A merchant account handles credit card processing. This allows you to accept credit cards as payment. Statistics have shown people are more likely to purchase when shopping with credit cards instead of cash.

Selecting a merchant account provider can be confusing and time consuming. There are a number of factors to consider, such as credibility, reliability, fees, and customer service. The first step is to evaluate your business’s present and future needs. Will you require 24 hour uninterrupted service, international processing capabilities, or how about the turnaround time on transactions. What kind of customer service do they provide? All these services come at a cost. However, the fees associated with a merchant account shouldn’t be your exclusive deciding factor when choosing a provider. Here is a list and explanation of common fees charged by a merchant account provider.

Application Fee: This covers the costs of processing the “paper” work of an application. It is usually non-refundable.

Setup Fee: Fee for setting up the account once approved. This is usually a onetime flat rate fee.

Discount Rate: This is the percentage that the bank with holds from each transaction it processes.

Per transaction Fees: This is a small fee charged on every transaction the business does. It can range from as low as 15 cents, but may be as high as $1.00.

Monthly Maintenance Fee: This monthly fee charged for operating and providing access to the merchant account, and its services.

Monthly Minimum Fee: The minimum charged if you do not meet your minimum sales.

Annual Membership Fee: A flat rate fee that can be several hundred dollars to free.

Monthly Statement Fee: The cost of preparing your monthly statement is charged a flat rate usually around $10.

Customer Service Fee: A small amount between 10 and 20 cents charged each time you call customer service.

Gateway Monthly Fee: This applies to online merchants and is charged monthly for gateway processing services to the internet.

Chargeback Fees: A small amount charged for every outstanding transaction on your account that is disputed by the customer.

It may help to determine your business needs. You should know your product or service well and be able to estimate you monthly sales volume. Once you have narrowed down your selection list you can run a calculation to determine the cost the merchant account. By knowing the theoretical cost of the account you should be able to determine if the merchant account provider’s services are worth it.

For more information on echeck processing, high risk merchant accounts and online credit card processing. please visit www.stradafee.com!

Any kind of business that accepts credit card payments is aware that chargebacks are a fact of life. Sooner or later it is going to happen. Most often a chargeback occurs when a card holder who is dissatisfied or does not receive a merchant’s product or service and disputes that debit on their credit card bill. Other reasons could include an incorrect or double charge on the card, an expired card, or a bank error. The card issuer then bills the amount back to the merchant. An excessive amount of chargebacks can seriously impact a business’s future by incurring additional fees which could wipe out profits, as well as the possibility of losing the merchant account all together. Once the merchant account has been terminated it may be considerably difficult to obtain another merchant account.

Adhering to credit card acceptance guidelines is the best defence against fraud. When conducting transactions face to face merchants should examine cards carefully. Ensure the identity of the card holder by requesting other forms of photo ID, such as a driver’s license, passport, or another credit card. Inspect cards for signs of fraud. Know where to look for built in security features such as microprinting, embossing, and features only visible under ultraviolet lighting. Make sure the embossed account numbers on the card match with the numbers on the monitor, and that the customers signature matches with the one on the back of the card. If the card is not signed or is expired refuse to accept it. Take extra time to scrutinize suspicious transactions, such as a pushy customer at the end of the day unable to verify his or her identity. Use address verification services (AVS) for online credit card processing and confirm the 3 digit security code found on the back of the card.

Make sure customers fully understand the service contracts or the products they are purchasing, as well as return and exchange policies. Include a copy of the policy with the sales draft and have the customer sign it. Let them know how the charge will appear on their credit card statement as well.

Dealing with charge backs can eat up hours of your time. In the event of a chargeback, contact the card holder’s bank and determine the reason for dispute. Promptly gather all information about the sale and prepare a written statement detailing the transaction. If everything is in order the customer should be liable for the sale. If there was a problem with the product or service arrange for return or exchange and issue a credit to the customer’s account. For mistakes at point of sale also issue a credit. Following these guidelines should help you reduce and manage the dreaded chargebacks.

For more information on echeck processing, high risk merchant accounts and online credit card processing. please visit www.stradafee.com!

Chargeback, it’s not a matter of if but when you’ll get them. A big misunderstanding that merchants make is that they won’t have them. That is a pretty big lie to tell yourself. Whether you’re a Card Present vendor, operating a sporting goods store or a strictly E-commerce business, you’ll have chargebacks on your settlement statement. Today, with as much fraud in the marketplace as there is, business owners need to watch their statements closely and be diligent to avoid chargebacks whenever possible.

Chargebacks stem from a number of sources. Probably the most common type of chargeback is a customer dispute. It happens; customers aren’t satisfied with a product or service and wish to get their money back. Most often, they’ll contact the merchant for a refund or some sort of compensation; the concept that the customer is always right, causes more problems than ever these days. If the merchant feels that they have fulfilled their responsibilities and cannot come to terms with the consumer, then usually, the consumer goes directly to their issuing bank that the charge was made on to dispute a charge. This is often done while the customer still has the merchandise or has been rendered the services. From there, the bank will contact the merchant to basically get their side of the story. If you, the merchant has taken notes, has good records of their transactions and has dealt or spoken to the disputing customer directly, this can be a saving grace for you and save a chargeback. A lot of times, in big organizations, this is not the case, and banks tend to charge back merchants more easily as there’s a long and inconsistent trail knowledge of the original transaction. If you have a customer service department, in-house customer dispute resolution and good call logs will help if chargebacks occur. The underlying moral her is, “Resolve your customer’s issues while you can.” You’ll save a chargeback and may save future business.

Another cause of chargebacks are Procesing Errors. These are usually the merchants fault; double processing single transactions or entire batches through the same or different banks happen more than you think. Be thorough, this is your business. Processors make mistakes too, make it a point once a month to reconcile your Settlement Statements and always take every chargeback seriously, every chargeback does count. Many times, merchants won’t be contacted about their chargebacks, as they stem from the issuing bank to the merchant bank; usually the type of chargeback delegates the merchant participation. Typically, your merchant bank will contact you about a customer dispute. Also, stay on top of pending chargebacks (investigations) or customer disputes, there is a time limit; if not responded to in a certain timeframe by you or the merchant bank, issuing banks will issue the chargeback and their decision is final.

Fraudulent charges are commonplace today; they’re a huge pitfall and merchants need to always be vigilant. Identity theft is not going to decrease and the criminals that perpetrate these types of crimes are getting smarter. These types of chargebacks usually stem from Card Not Present Transactions where a charge is called in or made via the internet. To help prevent fraudulent activity, requesting additional card or cardholder information prior to card authorization can weed out the bad cards. Card control numbers or CVV2 on the front or back of the card (front for AMEX, back for MC and VISA) mean that the cardholder is in possession of and looking at the card at the time of purchase. Billing information requests and requiring that merchandise is shipped to the billing address are a help too.

While most businesses have direct capture, in that the charge is made at the point of sale; some businesses preauthorize transactions and utilize third-party fraud scrubbing agencies to settle their accounts before the funds are captured. This is sometimes done out of sheer diligence and other times is a necessity for the merchant to process credit cards. Either way, third-party fraud scrubbing and other services like 3 D secure processing and AVS and CVV2 are offered by merchant service providers. You are not going to eliminate chargebacks or fraud, but diligence, good transaction protocol and accurate record keeping can lessen the time you spend fixing problems that you could have easily avoided.

For more information on echeck processing, high risk merchant accounts and online credit card processing. please visit www.stradafee.com!

A chargeback is a forced reversal of payment in a merchant’s account. In other words, a chargeback occurs when a payment for a product or service by a customer is reversed and the merchant’s account is deducted with the amount of a payment already made. Chargebacks can occur on account of a customer disputing a credit card charge or in case there is a technical error, such as the merchant not supplying the original bill of sale to the issuing bank. The chargeback will not immediately result in a reversal of merchant funds, and the charge will have to be proven by the customer and vice versa. For instance, if a customer claims that the product shipped is not what he or she ordered, the customer will have to prove that the product that was shipped and ordered are substantially different. In return, the merchant will need to prove that the product shipped is the same and there are no material differences.

Chargebacks can occur due to several reasons including the following major ones:

• Dual processing- when a customer is charged twice for the same order

• Defective- When the shipped product or service is defective (damaged or broken) and does not perform the purported functions as claimed by the merchant. In addition, if there is a substantial difference between the performance as promised and delivered.

• Not shipped- A customer may claim that the order shipment was not fulfilled.

• Unauthorized activity: A customer may claim that the transaction in question is either in error or not conducted by him or her at all, indicating fraud.

A charge back request must be initiated at customer’s end.

The typical process for a chargeback is as follows:

1. A customer complains to his or her credit card issuing bank about a specific transaction.

2. The credit card issuing bank registers the complaint and issues a recovery request to the acquiring bank. Along with the complaint, information relating to the transaction such as date of transaction, amount, reason for complaint (duplicate processing, etc.) must also be supplied.

3. In some specific cases when a customer report of non involvement in some specific transaction charged in his account, the credit card issuing bank can straight away issues a notification for chargeback.

4. The Acquirer forwards the recovery request to the merchant account service provider, or in case of a third party processor, the processor informs the merchant about the charge back complaint filed against him. Some third party processors such as PayPal allow the customer to check the status of the chargeback request anytime at their online “Resolution Center.”

5. The merchant account service provider marks the transaction as ‘disputed’ and forwards the recovery request to the merchant. Some merchant account providers or third processors may deduct the amount of the transaction from the merchant’s account freeze it at the merchant account provider or third party processor’s end. However, this amount will not yet be transferred to the end customer.

6. The merchant will now need to prove the legitimacy of the transaction, either through the presentation of the original credit card sales invoice or charge slip with the customer’s signature. In addition, the merchant may show delivery receipts or other documentation (product details as offered to customers), depending on the cause of the chargeback request.

7. The merchant account service provider will the review the provided documentation. If it appears that there is no fault on part of the merchant, the information will forwarded to the acquirer and the amount is added back into the merchant’s account, and vice versa. However, in case the service provider adjudicates that the merchant is not at fault, the end customer may choose not to accept this verdict and send a chargeback request for a second presentment, to which a reply needs to be provided within 45 days (usually in case of MasterCard and Visa). The exact time frame varies with different service providers as well as the cause of the chargeback request.

8. In case of 2nd presentment, the acquiring bank will need to mediate for arbitration, for which both the customer and merchant will have to file a request. At this stage, the final decision as to the chargeback will rest with the acquirer.

Chargeback communication including recovery requests are transmitted based on “reason codes,” which carry information as to the reason of request as well as the status of the chargeback.

For more information on echeck processing, high risk merchant accounts and online credit card processing. please visit www.stradafee.com!

How astute are you when it comes to your merchant banking? This is the second in a three part series that deals with terms associated with merchant accounts and things you should be paying attention to in your business. In the first part, we covered the Discount Rate, Batching, Terminals, Virtual Terminals and the differences between Card Present and Card Not Present transactions. We decided to run these articles partially to educate new merchants, but more as a refresher to existing merchants. It’s always a good thing to revisit your banking solutions and better your position, that’s our goal.

We covered the differences between card present and card not present transactions, but when it comes to card not present transactions, there are several different types. The first is MOTO, which stands for mail order, telephone order. It really is self explanatory, as it refers to merchant processing that originates through the mail or over the telephone, and are usually considered high risk. The second is M-commerce (wireless); we all know that E-commerce is electronic commerce or usually purchasing a product or service over the internet. M-commerce is similar in that it involves a handheld device such as a PDA, cell phone or whatever new gadget can fit in the buyer’s pocket. This type of transaction can be dangerous for consumers because these devices are small and often misplaced or stolen. The fraud rate goes up tremendously when it comes to M-commerce. U-commerce stands for universal commerce; it means that the merchant with U-commerce status has universal processing status, and can accept a credit card in any form, any time meaning MOTO, E-commerce, M-commerce Card Present or Card Not Present. It is fairly rare, but these merchants are out there and a U-commerce account is a bit difficult to obtain.

After your daily business has been batched and sent to the bank, where does it go? It goes to the Acquiring Bank. The Acquiring Bank will transfer the pertinent customer information to Visa, Mastercard, Amex or whatever kind of card it is; they will send it to the bank that issued the customer the card, for payment to the merchant. I know, it sounds pretty complicated, but it isn’t. There’s a lot of routing of the same information; but if you look at how many different credit cards there are out there, it’ll make more sense. This is done pretty quickly too, in about a day. That bank that pays the merchant ultimately is the Issuing bank, which will bill the cardholder at the end of the month. Every week or month, depending on your needs and what your processor makes available to you, a statement called a Processing Statement will be sent to you. A Processing or Settlement Statement is an aggregate of all the credit card transactions for that particular billing period. It provides the cardholder information on each transaction, amounts, issuing banks and dates of transactions. Each transaction warrants a rate, interchange rate, discount rate or qualifying rate, they’re all the same thing. It’s the rate that the bank will charge you on a particular transaction. This rate is initially based on your initial qualifying rate from the bank when you opened your merchant account, but can fluctuate, depending the type of card being processed; for example, you will get a lower rate charged you for processing debit cards, versus a higher than usual rate for rewards cards. A rewards card is a credit card that rewards the cardholder with miles, points, money back or any other reward for using the card for purchases. Regular bank issued credit cards fall in the middle. In addition to all of your account activity, rates, dates and amounts; your Chargebacks, if you have any will be debited from your account prior to summing the total amount that will appear in your account in your next bank wire. Chargebacks can be returns, fraud, unfulfilled or cancelled orders or even a disputed charge with the issuing bank. Chargebacks are a pitfall and challenge for merchants. You want to avoid them, they do not go away, and can endanger your merchant account and business. Chargebacks will be the focus of our next article, look forward to it.

For more information on echeck processing, high risk merchant accounts and online credit card processing. please visit www.stradafee.com!