My Merchant Account Blog

Your Merchant Account and Your Growing Business

Saturday, January 17, 2009

You have purchased a domain name, found a good web hosting company, and found a product that you think you can sell.  Now it is time to think about accepting credit cards.  Normally, some people might think of going to their bank to get an Internet (keyed) merchant account.  Some banks might just tell you they refer merchants over to merchant account provider (ISO / MSP) since getting an Internet merchant account also requires having an electronic payment gateway.  And all you needed was a way to accept credit cards on your web site.  Unfortunately, this is a pretty large step and many companies are involved in a credit card transaction on the Internet.

You finally sifted through all the companies, listened to sales people tell you why their company is better and you have decided on a ISO / MSP and an electronic payment gateway.  The ISO / MSP needs you to complete an application.  Now, if you decided on a company based solely on a typical sales call, read the contract completely.  It will be very detailed, explaining all the fees that are involved and if there is a contractual obligation.  Even if the salesman told you it is month to month, make sure it is.  Some will tell you it is month to month, but you might find the provider wanting a three-year agreement.  So what if you business tanks in six months - the salesman made the sale and got the credit.  Now you are stuck with a merchant account for thirty months.  It could cost you upwards of $1,000 or more to cancel the contract and to make sure you do not end up on the TMF / MATCH List.

Once you have completed reading the contract, making sure it is everything you thought it would be, you are ready to start the process.  It wants a lot of information, your DBA, the EIN, your address, phone number, e-mail address, how long you are in business, if you have had a merchant account before, how much monthly volume you expect, your average ticket amount.  Now wait a minute, if you are just starting a business, how do you expect to know how much volume you will be receiving?  You hope a lot, of course but being realistic, it might take a few months before you turn a profit.

Monthly Volume

Well what number should you enter into this field?  Does it make a difference?  Should you enter a number higher or lower than what you think?  Some good questions to ponder. 

Well, it does make a difference in the number you enter.  And it makes even a bigger difference if the average ticket is a large amount.  For example, if you enter $20,000 for the monthly volume and $5,000 for the average ticket, the ISO / MSP will look into this account a bit more.  One chargeback could easily push you over the chargeback ratio, thus having your merchant account suspended or even terminated.

Merchant Account Suspended

Let's look at this a bit differently.  Most ISOs / MSPs in the United States will approve your application pretty quickly if it is under $30,000 a month and you are not selling something they consider high risk.  Some sales agents will tell you to enter what you think you will be doing in six months.  Merchant account providers are in business to make money - most businesses are.  The provider is the one who will have to pay the money back to the consumer if the merchant turns out to be fraudulent.  They are the ones that monitor the merchant's activity.  If there is a significant increase in volume and transactions, this could raise a red flag to the provider.  The ISO / MSP might think you, the merchant, is doing something dishonest and might want to review your account.  This is very typical - it helps to protect the provider.  The provider could suspend some of the transactions while they verify the transaction with the consumer.

If you call the ISO / MSP to let them know of this increase before it happens, things will usually be a lot easier.  For example, maybe next month you are considering doing an advertisement on the local radio.  You hope this will increase your sales.  And you don't want anything to hinder your company from getting the money from those sales.  The ISO / MSP might ask that you fax over the receipt from the radio station as confirmation.  Fax that over and maybe the next day, follow-up with a phone call to make sure everything is OK.

The ISO / MSP might also ask that you fax over a copy of your bank statement and complete a request for a limit increase.  Do this right away to ensure no funds are held.  Follow up with a phone call the next day or so, and always document who you spoke to - get their name or ID number.  I am not saying that a ISO / MSP will do anything negative, it's just always good to have documentation.

Merchant Organic Growth

Another factor in growing is time in business.  Hopefully your business grows month-to-month, year-to-year.  Usually, merchant account providers will take this into consideration.  For example, I spoke with Chris over at CDGCommerce recently about this.  He said that usually no action is taken on a merchant if the volume increases slowly over time.  He called it "typical merchant organic growth".

Consider this - each merchant is different.  Each ISO / MSP is different.  I know that most like certainty - something like the Pythagorean theorem if you will.  Unfortunately, there is not a formula for them (merchants and merchant account providers) to just enter a couple of numbers into to get a specific answer.  Everything is on a case by case basis.  A considerate and polite attitude always helps as well.  I know these matters can be very delicate and patience might be needed from time to time. 

If you see your business growing as the example above, it won't hurt to pick up the phone and call your ISO / MSP.  I know, why bring attention to your account - things seem to be going OK, money is going into your bank account daily.  But you are an honest businessman doing a hard day of work, so you have nothing to worry about.  This will show the ISO / MSP you understand how much you respect having the account and you want to make sure you are playing by all the rules.

The Players in an E-Commerce Transaction

Thursday, January 08, 2009

When you get a merchant account, you usually let the merchant account provider know what card types (Visa, American Express, MasterCard, JCB, Discover, etc) you would like to accept.  This usually permits the e-commerce merchant to accept any cards that display this logo, even debit cards (you might need to check something on your merchant account application for the debit cards).  Accepting these cards, credit / debit, and at least Visa / MasterCard, will allow you to sell to most everyone.

If you start to think about accepting credit cards, you might only be familiar with your merchant account provider, the electronic payment gateway, and the consumer.  However, there are a few more companies involved in the transaction.  We will take a look at some of the companies and their function in a (Visa) e-commerce transaction.

E-Commerce Merchant

An e-commerce merchant is an authorized individual / company of certain card associations (Visa, MasterCard, American Express, Discover Financial Services, JCB, etc. for services or products.

Cardholder

An authorized individual / company that has a card with one of the card association logos on it.

Issuing Bank

This is a financial institution that maintains the (Visa) cardholder's relationship while also issuing (Visa) cards and contracts to cardholders for repayments of transactions.

Acquiring Bank

This is a financial institution that contacts with merchants to accept and process (Visa) cards for payment of services and goods.

VisaNet Processor

A member (or Visa approved nonmember) that is directly connected to VisaNet® to provide authorization, clearing, or settlements for merchants / members.

VisaNet®

This is a collection of systems that support the electronic transmission of all Visa card authorizations between acquirers and issuers and facilitates the settlement of funds.  In January 2002, First Data announced a program in which card transactions where First Data is the processor for both the card issuer and the merchant would be processed internally by First Data, without going through VisaNet®.  Visa did sue First Data but it was settled: Visa USA and First Data Corporation Agree to Settle Legal Dispute.

Merchant Servicer

This is a company that stores, processes, or transmits account numbers on behalf of a member's merchant.  Some examples include providing services as online shopping carts, electronic payment gateways, hosting facilities, data storage, authorization, and / or clearing and settlement messages.

All these companies or services help the authorization, authentication, and settlement of the transaction.

Let Me Use Your Merchant Account

Tuesday, January 15, 2008

Maybe you have a friend that has a small business.  And occasionally you allow him to run a credit card through your terminal or electronic payment gateway.  You see nothing wrong with this since he is your friend.  Unfortunately, chances are very great that this is against your merchant account agreement and card association rules (Rules for Visa Merchants and MasterCard Merchant Rules).  Allowing your friend to use your merchant account to accept credit cards will make you susceptible to chargebacks, specifically Reason Code 81 (Fraudulent Transaction - Card-Present Environment) or Reason Code 83 (Fraudulent Transaction - Card-Absent Environment) under Fraud Codes for Chargebacks.  The acquiring bank might also issue Reason Code 75 (Non Receipt of Information Chargebacks).

If your merchant account provider receives one of these reason codes from the issuing bank for a chargeback, your merchant account provider might suspend your processing until an investigation is complete.  Reason Code 75 usually will not be as bad as Reason Code 81 or 83, however you always want to do everything you can to prevent chargebacks.

Also, chances are very good that your merchant account provider will place you on the TMF / MATCH list.  Once on this list, it is near impossible to get another merchant account.

Excuses Not to Have a Merchant Account

A lot of times, business owners will make an excuse not to have a merchant account.  Unfortunately, these excuses might actually lead to the business going under.

Not Enough Money

Maybe your friend says he does not make enough to warrant a merchant account.  Well, a merchant account usually costs between $25.00 - $50.00 a month.  Most people have a cell phone that costs this much money per month.  And a lot of these fees are incorporated into your discount rate.  And since he does not advertise that he accepts credit cards, who knows what how much business is lost.  Always have confidence in your business so you will be able to invest money into your business.

Bad Personal Credit

Most merchant account providers understand people will run their business differently from their personal accounts.  If you are in the United States, applying for less than $30,000 a month in volume, and not selling any high risk items, your personal credit history will not have that much to do with your merchant account. 

Do not sign up for multiple merchant accounts if you think you might be turned down.  It usually takes less than 24 hours to be approved, wait for that confirmation.  Otherwise, you might end up with more than one merchant account which will cause you other problems.

Actually, your friend has a better chance of getting a merchant account than you since you are on the TMF / MATCH List.

Encourage Your Friends

They are your friends - encourage them to invest a little more money into their business.  You have seen first hand how much more business credit cards have brought to your business, share that knowledge with them.  Ask your friend to contact your ISO / agent for more information today!

Merchant Account Reviews

Thursday, June 14, 2007

There are scores of websites offering reviews of merchant accounts.  Unfortunately, most of the websites will usually be one-sided, favoring one merchant account provider or an agent.  If you are in the United States, you have hundreds of merchant account providers to choose from, and thousands of agents. 

First, remember you will always hear more negative comments about any company than positive ones.  A perfect example is Paypal.  You will hear a lot of negative stories and comments regarding Paypal.  Some people will even claim Paypal is a scam.  When something does not go our way, we tend to complain about it or find others that have had similar situations.  The Internet has allowed those people to congregate on message boards, newsgroups, etc to share experiences.

You can try your best to look at different websites and get a people's opinions.  Unfortunately, that is all it is - an opinion.  The more times you use a service, your chances increase that something will go wrong.  Reviewing a product or service can be very difficult.  Sometimes the reviewer has a bias already toward the company.  Or maybe the reviewer gets other people's opinions of a certain service since there is not any way the reviewer can test that product effectively.  And usually this is the case. 

Each merchant is different.  The reviews that you will read will also just use a certain amount of those services.  And it cannot really compare to your needs.

So what does matter in these reviews?  You can consider these opinions but most people will not give positive comments for a company. What about your money?  With the larger companies (First Data, Nova, Chase-Paymentech), you know your money is safe.  You have a large corporation to back it up.  Most agents will resell for one of these companies (and we have already discussed on how to choose a United States merchant account provider).  Most should be able to give you a free rate review if you have established processing history.   This review is the important factor.  It will allow you to see if you could save money by changing merchant account providers.  And you might be able to keep the same electronic payment gateway so your website will not need to be re-programmed.

Getting Your Money

Wednesday, June 13, 2007

When it comes to having a merchant account, getting your money is just as important.  Some people might tell you if you are in the United States and doing more than $1,000 a month, consider a merchant account along with an electronic payment gateway instead of an IPSP (Internet payment service provider) like (some versions of) Paypal and 2Checkout.

There are some reasons behind this.  Some processors change a minimum fee a month, maybe $15.00.  So if you sold $1,000 of merchandise that month and your discount rate is 2.29%, that would be $22.90.  You have met this monthly minimum requirement and should have nothing to worry about with this fee.

In Business to Make Money

Chances are you are in business to make money though.  And chances are, you will doing more than $1,000 a month.  But let's say that is what you are doing.  Is Paypal better for you?  Yes and no.  It might be cheaper for you when considering the amount of money they charge.  guess what though?  Paypal is keeping your money until you sign into their website and tell them to send it over.  Or you might be able to drive down to the bank and withdraw the money via an ATM.  Either way, it is going to take you some time. 

Faster Money with a Merchant Account

With a merchant account, your money is going to be deposited into your bank account usually in a couple of days after the batch is completed. Let's say you close your batch on Sunday (usually before a certain time as well - check with your processor).  If all the programs run correctly, you should have the money in your bank account on Tuesday. 

So you just have to ask yourself is your time worth the $25.00 or so a month you might be spending for a merchant account?  If the answer is yes, then get a merchant account.  If the answer is no, get a Paypal account.

(Keep in mind that we only discussed $1,000 a month in volume.  Chances are, anything over this amount, the scales are going to tilt more in your favor of having a merchant account.)

Debit Cards on the Internet

Friday, June 08, 2007

You might have seen some discounts that are being posted 2.05% or even lower on some merchant account provider websites.  This discount rate is easy to come by if you have enough volume.  Some merchant account providers though are now offering merchants two rates - often times called a split rate.  One rate for debit card transactions and one rate for credit card transactions.

Split Rates

Split rates might help your business if you think you have a lot of customers using a debit card.  Of course, it will have to be at least half of your volume to consider making the switch. 

Blended Rates

A blended rate is what most merchants have today, whether you know it or not. Merchant account providers charge you the same for debit card and credit card transactions.

For example, let's say the debit card discount rate is 2.05% and the credit card discount rate is 2.58% . And the blended rate 2.29%.  The average transaction is $50.00 and there are 30 transactions.  With a split rate and consider that half of your transactions are with a debit card, you would be spending about $34.73.  With a blended rate, the charges would be about $34.35. 

Remember, your discount rate is based on volume, not the number of transactions.  As usual, do a little research before switching or signing up for a split rate.  With the small monthly volume listed about ($1,500.00), your charges could be about $38.70 using a split rate and all your transactions are credit cards.

Chargebacks Are Not Worth Fighting

Wednesday, May 16, 2007

For whatever reason, some merchants are not worrying about chargebacks.  They might only get one every few months but they are not replying to it.  I guess they feel that the card associations are going to rule against them, so why bother? Well you bother because it is your business, it is your right to fight.

For example, if someone were to walk into your store, load up a basket full of items and walk out the front door - you would stop them, right?  By not fighting a chargeback, you are allowing the customers to walk right in and take whatever they need.  OK, you might have insurance but guess what, your insurance rates will go up because your risks are going up.  Your merchant account fees will also go up or they might even suspend or terminate you because you are a higher risk.

Retrieval Requests and Chargebacks

Of course, the first is to always try to prevent a retrieval request or a chargebacks. A retrieval request could be as something as simple as I don't recognize the name of this company.  I wrote about this because this happened to me once as a consumer: Some Ways to Help Internet Merchants Reduce Fraud and Chargebacks.  It also happened back in October.  I sent in my yearly membership fee to Sam's Club.  Over the weekend, I was checking my credit card statement online and noticed a charge for Wal-Mart.  Since I knew I had not been to Wal-Mart, I called the credit card company and told them the charge was unauthorized and to send me a new card (I thought my card had been compromised).  The next day I remembered I had used that particular card to pay for my Sam's Club membership via United States mail, but surely a company as large as this and actually wanted to get into this business would have a correct merchant identifier on the credit card statement?  It turns out I was wrong, since the charge was the same amount as Sam's Club's fees. 

Just to remind you just in case - always respond to a chargeback, no matter what.  That is unless of course, you are a merchant who opened a merchant account to process thousands of fraudulent credit card transactions in a short period of time.  Yes, those people do exists and you want to make sure that your provider does not think you are one of those types of merchants.

Some Basic Merchant Account Fees

Thursday, May 03, 2007

Merchant account fees vary per provider. The more volume you do, the better chances you have that your discount rate will be lower.  On your merchant account agreement, you will find some or all of the fees listed below.  If you see that you are being charged for something that was not on your merchant account agreement, contact your merchant account provider immediately.

Merchant Account Fees

But there are so many fees associated with accepted a credit card.  Some of the fees are (in no particular order):

• (Qualified) Discount Rate
• Authorization Fee
• Transaction Fee
• Electronic Gateway Fee
  • Set-up Fee
  • Monthly Fee
• Batch Settlement Fee
• Address Verification Service (AVS) Fee
• Chargeback Fee
• Retrieval Request Fee
• Batch Closure Fee
• Early Cancellation Fee
• Monthly Minimum Fee
• Cancellation Fee
• Monthly Fee
  • Statement Fee
  • Customer Service Fee
• Yearly (Club) Fee
• Point-of-Sale (POS) Terminal (lease or buy)
• Mid-Qualified Rate
• Non-Qualified Rate

Some fees above range from $.05 to $50.00.  A lot of the fees can also be negotiated by you, especially if you have a lot of volume. And most of these - you won't ever see. 

Discount Rate

The discount rate is a percentage of the sale.  The more volume you have, the lower the discount rate will be.  Right now, some providers are offering 2.39%.  Usually you can get a discount rate lower than this, even if you are only doing $10,000 a month.

Transaction Fee

This fee is usually imposed by the electronic payment gateway. You will see some gateways giveaway a number of transactions per month, some might charge $.10 per transaction, some might charge a percentage and some don't charge anything.

Authorization Rate

This is sometimes called a transaction rate as well. It is usually about $.25 per transaction.  And usually it is a fixed-fee.

Electronic Payment Gateway Fee

This set-up fee can usually range from $0.00 to about $500.00 per month, depending on the gateway.  The monthly fee is around $15.00-$50.00 a month.  Take into consideration the number of transactions that you get for free as well when determining what is the best monthly fee for your account.

Early Cancellation Fee

Usually most merchant account providers request some type of a commitment, ranging from six months to three years.  And some providers will give you more discounts if you sign up for a longer contract.  Most businesses usually plan on being in business for years, so a 6-month contract is usually nothing to them.

Batch Settlement Fee

This fee is usually the same amount as the authorization fee from the merchant account provider.  This fee is usually charged when the merchant account provider moves the money into your checking account.

Address Verification Service (AVS) Fee

This fee is usually $.05-$.10 per transaction. This is your first line in defense on preventing fraud. Usually with recurring billing done via the electronic payment gateway, the AVS does not need to be accomplished and you will not be charged.

Chargeback Fee

This fee is charged to you if a consumer calls the issuing bank to dispute the charges.  There are Some Ways to Help Internet Merchants Reduce Fraud and Chargebacks.

Retrieval Request Fee

This fee is sometimes charged along with a chargeback. It's a fee that the providers charge to pull all the information on the transactions. This fee can also be just when the consumer does not remember the transaction and requests more information about it.

Batch Closure Fee

This fee is charged when the your batch is closed. (A batch is a number of transactions that are ready to be closed.)  Usually this fee is the same as an authorization fee and providers usually charge this to deter merchants from running scores of batches per day.  Most providers will automatically batch your transactions daily.

Monthly Minimum Fee

This fee guarantees the merchant account provider a set amount each month from the merchant.  Usually though, this never affects the merchant.  For example, let's say your discount rate is 2.25% and the monthly minimum on your merchant account agreement is $25.00.  During the month of April, you processed $10,000.  The merchant account provider's portion would be $225.00 (10,000 * 2.25%).  The monthly minimum fee of $25.00 has been met and no charges should be applied.

Let's say you were just starting out and you did $1,000.00 that month.  The merchant account provider's portion would be $22.50, so you would still owe the merchant account provider $2.50. 

Cancellation Fee

Some providers will charge this fee when your contract ends.  Usually this fee is waived and most are veering away from this fee.

Miscellaneous Monthly Fees

Some providers will charge some type of a monthly fee, usually $10.00-$25.00 a month.  They might call it a statement fee, a customer service fee, or just monthly fee.

Yearly (Club) Fee

Some providers have a yearly fee as well as the monthly fee. They might offer you specials for signing up for this fee.  Or this fee might not be optional and you might have to pay a yearly fee to have a merchant account with that provider.

Point-of-Sale (POS) Terminal (lease or buy)

This equipment would only be if you had a retail business.  The terminal would be used to swipe the consumer's credit card.  

Mid-Qualified Rate

This rate is applied to certain transactions when specific credit card types are used. This rate will usually only apply to retail businesses.  Some providers might downgrade reward cards - ask your merchant account provider for more information.

Non-Qualified Rate

This rate is applied to certain transactions when specific credit card types are used, i.e. business or corporate cards.  Ask your provider to reduce this amount if your business accepts a lot of cards that are downgraded.  Other reasons that some providers might downgrade your transaction(s) to the non-qualified rate are:

• AVS is not done on a keyed transaction
• Batches are not done in a timely manner - be very careful with this one, if you are late all transactions in that batch will be downgraded
• A special card is used and the correct data was not entered (Level I, Level II, Level III data)
• A credit card was used that was not issued in the United States
• A credit card number was keyed in on a swiped account

Of course these rates vary per processor and the rules vary as well.

Your merchant account provider should be able to answer the above with ease.  These are the very basics of the credit card industry.

Manually Processing Credit Cards

Wednesday, April 25, 2007

A lot of merchants think they can use their swiped merchant account for their e-commerce solution.  A swiped merchant account is given to the merchant on the pretext the merchant will verify the credit card holder while doing the transaction using Visa's credit card security features or MasterCard's security features. If you suspect suspicious activity during the transaction, you might want to make a Code 10 call.

When a merchant is given a merchant account, the merchant assumes some risks and responsibilities.  These risks are also assumed by the merchant account provider, acquiring bank, issuing bank, and the card associations.  Basically there are two types of merchant accounts - one for your brick and mortar store, sometimes known as a swiped account, an internet merchant account, and a mail-order / telephone (MOTO) account.  The internet and MOTO accounts are sometimes known as keyed accounts.  You will need an electronic payment gateway, i.e. LinkPoint, Payflow, Quantum, or Authorize.net, to help process the transaction.  You can also accept credit cards over the telephone with an internet merchant account because the risks are very similar. 

Higher Risks

You have no way of verifying the cardholder on an keyed account as you would on a swiped account. The risks that the merchant assumes is usually passed through as a discount rate.  Since the risk is greater on a merchant keying in a transaction, usually the merchant account provider will downgrade this transaction.  This usually will result in a higher discount rate being charged on the transaction.

Even More Risks - Storing Cardholder Data

Plus you will need to store cardholder data, which you will need to be PCI compliant, to get the credit card number. Failure to comply could be very costly, especially to the small business owner.

Merchant Account Agreements

Read your merchant account agreement - it might even say that you only will swiped a certain per cent of your transactions a month.  This could be very costly in time making sure you do not violate this agreement.  I have even seen some providers raise the rates to over 3% on a swiped account because the merchant was keying in all of his transactions.  They claimed it was for his excessive chargebacks (he only had one in three years).  He immediately signed up for a MOTO merchant account. 

Savings

Let's say that you have 30 transactions that month at $50.00 each.  So you take time out of your busy day to enter the credit card number into your POS terminal.  And the provider charges you 1.9% on top of your 1.69% that you are already paying.  You would be paying about $63.00 a month for this.  This also does not include any time that you might need to use to call the customer because the credit card transaction failed. 

Internet Merchant Account

With an internet merchant account, you would probably be spending about the same amount of money.  But a few big differences that come to mind are:

• You are not doing anything that is against your contract that could get your merchant account terminated and you end up on the MATCH list
• Your customer knows immediately if his / her ordered was approved or denied
• You have a more professional look - having the transaction processed on your secure website
• You have saved your valuable time
• You can sleep well at night knowing that no credit card numbers will be compromised if your website is hacked
• There is no need to be PCI Compliant (even though it is a good idea), saving you hundreds of dollars up-front.

Level I, Level II, Level III Data

Friday, April 20, 2007

Some of the buzzwords in the merchant account business seems to be Level I, Level II, and Level III data.  Even though this information has been around for quite some time, April is the big month for card association changes.  And some of the changes affected the regulations on how this data is processed.  But exactly what is this data?

Level I Data

Level I data includes:

• Date
• Merchant Name
• City
• State
• ZIP Code

which is not prompted by the terminal.  The merchant will need to enter the purchase amount which also includes sales tax. 

Level II Data

Level II Data includes:

• Date
• Merchant Name
• Tax ID
• Merchant Type Code
• Merchant Category Code (MCC)
• City
• State
• ZIP Code

This information will automatically programmed into your terminal and you should not need to enter it.  The merchant will then need to enter:

• Purchase Amount Excluding Sales Tax
• Sales Tax
• Local Tax Indicator
• Customer Code (if using a purchasing Card)

Your terminal should prompt you to enter the above information for all Level II transactions.

Level III Data

Level III Data includes:

• Date
• Merchant Name
• Tax ID
• Merchant Type Code
• Merchant Category Code (MCC)
• City
• State
• ZIP Code

This information will automatically programmed into your terminal and you should not need to enter it.  The merchant will then need to enter:

• Purchase Amount Excluding Sales Tax
• Sales Tax
• Local Tax Indicator
• Customer Code (if using a purchasing Card)
• Full Line Item Details

Your terminal should prompt you to enter the above information for all Level III transactions.

Enhanced Data

With Level II and Level III data, some merchants can require even more specific data depending on their category.  Some examples are:

• Fleet
  • Level II Data
    • Vehicle or Driver ID Number (AKA Customer Code)
    • Fuel Type
    • Fuel Quantity
    • Fuel Unit of Measure
    • Fuel Unit Cost
    • Fuel Tax Exemption Status
    • Gross Fuel Price
  • Level III Data
    • Odometer Reading
    • Service Type
    • Net Fuel Price
    • Non-Fuel Gross/Net Price
    • Item Discount Amount
    • Item Description
    • Item Commodity Code
    • Item Unit Cost
    • Item Quantity
    • Item Unit of Measure
    • Item Total
• Airline Itineraries
  • Level II Data
    • Merchant Name / Original Ticker Number
    • Passenger Name
    • Departure Date
    • Origination City / Airport Code
    • Travel Agency Code / Name
    • Detailed Data for up to four legs of Travel
      • Carrier Code
      • Services Class
      • Stop-over Code
      • Destination City / Airport Code
  • Level III Data
    • Restricted Ticket Indicator
    • Total Fare / Tax / Fee Amount
    • Currency Code
    • Exchange ticket number and amount
    • Internet Indicator
    • Electronic Ticket Indicator
    • Conjunction Ticker Number
    • Ticket Issue Date
    • Fare Basis Code
    • Control ID detailed information for up to 198 legs of travel
• Hotel Folios
  • Level II Data
    • Check-In Date
    • Hotel Folio Number
    • Number of Room nights
  • Level III Data
    • Daily Room Rate
    • Summary Tax Elements
    • Telephone and FAX Charges
    • Gift Shop Purchases
    • Movies Charges
    • Health Club Charges
    • No Show Indicator
    • Business Center Charges
    • Laundry Charges
    • Check In / Out Dates
    • Food & Beverages & Mini Bar Charges
    • Folio Number
    • Parking & Valet Charges
    • Cash Advances
    • Non-Room Charges
• Purchasing
  • Level III Summary Data
    • Ship to / from ZIP Code
    • Destination Country Code
    • VAT invoice Reference Number
    • VAT tax amount / rate
    • Discount Amount
    • Freight / Shipping Amount
    • Duty Amount
    • Order Date
  • Level III Line Item Detail
    • Item Description
    • Item Quantity
    • Item Unit of Measure
    • Item Total
    • Item Commodity Code
    • Item Product Code
    • Item Unit Cost
    • Item VAT Tax Amount / Rate
• Car Rentals
  • Level II Data
    • Days Rented
    • Car Rental Agreement Number
    • Renter Name
    • Check-Out Date
  • Level III Data
    • Daily/Weekly Rental Rate
    • Check Out/In Date
    • Location/City of Car Return
    • One-way/Drop-off Charges
    • Late Return Charges / Hourly Rate
    • Insurance Charges
    • Fuel Charges
    • Regular and Extra Mileage Charges
    • Total Tax/VAT
    • Telephone Charges
    • Car Class Code
    • No Show Indicator
    • Extra/Other Charges
• Shipping and Overnight Courier Services Data
  • Level III Data
    • Tracking Number
    • Pick up Date
    • Origin/Destination Country Code
    • Number of Packages
    • Origin/Destination Name and Address
    • Item Service Description
    • Item Unit of Measure
    • Item Weight
    • Item Discount Amount
    • Item Net / Tax Amount
• Temporary Help Services Data
  • Level III Data
    • Employee/Temporary Name
    • Social Security Number
    • Description
    • Cost Center
    • Week Start / End Date
    • Rate Indicator

This data might be be passed back to the consumer if the merchant has not made the investment of such terminals.  Merchants are only likely to pass this data if there is a demand for it.  Merchants who have made the necessary changes to their systems will be capable of passing this enhanced data through their card systems.

Cheaper Merchant Account Provider

Sunday, April 01, 2007

A lot of times, people go looking for the cheapest merchant account provider.  I totally understand that people want to save money.  However, a lot of times, when you are dealing with a few basis points - you are only dealing with a few dollars every month.  And the time that you have put in trying to get a better deal even though you know the provider is top notch, costs you more money in the long run.

For example, let's say that you are going to be doing $10,000 a month.  And this largest merchant account provider wants to charge you 2.44% for your discount rate.  And chances are, it will cost more to maintain your account but the provider still wants to do business with your company.  But you found another processor who is willing to offer you 2.29%.  Now the actual difference in this is about $15.00.  And chances are, you charge $150.00 an hour at least for your time.  In the time that you have taken to inquire about a cheaper rate, you probably have already spent the $15.00 and then some.  And you know that the other provider might be smaller and could not support all your needs when your business grew.

Or maybe Visa and MasterCard raised their rates.  So the merchant account provider decided to pass along those fees to you, the merchant.  And let's say you are doing $10,000 a month.  At raising your discount rate 4 basis point (.04 per cent), it is basically $4.00 more a month that they are charging you.  The time you have taken out of your schedule to possibly complain to others, etc., is time that you have wasted.  And of course, you understand that usually these smaller companies actually cost more to maintain but you would rather have a large, stable company process your credit card transactions.

The best thing, of course, use a large, stable, reliable processor - since this is your money in the end.  Pay a few extra dollars a month to know that you have a multi-million dollar company behind each transaction.

Merchant Accounts Agreements

Friday, March 23, 2007

When you sign up with a merchant account provider, they want a contract.  This contract helps to ensure the provider that you will do some type of business with them.  Most businesses start because people want to make money.  And to make money, businesses sell services and products to others.  This merchant account agreement helps to ensure that you, as a merchant, will provide a business to the provider and will also stay in compliance with regulations set forth by the provider, by the acquiring bank, and by Visa and MasterCard. 

Some providers want you to sign an agreement for one year, two years, maybe even three years.  This not only protects the provider in knowing he will have a customer (the merchant) for a number of years, but it also protects, you - the merchant.  As the merchant, this contract ensures that you will have the processing capability that you will rely on.  Without this, you the provider could shut down at anytime without any recourse.  You, as the merchant, would be left without a merchant account provider, unable to process any credit card transactions and not making any money. 

When getting a merchant account, look to see how long the company has been in business.  Check to see if they are a public company and to see how much they are worth.  You want to know that the company you are going to choose is stable and reliable.  You want to know that the company you choose to process your credit card transactions will always be there for you and is not a fly by night company.  Also check out Choosing a United States Merchant Account Provider to see what information to look for.

Merchant Account Fraud

Friday, March 09, 2007

When applying for a merchant account, merchants tend to look for the cheapest processor.  This might be OK for some, but for others, you might want to consider who you are giving your personal information to. 

Merchant account providers' websites should always contain the acquiring bank name and if they are an ISO or MSP.  I know I wrote about this last April, but it always bears repeating about this time of the year.  Why?  Because April is usually the month that the interchange rates are increased by Visa and MasterCard.  And merchants get the notification that their rates will be increasing and they think that if they go to another provider, they will get cheaper rates.  Usually this is not the case and you will have a better chance at getting a better rate if you contact your current merchant account provider. 

Check choosing a United States Merchant Account Provider to remember the most simplest rules set forth by Visa and MasterCard to help to identify the company you wish to do business with.  If the provider does not have this, think twice about giving this company your personal information. 

Always choose a reputable company when picking a merchant account provider.  Know who you are dealing with, after all, it is your money as well.  Spending a little extra might be worth it - you will be less concerned that the provider will go bankrupt.

Credit Card Logos

Friday, February 23, 2007

When accepting credit cards on your website, you want customers to know what card associations (Visa, MasterCard, Discover, American Express, etc.) that you accept.  Each card association has their authorized logos available from their website for you to download and display. Usually, when you apply for a merchant account, Visa, MasterCard, and Discover brands are automatically included in your merchant account and American Express will require separate approval.

Visa Logo

The Visa logo is used to show that you accept Visa credit cards and possibly debit cards on your website.  Most debits cards issued today will have a Visa or MasterCard logo on them.  If your debit card has this, chances are that you can use your card anywhere Visa is accepted.  Visa Brand Mark Artwork has the instructions and logos that you can download to use on your website.

MasterCard Logo

The MasterCard logo is used to show that you accept MasterCard credit cards.  MasterCard actually has two images.  One is acceptance marks to indicate that you accept MasterCard.  Another is the brand mark which is used to when you are marketing or promoting MasterCard's products and programs.  You can download the MasterCard Acceptance Marks or Brand Marks from MasterCard's official website.  These images are permitted when you accept MasterCard.

Discover Logo

The Discover Logo is used to show that you accept the Discover Card as a payment option. If you do not use the Discover Logo, you must use the text Discover Network to show customers that you accept the Discover Card.  And if you are talking to customers over the phone, you should ask the customer if they will be using the Discover Network Card to pay for the purchase.  You can download the Discover logos from their official website to use on your e-commerce driven website.

American Express Logo

The American Express logo is used to show that you accept American Express on your e-commerce website.  You can download American Express's logos from their official website after providing some more information as well to American Express.

As you can see though, most of the website above will provide the card association's logos.  Just make sure you are familiar with each of the card associations regulations on displaying their logo on your website.

How to Make a Code 10 Call

Wednesday, February 07, 2007

When something does not look right, i.e. the security features look altered or they are missing, keep the card in your possession and make a Code 10 call to your authorization center.  You may be asked to keep the credit card or you might be instructed to return the card.  If your authorization center tells you it is ok, write down the authorization number on the sales receipt.

Code 10 calls allow merchants to alert card issuers to suspicious activity and take appropriate action when instructed to do so. You should make a Code 10 call to your voice authorization center whenever you are suspicious about a card, cardholder, or a transaction. The term "Code 10" is used so the call can be made at any time during a transaction without arousing a customer's suspicions.

How to Make a Code 10 Call

• Keep the card in your possession during the call.
• Call your voice authorization center, and say, "I have a Code 10 authorization request."

The call may first be routed to a representative at your merchant bank who may need to ask you for some merchant or transaction details. You will then be transferred to the card issuer and connected to a special operator who will ask you a series of questions that can be answered with a simple yes or no.
• When connected to the special operator, answer all questions calmly and in a normal tone of voice. Your answers will be used to determine whether the card is valid.
• Follow all operator instructions.
• If the operator tells you to pick up the card, do so only if recovery is possible by reasonable and peaceful means.

If for some reason, you do not feel comfortable making this call during the transaction, you can still call the authorization center after the consumer has left your store.  Doing this might help to prevent more fraudulent transactions to another merchant.

MasterCard and the PCI Data Security Standard

Monday, January 08, 2007

Data theft from online merchants, providers and third party processors is increasing at an alarming rate. Card associations developed the Payment Card Industry (PCI) Data Security Standard to help combat compromises. MasterCard was a primary sponsor in the PCI Data Security Standard during its inception in 2005.

MasterCard Site Data Protection

MasterCard Site Data Protection (SDP) is a component of the PCI Data Security Standard.  This program provides guidelines to merchants, acquirers, providers and compliance tools to help protect credit card data.

Being PCI Compliant

Being PCI compliant is not just getting scanned by a vendor like ControlScan. It is also adhering to standards, like storing card holder data and only allowing certain personnel access to cardholder data; completing a self-assessment questionnaire; and a possible on-site review (for Level One Merchants and Level One and Two Service Providers).

Storing Cardholder Data

Under PCI Standards, companies can store a cardholder's account number in a secure fashion. The account number should be encrypted or truncated. You can store the expiration date and cardholder's name as well. If these are stored in along with cardholder's primary account number, they should be encrypted as well. Merchants are not authorized to stored the CVC2 or Personal Identification Number (PIN).

Failure to Comply

Failure to comply with these standards can result in fines imposed by MasterCard. Level One Merchants along with Level One and Two Service Providers can be fined up to $25,000 USD per merchant or service provider.  Level Two and Three Merchants can be fined up to $5,000 USD per merchant.  Further non-compliance may also result in termination of your merchant account.

Adding a Surcharge to a Credit Card Transaction

Wednesday, December 06, 2006

Usually in your merchant account agreement, it will state that you cannot charge any additional fees to the consumer if they pay using a credit card instead of cash.

However, debit cards and credit cards have different rules and regulations. Interlink Debit grandfathered in organizations about ten years ago that were using their system to accept payment. Interlink allows these merchants to charge a surcharge specifically when a consumer pays and it goes through the Interlink debit system.

Credit card companies also allow the merchant to surcharge the consumer if and only if:

• Charged for a bona fide convenience outside of the merchants customary payment channel
• Disclosed to the cardholder as a charge for alternative payment channel
• Added only to non face to face (if merchant is face to face merchant)
• A flat or fixed amount
• Applicable to all forms of payment
• Disclosed prior to completing transactions
• Included in total amount of transaction

Meeting the above requirements, remember will be in the credit card associations (Visa, MasterCard, etc) and your merchant account provider. Before doing any type of surcharging, contact your merchant account provider and / or the associations for specifics.

I do not recommend this be done because if it does not follow the guidelines as set forth between your merchant account provider, the card associations, and yourself, you might find yourself without a merchant account and on the MATCH list.

Subscription Based Websites

Saturday, December 02, 2006

A lot of websites are based on subscriptions. Charging a consumer for anything is very risky and charging them monthly just makes it riskier. You run the risk of chargebacks and fraud. A lot of times, these go hand in hand. Someone might want to see what you have to offer and will use a credit card number that does not belong to them. By the time that you find out, they could potentially have used your services for a couple of months. You are now out your subscription fee(s) as well as chargeback fee(s). A few of these can potentially ruin a merchant.

You have a number of options available to you and choices to consider. The first, of course, is do you really want to get involved with something like this? Once you realize you do, you will want to protect your merchant account. You might even consider using a third party processor to process your transactions. Using a third party processor will help with a lot of the "scrubbing". Scrubbing basically means that the transaction will go through a few fraud prevention tools to help verify the transaction.

Once this is completed and the transaction is deemed OK by the processor, the consumer will be allowed access to your site. A lot of times, chargebacks will happen in days of the transaction. The consumer might not have thought it was worth their money. And instead of calling you, they contact their issuing bank. A good rule of thumb for this is to always send out an email maybe a couple of hours later even asking them about the service, etc. This way you open the communication with them.

Depending on the issuing bank, the consumer can have months to potentially request their money back. Usually with a debit card (with a Visa or MasterCard logo on it), the time frame is less than a credit card (with a Visa or MasterCard logo on it). With American Express, the time frame increases to almost forever. I have seen merchants complaining of chargebacks from over 18 months. This is why you should always keep records.

There are pros and cons to a subscription website. Whenever you are dealing with consumers, the word chargeback always lurks around. Increasing your business unfortunately increases your risks. You will want to do everything possible to scrub the transaction to prevent a chargeback.

How Credit Card Numbers Are Determined

Sunday, November 26, 2006

The card number itself comes from ISO 7812 standards. The first digit on the card will tell you what category it is in per the standards. Four and five identifies the card as banking and financial and six identifies the strip as merchandizing and banking. Three is actually travel and entertainment. The number itself has a structure to it - the first six digits being the Bank Identification Number (BIN).

MasterCard

MasterCard will usually begin with 51-55 with 16 digits. Usually the first six digits is the BIN and the next nine digits are your account number while the last number is a checksum for the mod-10 algorithm.

Visa

Visa credit card numbers will begin with a four and have 13 or 16 digits. It can be presumed though that most cards issued with the Visa logo will have 16 digits. Usually the first six digits is the BIN and the next nine digits are your account number while the last number is a checksum for the mod-10 algorithm.

American Express

American Express will usually begin with a 34 or 37 and have 15 digits.

Diner's Club

Diner's Club will usually begin with a 36 or 55. Those beginning with a 36 should have 14 digits will those beginning with 55 will have 16 digits. Keep in mind that in the last quarter of 2004, MasterCard and Diner's club formed an alliance. Cards issued in Canada and the USA start with 55 and are treated as MasterCards worldwide. International cards use the 36 prefix and are treated as mastercards in Canada and the US, but are treated as Diner's Club cards elsewhere.

Discover Card

Discover Card card will usually begin with 6011 and have 16 digits. Check out Standard Security Features Common to Discover Network Issued Credit Cards for more information.

Also check out this PDF for a bit more information: Card Security Features.

There are a few other organizations like JCB, Maestro, Solo, Switch, Visa Electron that can be found, however a lot of these are debit cards which might require a personal identification number (PIN) to be used with the transaction. Currently providers are unable to handle this PIN via the internet due to security reasons so you, as a merchant, might not be able to accept them.

Non Receipt of Goods or Services Chargeback Codes

Wednesday, November 08, 2006

There is only one chargeback reason code in this group. These chargebacks can happen from time to time if the consumer claims the services were not provided or the goods were not delivered - maybe even not received in a timely fashion.

Reason Code 30: Services Not Provided or Merchandise Not Received

Reason Code 30 can happen when card issuer receives a claim from a cardholder the merchandise or services ordered were not received or the cardholder cancelled the order as the result of not receiving the merchandise or services by the expected delivery date.

The most common causes is when the merchant:

• Did not provide the services
• Did not send the merchandise
• Billed for the transaction before shipping the merchandise
• Did not send the merchandise by the agreed-upon delivery date

Notified of a Chargeback

If the merchandise was delivered by the agreed-upon delivery date, contact the merchant account provider with details of the delivery or send your merchant bank evidence of delivery, such as a delivery receipt signed by the cardholder or a carrier's confirmation that the merchandise was delivered to the correct address. If the merchandise was software that was downloaded via the Internet, provide evidence to your merchant bank that the software was downloaded to or received by the cardholder.

If no delivery date has been specified, and the card issuer charged back the transaction less than 30 days from the transaction date, send a copy of the sales receipt to your merchant bank pointing out that 30 days have not yet elapsed. You should also state the expected delivery date.

If the specified delivery date has not yet passed, return the chargeback to your merchant bank with either information or a copy of the documentation showing the expected delivery date.  In general, you should not deposit sales receipts until merchandise has been shipped.  For custom-made merchandise, you may deposit the entire transaction amount before shipping, provided you notify the cardholder at the time of the transaction

If the merchandise was shipped after the specified delivery date, provide your merchant bank with the shipment date and expected arrival date, or proof of delivery and acceptance by the cardholder.

If the contracted services were rendered, provide your merchant bank with the date the services were completed and any evidence indicating that the customer acknowledged receipt.

To Help Prevent Chargeback Reason Code 30

If delivery of merchandise is to be delayed, notify the customer in writing of the delay and the expected delivery date.  As a service to your customer, give the customer the option of proceeding with the transaction or cancelling it (depending on your customer service policy).

If you are shipping merchandise without requesting proof of delivery, consider the costs and benefits of doing so compared to the value of the merchandise you ship.  Proof of delivery - such as certified mail or a carrier's certification that the merchandise was delivered to the correct address and signed for by the cardholder - will allow you to return the chargeback if the customer claims the merchandise was not received.

If you sell software that can be downloaded via the Internet, it is suggested that you design your web site to enable you to provide evidence to the merchant account provider that the software was successfully downloaded and received by the cardholder. You might even consider using extra scrubbing techniques like Verified By Visa and MasterCard Secure Code and using fraud protection services.

Cancelled or Returned Chargeback Codes

Thursday, November 02, 2006

These chargebacks from Visa can easily be prevented by the merchant as long as the merchant provides timely refunds to the cardholder. If you sell items via the internet, keep the communication open with the consumer to also help prevent chargebacks of this nature.

Reason Code 41: Cancelled Recurring Transaction

This usually happens when the cardholder notifies the issuing bank and tells them the recurring transaction was cancelled but the merchant is still charging the cardholder; transaction amount exceeds the pre-authorized dollar amount range; or the merchant was supposed to notify the cardholder prior to processing each recurring transaction but has not done so.

The most common causes are:

• Cardholder
  • Withdrew permission to charge the account
  • Cancelled payment of a membership fee
  • Cancelled the card account
• Card Issuer
  • Charged back a previous recurring transaction, and the cardholder did not expressly renew
  • Cancelled the card account
• Merchant
  • Received notice before the transaction was processed that the cardholder account was closed
  • Exceeded the pre-authorized dollar amount range and did not notify the cardholder in writing within ten days prior to processing the transaction
  • Notified the cardholder in writing within 10 days of processing the recurring transaction, after which the cardholder notified the merchant not to charge the account

Notified of a Chargeback

If the transaction was cancelled and credit issued for the recurring transaction, notify your merchant bank of the date that the credit was issued. If the transaction was cancelled and a credit was not issued, accept the chargeback. Do not issue a credit since the chargeback has already been processed.

If the transaction was not cancelled or you have no record of the cancellation, accept the chargeback. The cardholder does not have to supply evidence that you received the cancellation notice.

If the customer claimed they were billed for the service after they cancelled, notify your merchant bank that the bill in question covered services used by the customer between the date of the customer's prior billing statement and the date the customer requested cancellation. You might also need to provide proof as well.

Reason Code 53: Not as Described or Defective Merchandise

This can happen when the cardholder notifies the card issuer that the goods and / or services were:

• Not the same as shown and described on the screen for Internet transactions, or as described on the sales receipt or other documentation presented to the cardholder at the time of the transaction
• Not the same as the merchant's verbal description for a telephone transaction
• Shipped to the cardholder and received, but was damaged or defective

Note

Merchants should keep in mind that their return policy has no bearing on disputes that fall under Reason Code 53: Not as Described or Defective Merchandise.

For this reason code, the cardholder must have made a valid attempt to resolve the dispute or return the merchandise. A valid attempt to return may be to request that the merchant come retrieve the goods at their own expense.

The most common causes are:

• The merchant sent the wrong merchandise to the cardholder
• The merchandise was damaged during shipment
• The merchant inaccurately described the merchandise or services
• The merchant did not cancel the services purchased by the cardholder
• The merchant did not perform the services as described
• The merchant did not accept the returned merchandise
• The merchant accepted the returned merchandise but did not credit the cardholder's account

If credit was processed and merchandise was returned or services were cancelled and a credit was processed to the cardholder's account, provide your merchant bank with information or evidence of the credit.

Some Possible Remedies for Chargeback Reason Code 53

• If you have not received the returned merchandise (double-check your incoming shipment records to verify) or the cardholder has not cancelled the service, advise your merchant bank. (The cardholder must make a valid attempt to return merchandise or cancel the service.)
• If the merchandise was as described, provide your merchant bank with specific information and invoices to refute the cardholder's claims.
• If merchandise was returned because it was damaged, provide evidence that it was repaired or replaced.
• If the service performed was as described, provide your merchant bank with as much specific information and documentation as possible refuting the card-holder's claims.. It is recommended that you specifically address each and every point the cardholder makes

If the cardholder's complaint is valid and you received the returned merchandise but have not yet credited the cardholder's account, accept the chargeback. Do not process a credit since the chargeback has performed this function.

To Help Prevent Chargeback Reason Code 53

• Ensure that descriptions of merchandise or services shown in catalogs, on Internet screens and sales receipts, or used in telephone order-taking scripts are accurate, complete, and not unintentionally misleading.
• Regularly review your shipping and handling processes to ensure that orders are being filled accurately.
• Train staff on proper procedures on taking and filling orders, and schedule review sessions at least annually.

Miscellaneous Information on Chargeback Reason Code 53

• Chargeback Amount Is Limited - The chargeback amount is limited to the amount of the merchandise returned or services cancelled . The chargeback may include ship-ping and handling fees for shipment of the defective merchandise.
• Card issuer Waiting Period - If merchandise was returned, the card issuer must wait at least 30 calendar days from the date the cardholder returned the merchandise (to allow sufficient time for you to process a credit to the cardholder's account) before generating a chargeback.
• Quality Disputes - This chargeback code also may be used for quality disputes (for example, a car repair situation).

Reason Code 85: Credit Not Processed

This can happen when the card issuer received a notice from a cardholder acknowledging participation in a transaction for which goods were returned or services cancelled, but the cardholder has not received a written refund acknowledgement or credit voucher from the merchant or the credit has not appeared on the customer's Visa statement.

Some Possible Remedies for Chargeback Reason Code 85

The merchant

• Did not issue a credit
• Issued the credit but did not deposit the credit with its merchant bank in time for it to appear on the cardholder's next statement
• Did not issue a credit because the business does not accept returns, but did not properly disclose its return policy

To Help Prevent Chargeback Reason Code 85

If you never received, or accepted, returned merchandise or a cardholder's cancellation, advise your merchant bank immediately. Proof of cancellation is not required from the cardholders. If the cardholder returns merchandise or cancels services in a manner contrary to your disclosed return or cancellation policy, provide your merchant bank with documentation showing that the cardholder was aware of and agreed to your policy at the time of the transaction. Specifically, the cardholder's signature must appear on a sales receipt or other document stating your return policy.

If your establishment's return policy is on the back of a receipt that has been signed on the front and initialed on the back as required by Visa policy, you must provide your merchant bank with copies of both sides of the receipt. If the return policy is on the back of the receipt and is not signed or initialed, you have not provided evidence of proper disclosure

If a customer returns merchandise or cancels services in accordance with your disclosed return or cancellation policy, and you have already issued a credit, inform your merchant bank of the date that the credit was issued.

If a customer returns merchandise or cancels services in accordance with your disclosed return or cancellation policy, and if you have not already issued a credit, accept the chargeback. Do not process a credit since the chargeback already has performed this function.

Card Not-Present Transactions

Ensure that your establishment's return or refund policy is always clearly stated in your printed advertising materials, catalog and catalog order forms, and, for Internet merchants, on your electronic order screen. Always explain your policy to customers who place orders by phone. Be sure to include refund information with the initial transaction. For Internet transactions, your web site should include a screen with your return or refund policies, which appears automatically during the check-out process (that is, it is not on a separate disclosure screen that the customer has to click to open). The screen should include I Accept or Agree buttons for the customer to click on before completing the transaction, indicating that he or she has read and agrees to your policies.

Describing your return policy in a catalog or verbally on the phone does not constitute proper disclosure unless you also obtain a customer signature indicating disclosure was provided. Such policy descriptions may support your case for having alerted the customer to your policy.

If a cardholder can complete an Internet transaction without clicking an Accept or Agree button to indicate acceptance of your refund, return, or cancellation policy, proper and adequate disclosure has not occurred.

Gift Returns

In cases where a gift recipient has returned a gift ordered by mail, telephone, or Internet, you may provide a cash or check refund, an in-store credit receipt, or another appropriate form of credit to the gift recipient. If the cardholder claims a credit was not issued to his or her account for the gift, provide appropriate documentation or information to your merchant bank that the credit was given to the gift recipient.

For gift returns, if credit is to be used to a charge card, the credit must be issued to the same Visa account number that was used for the original transaction.

No-Return Policy Disclosure

If your business has a limited return policy or does not allow returns at all, the words "no returns" or similar words must be preprinted on all copies of the sales receipts near the cardholder signature line.

Authorization Error Codes for Chargebacks

Saturday, October 28, 2006

Authorization errors can happen from time to time. If the merchant is in a hurry and does not place close attention to the POS terminal as the transaction is being processed, there is a chance that the transaction could be charged back by the issuing bank.

Reason Code 70: Account Number on Exception File

This is when the card issuer received a transaction that was below the merchant's floor limit and the account number was listed on Visa's Exception File maybe because the merchant either did not check the Exception File or received a negative response.

The most common cause is when the merchant processes the transaction below its floor limit without making sure that the exception file had been checked. Floor limits are typically specified in merchant agreements, and the exception file is part of the merchant bank's or third-party processor's transaction processing system; that is, it should be automatically checked when a card is swiped. Floor limits are zero for all card-not-present transactions. This means that they always require authorization regardless of the dollar amount of the transaction.

If you are notified of the chargeback and you did check the Exception File, inform your bank the date that the Exception File was checked. You do not have to send a copy of the receipt, as the bank should be able to check its transaction log. If you did not check the Exception File, accept the chargeback.

When doing the transaction, check the exception file before completing transactions below your floor limit to help prevent this type of chargeback. With most POS terminals, the exception file is checked automatically when the card is swiped and the dollar amount entered. If in doubt, check with your merchant bank or third-party processor to make sure their transaction-processing system automatically checks the exception file for your under-floor-limit transactions and tell your sales staff that if they are ever in doubt about whether an authorization is necessary, they should request an approval.

Reason Code 71: Declined Authorization

This usually happens when card issuer received a transaction for which authorization had been declined. Usually the merchant attempted to circumvent or override a declined authorization by one of the following methods:

• Forced posting: After a decline response, the merchant forced the transaction through without attempting another authorization request
• Multiple authorization attempts: After an initial authorization decline, the merchant re-swiped the card one or more times until the transaction was authorized. In this situation, authorization might occur if the card issuer's authorization system times out or becomes unavailable, and the transaction is forwarded to Visa
• Split transaction: When a transaction for a certain amount is declined, the merchant splits the amount into several smaller transactions, each of which is submitted and authorized separately
• Alternative authorization method: The merchant swiped the card at a POS terminal, and the authorization was declined. The merchant then resubmitted the transaction by key entry or called in a voice authorization, and received an approval

If you are notified of a chargeback and the transaction was authorized, and you have an authorization approval code, inform your merchant bank of the transaction date and amount. Multiple authorizations attempts may not be accepted if the first authorization was declined.

When completing a transaction, obtain an authorization before completing transactions exceeding your floor limit to help prevent this type of chargeback. If you are unable to get an electronic authorization because your terminal isn't working or because the card's magnetic stripe cannot be read, call your voice authorization center. If the transaction is approved, write the approval code on the sales receipt in the appropriate space, and imprint the card's embossed information onto the receipt, using a manual imprinter.

Reason Code 72: No Authorization

This usually happens when the card issuer received a transaction that exceeded the merchant's floor limit and authorization was not obtained. The merchant did not obtain an authorization for a transaction above its floor limit or, for card-present transactions, obtained it after the transaction date. Floor limits are typically specified in merchant agreements. Any transaction above a merchant's floor limit must be authorized.

If you do receive a chargeback, and the transaction was authorized, inform your merchant bank of the transaction date and amount. If the transaction was not authorized, accept the chargeback.

During a transaction, obtain an authorization before completing transactions exceeding your floor limit to help prevent this type of chargeback. The authorization request is sent automatically when you swipe the card and enter the dollar amount. If you are unable to get an electronic authorization because your terminal isn't working or because the card's magnetic stripe cannot be read, you can request an authorization either by key-entering the transaction or calling your voice authorization center. If the transaction is approved, be sure the approval code is on the sales receipt in the appropriate space; in the case of a voice authorization, you will need to write it on the receipt. You should also imprint the embossed account information from the front of the card on a sales receipt or manual sales receipt form, which the customer should sign.

Reason Code 73: Expired Card

This usually happens when the card issuer received a transaction that was completed with an expired card and was not authorized.

Card Not Expired--Key-Entered Transactions

For key-entered transactions, the expiration date should be on the manually imprinted copy of the front of the card. If the expiration date on sales receipt shows the card had not expired at the time of the sale, send a copy of the receipt to your merchant bank. The chargeback is invalid regardless of whether authorization was obtained.

Card Expired, Authorization Obtained

If the card was swiped or a manual imprint made, an authorization approval was obtained as required, inform your bank of the transaction date and amount. Many merchant banks automatically handle this type of chargeback so you never see it.

Card Expired, No Authorization Obtained

If the card is expired and you did not obtain an authorization, accept the chargeback.

When completing the transaction, check the expiration or "Good Thru" date on all cards. A card is valid through the last day of the month shown; for example, if the Good Thru date is 07/10, the card is valid through July 31, 2010 and expires on August 1, 2010.

If the transaction was a MO/TO or Internet transaction, then the expiration date provided by the cardholder is considered correct. Many merchant banks automatically handle this type of chargeback, so you really never see it.

Always request an authorization for transactions on expired cards and submit the expiration date on the card as part of the authorization request. The expiration date is submitted automatically when you swipe a card. If a transaction is not approved, do not complete the sale.

Reason Code 76: Incorrect Transaction Code

This is when the card issuer received a complaint from a cardholder, stating that a debit was received for a transaction that should have been credited to the account. This can happen when the merchant issued a credit voucher but it posted as a sale instead.

If you receive a chargeback, and the correct code was posted, provide your merchant bank with documentation of the transaction, showing that it was posted correctly as a credit to the cardholder's account (and a debit to your account).

If the transaction was posted as a sale, accept the chargeback.

The easiest way to prevent this chargeback is when issuing a credit voucher, be sure to use the credit transaction code on your POS terminal.

Reason Code 77: Non-Matching Account Number

This is when account number transmitted to the card issuer did not match any account number on the card issuer's master file, and the transaction was not authorized. It usually happens when the merchant incorrectly key-entered the account number or incorrectly recorded the account number for a mail order or telephone order.

If you are notified of the chargeback and the account number matches, matches the account number cited on the chargeback, and the transaction received an authorization approval, return the chargeback to your merchant bank and request your bank to include the authorization log for this transaction when returning it to the card issuer. If the account number on the sales receipt does not match the correct account number cited on the chargeback, accept the chargeback, then process a new transaction with the correct account number, and be sure to request an approval code.

Chargebacks on Card-Not-Present Transactions

If the account number on the sales receipt matches the account number cited on the chargeback, and the transaction was authorized as a mail order, telephone order, or Internet transaction, return the chargeback to your merchant bank. Request the bank to include the authorization log for this transaction when returning it to the card issuer. Many merchant banks handle this type of chargeback automatically, so that you never receive them.

If the account number does not match, accept the chargeback.

Transaction Catch

After accepting the chargeback, the new transaction with the correct account number should be submitted within 30 days of the original transaction. Due to the chargeback cycle, in most cases, merchants will be unable to meet this time frame, which may in turn result in a second chargeback for Reason Code 74, Late Presentment.

Card-Present Transactions

If you swipe a card and the terminal cannot read the card's magnetic stripe, request authorization by key entering the account number. Be sure the key-entered account number matches the embossed account number on the card; be careful not to transpose numbers. Use a manual imprinter to imprint the embossed information from the face of the card onto the sales receipt that is signed by the cardholder.

If your terminal is not working or you do not have a terminal, call your voice authorization center for authorization approval and write the authorization approval code on the sales receipt in the appropriate space. Use a manual imprinter to imprint the embossed information from the face of the card onto the sales receipt that is signed by the cardholder

Compare the account number displayed on your terminal or electronically printed on the sales receipt with the account number embossed on the card. If they do not match, do not complete the transaction. Call your voice authorization center and ask for a "Code 10 authorization ." The card issuer may ask you to pick up the card if you can do so safely.

Card-Not-Present Transactions

For phone orders, read the account number back to the customer to verify it.

Recurring Billing

Because recurring payment transactions occur on a regular basis over time, it is possible that the cardholder's account number could be closed or could change (for example, if a new card is issued due to a bank merger or account upgrade). If authorization is declined on a subsequent recurring payment trans- action, contact the customer to obtain updated payment information.

Reason Code 74: Late Presentment

This happens when the card issuer received a transaction after the 30-day time frame and account number is blocked or closed. Usually the merchant did not deposit the sales receipt with its merchant bank within the time frame specified in its merchant agreement. Time limits are set for depositing transactions to ensure timely processing and billing to cardholders. When you hold transactions beyond the period defined in your merchant agreement (usually one to five days), you lose money, affect customer service (cardholders expect to see transactions on their Visa statements within the same or next monthly cycle), and possibly invite a chargeback. No remedies exist for chargebacks on sales receipts deposited 181 days or longer after the transaction date.

If you receive a chargeback, and the sales receipt was deposited within the 30-day time frame, ask your merchant bank to forward a copy of the receipt to the card issuer. If the sales receipt was not deposited within 30 to 180 days of the transaction date and the cardholder account has been closed, the chargeback is valid. If the sales receipt was deposited more than 181 days after the transaction date, accept the chargeback. (In this situation, the cardholder account status is not a factor.)

Deposit Timing Guidelines

Deposit sales receipts with your merchant bank as soon as possible, preferably on the day of the sale or within the time frame specified in your merchant agreement.

If you deposit paper sales receipts, ensure your staff deposits them on a regular schedule within the time frame required by your merchant bank to help prevent this type of chargeback. If you currently process deposits manually, consider the costs and benefits of a transaction data capture system at the point of sale. Transaction data capture sales terminals allow you to electronically deposit your sales transactions after you have balanced them each day. Electronic cash registers are another option. Electronic cash registers can be set up so that your transactions are automatically deposited in batches or on a real-time basis.

Reason Code 80: Incorrect Transaction Amount or Account Number

This happens when the card issuer identified the transaction amount or account number that posted as different from what is shown on the sales receipt. This usually happens when the merchant made a data entry error, i.e., keyed in the wrong amount or account number for that particular transaction.

If you are notified of this type of chargeback and if the transaction amount or account number on the sales receipt is the same as on the clearing record deposited for payment, provide supporting documentation to your merchant bank to re-present the item. If the transaction amount or account number on the sales receipt is not the same as on the clearing record, accept the chargeback. If the chargeback is due to an incorrect account number, process a new transaction using the correct one; however, do not process a credit since the chargeback already has performed this function. For incorrect-amount chargebacks, the chargeback amount will be the difference between the amount charged and the correct amount, so no further action is needed.

Reason Code 82: Duplicate Processing

This usually is when the card issuer received the same transaction more than once for posting to the cardholder's account. It usually happens when the merchant:

• Entered the same transaction into the point-of-sale terminal more than once
• Electronically submitted the same batch of transactions to its merchant bank more than once
• Deposited with its merchant bank both the merchant copy and the bank copy of a sales receipt
• Deposited sales receipts for the same transaction with more than one merchant bank
• Created two sales receipts for the same purchase

If you are notified of this chargeback, provide your merchant bank with information documenting that the two transactions are separate, or send legible photocopies of the alleged duplicate sales receipts and any other related documents, such as cash register receipts, to your merchant bank. The receipts should clearly indicate that the two transactions are not charges for the same items or services. If you have not already deposited a credit to correct the duplicate, accept the chargeback. Do not process a credit now as the chargeback has performed that function. If you identified the duplicate transaction and processed an offsetting credit before you received the chargeback, inform your merchant bank of the date the credit was issued. If your merchant bank requires other procedures, follow them. However, many merchant banks automatically look to see if a credit has been processed, so you may never see these chargebacks.

Review each batch of paper sales receipts prior to deposit to ensure that only bank copies--and not merchant copies--are included. If transactions are sent electronically for processing, ensure each batch is sent only once and as a separate batch number to help prevent this type of chargeback and take care to avoid entering the same transaction more than once.

Reason Code 86: Paid by Other Means

This is usually when the card issuer received a written complaint from the cardholder stating that he or she paid for the transaction by other means, i.e., cash, check, or other type of card. It can happen when the cardholder initially tendered a Visa card in payment for the transaction, but then decided to use cash or a check after a credit card receipt had been completed. The merchant erroneously deposited the credit-card sales receipt in addition to the cash, check, or other payment method.

If you are notified of a chargeback and the Visa card was the only form of payment tendered for the transaction, provide your merchant bank with sales records or other documentation showing that no other form of payment was used. If a Visa card sales receipt was erroneously deposited after another form of payment was used, and a credit was issued, provide your merchant bank with the date of the credit. Many banks automatically search for credits, so you may not see these. If a Visa card sales receipt was erroneously deposited after another form of payment was used, and a credit was not issued, accept the chargeback. Do not process a credit as the chargeback has already performed this function.

Reason Code 96: Transaction Exceeds Limited Amount

This happens when the card issuer received a transaction that exceeded the allowable amount from a Limited-Amount or Self-Service Terminal (including an Automated Fuel Dispenser (AFD) transaction). It can happen if the merchant processed a transaction from a limited-amount terminal and exceeded $25 or a self-service terminal (including AFD) and exceeded $50.

If you are notified of a chargeback and the transaction was less than the allowable amount of $25 or $50, provide documentation supporting transaction amount to merchant bank (e.g., copy of the sales receipt or audit tape). If the transaction amount exceeded $25 or $50, accept the chargeback. If the appropriate credit has been processed to the cardholder's account on the disputed transaction, send your merchant bank evidence of the credit. If the appropriate credit has not yet been processed on the disputed transaction, accept the chargeback. Do not process a credit since the chargeback has already performed this function. If the transaction was not conducted at an unattended terminal (i.e., Limited-Amount or Self Service) provide proof to merchant bank.

To help prevent this type of chargeback, evaluate potential risk of chargeback exposure by ensuring terminals are properly set at transaction amount limits.

Fraud Codes for Chargebacks

Monday, October 23, 2006

Fraudulent transactions happen all the time via the Internet. People use various methods like GeoIP, calling the customer, only shipping to he billing address, and maybe even products like LinkShield™ to help them curve these transactions.

Reason Code 57: Fraudulent Multiple Transactions

This is when the issuing bank is notified by the cardholder states he / she recognizes the transaction(s) but also states that he / she only authorized one of them.

This can happen if the merchant failed to void the other transactions or attempted to process transactions fraudulently.

If you are notified of this chargeback but have already issued a refund, notify your processor immediately with the transaction numbers. If there was actually a reason for multiple transactions, send a copy of all the sales receipts to the processor. If you have not issues the credit, accept the chargeback. Do not process a credit since the chargeback has already been done.

This type of chargeback could have a negative impact on your merchant account as it might indicate fraud at the point-of-sale. It could also just be a mistake. In either case though, most providers will do an investigation.

Reason Code 62: Counterfeit Transaction

This is when the issuing bank is notified by the cardholder claiming they were in possession of the credit card but did not authorize the transaction.

This might happen is the merchant failed to compare the first four digits of the embossed account number on the card with the pre-printed digits below the embossed number for a card-present transaction or you received authorization without transmission of the entire magnetic stripe.

If that card was swiped and you have a signature, provide a copy of that to your processor. If the transaction was fraudulent, accept the chargeback.

Check all card security features before completing the transaction to help prevent this type of chargeback. If the first 4-digits do not match, call your processor and tell them you have a possible Code 10. If you have to key-in the transaction because the card could not be read, be sure to get an imprint of the front of the card either on the printed sales receipt or a manual sales receipt form and get the customer to sign it.

Reason Code 81: Fraudulent Transaction - Card-Present Environment

This is when the issuing bank is notified that a sales receipt is missing required information, indicating a potentially fraudulent transaction. This could occur if the card issuer receives a sales receipt that has no imprint of the card's embossed or magnetic-stripe information or even the cardholder's signature the the cardholder certifies he / she neither authorized nor participated in the transaction.

This can happen if you do not swipe the card through a magnetic-swipe reader, you did not make a manual imprint of the card account information on the sales receipt for a key-entered transaction, you did not complete a card-present transaction without obtaining the cardholder's signature on the sales receipt or you completed a card-not-present transaction but did not identify the transaction as a mail-order / telephone-order or Internet purchase.

If account information was captured from the card's magnetic stripe, request that your processor send a copy of the authorization record to the issuing bank as proof that you swipe the card. You also should provide a copy of the sale receipt proving the cardholder's signature was obtained.

If the account number was manually imprinted on the sales receipt, send a copy of the sales receipt to the processor for documentation. The copy of the sales receipt must also contain the cardholder's signature to win the chargeback.

If the account number was not obtained from either swiping the card or manually, accept the chargeback.

If you did get the cardholder's signature on the sales receipt or a related document, send a copy of the document to the merchant account provider. You should also send evidence that that cardholder's card was present, specifically either a manually imprinted sales receipt or authorization record proving the card was swiped. You must be able to prove the sales receipt and other documentation are from the same transaction.

If you did not get a signature, accept the chargeback.

A high volume charge Chargeback Code 81 may also indicate a need for additional staff training in proper card acceptance procedures or better maintenance and cleaning of the magnetic-stripe readers in your terminals.

Reason Code 83: Fraudulent Transaction - Card-Absent Environment

If the issuing bank receives a complaint from the cardholder that he / she did not authorize or participate in the transaction or the transaction was charged to a fictitious account number for which authorization approval was not obtained, a chargeback could occur.

Usually this happens when the merchant processes a card-not-present transaction from a person who was fraudulently using an account number or the merchant processes a card-not-present transaction without submitting an authorization request.

The cardholder can cause this as well by not recognizing the card-not-present transaction on his / her statement due to an unclear or confusing merchant name or had his / her account number taken by fraudulent means.

If the transaction was a mail-order / telephone-order or Internet transaction and you received an authorization approval and an exact match to the AVS query and you have proof that the merchandise was delivered to said address, send a copy of the transaction invoice, proof of delivery, and any other information pertaining to the transaction to the merchant account provider.

If you did not use AVC and the item has been charged back to you, send a copy of the transaction invoice, proof of delivery, and any other information pertaining to the transaction to the merchant account provider.

All card-not-present transactions should be identified by the appropriate code for mail-order / telephone-order or Internet during both the authorization and settlement process. In most cases, this is automatically done by the transaction processing terminal or system, or electronic payment gateway. If not, be sure to write the appropriate code on the transaction receipt: "MO" for mail order; "TO" for telephone order; and "ECI" for Internet.

For card-not-present transactions, consider using AVS, CVV2, Verified by Visa / MasterCard Secure Code, to help reduce fraud. You will also want to make sure your merchant name will be recognized by the cardholder. You can reduce these chargebacks by sending out proper receipts.

Non Receipt of Information Chargebacks

Friday, October 20, 2006

Chargeback Reason are divided into six different categories. Today I will start with non-receipt of information.

Chargeback Code 60

Chargeback Code 60 is basically when the customer requested a copy of the receipt and it illegible or invalid. Maybe the merchant submitted a sales receipt that did not contain all the required information or the receipt was illegible because:

• POS printer ribbon was worn and the ink was too light
• POS paper roll was nearing the end and the colored streak indicating this made the print illegible
• The document submitted was not the requested copy of the sales receipt.
• The original sales receipt was microfilmed at a reduced size, resulting in blurred and illegible copies
• The copy was on colored paper
• The carbonless paper of the original sales receipt was mishandled, causing blotches and making the copies illegible

If you, as the merchant, receive this chargeback reason code, resubmit a legible or complete copy of the sales receipt to your merchant account provider. If you are missing information or a legible copy of the sales receipt cannot be provided, accept the chargeback. If the retrieval request is fraud-related and you provide a substitute sales receipt, accept the chargeback. You, as the merchant, has no representment rights unless the card issuer's chargeback is for "illegible item received or invalid".

Preventive Measures

For preventive measures, if you microfilm sales receipts, make copies of the microfilm at the same size as the original receipt, otherwise, the image(s) might make the receipt illegible.

• Change the POS printer ribbon routinely.
• When you see the colored streak, change the paper immediately.
• Keep the white copy of the sales receipt and give customers the colored copy. (Colored paper does not copy as well as white paper and might make illegible copies.)
• Handle carbonless paper and carbon- or silver-back paper careful. Silver-back paper appears black when copied. Any pressure on carbonless and carbon-back paper during handling / storage might cause blotches, making copies illegible.
• Position your logo or marketing message on sales receipts away from the transaction information.
• For fraud-relates retrieval requests, provide a copy of the signed sales receipt.

Chargeback Reason Code 75

Chargeback Reason Code 75 is basically the customer did not recognize the transaction and contacted the issuing bank. The most common reason is the merchant store name or location shown on the cardholder's billing statement was not correct or unrecognizable to the cardholder.

When this is the reason, provide any documentation that might help the customer remember, like a sales receipt, shipping invoice or delivery receipts, or a description of the merchandise or service provided.

The best way - especially when doing business on the internet is having a good receipt. It is critical that the merchant name, while reflecting the merchant's DBA name, also be clearly recognizable by cardholder.

Should I have my Own Merchant Account

Tuesday, August 29, 2006

It has often been said that if you are in the United States and doing about $1,000 a month, usually a merchant account is better than Paypal. But is that exactly true?

The Standard rate with Paypal is 2.9% with a $.30 transaction rate. Let's say that you are doing 100 transactions a month at $10. With Paypal, you are going to be charged about $60.00 and a merchant account is going to cost around $80. If we increase that to $20 per transaction at 50 transactions, that is $44 going to Paypal and about $64 going to a merchant account provider. And then increasing that to 100 transactions, Paypal is going to be about $90 while a merchant account provider will be about $100.

So why $1,000? Or where does it actually become beneficial? Well the thing with Paypal is you need to sign in and get your money. And this can take a about five business days. And with a merchant account - the money is automatically deposited into your bank account in two - three business days. So now you are also looking at time and money.

Create a simple spreadsheet to compare - you can use this as an example. It has the basic charges to get you started. Once you go through and figure out where your cutting point is, now you know what might be better for you in the long run.

Keep in mind that most gateways charge for a transaction - LinkPoint does not. So you might need to add $.10 to this as well if you are going to use Authorizenet.com as your electronic payment gateway. Verisign's Payflow is a bit more expensive but gives you 1,000 free transactions, so that is cheaper that Authorizenet.com. Authorizenet.com can make your costs increase your costs probably by at least $10 or so each month since you might have to pay $25 or so a month for their gateway, while LinkPoint is usually about $15.00 a month with no extra transaction or monthly costs.

What Makes a Good Receipt

Wednesday, July 05, 2006

A good receipt can help to prevent a chargeback. There are a lot of shopping carts that send out a order summary before the credit card is charged. This potentially can increase sales. If the customer decides not to buy the products for some reason, the customer still might have your email.

Once the customer enters the credit card information and is approved, a receipt should be generated. This email should be in text format to the consumer to help bypass any spam filtering. On the checkout page, your domain name should be there asking the consumer to whitelist your domain name. Your receipt should thank the customer from buying from http://www.example.com and then state that is a a part of (Your DBA here). A lot of times this is very different and can be confusing for the customer. You should also have there the total the credit card was charged. As well as an order number from your company. If you have a order number or tracking number from the electronic payment gateway, provide that at the end of this email.

And then you should have a break down of each item purchased. Show a sales tax and shipping line - even if you do not charge for it. This way everything is there.

And then provide your web address again, a contact email address, your physical address, and phone number(s), preferably both toll free and a local number for your customers to contact you.

When the order is shipped, send them an email letting them know the order is shipped. If you have a tracking number with UPS, USPS, Federal Express, DHL, etc., give that to them as well.

What is the TMF List or better known as MATCH

Wednesday, June 07, 2006

If you have had your merchant account terminated by the merchant account processor, your business name might end up on this list. Visa and MasterCard members both contribute to the combined MATCH list; however, MasterCard hosts and regulates the use and access of the system.

The system works by manually entering or batching data through MasterCard's online system for inquiry. When a merchant is identified on the system, there is one of two replies: Exact Match or Partial Match.

• Exact Match: Business Name, Tax ID#, Phone Number, Owner Name, SS#.
• Partial Match: Business Address, Owner Address

Merchant account providers are not prohibited from accepting a merchant that has matched or partially macthed. It is discouraged though and it is considered an unnecessary risk.

The merchant account provider / acquirer who places a merchant on the file has the sole ability to remove the merchant. This is uncommon yet happens more than one would expect. Placing a merchant on MATCH may seem excessive in some circumstances, but it is mandated that a merchant terminated for one of the reason codes listed below is placed on the MATCH file. If the acquirer fails to do so, and the merchant causes another member bank monetary losses, the original member can be liable for those damages.

Merchants can be added to MATCH for any one of the following reason codes:

1. Excessive Counterfeit
2. Unauthorized Cardholder Charges
3. Laundering/Factoring
4. Excessive Chargebacks
5. Excessive Fraud (8% violation rate)
6. Violation of Merchant Agreement
7. Fraud Conviction

Most reason codes are very specific; some leave room for interpretation. The possibility of a good merchant or otherwise not deserving merchant being placed on MATCH cannot be denied. The ratio still makes MATCH a necessary defense for the acquiring industry.

Selling Downloadable Goods

Saturday, June 03, 2006

If you are selling downloadable goods, you might consider a third party processor or system instead of a merchant account. The reason being is that these accounts have a higher risk of chargebacks. And you do not want to risk putting your merchant account in jeopardy. If you get too many chargebacks, you might be placed on the TMF list and then it would be very difficult to get a merchant account.

Companies like Share It will do the credit card scrubbing for you. They will process the credit card transaction and give you your money. They take all the risks. You sell your product. It might cost a little more, but in the long run, it will be worth it.

Do your due diligence. Share It is a bit more expensive but they are taking all the risks for that sale. You are selling your product and still making money.

First Data Named as Global Cards Processor of the Year

Friday, May 26, 2006

London, May 24 2006  First Data has been named Cards Processor of the Year in Cards International's 2006 Global Awards. The prestigious industry award was presented to First Data, a global leader in electronic commerce and payment services, at the Cards International Awards Dinner in Milan last night.

First Data won the Global Cards Processor Award following shortlisting with eFunds Prepaid Solutions and TSYS. First Data was also shortlisted for the Best Merger & Acquisition Award, in recognition of a number of significant acquisitions made by the company in Europe and South East Asia over the past 12 months.

The award was accepted on behalf of First Data by David Yates, President, Europe, Middle East and Africa, First Data International. Addressing judges and dinner guests, he commented: "I am delighted to accept this award and, in doing so, to thank our clients for the trust they place in us and our staff for their efforts in delivering service excellence to our clients. I believe our success tonight reflects First Data‘s single-minded focus on client delivery. We know that we can only serve our clients effectively if we combine robust global capabilities with breadth of service and a real understanding of the markets in which we operate."

Pam Patsley, President of First Data International, adds: "This award provides powerful endorsement for our focus on executing a global strategy with local impact. In this way, we can ensure that our scale and solutions translate into real benefits for our clients in terms of increased competitiveness and operational efficiency."

Cards International award winners were selected by a panel of judges which included Gerard Lysaght, Editor, Cards International; Joanne Robinson, Director, Cards & Payments and Consumer Finance, VRL Publishing; Ken Howes, Director Edgar, Dunn & Company; Jayne Barber, Advisor to the Board, Experian International; and Francesco Burelli, Principal Consultant at CAPCO.

About First Data

First Data Corp. (NYSE: FDC) is a leading provider of electronic commerce and payment solutions for businesses and consumers worldwide. Serving 4.6 million merchant locations, 1,600 card issuers and millions of consumers, First Data powers the global economy by making it easy, fast and secure for people and businesses around the world to buy goods and services using virtually any form of payment.

First Data serves a diverse range of markets, leveraging global scale through a local presence and maintaining focus on individual client needs. The company operates across the USA, Europe, Middle East and Africa, Latin America, Canada, Australia and Asia Pacific.

First Data's portfolio of services and solutions includes credit, debit, private-label, gift and other prepaid card issuing and merchant transaction processing services; money transfer services; money orders; fraud protection and authentication solutions; check guarantee and verification services through TeleCheck; as well as Internet commerce and mobile solutions. Western Union, Vigo and Orlandi Valuta together make up one of the world's largest money transfer networks with approximately 274,000 Agent locations in more than 200 countries and territories. The company's STAR Network offers PIN-secured debit acceptance at 1.9 million ATM and retail locations. For more information, visit www.firstdata.com.

Source

Visa and MasterCard Defined

Monday, May 15, 2006

You probably accept Visa and MasterCard in your business or over the internet. And you get charged to accept these cards. Not once, but every time. You probably get charged a discount rate ranging from usually 1.4% to around 3.5%, depending on your type of business and the type of transaction (keyed (internet / telephone) or swiped (on a POS terminal)).

But Visa and MasterCard are not banks - they are registered and trademarked brands issued by card-issuing banks. Advertising plays a very big role in promoting the brands so in turn, they promote the use of the cards. Chances are very good that you are familiar with Visa's "Don't leave home without it," and MasterCard's "Priceless".

Visa and MasterCard associations are actually designed to generate revenue for their member banks. They do this by charging discount rates and transaction fees to the merchant.

To accept credit cards, you need to have a sponsoring bank. And for this piece, you can stay tuned for more information.

Choosing a United States Merchant Account

Friday, April 14, 2006

If you are in the United States and need a merchant account, you have hundreds of merchant account providers to choose from. And the large independent sales organizations (ISO) and merchant services providers (MSP) usually use agents to sell their services. This way they do not have to employ people to sell the services and the agent works when he / she wants to.

The first thing to look for in a ISO / MSP is to determine if they are actually an ISO / MSP. An ISO / MSP will usually look something like this :

Copyright© 2004-2009 CDGcommerce, Inc. All Rights Reserved.
CDGcommerce is a registered ISO/MSP for First National Bank of Omaha, 1620 Dodge St., Omaha, NE - Member FDIC.

This tells you who actually owns the company and what acquiring bank is used.
An agent of an ISO / MSP will look something like this:

Copyright 2005-2006 Cardservice International All Rights Reserved.
FDIS Illinois States is an independent agent office of Cardservice International.
Cardservice International is a registered ISO/MSP for the following FDIC-insured banks:
First Financial Bank, Englewood, CO; Wells Fargo Bank, N.A., Walnut Creek, CA.

It tells you who the ISO / MSP is and it tells you they are an agent.

Here is another example (Sam's Club)

©2006 First Data Merchant Services Corporation. All Rights Reserved.
All trademarks, service marks and trade names referenced in this material are the property of their respective owners.
SAM'S CLUB© Merchant Credit Card Processing is a registered ISO/MSP of Wells Fargo Bank, N.A., Walnut Creek, CA.

A lot of companies partner with First Data to offer merchant services.  First Data is one of the largest transaction processors in the world.  Companies like Wal-Mart, Home Depot, Dick's Sporting Goods turn to them for all their processing needs.

You always want to make sure it tells you in the footer what company it is, if it is an ISO/MSP or an agent and who the acquiring bank is.  If it does not, chances are that it could be a third party processor and you won't have your own merchant identifier or the bank / company might not be located in the United States.

Verified By Visa-MasterCard Secure Code-Things You Should Know

Tuesday, April 11, 2006

Verified By Visa (VBV) and MasterCard Secure Code (MSC) are two standards that Visa and MasterCard developed to protect transactions in a card-not-present (CNP) environment.  Two benefits that Visa and MasterCard boast:

• You are not liable for fraud resulting from the unauthorized use of Visa cards.
• Fraud on your site is reduced.

However, there are things that you should know re: VBV / MSC before implementing them on your web site.  They might not reduce the fraud as one would expect.  Yes, they do help with the "I didn't do it" chargeback: it could be the reason code:

75 - Cardholder Does Not Recognize Transaction

However, if you do a lot of recurring billing, VBV / MSC will not help you with these usual chargeback:

41 - Cancelled Recurring Transaction

The reason is simple - VBV / MSC require the cardholder's authentication.  And authentication is only done on the initial charge.  All recurring charges are usually completed by the electronic payment gateway and therefore, no cardholder authorization.

You also might run into problems in which the transaction has to be re-authorized.  Some merchants pre-authorize a credit card transaction for a certain amount until they are ready to ship the merchandise.  When they are ready to ship, they do a post-authorization / sale transaction in their virtual terminal.  Usually this pre-authorization only lasts a few days, depending on the issuing bank.  So if this pre-authorization has passed, you might need to re-do the transaction.  Usually the gateway does this without you even knowing the pre-authorization has passed.  And at this point, you are not protected.

If, by chance, the transaction failed to authenticate, you are not covered.

Sales that use the "one-click buy" technologies are usually not protected either. 

Now what you need to really know is this: If the credit card is Visa, and the cardholder is not enrolled in VBV, you can still be protected (as long as the transaction is not one of the above).  However, if the cardholder is in the United States with a MasterCard and not enrolled, you are not protected.  The MasterCard cardholder in The United has to be enrolled and authenticated for you to be protected.

Some high risk accounts like adult entertainment and gambling might not be covered.  These rules vary actually per card association, so you would be best to contact your VBV / MSC vendor (not your merchant account provider / electronic payment gateway.)

Multiple Merchant Accounts

Friday, April 07, 2006

I have three websites selling different items. I spoke with a merchant account agent and he told me I needed three separate merchant accounts. Why is this?

Well actually, one might do. It depends on what you are selling on all three websites. For example, if you are selling office supplies one and pet supplies on the other, make sure that your customers know your merchant name. Try to make it a little generic and not specific to one. Otherwise, you might experience a chargeback. You might also review Some Ways to Help Internet Merchants Reduce Fraud and Chargebacks.

Some merchant account providers (MAPs) consider products high risk. This varies per provider greatly. So if you were selling two products and one was high risk you would want a separate merchant account for this. This way, if something happens and you experience a lot of chargebacks and the account is terminated, you other merchant account should be fine.

A reason to have two merchant accounts is to help your accounting department. Having two merchant accounts will help them know what money is what. If you are processing over $10,000 a month for each, there is really no reason not to have more merchant accounts. At $1,000 in the United States is usually the starting point for a merchant account. Any fee less than this, I would recommend an internet payment service provider (IPSP) like 2Checkout or Paypal.

$1,000 is usually the starting point to really consider a merchant account.

Who Is the Worst Merchant Account Provider

Sunday, April 02, 2006

There is really no such thing as the worst merchant account provider.  There are some very large merchant account providers with a large client base. 

Paypal is a pretty large aggregator.  Currently, on their site today they say they have over 96.2 million members.  With that size of client base, you are always going to find problems.  The longer you are with a company and the more you do business with a company, you will increase your chances of problems.

With that type of base, let's say that they one 25% of of those clients in one day with one transaction.  That averages out to about 357 transactions per second.  With this type of statistic, you have to assume that at some point you are going to have problems. 

Some of the larger merchant account providers (MAPs) (Chase / Paymentech, Cardservice, First Data Merchant Services, Ipayment) boast a huge client base.  With these MAPs, they do a significant amount of business per year.  For example in 2004, Cardservice, who is owned by First Data processed $10,270,500,000 in 123,800,000 transactions alone.  The majority of these merchants use the LinkPoint gateway.  This is the same for Chase / Paymentech who First Data owns 50% in.  They processed $254,949,800,000 in 3,448,800,000 transactions and $189,782,500,000 in 3,353,300,000 transactions respectively. 

You hear a lot about Paypal and how bad they are.  One of the larger reasons is they do not check the identity of the merchant.  When it is found out that the merchant is underage or possibly selling something that is against the terms of service of Paypal, Paypal willl suspend or terminate their account.  And usually they will hold any money left in the account for 180 days in case of any chargebacks. 

Cardservice has a very lax policy in their merchants.  They will approve a lot of higher risk clients even if you are on the terminated merchant file (TMF).  They also will approve you if you are just starting out and have no processing history.  This increase Cardservice's statistics of course of hanving unhappy merchants.  And then of course when Cardservice suspends / terminates an account because of chargebacks or potential fraud, people tend to complain.

One individual even created their own site because he / she was very upset with Paypal: Paypal Sucks. That same individual also created Cardservice Sucks, which goes to the same web site which leads on to believe that he / she just likes to complain.  It also goes to prove what I just said above - lax policies with Paypal and Cardservice can actually cause more problems for them.  They try to help merchants start their business, but some merchants take advantage of that help and they try to actually rip off Paypal and Cardservice as well as their merchants.  And remember, you will always hear more complaints about a company than you will compliments.  It is human nature to complain more unfortunately.

How Does a Credit Card Transaction Get Processed

Sunday, February 12, 2006

It all begins when a Cardholder, your customer, presents their credit card to you to pay for the goods or services you are selling. In a retail or "card present" environment, the customer hands you their credit card. In an e-Commerce environment or "card-not-present" environment, the customer presents their credit card to you on the secure checkout page of your online shopping cart.

There are basically seven steps in the life of a transaction:

1. Authorization: The first step is called the Authorization which is the process of requesting an authorization from the bank or company that issued the customer's credit card. For Internet Merchants, the shopping cart is connected to or integrated with a Payment Gateway. For Retail Merchants, the card is swiped through a magnetic reader on the Point of Sale (POS) Terminal. The Payment Gateway and POS Terminal then connects to a Front-End Processor. If the credit card used is a Visa or MasterCard (V/MC), the Front-End Processor transmits the authorization to the Visa or MasterCard Associations who then rout it to the appropriate Issuing Bank. Otherwise, the authorization is transmitted to the appropriate Card Issuer (Amex, Discover, Diners, JCB) for approval. The Issuing Bank or Card Issuer authenticates the Cardholder and approves or declines the transaction amount. It is important to note that no money changes hands during the Authorization. Merchants must re-present the transaction to receive payment. For Retail Merchants, the transaction is stored on the POS Terminal. For Internet Merchants the transaction is stored on the Payment Gateway.
2. Merchant Balancing: The second step is called Merchant Balancing which is the process of totaling the transactions and balances by card type and transmitting them to the Front-End Processor. This is also known as Batching Out. Most POS Terminals and all Payment Gateways perform an auto close function at the end of the day and batch out automatically.
3. Capture: The third step is called the Capture which is the process of requesting payment from the Issuing Bank or Card Issuer. The Front-End Processor matches the Authorization data to the settlement data and transmits the card capture file to a Back-End Processor for V/MC transactions or to the appropriate Card Issuer for other card types.
4. Clearing: The fourth step is called Clearing. During this stage the Back-End Processor performs compliance checks and risk management procedures and transmits the transaction to V/MC or to the appropriate Card Issuer for other card types.
5. Interchange (V/MC Only): The fifth step is called Interchange. During this stage the V/MC Associations sort the transactions by Issuing Bank and transmit them to the appropriate Issuing Banks for settlement.
6. Settlement: The sixth step is called Settlement. During this stage the Issuing Bank calculates fees and deductions (i.e., chargebacks) and routs the net funds to the V/MC Associations who then sort them by Acquiring Bank and transmit them to the appropriate Acquiring Bank for payment to the merchant. For other card types, the appropriate Card Issuer determines the daily deposit for the merchant.
7. Merchant ACH: The final step is the Merchant ACH. During this stage the Acquiring Bank or Card Issuer transmits the merchant deposit to the merchant's checking account.

The typical timeline for the transaction processing is as follows:

Day 1: Authorization
Day 2: Merchant Balancing/Capture/Clearing/Interchange/Settlement
Day 3: Merchant ACH

Some Ways to Help Internet Merchants Reduce Fraud and Chargebacks

Sunday, January 15, 2006

Chargebacks can occur for a variety of reasons. From the simple "I didn't do it", to the package was not received, or maybe it was not what I expected. Ten common reasons that chargebacks happen:

1. Failure of merchant to respond to retrieval request.
2. Cardholder was billed more than once for the same transaction.
3. Cardholder denies making or authorizing a transaction.
4. Failure of merchant to follow correct procedures in completing the sales slip at the point-of-sale.
5. Account numbers don't match.
6. A credit or refund was not properly processed.
7. Failure to obtain proper authorization.
8. A card was used either before or after its valid date.
9. Merchandise or service not received by cardholder.
10. Cardholder disputes quality of merchandise or services.

The key to preventing most chargebacks is communication. Keep the lines of communication open between you and your customer. When the customer is on your check out page, put the name of your business by the submit button. This name should be the same as what will appear on the consumer statement from the issuing credit card company. Since most credit card companies offer online access and people can review this at any time, it is important to know what company is charging their credit card.


If your phone number does not appear on the credit card statement, contact your agent or your merchant account provider today and request it be placed on there. This way, the customer sees your number and this will increase your chances of them calling you - whether the call might be "What company is this" or "It was not what I expected".

Depending on the reason of the chargeback, you might get a retrieval request. This request is from the issuing bank. Some merchant account providers will charge you for this retrieval request on top of chargeback fees. This retrieval request is your first step in preventing a chargeback. As you can see above, failure of merchant to respond to a retrieval request will cause a chargeback to be issued. Once again, communication. You need to respond to the request immediately. Most merchant account providers will allow online access to your account or maybe even email you. Check this daily and to help you properly respond to the request.

Usually each gateway will send you an email for all transactions completed. If you receive two emails that look like the same order, review your shopping cart and then cancel the order through your virtual terminal. Doing this before batching out, can possibly even prevent the customer from knowing what happened.

If a cardholder denies making the authorization or transaction, this can potentially be fraud. There are a variety of things that you can do to prevent fraud. The first step is AVS (address verification service). This is an archaic method that Visa and MasterCard used to rely on quite heavily to prevent fraud. With so many problems though, they came out with a CVV (Card Verification Value) or CVC (Card Verification Code). Most Visa and MasterCards in the market today will have one of these numbers on the back. Electronic payment gateways will send you a transaction / order ID on your completed transaction. In this ID, you will be able to tell if the address and the CVV matched. If there was a problem., you need to scrub the transaction even further. And be very diligent in this - especially if you are allowing electronic downloads. A few other red flags could be:

1. Free email address
2. Phone number does not match the GeoIP or not entering a phone number
3. Do a GeoIP look-up (this will help to verify that the IP matches near the address of the consumer)
4. Purchasing quite a few of the same products

These are just a few reasons to scrub the transaction, I would guess that 99% of all consumers will not mind being called to verify the transaction.

If you sell a lot of high ticket items, consider faxing a credit card authorization slip over to the consumer. This can be as (link to authorization form).If you have some pretty strict return policies, consider adding some of those on this simple page. This way, If the consumer does a chargeback (and depending on the reason), you might be able to beat the chargeback. MyChoiceFax will provide a toll-free phone number with 100 free minutes for $9.95 a month if you need one.

Also, have you shopping cart verify the expiration date as well as the credit card number using the Lunh's method before submitting it to the gateway. This will help prevent a consumer using an expired card. Sometimes, the gateway or the platform will not check the expiration date.

Whenever possible, use a carrier that will provide you with proof of delivery. Having this on file will also help in some chargebacks.

And when you think the merchandise has been received by the consumer, send them a follow-up email. This will help to maintain the communication between you and your customer. This way in case something is wrong with the order, your chances will be increased that he / she will actually contact you.

Sell Your Chargebacks

Saturday, January 07, 2006

Ever get hit with a chargeback for service or product provided? Are you tired of giving away your hosting services, other services, or products for free? Why not consider selling your chargebacks and NSF checks. There are companies, like CRB Company, that specialize in buying chargebacks and NSF checks. You get paid, upfront, a % of the face value of the chargebacks/NSF's and they are responsible for locating and collecting from the consumer. For those that are selling webhosting plans for $19.95 a month, this might not seem to be worth it to you. Now, with the help of Host Legal, we have come up with new TOS for your company which may allow you to add fees to your chargebacks / NSF's. You have to have the fees listed in your TOS to be effective. These fees will vary from state to state.

Once these fees are calculated, you might be able to get at least the money back for the services rendered as well as the chargeback fee imposed by the Merchant Account Processor (MAP) or Third Party Processor. While it will not help you on your chargeback percentage, it will help on your receivables. Each service, chargeback, and returned check is different – just like a merchant account. I recommend that you contact CRB Company for more information on selling your chargebacks and returned checks since they also have some minimum requirements, which vary from merchant to merchant. They primarily deal with United States consumers. And if you have a webhosting company, check out Host Legal for more information on TOS if you are a web hosting company.

One thing to keep in mind, if the charge is known to be fraudulent, CRB or any other company, will not buy your chargebacks. The easiest way to tell this is if there was a police report filed. If so, CRB Company and most other companies cannot enforce these on the consumer. Feel free to contact CRB Company today for more information. If you provided the services or products to the consumer within your TOS and AUP, and they do a chargeback, chances are that you should be able to get your money back. For example, someone signs up with your hosting company and they use your services for one month. The uptime is well within your SLA. Yet, at the end of the month, they leave and decide to do a chargeback. Consider getting your money back. Or maybe you sell a script to someone. And maybe even help them install it. Then two weeks later - you get the chargeback notification. You know they are using it, but due to Visa's rules on chargebacks and the internet, you really do not have a leg to stand on. Consider speaking with CRB Company to get your money back for that script.

The extra charges that you are able to tack onto a chargeback or NSF check is state sensitive. Unfortunately, the resources to locate each of these numbers are very low. I recommend that before you update your TOS, to check with your attorney or State's attorney.

Now you are probably wondering what fees might be imposed? Well - to only give you an idea, let's say that you have a webhosting plan that is $19.95. After one month, the consumer cancels service and does a chargeback. What happens now? You get charged $15-$50 for that chargeback on top of the $19.95. So you are out $34.95-$69.95 right now. Now here is where it becomes tricky. What to "charge" exactly. You can charge the $19.95 and the chargeback fee. This is a start, but CRB Company and others are only going to give you a small percentage, so right now you are looking at probably only looking at $3-$7.00. Not too much so you will need to determine what your state might allow, possibly 3-5 times the amount of the chargeback along with a not too exceed amount. Let's say you charge 5X the chargeback, $60 recovery fee and your other chargeback fees ($25.00 from your MAP). This would be $204.70. And selling it to CRB could net you about $20.00. This is only an example.

Guess it is about time to update those Terms of Service. Good luck!

Merchant Account Fees

Wednesday, December 28, 2005

Getting a merchant account is very easy - understanding it is a different story. There can be a lot of different fees associated with a merchant account*:

• Discount rate (Visa / MasterCard): usually 2.39%  
• Transaction Rate (usually $.25-.30 per transaction)  
• Batch Fee(usually $.25-.30 per batch)  
• Address Verification Service (AVS) (usually $.05 per transaction)  
• Electronic Gateway Fee ($10-$30 monthly)  
• Statement Fee ($0 - $20)  
• Customer Service Fee ($0 - $20)  
• Monthly Minimum ($0-$50 – for example, if your discount rate is 2.5% and you sell $1,000 that month, your charge is $25.00. If you monthly minimum is $25.00, you have met that requirement, and should not be responsible for that amount)  
• Application Fee ($0-$1,000)  
• Merchant Account Set-Up Fee ($0-$1,000)  
• Electronic Payment Gateway Set-Up Fee ($0-$1,000)  
• Membership or Annual Fee ($0-$1,000)  
• Virtual Terminal ($0-$25 monthly)  

As you can see, there can be a lot of charges. The two basic components of an internet merchant account are a credit card processor and an electronic payment gateway. The electronic payment gateway is similar to the point-of-sale (POS) terminal in the grocery store. The main U.S. gateways are LinkPoint, Authorizenet.com, and Verisign. All three of these companies cannot process credit cards without the aid of a credit card processor.  

A few things to ask a merchant account provider: Do they provider 24 hour customer support? What are the charges of a transaction and monthly charges?  

Whatever they tell you on the charges - when you sign the contract, make sure that those charges are spelled out on the contract. This is what matters. Also read the print to see how long the contract is good for. They are either usually 6 months, 12 months, 24 months, or 36 months. Twelve months might be a good start because if Visa / MasterCard decide to raise the interchange rates, your rate will be guaranteed for the amount of that contract. Usually once the contract has expired, it will be month-to-month.  

Do your due diligence. Let’s say you sign up with a 2.39% discount rate, $.25 transaction fee / batch fee, $.05 AVS, $15.00 monthly electronic gateway fee, and $10 customer service fee. With the above contract, let’s say you have 40 transactions at $100.00. So the transaction fee / AVS is going to be a total of $12.00 ($10.00 / $2.00 respectively). And your discount rate charge is going to be about $95.60. Now let’s say that you have nightly batches & it is only Monday-Friday. And four weeks - so that is 20 days - so that should be about $5.00. So right now, your total is $137.60 for the $4,000 in sales, which is about 3.4%. If you were processing thru 2CO, this would be 5.95%. Third party processing has some advantages over a merchant account. A comparison of third party processing and your own merchant account will be out soon. But if you are only processing about $500 a month with a merchant account, you would be looking at about 11% or more.  

*All rates are for United States residents.