant provider is flexible enough to accommodate transactions. Even though you may just have a simple store today, tomorrow even simple stores may turn out to be e-commerce players.
COSTS AND RISKS
Chargebacks
If there's a downside to accepting credit cards for payment, it can be encapsulated in one word — chargeback. A chargeback occurs when a transaction is reversed, and the amount of the transaction, previously credited to the merchant's account, is then deducted.
Chargeback rules were originally created to protect cardholders from erroneous transactions, which were more common when transactions were processed using little slips of paper. Now chargebacks occur for many reasons: unauthorized credit card user, no signature on the receipt, double-charging errors, credit card expired, bank error and customer disputes. Be careful with chargebacks; too many will risk losing your merchant credit card account.
Precautionary tactics are the best preventative medicine. Make sure you follow the rules set by the bank/processor. You need a routine for processing credit cards, and your sales staff must follow it religiously. For phone and Internet orders, get the customer's home and work phone numbers, and verify that info before sending merchandise.
A great way to head-off customer disputes (and chargebacks) is to provide a liberal return policy. In those cases where you can't avoid a customer's attempt for chargeback, you'll need to provide suitable documentation (sales and shipping receipts) to refute any claims.
Up-Front and Hidden Costs
Yes, there are costs associated with credit card processing — no gain without a little pain. Below are typical costs you might face, with some ballpark estimates. All of these should be taken into consideration when you're comparison shopping for a merchant account.
Application fee ($0 — $300) Installation/setup fee ($0 — $100) Bank setup fee ($0 — $75)Terminal costs ($200 — $2000)Statement fee ($0 — $10 per month) Minimum account billing (varies...often not required) Chargeback fee ($0 — $25) Voice authorization fee ($0 — $1 per call) Transaction fee (Varies, usually around .20 per transaction) Daily close-out fee (Varies...often not required) Discount rate (1.75% to 3% of sale)
Despite the costs, consider the upside: credit card sales are a customer-centered service; they'll love you for the privilege of paying by plastic. Plus, customers tend to buy more per sale when paying by credit than cash.
And don't forget, there are also costs associated with handling cash — counting, trips to the bank, the hassle of keeping adequate change on hand, and even potential losses through mishandling currency.
A PLAN TO BUILD ON
1. Understand the credit card process before making any decisions. Apply new knowledge to your unique circumstances — ask questions, network, e-mail your colleagues, explore the links on BizzedSM and other websites.
2. Shop around, and keep a running list of the features and benefits of each provider, plus the costs. Start with the costs on the previous page, but be sure to dig deep to uncover any potential costs with each provider. Don't overlook the benefits of working with a world-class full-service provider (like Express Merchant Processing Services, a BizzedSM partner). The added operational and technical support you might receive can be well worth a slightly higher discount fee.
3. If you are a small home or mail order business, you might have some difficulty getting approved. If so, you might start with your existing bank, or another small to medium-sized bank. When you apply for an account, expect to be asked for full financial disclosure — banks are quite sensitive to credit card fraud.
4. If your bank or another processor turns down your request for a merchant account, never give up! Try other banks/processors — there are lots to choose from. You could also opt for an Independent Service Organization (ISO), which shoulders the risk and contracts with a bank on your behalf. Buyer beware though — always explore all the costs, fees, and charges associated before entering into any agreements.
5. Keep your eye on where you're headed and where you want to grow. The goal with credit card processing is getting the infrastructure in place so you can sell smoothly, conveniently, affordably, without glitches and holdups — a process scaleable to your aspirations.
For instance, currently you may run a cash-only business and want to grow into point-of-sale credit card transactions. Fine. But where do you want to be in a six months, a year? Do you foresee accepting orders over the phone or setting up an e-commerce store on the net? This kind of forward-thinking will help you make the right up-front decisions.
When You're Up and Running
When you get your merchant account and begin accepting cards, be sure to establish and follow good operational procedures. Your provider will assist you in understanding required procedures. Key items are signature verification, authorization procedures, and physical card inspection.
Be careful — different cards may require different procedures (e.g., American Express v. Visa/Mastercard), and there will be different procedures per transaction type (point-of-sale, phone, mail, and e-commerce orders).
More than anything else, following the correct operational procedures will protect your business against chargeback losses. Make sure everyone handling transactions for your business knows the procedures. Training is key, although posting reminders and "cheat sheets" at the point-of-sale can be very beneficial as well.
Retail Merchant Accounts & POS Swipe Terminal Guide
As a retail merchant, you should know what you're doing when it comes to choosing a merchant account provider and a Point Of Sale terminal solution. Selecting the wrong merchant account provider can mean paying high priced leases on a terminal your business doesn't need, and even paying high monthly fees. Don't be caught by surprise!
The purpose of this guide is to help you get a merchant account and aid you in selecting the right terminal for your business needs. Let's get started...
Step One: Understanding Retail Merchant Accounts
Before you can start looking for the right merchant account provider, you need to know what a merchant account is and what it does.
A merchant account is a special account that is set up for a business to accept and process credit card orders. After a customer swipes their credit card through a terminal, the information is passed securely to a processing bank. The processing bank makes sure there is enough available credit in the customers account, and if so, they then deduct the appropriate funds from the account. If there are not enough funds, the card is rejected and a message is displayed on the terminal read-out screen. Assuming the funds are available, the money is transferred to the merchant's business checking account within 2 to 3 business days.
In addition to checking for available funds, the processing bank also makes sure the card has not expired or wasn't reported as lost or stolen. If either of these are the case, the transaction is immediately halted.
Step Two: Preparing Your Retail Storefront
Before even starting to look for a merchant account provider (or perhaps when you've just started to look), it is important to know where you want to place your credit card processing equipment.
Here are some aspects to consider when deciding where to place processing equipment:
1. Customer access to terminal If you plan to accept debit cards, customers will need to access your terminal (or PIN pad) so they can enter their PIN.
2. Ease of processing access The faster the better, customers are an impatient bunch and expect speedy checkout times. Having a terminal located halfway across the store won't accomplish this task.
3. Access to telephone jacks Terminals will need to be placed close to telephone jacks for connection. Have your local telephone company install jacks where you'll be placing processing equipment.
4. Size of equipment footprint Do you want an all-in-one integrated terminal solution or separate equipment? More merchants desire a smaller footprint, to conserve countertop space, and tend to choose integrated equipment.
5. Purchasing a second phone lineIn most cases, you'll want to purchase a second phone line from your local telephone company to connect your terminal to. Tying up phone lines when processing transactions can cost you sales. You're in business to bring in sales... not lose them.
The purpose of this guide is to help you get a merchant account and aid you in selecting the right terminal for your business needs. Let's get started...
Step One: Understanding Retail Merchant Accounts
Before you can start looking for the right merchant account provider, you need to know what a merchant account is and what it does.
A merchant account is a special account that is set up for a business to accept and process credit card orders. After a customer swipes their credit card through a terminal, the information is passed securely to a processing bank. The processing bank makes sure there is enough available credit in the customers account, and if so, they then deduct the appropriate funds from the account. If there are not enough funds, the card is rejected and a message is displayed on the terminal read-out screen. Assuming the funds are available, the money is transferred to the merchant's business checking account within 2 to 3 business days.
In addition to checking for available funds, the processing bank also makes sure the card has not expired or wasn't reported as lost or stolen. If either of these are the case, the transaction is immediately halted.
Step Two: Preparing Your Retail Storefront
Before even starting to look for a merchant account provider (or perhaps when you've just started to look), it is important to know where you want to place your credit card processing equipment.
Here are some aspects to consider when deciding where to place processing equipment:
1. Customer access to terminal If you plan to accept debit cards, customers will need to access your terminal (or PIN pad) so they can enter their PIN.
2. Ease of processing access The faster the better, customers are an impatient bunch and expect speedy checkout times. Having a terminal located halfway across the store won't accomplish this task.
3. Access to telephone jacks Terminals will need to be placed close to telephone jacks for connection. Have your local telephone company install jacks where you'll be placing processing equipment.
4. Size of equipment footprint Do you want an all-in-one integrated terminal solution or separate equipment? More merchants desire a smaller footprint, to conserve countertop space, and tend to choose integrated equipment.
5. Purchasing a second phone lineIn most cases, you'll want to purchase a second phone line from your local telephone company to connect your terminal to. Tying up phone lines when processing transactions can cost you sales. You're in business to bring in sales... not lose them.
Mobile Commerce Wireless Payment Processing Guide
Mobile Commerce (m-commerce) isn't a new way of processing credit and debit cards. The acceptance method has been around for a few years, but is just really starting to make a large impact on how we do business away from our offices.
m-commerce first started with the use of wireless POS (Point Of Sale) swipe terminals and has since then made its way into cellular phones and PDA's (Personal Digital Assistants). Wireless POS swipe terminals are much more expensive (usually around $399 and up) then regular "wired" terminals which require you to be nearby a phone jack and electrical outlet in order to operate. As a result, this has caused many people to find alternative ways to process transactions while their "on the road" -- at least until now.
Cellular phones and PDA's have largely grown in popularity and as a result manufacturers have made significant improvements and added features to attract even more consumers and meet current owners demands. One of those features is wireless transaction processing. Imagine being able to process credit card and debit card transactions wirelessly within seconds at tradeshows, business seminars, house calls, etc.
Wireless Processing Benefits
Before m-commerce solutions became available collecting funds for orders done "on the road" required people to either pay by cash, check or write down their credit card information so you could process the transaction later back at your office. The fact is, cash and checks can get lost and credit card information, if not put in a secure place, can get into the wrong hands between the time the information was taken down and the customers card was charged. m-commerce solutions have taken a lot of the hassles out of doing business "on the run."
Improved cash flow
Secure credit and debit card authorizations within a matter of seconds
Reduced instances of credit card fraud and chargebacks
Ability to conduct business where phone line connections don't exist
m-commerce first started with the use of wireless POS (Point Of Sale) swipe terminals and has since then made its way into cellular phones and PDA's (Personal Digital Assistants). Wireless POS swipe terminals are much more expensive (usually around $399 and up) then regular "wired" terminals which require you to be nearby a phone jack and electrical outlet in order to operate. As a result, this has caused many people to find alternative ways to process transactions while their "on the road" -- at least until now.
Cellular phones and PDA's have largely grown in popularity and as a result manufacturers have made significant improvements and added features to attract even more consumers and meet current owners demands. One of those features is wireless transaction processing. Imagine being able to process credit card and debit card transactions wirelessly within seconds at tradeshows, business seminars, house calls, etc.
Wireless Processing Benefits
Before m-commerce solutions became available collecting funds for orders done "on the road" required people to either pay by cash, check or write down their credit card information so you could process the transaction later back at your office. The fact is, cash and checks can get lost and credit card information, if not put in a secure place, can get into the wrong hands between the time the information was taken down and the customers card was charged. m-commerce solutions have taken a lot of the hassles out of doing business "on the run."
Improved cash flow
Secure credit and debit card authorizations within a matter of seconds
Reduced instances of credit card fraud and chargebacks
Ability to conduct business where phone line connections don't exist
Credit Card Processing: Can High Risk Businesses Get a Merchant Account?
Is your business considered high risk? And can you still get a merchant account?In credit card processing, there are many different reasons why a business may be considered high risk. - First, it may be the actual business industry that has been tagged "high risk", such as travel, multi-level marketing (MLM), e-commerce, aggregators or collection agencies. - Second, the reason may simply be the business volume that places a business in the high risk category. - And third, it may be a reflection of the business or the business owner's credit history.The question still arises: Can High Risk Merchants Obtain a Merchant Account?The answer is YES. But you have to know where to go for the expert advice and guidance needed so you and your business are safe from excessive expenses often associated with high risk merchant accounts.Working with an expert in high risk merchant accounts is critical to the success of obtaining the best merchant account solution for your business. 5 Points to Consider When Selecting the Best Merchant Account for Your High Risk Business:- Your application needs to be handled by a high risk professional expert- Your high risk merchant account processor should have experience with merchants in your business industry- The high risk merchant account processor needs to have access to numerous credit sources - including more liberal banks and offshore options- If your business does have to be taken offshore, your high risk experts need to work on getting the lowest rate available- All rates should be disclosed prior to contract with the high risk credit card processing company3 Insider Tips To Ensure Approval for a High Risk Business Merchant Account:- Do you have a poor credit rating? Be honest about disclosing any past financial challenges. Acknowledging previous liens, bankruptcies, judgments, etc. will only improve your credibility and alleviate one more barrier.- Be open to offshore options as sometimes they can offer your business the best merchant account solution.- Shop around for a credit card processor that has expert knowledge in high risk merchant account approval - and don't be afraid to ask questions. The more you educate yourself in the process, the more you will recognize a good high risk merchant account processor giving you intelligent, experienced answers to your questions.Operating a high-risk business does not exclude you from being able to process credit cards. Like any business, you want to provide your customers with as many non-cash payment options as possible. It is statistically proven that accepting credit cards help generate revenues and stimulate impulse purchases.Owning a high risk business doesn't mean you won't be able to open a merchant account. It does mean, however, that you may have to do a little more in setting one up that is right for your business. Do your "due diligence", shop around and ask questions to find a credit card processing company that specializes in high risk and offshore merchant accounts and will offer their expertise to businesses who fall into the high risk category.
Merchant Account Risk - Who Takes it On?
Have you ever wondered why most providers of real merchant accounts go through verifications and checks on not only your business but also on your individual processing history as an owner (unless you are a 501c3 Non-Profit)? And why approvals can take from 1-5 days for merchant accounts?
You probably ask "Why are they treating this as if I'm applying for a loan? This should be as easy as visiting my favorite 3rd party processing service's website and entering my checking account information".
Well merchants need to understand that there are very legitimate reasons for merchant providers being just a little more cautious than third party payment processing providers.- A. Merchant account providers have to abide by very different rules than other payment service providers. Visa/MC sets forth rules that are to be honored by not only merchant account providers but their sponsoring bank. And in the case of Visa/MC's rules for merchant account providers, many of them have been put in place by Visa/MC after many years of being in the branded credit card business so they've drafted many of their current contracts in effort to prevent past operational mistakes from reoccurring - just as any business person drafts a contract, to prevent the worst and protect their interests
- B. Many merchants do not understand that the government does have some sort of say so in what's going on in the merchant industry. It's called Homeland Security, and though they're not yet working as closely as they want to with merchant providers their Homeland Security rules to have parameters set in place where banks can be held responsible for clients that use their services to break Homeland Security laws. (Note: there have been reports that they are fighting hard to have all of merchant's processing data turned over to them - and processors are fighting back, so it's not 100% complete yet).
- C. At least 95% of merchant account providers ask for voided check copies or bank letters for verification when a merchant applies for an account. Merchants sometimes wonder why the processor cannot simply "call my bank to verify the information and go on and approve the account". Well in that method there's no paper trail or proof in writing that the provider actually verified the checking account information. And in both the legal world and in Visa/MC's rules this carries no weight in the case of a merchant signing on and causing a fraudulent catastrophe.
- D. Merchants should also understand that with a real merchant account they are their processing their own sales either by allowing their customer to enter card data or by the merchant manually entering card data. They are entrusted with very sensitive credit card data. Have you ever noticed that with many 3rd party payment processing providers that are not real accounts often charge much more for allowing merchants access to their Virtual Terminal, which allows the merchant to enter their own sales as needed? Well this is because when the merchant can just take a card number and enter it themselves the risk of fraud does increase, as if the merchant isn't the most honest business person they have the opportunity to steal card numbers and enter the numbers into the Virtual Terminal themselves at will.
This is why many third party providers often offer their "cheap" options as the option that only allows customers to enter their own data and charge much more for the Virtual Terminal, but as many merchants know this isn't always the most feasible or professional way to do business, as sometimes your customers won't want to have to "visit your website" just to pay for a product or service, they may want to pay for it via mail, phone, or even in person. This is where being entrusted to use the Virtual Terminal ethically comes in handy, and if the merchant is not ethical it's ultimately the processor that's responsible for resolving the fraudulent activity (explained more below).
E: Contrary to popular belief the merchant account provider and bank is taking on much more risk than many merchants believe. Here's an example scenario where the merchant should be held responsible for fraud but a processing bank may be:
A merchant applies for an account, without the best intentions, they are approved by the bank's underwriting.
The merchant gets access to stolen card information and manually enters that info themselves via either their Virtual Terminal or Web Interface. Let's say $500.
The real customer, having no knowledge of where this charge originated sees that their card was used fraudulently.
The customer disputes that transaction with their credit card company considering it fraud because they did not authorize it.
The merchant provider/processor attempts to contact the merchant to inform them that they have a chargeback and will have to refund this customer because the customer charged this transaction back with their credit card company and the merchant has no proof of customer authorization (so the customer wins the Chargeback dispute).
The problem is that the merchant had bad intentions to begin with and they're long gone.
In this case who has to refund the customer that money because the merchant is no where to be found? The merchant processor and processing bank does! Though the merchant is responsible for the fraud they cannot be tracked down in this instance but the customer must still be refunded. So the role of the provider in this case is to take care of reimbursing the customer - of course this would make any provider a little cautious about who they sign on.
Operating a business that accept credit cards is, at the end of the day, a responsibility that should not be taken lightly. Think about it, if it were your credit card being used by a business wouldn't you want the bank that's trusting and processing for that merchant has done due diligence to verify that the merchant has good intentions? Sometimes merchants are frustrated that providers turn them away as if only they should be the ones choosing in the process, but when there's so much at stake providers have to ask just as many questions before boarding a merchant as a merchant has to ask before choosing a provider.
You probably ask "Why are they treating this as if I'm applying for a loan? This should be as easy as visiting my favorite 3rd party processing service's website and entering my checking account information".
Well merchants need to understand that there are very legitimate reasons for merchant providers being just a little more cautious than third party payment processing providers.- A. Merchant account providers have to abide by very different rules than other payment service providers. Visa/MC sets forth rules that are to be honored by not only merchant account providers but their sponsoring bank. And in the case of Visa/MC's rules for merchant account providers, many of them have been put in place by Visa/MC after many years of being in the branded credit card business so they've drafted many of their current contracts in effort to prevent past operational mistakes from reoccurring - just as any business person drafts a contract, to prevent the worst and protect their interests
- B. Many merchants do not understand that the government does have some sort of say so in what's going on in the merchant industry. It's called Homeland Security, and though they're not yet working as closely as they want to with merchant providers their Homeland Security rules to have parameters set in place where banks can be held responsible for clients that use their services to break Homeland Security laws. (Note: there have been reports that they are fighting hard to have all of merchant's processing data turned over to them - and processors are fighting back, so it's not 100% complete yet).
- C. At least 95% of merchant account providers ask for voided check copies or bank letters for verification when a merchant applies for an account. Merchants sometimes wonder why the processor cannot simply "call my bank to verify the information and go on and approve the account". Well in that method there's no paper trail or proof in writing that the provider actually verified the checking account information. And in both the legal world and in Visa/MC's rules this carries no weight in the case of a merchant signing on and causing a fraudulent catastrophe.
- D. Merchants should also understand that with a real merchant account they are their processing their own sales either by allowing their customer to enter card data or by the merchant manually entering card data. They are entrusted with very sensitive credit card data. Have you ever noticed that with many 3rd party payment processing providers that are not real accounts often charge much more for allowing merchants access to their Virtual Terminal, which allows the merchant to enter their own sales as needed? Well this is because when the merchant can just take a card number and enter it themselves the risk of fraud does increase, as if the merchant isn't the most honest business person they have the opportunity to steal card numbers and enter the numbers into the Virtual Terminal themselves at will.
This is why many third party providers often offer their "cheap" options as the option that only allows customers to enter their own data and charge much more for the Virtual Terminal, but as many merchants know this isn't always the most feasible or professional way to do business, as sometimes your customers won't want to have to "visit your website" just to pay for a product or service, they may want to pay for it via mail, phone, or even in person. This is where being entrusted to use the Virtual Terminal ethically comes in handy, and if the merchant is not ethical it's ultimately the processor that's responsible for resolving the fraudulent activity (explained more below).
E: Contrary to popular belief the merchant account provider and bank is taking on much more risk than many merchants believe. Here's an example scenario where the merchant should be held responsible for fraud but a processing bank may be:
A merchant applies for an account, without the best intentions, they are approved by the bank's underwriting.
The merchant gets access to stolen card information and manually enters that info themselves via either their Virtual Terminal or Web Interface. Let's say $500.
The real customer, having no knowledge of where this charge originated sees that their card was used fraudulently.
The customer disputes that transaction with their credit card company considering it fraud because they did not authorize it.
The merchant provider/processor attempts to contact the merchant to inform them that they have a chargeback and will have to refund this customer because the customer charged this transaction back with their credit card company and the merchant has no proof of customer authorization (so the customer wins the Chargeback dispute).
The problem is that the merchant had bad intentions to begin with and they're long gone.
In this case who has to refund the customer that money because the merchant is no where to be found? The merchant processor and processing bank does! Though the merchant is responsible for the fraud they cannot be tracked down in this instance but the customer must still be refunded. So the role of the provider in this case is to take care of reimbursing the customer - of course this would make any provider a little cautious about who they sign on.
Operating a business that accept credit cards is, at the end of the day, a responsibility that should not be taken lightly. Think about it, if it were your credit card being used by a business wouldn't you want the bank that's trusting and processing for that merchant has done due diligence to verify that the merchant has good intentions? Sometimes merchants are frustrated that providers turn them away as if only they should be the ones choosing in the process, but when there's so much at stake providers have to ask just as many questions before boarding a merchant as a merchant has to ask before choosing a provider.
Merchant Account Services & Other Payment Solutions
Merchant Account Services & Other Payment Solutions
Merchant services, accepting credit cards online and other payment processing solutions is vitally important to the success of your business. The fact is, your businesses success or failure can depend on whether or not you accept credit card orders. Searching for a good deal from a merchant account provider is a slow and tedious process. Now, we're bringing the merchant accounts to you! That's right, no more time consuming searches on the search engines, because we've done the searching for you. We have both developed an online database providers who issue merchant accounts, and created extensive archives and resources (articles, news and more). MerchantSeek was created to aid you in the process of locating a provider that is right for your businesses needs and budget.
Merchant services, accepting credit cards online and other payment processing solutions is vitally important to the success of your business. The fact is, your businesses success or failure can depend on whether or not you accept credit card orders. Searching for a good deal from a merchant account provider is a slow and tedious process. Now, we're bringing the merchant accounts to you! That's right, no more time consuming searches on the search engines, because we've done the searching for you. We have both developed an online database providers who issue merchant accounts, and created extensive archives and resources (articles, news and more). MerchantSeek was created to aid you in the process of locating a provider that is right for your businesses needs and budget.
Merchant Account Tips
Once you have your merchant account you will need to take necessary precautions to avoid chargebacks and fraud. Here are some tips to follow:
1. Collect CVC2 and CVV2 Verification NumbersThis tactic alone can not only reduce instances of chargebacks by 26%, according to Visa, but also reduce any pass-through fees that may be charged when a credit card order is conducted. On the back of MasterCard, most Visa and Discover credit cards is a 3-digit security code located right after your credit card number. Requiring customers to give the 3-digit code acts as an additional verification measure. American Express cards also have a similar security code that is located on the front of the card right above the cardholder's account number and is usually 4-digits long. Most online payment processors support entering the security codes when processing credit card orders. Check with your payment gateway provider (i.e. Verisign, Authorize.Net, NexCommerce, ECHO Inc., etc) for details.2. Use Address Verification System (AVS)AVS checks to ensure the address entered on the order form matches the address to where the cardholder's billing statements are mailed to. People ordering products and/or services using a stolen card number will never use the real cardholder's billing address, so this is your chance to stop the order before it's too late. AVS only works with orders conducted in the US. Failure to use AVS when processingcredit card transactions will always result in paying higher credit card processing fees.3. Scrutinize orders from developing foreign countriesA large percentage of fraudulent Internet purchases are made from Indonesia, Russia, and other eastern block or developing countries. Accept orders from such countries at your own risk until a worldwide AVS system is developed.4. Let customers know what name will appear on statementsMany merchants who use 3rd Party Processing companies have run into problems because the company name that appears on cardholder's monthly statements is usually the name of the 3rd party processing company and not the company name of the site the cardholder made their purchase from. This isn't always the case, but in many cases it is. If you use a 3rd party processor, and even if you don't, make sure the customer knows what name will appear on their credit card statement at the end of the month. This will help to reduce any confusion that might would otherwise occur.5. Handle suspicious orders accordinglyIf an order seems suspicious the best way to handle the situation is to either call or e-mail the customer and attempt to verify that they placed the order. As a rule of thumb, if in doubt, check things out. It may be a good idea that if a customer makes an unusually large volume purchase from your site to follow-up with a verification call.6. Watch out for orders using free e-mail addressesBe wary of accepting orders from people who used a free e-mail address when ordering (i.e. Hotmail, Yahoo, etc.). Tracking people who used a free e-mail address is almost impossible, it's much easier for them to get away then if they used their Internet Service Provider (ISP) or their own company web site e-mail address. To check whether an e-mail address is a freebie or not just take the part of theaddress after the "@" symbol, add "www" to the front of it and see what website it brings up (i.e. joe@yahoo.com = www.yahoo.com).7. Signatures on deliveryIf your business delivers products use a carrier that requires a signature on delivery, and allows you to have a copy of the signature. Retain these for your records.8. Request fax copies of ID and credit cardYou may want to request your customer to fax a copy of both sides of their credit card and driver's license. This tactic usually works best in a B-to-B (business to business) sales environment. While this is not a defense under Visa or MasterCard rules, it is yet another way to deter fraud.9. Posting a warning messageTaking the time to post a warning message on your order page to those who may attempt to make a fraudulent order will greatly deter the number of instances of fraud. Be sure to mention that IP (Internet Protocol) addresses are being logged. IP addresses can come in handy when locating people about fraudulent orders.
1. Collect CVC2 and CVV2 Verification NumbersThis tactic alone can not only reduce instances of chargebacks by 26%, according to Visa, but also reduce any pass-through fees that may be charged when a credit card order is conducted. On the back of MasterCard, most Visa and Discover credit cards is a 3-digit security code located right after your credit card number. Requiring customers to give the 3-digit code acts as an additional verification measure. American Express cards also have a similar security code that is located on the front of the card right above the cardholder's account number and is usually 4-digits long. Most online payment processors support entering the security codes when processing credit card orders. Check with your payment gateway provider (i.e. Verisign, Authorize.Net, NexCommerce, ECHO Inc., etc) for details.2. Use Address Verification System (AVS)AVS checks to ensure the address entered on the order form matches the address to where the cardholder's billing statements are mailed to. People ordering products and/or services using a stolen card number will never use the real cardholder's billing address, so this is your chance to stop the order before it's too late. AVS only works with orders conducted in the US. Failure to use AVS when processingcredit card transactions will always result in paying higher credit card processing fees.3. Scrutinize orders from developing foreign countriesA large percentage of fraudulent Internet purchases are made from Indonesia, Russia, and other eastern block or developing countries. Accept orders from such countries at your own risk until a worldwide AVS system is developed.4. Let customers know what name will appear on statementsMany merchants who use 3rd Party Processing companies have run into problems because the company name that appears on cardholder's monthly statements is usually the name of the 3rd party processing company and not the company name of the site the cardholder made their purchase from. This isn't always the case, but in many cases it is. If you use a 3rd party processor, and even if you don't, make sure the customer knows what name will appear on their credit card statement at the end of the month. This will help to reduce any confusion that might would otherwise occur.5. Handle suspicious orders accordinglyIf an order seems suspicious the best way to handle the situation is to either call or e-mail the customer and attempt to verify that they placed the order. As a rule of thumb, if in doubt, check things out. It may be a good idea that if a customer makes an unusually large volume purchase from your site to follow-up with a verification call.6. Watch out for orders using free e-mail addressesBe wary of accepting orders from people who used a free e-mail address when ordering (i.e. Hotmail, Yahoo, etc.). Tracking people who used a free e-mail address is almost impossible, it's much easier for them to get away then if they used their Internet Service Provider (ISP) or their own company web site e-mail address. To check whether an e-mail address is a freebie or not just take the part of theaddress after the "@" symbol, add "www" to the front of it and see what website it brings up (i.e. joe@yahoo.com = www.yahoo.com).7. Signatures on deliveryIf your business delivers products use a carrier that requires a signature on delivery, and allows you to have a copy of the signature. Retain these for your records.8. Request fax copies of ID and credit cardYou may want to request your customer to fax a copy of both sides of their credit card and driver's license. This tactic usually works best in a B-to-B (business to business) sales environment. While this is not a defense under Visa or MasterCard rules, it is yet another way to deter fraud.9. Posting a warning messageTaking the time to post a warning message on your order page to those who may attempt to make a fraudulent order will greatly deter the number of instances of fraud. Be sure to mention that IP (Internet Protocol) addresses are being logged. IP addresses can come in handy when locating people about fraudulent orders.
Merchant Account Rates
Application/Setup: $0 - $100+ (one time fee)Most providers have an application fee. Some charge it right out at the beginning, while others add it into the solution purchase/lease costs. Some providers do not have an application fee at all.Hardware/Software: $99 and up or Lease: $20/month and up.One important note worth mentioning here, though leases are sometimes beneficial to you because they keep you from paying up front for a terminal, it's usually much better to purchase from the beginning than pay a lease for the next 12, 24, 36 or 48 months. Why? With a lease you'll end up paying sometimes 3 times or more then if you would of just purchased the solution outright from the beginning. While a $29.95 monthly lease for 48 months sounds good in reality it isn't. Leases are very hard to get out of once started. If your business goes under before the 48 months are up, you still have to pay on the hardware/software costs until the last penny has been received by the leasing company. Also, the lease fee you seedoes not include your state sales tax or the amount charged for the damage/loss waiver. If you do go for the lease, always determine the lease's buyout clause, end of lease terms, and especially beware of clauses that allow the lease company to continue charging you even after the 48 months have passed (they say that you should contact them in writing one month prior to the end of the lease, or you can just let them keep charging you).Programming: $0 - $100+ (one time fee)This usually only applies to retail merchants who have changed from one provider to another. The programming process isn't difficult but watch out for the cost, someproviders may nickel and dime you on programming fees. Why do they charge this fee if you use your own equipment? It's used to somewhat make up for the loss of not selling or leasing you their equipment.Discount Rate: 1.49% - 4% per transactionThis is the fixed percentage amount that is deducted from the purchase cost. The lower discount rates are for retail establishments while the higher are for Mail Order/Telephone Order (MOTO) and Internet-based businesses. Why the lower cost for retail? The instances of credit card fraud are much lower so banks are able to charge lesser percentages for these types of businesses. A typical discount rate for US business is right around 2.30% for online and 1.79% for retail, perhaps a little higher or a little lower.Non-US businesses will pay a higher discount rates closer to the 3% to 4% range.Don't let a few tenths of a percentage point be the deciding factor between two providers. For example, if Provider "A" charges 2.29% and Provider "B" charges 2.49% you'll only save $0.20 for every $100 processed through your merchantaccount.Transaction: $0.20 - $0.50 per transactionIn addition to the discount rate a transaction fee is also deducted from the purchase cost. Also, just as with discount rates, transaction fees are lower for retail businesses while slightly higher amounts are charged for MOTO and Internetestablishments. Address Verification (AVS) may either cost an additional fee, or may be included in the base transaction fee. The typical transaction fee for US businesses is right around $0.30 while the higher end of this fee is sometimes the case for Non-US businesses.Monthly Minimum: $0 - $25 per monthThe fee is based on your transaction and discount rate fees from your credit card sales each month. For instance, say your bank charged $25 as a monthly minimum, the transaction and discount rate fees collected by the bank must equal or go over$25 each month. If this is the case no monthly minimum will be charged. However, if the fees collected for that month do not meet the $25 minimum, you will then be charged the difference. Not all processors have a monthly minimum fee, however most do.Gateway Access: $0 - $25+ per monthSince in most cases, the Secure Payment Gateway provider (e.g. Authorize.Net, VeriSign, etc.) is a separate company from the Merchant Processor, they charge extra fees. For every month that you are on their system, you usually pay an access fee.The usual fee to pay for gateway access is around $10.Statement: $0 - $15 per monthThe statement fee is charged because at the end of each month you will receive a statement from your processing bank that will list all the transactions that went through for that particular month. It's very much like your credit card or telephone bills.Daily Close-Out: $0 - $0.15 each dayAssociated with software and terminal processing solutions where at the end of every business day you close-out all your transactions. Many providers do charge this daily closeout fee.Address Verification System (AVS): $0 - $0.05 per transactionThe AVS service checks to see that the billing address given by the customer matches the credit card. If you opt not to use AVS, VISA and MasterCard will not support your transactions and will charge you an additional 0.17% to 1.25% on those sales. Most merchant accounts do have an AVS charge, even if it's bundled with your transaction fee. The AVS service works only with US credit card holders. Currently, there is no AVS service in place for non-US credit card holders.Chargeback: $5 - $35 per instanceA chargeback occurs when the cardholder disputes a charge that they found on their monthly credit card statement. A large number of chargebacks can cause your merchant account to be dropped totally and leave you in a bind when trying to get another merchant account for your business. If this is the case you may not be able to get another merchant account for several years. As a merchant it is important that you take the necessary steps to reduce and potentially eliminate the instances of chargebacks.Reserve: Varies, ask the provider for detailsSome providers will require you to have a reserve account where the amount is determined by your businesses estimated sales receipts. Usually a reserve is almost always charged to a Non-US based merchant who is trying to obtain a merchant account. Also, businesses that do a high volume of sales each month may be charged a reserve fee. Otherwise, there usually isn't a charge. In most cases, the reserve fee is used to cover for any chargebacks on the merchants account. A reserve should be avoided if all possible.
Annual Fee: $0 to $100 per year
Some credit card processors will charge this fee just as additional way to pay for maintenance and system upgrades. This fee usually isn't disclosed upfront. Ask your merchant account sales representative for information.
Annual Fee: $0 to $100 per year
Some credit card processors will charge this fee just as additional way to pay for maintenance and system upgrades. This fee usually isn't disclosed upfront. Ask your merchant account sales representative for information.
Explanation of Credit Card Processing Solutions
n order to process credit and debit cards through your merchant account, you need to decide which processing solution is right for you.
Retail Swipe Terminal - This particular solution is for retail and storefront merchants who see their customers face-to-face. This type of solution incurs the lowest merchant account processing fees since you actually are able to swipe the customers credit card through the terminal. It is believed that orders that are swiped have a lower fraud risk, hence the reason for the lower processing fees. Check out our Complete Guide to Retail Merchant Accounts & POS Swipe Terminals.
Real-Time Processing - This is the solution for businesses on the Internet. Real-Time allows you to automatically process credit card orders through your merchant account with no assistance needed on your end. Everything is automated, and the funds transferred into the merchant account, from the cardholder, is deposited into your business checking account, within a few days. All Real-Time solutions are secure and the purchase of a secure certificate is not usually required. Get more information on a real-time internet merchant account.
Virtual Terminal - If you are a merchant on the Internet and expect to receive orders via phone, fax or mail then getting a Virtual Terminal solution (along with a Real-Time processing solution) is the best route to go. The Virtual Terminal is a secure website where you login and manually type in a customers credit card information. Once the information is submitted, it is securely processed and funds are then deposited into your merchant account within a few days. A Virtual Terminal can be accessed securely from any computer connected to the Internet. Most all Real-Time processing solutions also come with a Virtual Terminal at little or no additional cost. Virtual Terminals can also double as good mobile processing solutions, click here for more information.
Wireless Merchant Solutions - There are two types of mobile solutions, solutions that allow you to swipe a credit card in a mobile environment and Touch-Tone solutions that allow you to manually enter card information into a touch-tone phone. The Touch-Tone solutions are usually good for smaller mobile merchants that want to process credit cards in a mobile environment without high startup costs. The wireless swipe terminal solutions are great for merchants that don't mind purchasing the terminal up front (purchasing is usually better than free terminal options as often times free terminals come with hefty termination fees). Both the touch-tone and wireless swipe solutions have benefits, it really depends on your business needs in the area of credit card acceptance. Find out more about available wireless merchant account options.
Retail Swipe Terminal - This particular solution is for retail and storefront merchants who see their customers face-to-face. This type of solution incurs the lowest merchant account processing fees since you actually are able to swipe the customers credit card through the terminal. It is believed that orders that are swiped have a lower fraud risk, hence the reason for the lower processing fees. Check out our Complete Guide to Retail Merchant Accounts & POS Swipe Terminals.
Real-Time Processing - This is the solution for businesses on the Internet. Real-Time allows you to automatically process credit card orders through your merchant account with no assistance needed on your end. Everything is automated, and the funds transferred into the merchant account, from the cardholder, is deposited into your business checking account, within a few days. All Real-Time solutions are secure and the purchase of a secure certificate is not usually required. Get more information on a real-time internet merchant account.
Virtual Terminal - If you are a merchant on the Internet and expect to receive orders via phone, fax or mail then getting a Virtual Terminal solution (along with a Real-Time processing solution) is the best route to go. The Virtual Terminal is a secure website where you login and manually type in a customers credit card information. Once the information is submitted, it is securely processed and funds are then deposited into your merchant account within a few days. A Virtual Terminal can be accessed securely from any computer connected to the Internet. Most all Real-Time processing solutions also come with a Virtual Terminal at little or no additional cost. Virtual Terminals can also double as good mobile processing solutions, click here for more information.
Wireless Merchant Solutions - There are two types of mobile solutions, solutions that allow you to swipe a credit card in a mobile environment and Touch-Tone solutions that allow you to manually enter card information into a touch-tone phone. The Touch-Tone solutions are usually good for smaller mobile merchants that want to process credit cards in a mobile environment without high startup costs. The wireless swipe terminal solutions are great for merchants that don't mind purchasing the terminal up front (purchasing is usually better than free terminal options as often times free terminals come with hefty termination fees). Both the touch-tone and wireless swipe solutions have benefits, it really depends on your business needs in the area of credit card acceptance. Find out more about available wireless merchant account options.
Merchant Account General Introduction
Credit card processing can be a confusing subject. Before you jump in with both feet lets give you an introduction; What merchant accounts are, what information is needed to obtain your merchant account and rates/fees involved.
What is a Merchant Account?
A merchant account is a special account that is setup for a business to accept and process credit card orders. 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.
Requirements for a Merchant Account
Getting important information together ahead of time will ensure that you breeze right through your merchant account application process. Here's what you may or may not (depending on the provider) need in order to obtain your merchant account:
Checking account (some providers set you up with one but most require that you have one already. If you're a Sole Proprietor you may usually use your personal checking account, however if you're an LLC or Corporation you may need a business checking account)
A copy of a voided check (if you use your own checking account for funds to be deposited in) Articles of incorporation, business license or reseller license. - only if applicable. (A 'Certificate of Assumed Name' from your county Register of Deeds office may be all that is required. These only cost around $8.) The purpose of this is to prove you are a legitimate business.
What is a Merchant Account?
A merchant account is a special account that is setup for a business to accept and process credit card orders. 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.
Requirements for a Merchant Account
Getting important information together ahead of time will ensure that you breeze right through your merchant account application process. Here's what you may or may not (depending on the provider) need in order to obtain your merchant account:
Checking account (some providers set you up with one but most require that you have one already. If you're a Sole Proprietor you may usually use your personal checking account, however if you're an LLC or Corporation you may need a business checking account)
A copy of a voided check (if you use your own checking account for funds to be deposited in) Articles of incorporation, business license or reseller license. - only if applicable. (A 'Certificate of Assumed Name' from your county Register of Deeds office may be all that is required. These only cost around $8.) The purpose of this is to prove you are a legitimate business.
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