Merchant Café
Frequently Asked Questions
What is a Merchant Account?
A merchant accepts credit cards and either 'swipes' the card or 'keys' the credit card into a
terminal but this alone is not enough. A merchant account is a relationship with a credit card
processing bank, that actually does the back-end processing. Merchant accounts can be set up
in the name of an individual or by a corporation. Each location of a business with a single
ownership must have its own merchant account. And, each website set up by a merchant that
either has a different name or sells different products needs to have its own merchant account.
There are two basic merchant categories, Retail, and MOTO (Mail Order, Telephone Order). The
credit card business has a rate structure based on Risk, the more secure your transactions the
better your rate. A MOTO account entails more risk since the sale is made by phone or over the
internet, or possibly at a trade show with a manual imprinter. The numbers are later 'keyed' into
the terminal.
What is CVV2?
CVV is a card verification system that verifies that a cardholder is in possession of a credit card by
verifying a set of numbers that is embossed on the credit card and not encoded in the magnetic
strip. This way even if the card number is stolen, a transaction cannot be processed if the
purchaser cannot verify the cvv number on the card. Requiring CVV in addition to AVS can help to
eliminate most fraudulent orders for internet and keyed entry businesses. Each card issuer has a
different name for the CVV system, but all are essentially the same thing. Visa refers to it as CVV2,
Mastercard is called CVC2, Amex is CID. The CVV number is located on the back of the card
except for most Amex cards where it is on the front. Amex also uses a 4 digit verification code
whereas all other card makers use a 3 digit number.
Q. What are the requirments for a merchant account?
To setup a domestic or US based merchant account a merchant must have a physical location
within the US and an American checking account. Once these conditions are met a merchant can
apply for a domestic merchant account. If these conditions cannot be met a merchant must use an
offshore merchant account.
Application Requirements for all businesses:
What is a discount rate?
This is a fixed percentage rate that is deducted from the purchase cost when an order is made. A
small transaction fee is also deducted in addition to the discount rate.
What are statement fees?
Most processors charge between $10 and $15 a month. This is an administrative fee just to carry
the account in the system. At the end of each month you will receive a statement that will list all
the transactions that went through for the last month. It's very much like a credit card or telephone
bill.
What is a gateway fee?
A gateway fee is charged by the processing bank for maintenance of the system that is used to
"pipeline" credit card transaction information from your business or web site to the network of
banks that further process the transaction. Usually a typical gateway fee is around $10 per month.
Are there monthly minimums associated with accepting credit cards?
Usually the monthly minimum is around $25; for some banks it might be higher. This processing
fee is collected by your transaction and discount rate fees from your credit card sales each month.
So, for instance, say your bank charges $25 as a monthly minimum, if the transactions and
discount rate fees collected by the bank equal or go over $25 that month, no monthly minimum will
be charged. However, if the fees for that month do not meet the $25 monthly minimum, you will
then be charged the difference. For small businesses the monthly minimum is sometimes waived.
What is a chargeback and are there any fees?
A chargeback occurs when a customer challenges the sale on their credit card bill, often a month
after the sale was actually made. There are many reasons for a customer to charge-back the item.
Sometimes it is a mistake. The merchant then has the option to dispute the chargeback, usually
by producing the signed receipt. Fees for a chargeback are usually around $30.
Are there any programming and/or installation fees?
Usually not. However, some providers do charge $100 or more. If you are a retail business and
purchased a terminal from somewhere other than from the merchant account provider you are
obtaining a merchant account from they may need to do some slight programming modification to
the terminal unit so it can work properly with the processing bank they represent.
What kind of transaction fees are associated?
These can vary depending on what processing solution you are using and what credit cards you
accept. An overall ballpark figure would be between $0.15 to $0.35 per transaction.
Are there any setup fees?
Most of the time no, but some providers may charge up to $50.
What is the daily batch fee?
Also called a close-out fee, this type of fee is associated with software or terminal processing
solutions where at the end of every business day you close-out all your transactions.
Do providers require a reserve account?
Some providers will require you to have a reserve account where the amount is determined by
your businesses estimated sales receipts. Dealing with this type of reserve is NOT recommended.
Usually a reserve is almost always charged to an out-of-country 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.
Should I purchase or lease equipment?
If you can afford to pay up front for the equipment that you are looking to obtain, you should
definitely do it. Purchasing will save you a considerable amount over leasing. The bottom line is
that even if a lease sounds like a good deal you will still spend much more than if you outright
purchase the equipment. Most leases are non-cancelable, and may or may not include a buyout
option at the end where you will be required to pay a percentage of the cost of the terminal. We
have seen merchants using other companies with a buyout option of the total cost of the terminal
that they are leasing.
Can I process over an IP based phone connection?
Many merchants have broadband connections for their business and would like to utilize this
connection for their credit card processing. The terminals that we offer for use with this type of
connection are the Omni 3740 and the Omni 3750 with the ethernet adapter. PC Charge can also
be used through a broadband connection, in conjunction with a PC card swiper. Additionally,
Lipman's Nurit 8320 State-of-the-Art terminal has IP connectivity. These options will provide a
lightning fast method for processing your electronic transactions.
How long does it take to be approved and set up?
Usually within 24 hours.
Will terminals work with VOIP?
Since the emergence of VOIP phone systems in the business world, this has been a common
question. Most credit card terminals will not work with a VOIP telephone connection. A VOIP
connection uses a digital phone network which involves switches and multiplexing to transfer data.
Most credit card machines use an analog type connection that is incompatible with a digital circuit.
The easiest way to use a broadband connection is to use a Verifone Omni 3740 or Omni 3750 or
a Nurit 8320 with the ethernet adapter. These terminals in conjunction with a router will allow you
to connect all of your electronics easily through the same internet connection.
It may be possible to use an analog to digital converter, but since this is a very expensive and
technically advanced process it is not documented or recommended
Do I have to have great credit to get approved?
Personal and business credit are factors that are used to qualify a business or individual for a
merchant account. Every merchant account application will include a credit check of the business
and the person signing for the merchant account. Perfect credit is not a requirement for opening a
merchant account, but a better credit rating can help speed up the application process. The only
time that credit becomes an issue when opening a merchant account, is if a merchant has an open
bankruptcy, or has been terminated from processing in the past.
Can I buy a terminal from another company?
Yes. We can reprogram almost any terminal in the processing industry and there is no charge to
reprogram it. However we will not warranty any terminal that is not purchased from us. You will still
be entitled to all of our customer service benefits, but if a problem arises with your equipment, you
will need to refer to the manufacturer for warranty and service issues.
What is AVS?
The Address Verification System or AVS is an electronic system that verifies the address of the
card holder during a credit card transaction. This system is commonly used in internet based and
keyed in transactions where the card is not being swiped through a credit card machine. This
system can verify the billing zip code of the card holder and if setup properly can verify the street
address and sometimes even the telephone number. The merchant gets a response that the AVS
is approved or declined and can then chose to run the transaction or not.
AVS should always be used for every internet and keyed transaction to avoid downgrade charges
and fraud. Even if you can verify who your customer is, if you are setup as a keyed or internet
account, you should use AVS for every transaction.
Can I process through a website?
Yes. An internet merchant account will allow you to acept credit cards through your website.
We offer three Payment Gateway Systems: Authorize.net, CyberSource and Paradata. The
gateway that you chose will allow your website to securely connect to the processing networks.
What if my business is not based in the US?
The requirements for a business to be able to process through a domestic merchant account are
an American bank checking account and a physical location in the US. Once these requirements
are met, a business can apply for a domestic merchant account. For businesses that do not meet
these standards off-shore banks also offer merchant accounts.
What is an Offshore Merchant Account?
An offshore merchant account is a merchant account that is processing through a non-domestic
(Non-American) processing bank. Foreign processing banks are not subject to the same federal
restrictions as American processing banks, so the types of businesses that they provide services
to is also less restrictive. Offshore providers are generally significantly more expensive than
American processing banks, but they don't have volume or ticket size restrictions that American
processing banks often have. Many American companies use offshore processing banks for their
credit card processing because their businesses fall into a high risk category.
Is wireless coverage available in my area?
Most cities have adequate coverage but rural areas do not. See coverage
How long does it take for funds to be available?
Funds will be available in your bank account normally between 48 to 72 business hours from the
time that a batch is received by the processing bank. The time is measured from the time of the
batch.
Once a batch is received by the processing bank, the funds transfer is initiated. The funds are
withdrawn from the customers account almost immediately, and the merchant's bank will hold the
funds until the transfer is finalized. This wait period is also a fraud prevention measure.
When transactions are processed on the weekend or holiday, the funds will take extra time for the
transfer. The banking systems are closed on the weekends, which causes the delay.
How much does wireless processing cost?
Wireless terminals such as the Nurit 8000 and the Comstar need access to a system of radio
towers. With the advanced technology there also comes a higher price tag than land line
processing terminals. Usually $20/month plus .05/transaction. These fees are in addition to your
merchant account fees.
A merchant accepts credit cards and either 'swipes' the card or 'keys' the credit card into a
terminal but this alone is not enough. A merchant account is a relationship with a credit card
processing bank, that actually does the back-end processing. Merchant accounts can be set up
in the name of an individual or by a corporation. Each location of a business with a single
ownership must have its own merchant account. And, each website set up by a merchant that
either has a different name or sells different products needs to have its own merchant account.
There are two basic merchant categories, Retail, and MOTO (Mail Order, Telephone Order). The
credit card business has a rate structure based on Risk, the more secure your transactions the
better your rate. A MOTO account entails more risk since the sale is made by phone or over the
internet, or possibly at a trade show with a manual imprinter. The numbers are later 'keyed' into
the terminal.
What is CVV2?
CVV is a card verification system that verifies that a cardholder is in possession of a credit card by
verifying a set of numbers that is embossed on the credit card and not encoded in the magnetic
strip. This way even if the card number is stolen, a transaction cannot be processed if the
purchaser cannot verify the cvv number on the card. Requiring CVV in addition to AVS can help to
eliminate most fraudulent orders for internet and keyed entry businesses. Each card issuer has a
different name for the CVV system, but all are essentially the same thing. Visa refers to it as CVV2,
Mastercard is called CVC2, Amex is CID. The CVV number is located on the back of the card
except for most Amex cards where it is on the front. Amex also uses a 4 digit verification code
whereas all other card makers use a 3 digit number.
Q. What are the requirments for a merchant account?
To setup a domestic or US based merchant account a merchant must have a physical location
within the US and an American checking account. Once these conditions are met a merchant can
apply for a domestic merchant account. If these conditions cannot be met a merchant must use an
offshore merchant account.
Application Requirements for all businesses:
- Physical Location in the US.
- Checking account with an American bank in the name of the business or the merchant
account signer. - Explanation of business type (ie: LLC, Corporation, Sole Proprietorship, etc.).
- Federal Tax ID Number (EIN). ( if a corporation)
- Owner or Merchant Account signers SSN.
- Owner or Merchant Account signers address information.
- Product or Services being sold information.
- Exchange and Refund policies.
- Intended method of accepting transactions (ie: swipe, internet, keyed, etc.).
- General business location type (ie: Shopping Center, Home Based, etc.).
- Copy of a voided check from merchants checking account.
- Marketing material (ie: business card, brochure, advertisement, etc.).
- State or Federal Business License.
- Proof of business existence (ie: phone bill, utility bill, etc.).
- Proof or financial stability (ie: profit and loss statements, bank statements, etc.).
- Active website with DBA of website listed on application.
- Product delivery methods and timeframe clearly stated on website.
- Product prices in US dollars.
- Privacy Policy listed on website.
- Customer Service telephone number listed.
- Secure checkout system.
- Domain name registered to merchant.
What is a discount rate?
This is a fixed percentage rate that is deducted from the purchase cost when an order is made. A
small transaction fee is also deducted in addition to the discount rate.
What are statement fees?
Most processors charge between $10 and $15 a month. This is an administrative fee just to carry
the account in the system. At the end of each month you will receive a statement that will list all
the transactions that went through for the last month. It's very much like a credit card or telephone
bill.
What is a gateway fee?
A gateway fee is charged by the processing bank for maintenance of the system that is used to
"pipeline" credit card transaction information from your business or web site to the network of
banks that further process the transaction. Usually a typical gateway fee is around $10 per month.
Are there monthly minimums associated with accepting credit cards?
Usually the monthly minimum is around $25; for some banks it might be higher. This processing
fee is collected by your transaction and discount rate fees from your credit card sales each month.
So, for instance, say your bank charges $25 as a monthly minimum, if the transactions and
discount rate fees collected by the bank equal or go over $25 that month, no monthly minimum will
be charged. However, if the fees for that month do not meet the $25 monthly minimum, you will
then be charged the difference. For small businesses the monthly minimum is sometimes waived.
What is a chargeback and are there any fees?
A chargeback occurs when a customer challenges the sale on their credit card bill, often a month
after the sale was actually made. There are many reasons for a customer to charge-back the item.
Sometimes it is a mistake. The merchant then has the option to dispute the chargeback, usually
by producing the signed receipt. Fees for a chargeback are usually around $30.
Are there any programming and/or installation fees?
Usually not. However, some providers do charge $100 or more. If you are a retail business and
purchased a terminal from somewhere other than from the merchant account provider you are
obtaining a merchant account from they may need to do some slight programming modification to
the terminal unit so it can work properly with the processing bank they represent.
What kind of transaction fees are associated?
These can vary depending on what processing solution you are using and what credit cards you
accept. An overall ballpark figure would be between $0.15 to $0.35 per transaction.
Are there any setup fees?
Most of the time no, but some providers may charge up to $50.
What is the daily batch fee?
Also called a close-out fee, this type of fee is associated with software or terminal processing
solutions where at the end of every business day you close-out all your transactions.
Do providers require a reserve account?
Some providers will require you to have a reserve account where the amount is determined by
your businesses estimated sales receipts. Dealing with this type of reserve is NOT recommended.
Usually a reserve is almost always charged to an out-of-country 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.
Should I purchase or lease equipment?
If you can afford to pay up front for the equipment that you are looking to obtain, you should
definitely do it. Purchasing will save you a considerable amount over leasing. The bottom line is
that even if a lease sounds like a good deal you will still spend much more than if you outright
purchase the equipment. Most leases are non-cancelable, and may or may not include a buyout
option at the end where you will be required to pay a percentage of the cost of the terminal. We
have seen merchants using other companies with a buyout option of the total cost of the terminal
that they are leasing.
Can I process over an IP based phone connection?
Many merchants have broadband connections for their business and would like to utilize this
connection for their credit card processing. The terminals that we offer for use with this type of
connection are the Omni 3740 and the Omni 3750 with the ethernet adapter. PC Charge can also
be used through a broadband connection, in conjunction with a PC card swiper. Additionally,
Lipman's Nurit 8320 State-of-the-Art terminal has IP connectivity. These options will provide a
lightning fast method for processing your electronic transactions.
How long does it take to be approved and set up?
Usually within 24 hours.
Will terminals work with VOIP?
Since the emergence of VOIP phone systems in the business world, this has been a common
question. Most credit card terminals will not work with a VOIP telephone connection. A VOIP
connection uses a digital phone network which involves switches and multiplexing to transfer data.
Most credit card machines use an analog type connection that is incompatible with a digital circuit.
The easiest way to use a broadband connection is to use a Verifone Omni 3740 or Omni 3750 or
a Nurit 8320 with the ethernet adapter. These terminals in conjunction with a router will allow you
to connect all of your electronics easily through the same internet connection.
It may be possible to use an analog to digital converter, but since this is a very expensive and
technically advanced process it is not documented or recommended
Do I have to have great credit to get approved?
Personal and business credit are factors that are used to qualify a business or individual for a
merchant account. Every merchant account application will include a credit check of the business
and the person signing for the merchant account. Perfect credit is not a requirement for opening a
merchant account, but a better credit rating can help speed up the application process. The only
time that credit becomes an issue when opening a merchant account, is if a merchant has an open
bankruptcy, or has been terminated from processing in the past.
Can I buy a terminal from another company?
Yes. We can reprogram almost any terminal in the processing industry and there is no charge to
reprogram it. However we will not warranty any terminal that is not purchased from us. You will still
be entitled to all of our customer service benefits, but if a problem arises with your equipment, you
will need to refer to the manufacturer for warranty and service issues.
What is AVS?
The Address Verification System or AVS is an electronic system that verifies the address of the
card holder during a credit card transaction. This system is commonly used in internet based and
keyed in transactions where the card is not being swiped through a credit card machine. This
system can verify the billing zip code of the card holder and if setup properly can verify the street
address and sometimes even the telephone number. The merchant gets a response that the AVS
is approved or declined and can then chose to run the transaction or not.
AVS should always be used for every internet and keyed transaction to avoid downgrade charges
and fraud. Even if you can verify who your customer is, if you are setup as a keyed or internet
account, you should use AVS for every transaction.
Can I process through a website?
Yes. An internet merchant account will allow you to acept credit cards through your website.
We offer three Payment Gateway Systems: Authorize.net, CyberSource and Paradata. The
gateway that you chose will allow your website to securely connect to the processing networks.
What if my business is not based in the US?
The requirements for a business to be able to process through a domestic merchant account are
an American bank checking account and a physical location in the US. Once these requirements
are met, a business can apply for a domestic merchant account. For businesses that do not meet
these standards off-shore banks also offer merchant accounts.
What is an Offshore Merchant Account?
An offshore merchant account is a merchant account that is processing through a non-domestic
(Non-American) processing bank. Foreign processing banks are not subject to the same federal
restrictions as American processing banks, so the types of businesses that they provide services
to is also less restrictive. Offshore providers are generally significantly more expensive than
American processing banks, but they don't have volume or ticket size restrictions that American
processing banks often have. Many American companies use offshore processing banks for their
credit card processing because their businesses fall into a high risk category.
Is wireless coverage available in my area?
Most cities have adequate coverage but rural areas do not. See coverage
How long does it take for funds to be available?
Funds will be available in your bank account normally between 48 to 72 business hours from the
time that a batch is received by the processing bank. The time is measured from the time of the
batch.
Once a batch is received by the processing bank, the funds transfer is initiated. The funds are
withdrawn from the customers account almost immediately, and the merchant's bank will hold the
funds until the transfer is finalized. This wait period is also a fraud prevention measure.
When transactions are processed on the weekend or holiday, the funds will take extra time for the
transfer. The banking systems are closed on the weekends, which causes the delay.
How much does wireless processing cost?
Wireless terminals such as the Nurit 8000 and the Comstar need access to a system of radio
towers. With the advanced technology there also comes a higher price tag than land line
processing terminals. Usually $20/month plus .05/transaction. These fees are in addition to your
merchant account fees.
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| Merchant Cafe is an Agent of United Bank Card, a registered ISO/MSP of First National Bank of Omaha, NE 68197 |
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