Merchant Account Blog & Credit Card Processing Blog

Welcome back!

Accepting credit cards is a must in today marketplace. With the addition of Visa & MasterCard Branded debit cards to the market in the mid-1990’s, the use of plastic has exploded. Consumers who use to carry cash, now prefer to carry the debit card. Visa & Mastercard “Check Cards”, as they are referred to are accepted any where credit cards are accepted. Consumers look for the sign “We Accept Credit Cards” when deciding to make a purchase.

Credit card transactions also began to take off as consumers got comfortable using their credit card for e-commerce purchases, beginning in around the same-time debit cards were “Branded”. E-commerce transactions continue to grow each year with no end in site. With the current cost of gasoline the growth trend in e-commerce transactions should spike, as consumers can order products with free shipping and in some cases, no sales tax.

In closing, your ability to accept credit cards is a must. Your competitors will steal a large percentage of your customers if you think credit card processing is expensive. This thinking will surely cost you more money lossing sales to your competitors. Don’t be penny-wise and dollar-foolish.

If you need to discuss setting up a merchant account to accept credit cards, feel free to give me a call.

MARK SAND
http://www.usa-merchantaccount.com

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Getting The Best Merchant Account Rates

Understanding your merchant account rates, is the first step in insuring that you get the best rate. Most merchants do not understand the rate structure of their merchant account. The majority of merchant accounts are on a Tiered System, as Visa & Mastercard charge different rates for certain business types and transaction types. This is called “Interchange” and is extremely complicated. Between both Visa and Mastercard there are at least 100 different Interchange Catagories, here are the current interchange rates from Visa Interchange and Mastercard Interchange, as-of this writing. As you can see, Interchange Rates are extremely complicated.

The popular Tiered System tends to simplify this extremely complicated formula used by Visa & Mastercard. Most merchant accounts use a Three Tier System for Qualified, Mid-Qualified, and Non-Qualified Transactions with different rates for each. Basic understanding of each, is key to getting the best possible rate for that particular transaction type.

GETTING THE BEST RATE:

Alway’s swipe the credit card, when possible.
Use AVS & CVV2 when keying a transaction. ( Address, Zip Code, Last 3 On Back )
CLOSE YOUR TERMINAL BATCH DAILY !!!!!!!!

Majority of your transactions should fall under Quailfied Transactions, by following the above proceedure. Any Rewards Cards process will probally fall under your Mid-Quaified Tier. Finally any of the following card types will fall under the Non-Qualified Tier….Foriegn Cards, Business Cards, and any hand-key transactions with a retail account.

Larger businesses that process above $37,500 per month, may qualify for Interchange Plus pricing which is Interchange Cost, plus a flat rate of 0.27% above interchange cost. This is actually much simpler and you will receive a monthly break-down of where each transaction fall’s under the complex Interchange Structure. This option is reserved for higher volume merchants, currently processing credit cards. Call us today, to see if you qualify as a high-volume merchant account. Your 3 most recent credit card processing statements are required.

Both Visa and Mastercard offer special Supermarket Rates for grocery stores that:

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Credit Card Fair Free Act (HR 5546) ) - House Of Represenatives

On July 16, 2008, the U.S. House Judiciary Committee passed the Credit Card Fair Fee Act (HR 5546), by a 19 to 16 vote. Legislation was introduced by D-Rep John Conyers of Michigan back in March of this year. The bill addresses government price controls of interchange rates charged to businesses through their merchant account agreements. This bill clearly states that the board will “set rates and terms” for access to the benefits of accepting electronic payments.

We feel this bill is very dangerous to small merchant’s with business types of higher risk, as they may get squeezed out of the market, by mandated pricing by the goverment. By lowering the margin’s of the credit card processing providers, they will surely cut the amount of risk they are willing to accept. This would surely cost may small businesses, especially internet-based-merchants the ability to accept credit cards at their business, as no provider would accept the risk with lower rewards.

The credit card processing indusrty over the past ten years has regulated itself, as it should in a Free Market Economy. Ten years ago, a merchant’s monthly overhead to accept credit cards was much higher than it is today. Then, a merchant had a choice of paying $1,200 for a credit card terminal or leasing one for $3,400 over a 4 Year Contract. Those day’s are gone, as merchants can receive a free terminal with their merchant account. Today, many things are negociable, even to the smallest of merchants, as the competion is fierce with the introduction of the internet.

As for the idea of government price controls in a free market economy, well today’s congress just does not get it. Back in September of 2007, legislation was passed to control the interest-rates on student loans. This caused all of the major banks to stop student loan lending in the Spring of 2008, then guess who came to the rescue 2 month’s ago, the legislature !!! They passed a new bill, guaranteeing the student debt, with tax payer dollars. ( I don’t think they will be guranteeing any merchant accounts when mom & pop can’t get a one, do you ?? ).

Again, we think this is bad politics and bad for business. Please share your thoughts.

MARK SANDS
http://www.usa-merchantaccount.com

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Level 4 Merchants:

According to Visa’s Website, a level 4 merchant is described as: Any merchant processing fewer than 20,000 Visa e-commerce transactions per year, and all other merchants-regardless of acceptance channel-processing up to 1,000,000 Visa transactions per year. Please keep in mind that this reffers to Transactions Processed, not dollar volume processed.

PCI Compliance Requirments:

An annual PCI Self-Assessment Questionnaire is to be completed ans signed by the Principal or Officers of the company. Questionaire should be available by contacting your merchant services provider.

A Quarterly Network Scan provided by an Approved Scan Vendor, is also required.

Again, please direct any questions to your merchant services provider, as failure to become compliant could result is termination of your credit card processing agreement.

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Level 2 Merchant:

According to Visa’s Website, a Level 2 merchant is described as: Any merchant-regardless of acceptance channel-processing 1,000,000 to 6,000,000 Visa transactions per year. Again, please keep in mind that this is Transaction Volume, not dollar volume.

PCI Compliance Requirments:

An annual PCI Self-Assessment Questionnaire is to be completed ans signed by the Principal or Officers of the company. Questionaire should be available by contacting your merchant services provider.

A Quarterly Network Scan provided by an Approved Scan Vendor, is also required.

Again, please direct any questions to your merchant services provider, as failure to become compliant could result is termination of your credit card processing agreement.

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 PCI DSS stands for “Payment Card Industry Data Security Standard”. The card associations are cracking down on loose security measures with regard to credit card processing. The new effort will provide new standards to follow with regards to credit card data handling and data security.

Seems that not only eCommerce Transactions are in question, as the card associations have defined different levels, including “Card Present” retail transactions. Security issues will vary by level and all merchant types must be within compliance or risk termination of your merchant account.

We will be covering this topic in detail, shortly. 

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