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- What type of application process is required by credit card processors?
- Is it difficult to get approved by credit card processors?
- Does a merchant need a business license or business checking account to obtain an account with a credit card processor?
- How long does it take to get approved by a credit card processor?
- What type of monthly fees are required by credit card processors?
- What is a gateway fee?
- What is a statement fee?
- What is a monthly minimum?
- What types of fees do credit card processors charge for individual transactions?
- What is a discount rate?
- What is a transaction fee?
- What is an address verification fee?
- Are the fees the same for both retail and internet transactions?
- What is a non-qualified rate?
Processing Different Transactions
- What types of transactions can be processed by credit card processors?
- How long does it typically take a credit card transaction to clear a merchant’s account?
- How does a merchant acquire a P.O.S. credit card swiper?
- How can a merchant handle credit card transactions with a mobile phone?
- How do credit card processors handle internet transactions?
- Do credit card processors offer merchants virtual shopping carts?
Fraud Protection and Security
- What types of fraud protection are offered by credit card processors?
- How does real time processing enhance a credit card processor’s fraud protection?
- What is SSL and 3DES data encryption?
- What is a CVV2 number?
- How does the use of a CVV2 number reduce credit card fraud?
- What is a merchant account?
- What different types of merchant accounts are available?
- What is the difference between different types of merchant accounts?
Refunds, Chargebacks and Other Topics
- How do credit card processors handle refunds and customer returns?
- How do credit card processors handle chargebacks?
- What is the role of batching in credit card processing?
- What is the difference between credit card processing with a bank versus third-party institutions?
- Do credit card processors charge a termination fee if a merchant wants to switch to a different company?
- What types of customer support are offered by credit card processors?
- How do credit card processors handle gift cards and gift certificates?
In order to get approved by a credit card processor, a merchant will need to provide the company with some fairly basic data concerning his or her business. While some credit card processors require you to fill out lengthy forms and submit them through the postal service, many processors now allow merchants to apply online. Many of the top credit card processors do not require an application fee or will wave their fee at a merchant’s request. Compare providers here or ask your questions at:
Flagship Merchant Services: (800) 747-3193
National Bankcard: (888) 357-9088
LEADERS Merchant Services: (888) 328-0119
Generally speaking, it is not very difficult to get approved by a credit card processor. Most credit card processors approve between 95-99% of their applicants.
Not necessarily. A business license is not required in order to be approved by a credit card processor, but it can help speed up the approval process. A merchant does need to have a business checking account if the business is a corporation.
The length of time that it takes to get approved by a credit card processor can vary from one company to the next. Some credit card processors boast same day approval, while others can take three days or more to get to your application. High risk merchants can expect longer approval times.
There are three monthly fees that are required by nearly all credit card processors: the gateway fee, the statement fee and the monthly minimum. As soon as you get a merchant application, you will be able to see all applicable fees. Please, please ask the salesmen whenever you aren’t clear about the nature of any of the fees. It will save you money!
Credit card companies partner with gateway providers to verify a customers data and determine the authenticity of a transaction. Most gateway providers charge a monthly fee that is billed to merchants through the credit card processor. Most gateway fees range from around $5-20 per month.
A statement fee is simply the monthly fee charged by credit card processors for their services. Statement fees are typically $10 per month or free at some providers.
The majority of the top credit card processors out there require merchants to process a minimum amount of money per month of $15-25. If a merchant does not meet the monthly minimum, the difference is added to the merchant’s monthly charges.
Credit card companies charge three different types of fees for each transaction: the discount rate, the transaction fee and the address verification fee. Other fees may apply. Make sure to examine your merchant application in detail before signing!
The discount rate is the percentage of a transaction that a credit card processor keeps for itself.
A transaction fee is the set rate that credit card processors charge for all transactions regardless of their size. Transaction fees are rarely more than $0.30 cents.
Whenever a credit card address is verified during a transaction, a fee of $0.05-0.10 is charged to a merchant’s account. Addresses are verified in credit card transactions by an address verification service, or AVS.
No, internet transaction cost merchants slightly more than retail transactions.
A non-qualified rate is the discount rate that a credit card company charges for certain types of transactions that are not covered by a particular merchant account, such as a phone order. Non-qualified rates are commonly 5-8%, so be sure that all of your transactions are covered appropriately before you agree to a processing contract.
The top credit card processors can handle all major credit cards, charge cards, checking cards, debit cards, gift cards and electronic checks.
Although there are some credit card processors that clear all transaction the following day, most processors clear payments two to three days after a customer has completed a transaction.
Many credit card processors provide merchants with a point of sale credit card swiper at no cost regardless of whether a merchant will be conducting retail transactions or not.
Most credit card processors now allow merchants the flexibility of accepting credit card payments on the go with their mobile phone. Most mobile phones with internet access can handle these transactions. A merchant simply logs on to their account over their mobile phone and enters a customer’s credit card information, and the payment is approved a moment later. Some credit card processors even offer Bluetooth enabled credit card swipers that work with a merchant’s mobile phone. iPhone/Droid applications may be available as well.
Most credit card processors provide merchants with a virtual terminal in the form of a link to a secure webpage where customers can enter their credit card information.
Most types of online transactions require a basic shopping cart in order for customers to shop efficiently. While not all credit card processors offer this service to their merchants, the leaders in the processing industry general offer some sort of basic shopping cart.
Credit card processors use a number of different methods to provide the appropriate level of security for merchants and their customers, including address verification, real time processing, SSL or 3DES data encryption and the three digit CVV2 number. The top processing companies have proprietary solutions to fight fraud more effectively.
Credit card transactions are generally validated by a credit card processor in a matter of seconds, reducing the amount of time that a customer’s information is available to computer hackers and other criminals.
SSL, or secure socket layer, provides credit card processors and merchants with some basic security to safely complete credit card transactions without criminals intercepting a customer’s personal information. SSL consists of a 128-bit encryption. Some credit card processors use 3DES for their data encryption. 3DES encrypts information three times over 64-bit keys, resulting in a total of 192-bit encryption.
A CVV2, or card verification value, is the three digit number located on a credit card that is not included on a card’s magnetic strip. The CVV2 number is located either on the back or the front of the card depending on a customer’s credit card.
Credit card processors often require customers to enter their CVV2 number in order to reduce the likelihood of credit card fraud because a customer typically must have his credit card in front of him in order to provide this information.
A merchant account is simply the individual account that a merchant has with a credit card processor. Using a merchant account that is not your own to complete a transaction is an illegal activity known as factoring that can have severe legal consequences.
The most common types of merchant accounts offered by credit card processors are retail and eCommerce. Other types of merchant accounts include restaurant, lodging, mail order and car rental.
There are two main differences amongst the different types of merchant accounts. First, merchant accounts that have a higher risk of fraudulent activity like eCommerce and mail order typically charge a higher discount rate. Second, some merchant accounts provide customers with more information regarding the merchant and the transaction. For example, merchant accounts for lodging provide customers with some detailed information regarding their stay, such as check in time and room service authorizations, while retail merchant accounts simply provide customers with the basic details of a transaction.
Most credit card processors allow their merchants to provide customers with a refund as long as the transaction is completed within 90 days of the original sale. However, the merchant does not receive a refund for the transaction fees that were charged on the original sale, and many credit card processors charge an additional fee for processing refunds.
If a customer disputes a transaction or there was some sort of error in the way that the payment was processed, the credit card issuer will send the transaction back to the processor. The processor will then inform the merchant of the problem, and it will be up to the merchant to either accept or dispute the chargeback.
After a credit card transaction has been authorized at the point of sale, the transaction is then stored in what is known as a batch. A batch is a group of transactions that have not been settled. Most merchants submit their batches to their credit card processor at the end of their business day.
While many merchants enjoy the convenience of letting their bank process their credit card transaction and deliver payments directly to their account, third party processors offer the same services at a much lower rate.
It depends. Some credit card processing contracts last for one to three years, and processors may charge a fee of a few hundred dollars to merchants who decide to cancel their contract early. Other processors choose to offer monthly contracts with no cancellation fees. Check our chart for more details!
All credit card processors offer some form of customer support 24 hours a day, 7 days a week through a toll-free phone number or email messages, and many now offer live chat at their website. However, it is important to find out what type of support is available, as some processors have outsourced much of the customer support oversees. Retail merchants who may need to have their point of sale equipment repaired should make sure that their credit card processor has local repairmen who are on call whenever the merchant is open for business.
Not all credit card processors offer support for gift cards or gift certificates. However, some processors can issue merchants gift cards that are processed at a much lower fee than other transactions.