ArchiveCategory Archives for "Merchant Services"
If 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
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.
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.
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.
A merchant services provider is nearly the same as a merchant account provider.
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.
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.
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.
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.
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.
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.
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:
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/
A payment gateway is a solution that sends out settlement transactions to a credit card network such as Visa, MasterCard, or American Express. The payment gateway service gathers your money from your consumer and also sends out the cash to you (the vendor) by depositing the money to a checking account.
A merchant account is a service that maintains money gathered using a payment gateway until the cash is sent out to a typical checking account. A bunch of online seller accounts additionally have a payment gateway that accumulates funds from the consumer.
In this post, we are needing to check out on the internet seller accounts that have a payment gateway so you can begin to market online.
As you start your look for a merchant account provider, take into consideration the questions below. Your merchant account should be able to satisfy the one-of-a-kind needs of your company.
Do I need shopping carts?
Shopping carts are an ecommerce solution where the customer checks out your web site and also adds items they wish to acquire.
Am I marketing digital products that get downloaded and install instantly such as images, online games, or books?
What international currency do I require as well as desire to approve? Or am I delighted with just United States buck or Canadian buck sales?
Do I need recurring or membership payment functions? This permits me to bill my customer every day, weeky or month.
Do I desire my merchant account to procedure payments online only? Do I additionally wish to take bank card repayments personally with a mobile credit card visitor? Or do I additionally have a store front where I will intend to attach to sales register?
As soon as you find a few merchant accounts that meet your needs, ask yourself the following concerns about each of your selections.
Do I require an SSL certificate on my internet site to make use of with the payment gateway service?
Among the more crucial questions is does this service incorporate with my current web site or system? Or do I wish to utilize this opportunity to start over and also build an entire new web site and also incorporate with a brand-new ecommerce remedy?
Just how much are the processing as well as transaction costs?
How much are the yearly charges that I should pay the company?
Does the solution incorporate with my accounting software program such as Quick Books, FreshBooks or various other accountancy solutions?
An idea to locating the ideal merhant account company, is to concentrate on the really fundamental things that you require.
Look for merchant accounts that incorporate with your system if you already have a web platform that makes it possible for ecommerce transactions. Take into consideration utilizing one of the adhering to ecommerce systems to launch your store if you are starting from zero. Each of these alternatives provides combination with merchant accounts.
They also handle all the internet holding so you do not need to mess with that. They offer combination to many different settlement gateways. This is a great alternative for folks who are simply obtaining started selling online.
Square Payments is a merchant account that provides both online as well as in-person payments. Square is probably best recognized for its mobile credit card viewers. The mobile bank card visitor is called a “dongle” and also it plugs into your smartphone or iPad. When you make a sale your client hands you their credit card as well as you swipe the charge card via the dongle. The safe and secure deal is transferred within a couple secs as well as you receive a feedback back from the credit card network. A lot of sellers include more equipment to the Square credit card visitor. Several sellers include iPad Stands to hold their iPad, receipt printers that immediately publish out a receipt, automated cash drawers and also bar code scanners. This things could appear challenging to configuration however its not. Everything aid you provide an expert existence to your customers promptly and also quickly. If you’re a vendor at a craft show, or farmer’s market, for example, these points are have to haves when you’re marketing from your display.
There are many merchant account suppliers yet we’ve chosen two. These are a few of the most preferred companies in the market today. They are some of the most convenient companies to get begun with.
Paypal is probably the most well understood of the repayment gateways and merchant account companies. You’ll get a merchant account and also payment gateway in one solution.
Authorize.net supplies a ton of attributes. You’ll get a payment gateway, merchant account, mobile charge card visitor, persisting payments, pay kinds and much more. This company has beened around for well over 20 years and they understand how you can service the needs of small merchants and also companies that are simply getting going marketing. Authorize.net pumps in worth right into their offering. You’ll obtain repeating settlements for memberships together with scams detection and also prevention tools. Since they’ve been around forever and a day every ecommerce remedy on earth understands them and there are lots of pre-made combination options that are currently done for you.