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merhant accounts

creditcardsIf you sell online or in person, you need to take credit card payments from your customers. Let me help you understand some fundamentals concerning credit card payment processing. Credit cards have been around for a while however how they work is not open an secret. Let’s cover that rapidly so you have some information to aid you. For those who don’t want to read through the details, here are links below.

Finding a Merchant Account Provider

High Risk Merchant Accounts

Non-Profit Credit Card Payment Processing

How do credit cards work?

Most of us have a charge card or credit card from our bank. When we pay our regular monthly bank card bill we pay our financial institution. There are other people in the credit card business that get paid. There is VISA, MasterCard, Discover, American Express, JCB, UnionPay as well as other credit cards. Here’s how it all works. You the business or merchant sell items online. There is a company that connects you to the credit card networks. This business is normally called a payment gateway, merchant account provider, merchant services provider. Let’s talk about the payment gateway right below.

Payment Gateway

The Gateway is the entrance or portal to the network of credit cards as well as financial institutions. When your client buys something from you, your customer enters their credit card number as and this is passed by your payment gateway to the credit card network and bank that provided the credit card. The financial institution determines whether the client can pay with credit card or not and sends a message to the credit card network. This message gets back to you in a few seconds. If the customer is ok to pay with their credit card then this is called an approval.

The Payment Gateway has an obligation to pay you for the acquisition price of the item you sold. The gateway has a duty to make certain that you are a trustworthy business and not some type of bad person up to no great. The Gateway do not constantly offer to you often they will use other means to offer bank card payment handling. They will certainly use affiliate salesmen or resellers. These companies often have the strange name “ISO.” Many of the time you be dealing with a Gateway so that is where will certainly focus many of the details to assist you discover and obtain the finest deal for your business.

Merchant Account Provider

The merchant account provider offers the bank account where you will receive your money. They also investigate you as a business to make sure you are legit. They also monitor you to make sure you run your business in a reputable and legal manner. You can’t do payment processing without a merchant account.

Merchant Services Provider

A merchant services provider is nearly the same as a merchant account provider.

Charge card Number Safety and security

The payment card industry (PCI) has stringent guidelines for any individual that collect repayments from consumers making use of charge card. These policies are PCI guidelines. If you collect credit card numbers you have to comply with these guidelines as well as go through assessment annually. The rules need you to shield the charge card numbers as well as maintain them encrypted as well as limited access by your organization. Right here is a link to find out more regarding PCI.

Sometimes the consumer will complain that they did not make the buy from you. When this occurs the client grumbles to their bank and the financial institution begins a “chargeback” process. The bank will ask for information about the purchase as well as if you are incapable to offer info, give inusufficient info the bank will certainly alert your gateway that will certainly take the money back from you. This is called a “chargeback.” If you have a lot of chargebacks you can be identified a high risk merchant and also consequently you will certainly want to reduce chargebacks.

But there’s more to offering credit card payments online.

Shopping Carts, Ecommerce Solutions, Redirects, Widgets

All sites that sell online have shopping carts. Just what is a shopping cart? A shopping cart is software program that enables your client to pick products from you web site and also spend for them at check out. Appears quite basic yet it can be complicated sometimes. Your customer might stop going shopping before checkout as well as leave your website. When they return to your website you will want to the products they selected to be in their cart so that they can purchase. Your client will certainly choose one to two products, include them to the cart and also check out. The shopping cart tallies the price of both items, calculates the tax obligation and shipping then sends out the complete acquisition price to the repayment entrance. Buying carts were usually contributed to sites that were built separately from the shopping cart. There are still many of these purchasing carts around.

Ecommerce Solutions

This may sound complicated but there are some truly easy options that do not cost much and also make it very easy to obtain started. The ones we such as are Shopify, Magento, Volusion as well as Big Commerce.

Merchant Account Blog Presents: D.C. Taxicabs and Credit Card Readers

In August, D.C. Mayor Vincent C. Gray, unveiled his plan to modernize D.C taxicabs. In every cab a meter with GPS, merchant account readers and a television screen was to be installed in every taxi. The cost to the taxi drivers has been debatable between $150-$500 per cab. Now, the modernization plan has been halted due to the cab drivers suing the city over the suspicious circumstances that this law was passed. Council member Mary M. Cheh (D-Ward 3) who introduced the legislation described the halt as “unfortunate.”

This delay stalls a winning $35 million bid by Verifone to be the equipment installer of 10,000+ taxicabs. The losing bidders, Creative Mobile of New York and Ride Charge of Alexandria, VA are in favor of the delay. So far, District Cab Fleet is the only company moving forward with 30 units installed out of 650+ cabs.

The reason the taxi drivers are angry is simple math. Cab drivers are charged a 15% surcharge from their brokers in order to accept credit cards. Many other taxicabs are instructed to charge $2-3 in “convenience fees” to accept credit cards. The drivers see none of these surcharges or fees. After speaking to a few owners in the taxi industry, neither do the cab companies! [So the question lies…”Where does the money go?”]

Fortunately, MerchantAccount-Blog.com was given a credit processing statement from a major taxi company (which will remain unnamed). In the statement, we noticed that the average cab fare is $50, and the average taxi earns $2,000/month in credit card processing. If we were to follow the taxicab driver’s union, and allow drivers to select their own system (for example Square or Phone Swipe) the charge would range from 2.75% to as low as 10 basis points. That means out of the $3 surcharge cost would be $1.38 (out of a 2.75% worst case scenario). That leaves $1.62 in revenue for every cabbie that accepts credit cards. Using the fore mentioned averages, that means the cabbies are losing $64.80 a month in revenue on average. Obviously Councilwoman Cheh and Mayor Gray are aware of this. [This is not even mentioning the potential monthly credit card residual profit share].

It would be irresponsible or (at least) inept for a government official to miss potentially $648,000/month in collective revenue. Remember, in History of Capitalism 101, the founding principle was laissez-faire [individualism: the doctrine that government should not interfere in commercial affairs]. Now 10,000+ small businessmen and women and the taxi companies are taking a loss when officials use faulty math to a corporate giant’s advantage.

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Lending & Merchant Account Cash Advance

During a speech at George Washington University Federal Reserve, Chairman George Bernanke stated, “small businesses have…found it difficult to get credit.” [Now, if banks make money by giving loans, what is the cause? Possibly, Bernanke, to a small degree?] According to FDIC statistics lending has reduced dramatically. Perhaps, merchant account cash advances are an option?

Business loans under $1 million fell 13% between June 2007 and June 2011. In addition, the amount lent has dropped 19%.

In observance of Federal Reserve incentives, banking lending standards have increased. Therefore, fewer companies can qualify for loans.

Increasing their lending standards for risky mortgage loans, banks have relegated business loans as collateral damage in an effort to improve lending practices. This, ultimately, is a scar left behind by the financial crisis.

Small business loans and mortgage loans are inexorably linked together since many small businesses use home equity to finance their companies. Obviously, forcing the Fed to loosen standards would force us to revert back into the ballooning crisis we just got out of. So, the predicament lies as to where do we find funding for America’s small business?

To get suggestions, I emailed commentators, repliers and subscribers to my blog for answers. The replies were almost choral; because everyone had the same response…Merchant Cash Advance.

Small business owners who need cash infusions into their businesses are turning more frequently to this 10 year old industry. Cash providers, who generally charge premiums of 30% or higher are trying to promote a universal standard in order to avoid regulatory restrictions.

Businesses receive cash advances from providers [Note: I did not say lenders!] in exchange for future credit sales. The caveat, however, is that (because these companies may have little or no credit) businesses are charged interest rates (normally) ranging from 60% to 200% APR. Again, these transactions are not considered loans. They are regarded, none the less, as a purchase of future revenue. Therefore they are not regulated, and can collect from daily credit card processing proceeds. In addition, because some businesses are seasonal, payments are lowered during slower months.

According to Marc Abbey, managing partner of the consulting firm First Annapolis, there has only been a 10% penetration in this $5 billion dollar industry. Responsible cash advance companies, make a conscious decision not to collect too much too soon, so that client businesses can survive.

As mentioned before, this is a newer industry, being only 10 years old. Even now, lines are being drawn in the form of legal battles in heavy merchant advance states like California. Requiring cash advance companies to obtain state licensing, merchant capital advance companies now have expanded parameters for collection and terms.

Through expansion and newer innovation, MCA’s can now provide cash advances in the form of loans, lines of credit, funding on credit cards, and support leases. It can also complement bank funding.

In regards to salespeople and independent sales offices, be very careful. Before you enter into this arena, it is prudent to be well educated about the industry. I suggest you refer to the Electronic Transaction Association. You can find a detailed white paper on Merchant Cash Advance basics, there.

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How To Get A Merchant Account

In the past interchange rates were restricted to members of credit card associations and merchant account / credit card processors. In easy speak; interchange is simply the cost of doing business. In addition, credit card processing companies add basis points and fees to interchange in order to mitigate their company cost and add profit.

To see an example of interchange rates, you can do a simple search engine query for Visa USA Reimbursement Fees.

The good news is that merchant account holders can “peak behind the curtain” and negotiate from an informed platform .The bad news is that many merchants have no idea how and what costs to add to the equation. Credit card processors and ISO’s make their money from the previously mentioned basis points, equipment, and fee charges. Many less honorable companies take advantage of unsuspecting merchants promoting savings with low percentages for transactions that you will never perform, while overcharging for your company’s method of card acceptance and type. Another trick performed, most commonly, is not fully disclosing all the fees (thus the hidden fee heartache begins). However, my favorite method is the “free terminal” promotion. Yes, the terminal is free as long as you are a client. However, you find yourself paying for services and fees that you had never seen before. Think about it. Can a merchant account holder give away it’s most expensive asset to a customer in hopes that they will continue to shop in their store? No! It’s bad business. Nothing of any worth is truly free.

The question for you Mr. or Mrs. Merchant, is do you want something for nothing? Is your business a glorified hobby?

Then why would you expect other companies to conduct business that way? Even though it may not sound as appealing, the truth is typically the best way to conduct business.

The two questions a merchant should ask a merchant account service provider is:

(1) Are you a wholesale or third party provider?

(2) “Do you have an approval rate above 85% for retail business?” Why question #2? This is because many companies that provide free equipment hope that the merchant has previous processing. Not only previous processing, but processing above five thousand dollars a month. That way, whether it is a hidden fee, a customer support / technical support fee, or an annual membership with some obscure club; their investment is returned.

Those that are not in that category are put through more restrictive underwriting. Thus, making your chances of approval, a rigorous process to say the least (if approved at all).

So far we have learned the “what’s and how’s” in regards to interchange and free equipment. In my next article, I will teach you the four basic platforms you can use to tailor your merchant account… Hope to see you soon.

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Consolidating the Business Debts for Merchant Credit

 

Debt consolidation is the option in which you may be able to get the interest rate lowered. In addition, the number of debts which you have gets rolled over as a single debt. Now, fact is that it is not only the personal finance related debts which can be consolidated. If you are having problems with regards to the business related debts, you can consolidate your business debts too. This is a great way to clear the problem which you may be having with regards to the business related debts opening the door to leverage your merchant account/credit card service rate. There are various ways in which you may be able to consolidate your business debts.

Options on business debt consolidation

The different options, with regards to business debt consolidation, of which you can take help, in order to be able to consolidate the business debts, and pay down the same, are:

  1. Consolidate the business debts of your own – There are various way in which you can consolidate and pay down the business debts of your own. These are:
  • Balance transfer – Balance transfer is the option in which you will be required to transfer the balance from all of the business credit cards or any other such unsecured debts to a credit card related to the business, which have a low interest rate. This is going to help you with paying down your business debts with ease. As the interest rate lowers, and as the number of debts gets lowered, it becomes easier for you to maintain the payments.
  • Taking out consolidation loan – The consolidation loan can either be secured or unsecured. You will be required to shop for the consolidation loans in such a way, so that, you can get better loan offers, with low interest rate and longer loan term.
  1. Take help from business debt consolidation agencies – If you think that it won’t be possible for you to consolidate the business debts of your own, you can opt to take the help of a business debt consolidation agency. Not all of the merchants can have either the time or the energy to work on paying down the debts. The consolidation agency analyzes the business debt problem you are in and then, starts negotiating with the creditors.

So, this is how you can consolidate and pay down your business debts, and save it from going bankrupt.

However, if you think that you have some assets with regard to the business, you can also use some of those, in order to pay down your business debts. You can simply liquidate the assets in such a way so that you can pay down the debts, without having to borrow more.

This article was contributed by Yazmine Wilson of http://www.debtconsolidationcare.com/

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Non-Profit Credit Card Processing

There are several reasons why cash is generally unpopular for donations while credit cards are popular. Credit cards offer a record for donors to use when they do their taxes. Credit cards offer an incentive or some sort of rewards program for usage. Credit cards can be automated donation payments that happen every month or year. So your chances of getting donations could be higher when you offer credit cards. Credit card payments can mean less work for the non-profit as well. You may be able to partner with the credit card company or bank that issued the credit card to your donor. So there is likely some form of cooperation you can achieve when the bank or credit card company knows that their customers are also your donors. Credit card payments can mean less work for your organization. Credit card and debit card based donations can mean more donation volume for you as opposed to cash only donations. Bank that issue credit cards and the credit card companies themselves might be willing partners for some cooperation for your non-profit. If you are a nonprofit organization, you can sometimes reduce your credit card processing rates just by asking your payment processor. Credit card processing fees can change a lot depending on the company that does the processing and how the processing is handled by the provider. All card payments are assessed an “Interchange” fee. These are fees paid to the banks that issue credit cards to your customers and the fees paid to the credit card companies. Look in our diagram and you’ll see the parties involved in a credit card transaction. You’ll see your customer, you the merchant, bank processor and then the credit card network followed by the bank. Interchange fees are set and are generally non-negotiable and these fees are paid to the bank who issued the credit card to your customer and to the credit card network. If you already accept cards, ask your processor about ways to lower your rates. You may need a USB card swiper to plug into your computer.

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