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!

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!

It’s a fact that customers rely on business to accept all forms of payment. Nothing is more irritating for a customer than to have a shopping cart full of one type of product or another and getting up to the register to pay only to find out that they didn’t bring enough cash. No problem, they can just use a credit card, right? Unfortunately the sales clerk informs them that they don’t accept that certain type of credit card, or any credit cards for that matter because the business doesn’t have a merchant account. The customer is then faced with the fact that they just wasted an extreme amount of time in that store and has to leave without anything they shopped for. It is reasonable to assume that it’s highly unlikely that the customer will ever return to that store for any future purchases. Circumstances such as this can impact a business in terms of growth and profit. The same scenario can just as easily occur with online businesses that don’t offer their customers a wide variety of payment options.

Consumers rely heavily on the use of their credit cards and since there more than one type of credit card, businesses need to be able to accept all major forms of credit card payment. In order to accept credit card payments a business needs to open a merchant account of some kind in order to process their credit card transactions. The key is finding the right type of merchant service provider that meets all of your business needs. Many merchant service providers give merchants the options of different type of merchant accounts. There are domestic and international merchant account, offshore merchant accounts, and high risk merchant accounts. No matter what type of account you choose or your business can qualify for, it’s important to obtain a merchant account in order for your business to grow.

Each type of account has something that might appeal to different types of business. When looking for merchant account you should find one that accepts all major credit cards such as Visa®, MasterCard®, American Express®, and Discover®. This allows customer to choose how they wish to pay and opens sales opportunity for your business. Another aspect to look for in a merchant account is a provider that lets you have online access to your merchant account 24/7. This allows you to keep informed about what is going on with your business whenever it is convenient for you. Constant customer support is also a key element when opening a merchant account. Your business is important and if there are any issues with credit card processing for your business, you need to be able to get help as soon as possible.

Even if you have less than perfect credit, it is still possible to get a merchant account for your business. If you find the right merchant service provider, they understand that life happens and that having a merchant account is necessary for your business. Another important aspect of a great merchant account is the ability to have your money deposited quickly into your account. All of this is possible when you open a merchant account for your credit card transaction needs.

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

Some of the worst decisions we make for our businesses are the ones that we make out of desperation and in haste. We often make these because we find out when it is too late or need a product or service as a stop gap measure. Most times, the daily business of your business consumes so much time that doing the proper research to educate yourself on really important issues just doesn’t happen. As a merchant, your funds’ transactions are the lifeblood of your day to day business and more. Your merchant account may be an overlooked area where your business loses money, unnecessarily. Here are some things we think you should know about your merchant account and merchant service provider.

Let’s start with the easy stuff, so we can build on that for later. The most important and never out of sight fee that merchants incur is the Discount Rate. The Discount is charge that you, the merchant pays on each transaction. It’s a percentage of the total ticket amount. These rates vary depending on what kind of business you are and how you process your credit card transactions. If you’re processing cards as a Card Not Present vendor, then that means that your customers are not present to swipe and sign their receipts when they purchase items or services that day. Chances are that you’re Discount Rate is a little higher than other vendors that are Card Present Vendors; where their customers are there to swipe and sign their receipts. Rates depend on a number of things from business longevity, personal credit or backing, funds’ security and the type of business that you operate. These are risks that banks take on you, the vendor. While a Card Present Transaction is pretty safe, in that there’s less of a chance of fraud, theft or a chargeback; and yes, these merchants get better rates, the other half is losing out lately and here’s why. As businesses have been losing customers to online vendors and, more importantly international online vendors; local business owners are closing the doors, launching websites or both to compete with this trend. I guess, at the end of the day, this is great for banks, as they can charge higher rates for. Which now happens to be quite an acceptable risk for the right price.

Every day, you’re going to tab how much you made…or lost sometimes and that’s an exciting time. If you currently take cards, go to the next paragraph, if not, continue to read. So how do you turn all those transactions to zeros in your bank account? You need to batch. Batching is just summing all of the days’ electronic payments transactions and sending them to the bank for settlement. It’s that easy, and from there account information is justified and within a couple days, you are wired the money for that day’s business.

Two very similar, but very different terms in merchant service processing are Terminals and Virtual terminals. This is how the information is compiled for batching; Terminals or card swipers are small computers that read cards to transfer and compile information for monetary exchange. Virtual Terminals are a little different and are becoming more mainstream. As with ecommerce becoming more mainstream, Online Virtual Terminals are just as popular as regular terminals or card swipers. An easy way for a small or medium size business owner to operate one of these is on a PC. Your merchant service provider can set up a link for you to charge and capture money from your customer’s, or just put a hold and capture later, once the bank has verified customer information. Again, the problem is that banks tend to charge a bit more for these types of transactions.

Well, that’s it for now. As I know a lot of you are well informed, bringing these subjects up from time to time, makes merchants more diligent about their ecommerce banking services and the charges they incur. This is the first part of a couple glossary or “Terms” articles that we’re publishing.

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

In September 2006, the 5 major credit card companies in the world- MasterCard, Visa, American Express, Discover Financial Services and JCB came together to form an organization that would create, disseminate and regulate the standards by which each member of the payment cards industry would need to comply. The organization would be called the Payment Cards Industry (PCI) Security Standards Council. The key theme behind the PCI council is the DSS or Data Security Standard, which is a set of compliance requirements to be met by each entity in the process of credit card processing, who maintains, processes or stores credit card information. The current version of the Data Security Standard is 1.1 adopted with effect from December 31, 2006.

The PCI consortium is basically aimed at providing security to customers in the e-commerce environment, by ensuring that the merchant or acquirer who is handling the credit card information has sufficient security checks and facilities in place to prevent fraudulent activity. PCI compliance is a mandatory requirement for any merchant, third party credit card processor or acquirer, who is storing, processing or receiving credit card information in any form. By the end of 2007, PCI compliance was made mandatory for any organization that accepts credit card payments. In case such a merchant or acquirer is not PCI compliant, the PCI council is empowered to levy fines (upto $500,000) and take regulatory action, in some cases even permanently prohibit the entity from credit card activity. However, it is important to note that PCI compliance is mandatory for only those parties who are in possession of the Primary Account Number (PAN), or the full 16-19 digit credit card number. Technically, if the merchant or acquirer in question does not store, process or receive the PAN, then the said party would not need to comply with PCI rules.

To be PCI compliant technically means that at the time that an authorized PCI auditor audits a merchant or acquirer’s systems, the said party is in 100% compliance with the PCI rules. This practically means that as long as the merchant can show compliance at the time the audit is conducted, he or she does not need to stay compliant throughout- this is obviously a regulatory issue which may need to be sorted out with time. In any event, being PCI compliant would mean that each of the 12 requirements of the PCI DSS 1.1 standard is met by the merchant or acquirer in question. Most of these requirements revolve around access control and network protection. In addition, proper monitoring and regular security checks are mandated. The PCI DSS can be divided into 6 basic sections to aid understanding:

1. Network Security
2. Protection of Credit card information
3. User and group level access control
4. Organizational level information security policy
5. Protection against vulnerability and business risks
6. Regular monitoring and maintenance of security infrastructure.

The PCI council, prescribes these rules in the context of merchant levels (1, 2, 3, 4), which have different levels of required compliance and corresponding fines and levies. Merchants are classified into levels 1, 2, 3 and 4 based on their volume of transactions and whether or not the merchant has had any data breaches in the past. For instance, Level 1 merchants are those that have the highest volume of transactions, upwards of 6 million a year currently, as well as the merchants who have experienced a breach of sensitive data in the past. It is important to note that the DSS 1.1 standard is more focused on Level 1 and Level 2 merchants, as they are more prone to credit card fraud than the other levels. Furthermore, MasterCard doesn’t have any specific requirements for a merchant to fall under Level 4, whereas Visa has different categories in some geographic regions. While MasterCard suggests that level 4 is for merchants who are not in Level 1, 2 or 3, Visa goes a step further and has level 4a and level 4b categories as well.

Becoming PCI compliant will not be free, as putting in place both organizational as well as technical measures will involve investment in terms of both time and money. It is estimated that a Level 1 merchant would need to spend nearly $700,000 in order to implement PCI compliance. The costs would be lower for lower level merchants- for instance, a Level 2 merchant may spend only half the amount of a Level 1 merchant. However, this is not taking into account the fact that non-compliance could lead to huge fines and sometimes a revocation of the right to accept credit cards.

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

A multi-currency merchant account allows a merchant to accept payments in multiple currencies and currencies other than his home currency. This can be an excellent advantage in the given scenario of globalization which has provided an internet merchant access to a global market for his or her products. With a multi currency account, a retailer can provide the customer the ability to pay in their own currency, while still receiving remittances in the home currency. In case an international merchant account is used, a number of different currencies are available to the merchant in which to settle funds. For instance, a buyer in New Zealand can buy products from a US merchant and still pay for it in New Zealand dollars. At the same time, the US online merchant will receive remittances in US dollars.

Any e-business today will be hard pressed to survive without international sales or an online presence. People in major emerging economies such India and China are increasingly interested in products from developed countries such as the US and the UK, as these countries are renowned for their high quality, which is often not available in developing nations. However, as is the case with many of these countries, the government imposes a restriction on currency exchange and their own home currencies are not freely convertible. By offering a multi-currency option, an e-merchant can not only gain a wider market access, but also gain a competitive edge in the e-tailing marketplace. An added benefit with some merchant account providers who have multi-currency capabilities is that they are able to provide localized web pages in the reader’s language that makes it even more user friendly.

There are many merchant account providers out there who offer to credit card acceptance in most global currencies, sometimes ranging from 120 to170 currencies around the world. It is important to note, however, that for the merchant, the currencies in which funds are made available finally, are more limited to the better known currencies, usually 15 major global currencies including UK Pound Sterling, US Dollars, Euro, Canadian Dollar, Japanese Yen, Swiss Francs and Australian Dollar. Foreign exchange rates are provided daily by the merchant account provider. The multi currency merchant account provider will indicate currencies on the monthly account statement.

While it is obviously beneficial to provide multi currency facilities, it does not come free, and adding more currencies will increase both monthly maintenance fees as well as monthly and set up fees. Some provides will usually provide a default currency at no additional charge and an incremental fee for each progressive currency added. In addition to the wider market access that comes with multi-currency acceptance, an online merchant may choose to maintain multiple accounts for each different currency. For instance, if an US based online merchant receives several orders from the UK, it may be wise to set up a separate Pound Sterling account offshore to maintain funds in the same currency. Conversion charges can be saved significantly using this technique, and many e-tailers opt for it. This insulates them substantially from currency exchange rate fluctuations.

While multi-currency merchant accounts increases market access available to an online merchant, it also increases exposure to credit card fraud, especially since the foreign buyer is not regulated,  and in case of a problem, the local government may not be able to provide any suitable protection. According to a survey conduct by the Merchant Risk Council, online credit card fraud causes losses of upto USD 50 million each year. In most cases, credit card fraud originates from the less developed nations, primarily the following (actual rankings differ as per different surveys):

The Ukraine
Indonesia
Yugoslavia
Lithuania
Egypt
Romania
Bulgaria
Turkey
Russia
Pakistan
Malaysia
Israel
Venezuela

In order to minimize potential losses due to such fraud, it is important for an online merchant to ensure that the merchant account provider has taken the necessary steps in terms of verification, particularly fraud scrubbing. In addition to CVV and AVS verification, a good fraud scrubbing software can be instrumental in weeding out potentially loss making sales. However, the merchant must remember that the process is not perfect, and it is likely that along with fraudulent transactions, a small percentage of legitimate sales may also be lost.

For more information on multi-currency merchant accounts.   please visit www.stradafee.com!

Check 21 or the, “Check Clearing for the 21st Century Act” is a regulation that enabled electronic check collection, processing and clearing between banks in the United States. The Federal Reserve had been investigating electronic check processing since the year 2000 with a focus on speeding up check processing and reducing transportation related delays. Through the collective efforts of industry officials and Federal Reserve staff, the act took shape and was presented before the US congress in the year 2002. The act, though signed in 2003, came into effect only from October, 2004. This act has brought in substantial changes, not only in the conventional method of check processing in United States, but also in the electronic payments industry, which was so far dominated by credit cards. The act is aimed at reducing both time and costs of physical transportation and processing of checks by using electronic images which are delivered electronically through a nationwide network of banks called ACH or Automated Clearing House. Compared to the previous standard of 3 days for a local check and around 14 days for out of town checks, a check now deposited at day 1 can be processed and cashed by the end of day.

In addition to being time consuming and expensive (considering the additional cost of transportation, particularly in outstation checks), physical transfer of paper checks is relatively more prone to theft. Check 21 Act has allowed ‘check truncation’ which means that the physical check is no longer required and an electronic substitute in the form of a digital image of the front and back of the check can be used for processing and payments, and is just as good as the original paper check. Such substitute digital images are also referred to as Image Replacement Documents (IRD) or echecks (electronic checks), though the term ‘echecks’ also encompasses several other payment options nowadays. However, to qualify as a valid e-check, the digital image has to comply with certain requirements of the Check 21 act. The substitute check must have an additional statement added to it saying, “This is a legal copy of your check. You can use it the same way you would use the original check.” In addition, the substitute check must identify the account holders name and address, check number, transit code, bank information, 9 digit routing number and checking account number. Image file size of the substitute check is a critical consideration, as with the sheer number of checks in processing due to its growing popularity, banks will have to store a large number of check images for their records. In addition to storage, a larger file size will also lead to slower transmission and consequently slower processing. Banks may thus be compelled to lower the image file size, thereby lowering resolution and image quality, which may cause problems with validation of electronic checks and consequently security of the processing system.

Quicker processing will mean that there will be a much shorter time lag between the payee depositing the check and the funds clearing from the payer’s bank account. Hence, “Float” may not be available, implying that the payer’s funds have to be in place before the payee deposits the check. In case funds are insufficient, either party can face penalties and fines, as per the provisions of Check 21. Check 21 also provides protection to customers, in case of double deposit (where paper and electronic copies are deposited), or in case funds are deposited to or withdrawn from the incorrect account. In such cases, Check 21 provides the customer the right to have funds re-credited upto USD 2,500 per check, within 10 business days until the investigation is completed. However, this benefit applies to only those cases, in which a customer possesses a valid “substitute check.” The right to recover losses due to error or fraud covers not only the amount withdrawn, but also the fees, dues and/or penalties associated with the respective transaction. Check 21 provides these rights in view of potential problems associated with electronic check processing, such as the ones mentioned above. In addition, sometimes the digital image may not legible, causing transactional errors.

While Check 21 has increased the speed and efficiency of check processing, it has also increased the chances of check related fraud. As physical checks are minimized in electronic processing, it is harder to detect fraudulent deposits or payments. For instance, a digital image does not have the benefits of watermarks or chemically reactive paper, which are used to detect and minimize fraudulent checks. However, it has breathed new life in the usage of checks, which were on a constant decline, and created new demand for electronic checks, which are becoming increasingly popular, and are viewed by many as an excellent and low risk substitute for credit cards.

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

Every business has to have an online payment system in today’s e-commerce driven marketplace. When it comes to making a payment online, several methods are available, including credit cards, debit cards, e-wallets, and echecks, which are fast becoming popular and taking a chunk of the market away from credit cards. An e-check is an electronic check processing option that works like a physical check- instead of transferring sensitive credit card information online, which is prone to security breaches, an e-check simply transmits the check information along with some other details, thereby keeping sensitive credit card information safe. While an e-check is not perfectly secure, it does offer some benefits related to security, especially when compared to a credit card.

Making payments or accepting checks online is relatively straightforward. There are two basic ways to accept check payments online. In both methods, a customer completes an order by checking out much the same way as in the case of a credit card transaction. The difference comes in when payment information has to be entered. In the first method, instead of filling in credit cards numbers, expiration dates and verification codes, a user will need to enter the information on the physical check (which is in the customer’s possession). This information will then be processed through the ACH network and upon approval, the check information is transferred to the seller, who can then take a physical printout of the check and deposit it in his or her local bank. The critical component here is the software that processes the check information and provides an electronic version of the check that can be printed out by the seller at his own location.

This can be accomplished via e-checks or electronic checks. In a typical transaction, instead of providing credit card details, the customer will enter bank routing information and check number. Echecks are essentially a replacement for paper checks, as far as the buyer is concerned. The seller may still have to print the physical checks and deposit them with the bank at periodic intervals. However, services are available whereby the printing can be outsourced to a processor and the payment is directly deposited into the seller’s account.

In the second method, the need to take a print out for deposit is eliminated, as the check gets directly cleared online and is settled by both payer and payee banks directly. In this method, an online payment gateway which has check processing facilities will collect bank account, routing and other information and transmit funds through the ACH network.
Also, check payments are contingent upon funds being cleared by the payer’s bank. This method is called ichecks or internet checks. This method completely removes the role of physical checks and the processing is

In order to start accepting checks online, a merchant will need to sign up with a check processing service, which will provide a payment gateway software to process check payments via the internet. This payment gateway will collect the necessary information including bank information routing number as well as the check number. It will also be responsible for processing the payment via the ACH network. Typical fees associated with such accounts include set up and transaction fees. There may also be check guarantee and verification fees as well as reserves, depending on the chosen provider.

A key benefit of accepting checks online is that nearly everyone is familiar with checks and transacting check payments and receipts involves much less training, compared to credit cards. Hence, a new e-commerce customer will find it much easier to just go in and input check information on a payment gateway, rather than enter credit card information, CVV and other numbers. In addition, check processing fees are typically lower than credit card processing fees. The obvious drawback is that a check is not cleared instantaneously, and most sellers will only ship the item once the funds clear. Hence, there will be a longer waiting period for a buyer, compared to if he or she conducts a transaction through a credit card. This is where check guarantee and verification come in. Many service providers will provide either seller protection terms or check guarantee and verification, within the processing function.

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

The use of plastic money or credit cards is fast becoming the preferred mode of payment for all kinds of purchasing activities, not just in the developed world but also in emerging economies. Two key factors are contributing to this trend:

1. Convenience and Security: Credit cards mean that hard cash does not have to carried around in large quantities for high value purchases. Credit cards also carry the convenience of remote purchasing and instant payment delivery, unlike in the case of pay orders or banker’s cheques, which involve extra fees, delivery charges and the logistical time lag.

In addition, there is a security feature attached to credit cards, and generally speaking, a credit card loss does not always mean an immediate loss of money.

2. E-commerce: with the growing prevalence of electronic purchasing options such as online, TV and telephone and growing adoption of the convenience factor, credit cards are becoming the only practical choice for payments.

Merchant accounts are accounts which enable acceptance of payments through credit cards, cheque cards and debit cards. A retailer can obtain a merchant account with a bank or through an independent merchant account provider, who specializes in setting up and maintaining merchant accounts for miscellaneous business entities. The procedure for applying for and obtaining a merchant account is relatively simple and can be viewed http://stradafee.com/merchant-enrolment.php

There are different types of merchant accounts available depending on retailer needs and the nature of business. For instance, for an internet retailing business, an internet merchant account is used, whereas a swipe based physical terminal is used for a brick and mortar retail business. Most merchant accounts can however, be classified as:

1. Swipe based: These merchant accounts depend on a physical terminal connected to a phone line. The credit card needs to be swiped through this terminal to initiate, process and complete a payment transaction. In the case of check verification, there will be a check reader, acting as the swipe terminal.

A new innovation in the swipe based processing segment is the wireless merchant account terminal, in which instead of a regular phone line, is connected wirelessly using cell phone technology. The advantage of this technology is that a merchant or e-tailer will not be limited geographically for accepting payments. For instance, at a retail exhibition, a merchant can easily set up without wires, a payment system for walk-by clients to submit credit card payments.

2. Non swipe based: These include all those methods of payment which require credit card information but the credit card itself does not need to be swiped. This also includes merchant accounts for online check payments and clearance. Some of the common non-swipe merchant accounts include:

a. Internet Merchant Account: This type of account is used by internet based retailers. Credit card payments are processed after receiving electronic credit card information received through a web-based form and transmitting it through a payment gateway. This type of merchant account is a very popular merchant account, particularly due to the substantial growth of the e-commerce industry.

b. Online cheque acceptance (e-checks): This type of processing utilizes cheque payments without actually having to receive a cheque by mail. The customer can provide cheque information on the physical cheque, such as depositor name, account name, cheque number and so on, and the retailer can, using a cheque processing solution, verify and receive a cheque via online submission or phone/fax or email. Using the special software, the cheque can then be printed remotely and submitted by the retailer in physical form.

c. Telephone order merchant account: Using a touchtone telephone, this type of account receives information about the credit card using the telephone keypad. This account is suitable Telephone Order businesses which have a substantial business coming in through the telephone.

An important factor to remember with merchant accounts if fees; merchant accounts involve a number of fees to run and maintain, including setup, monthly/annual, statement fees (which are fixed) and a number of variable fees such as discount rate, rolling reserve, per transaction fees and address verification (AVS) charges. The actual cost of setting up, running and maintaining a merchant must be understood and compared to actual business requirements, such as volume and frequency of transactions, nature of business and track record. Selecting the right merchant account provider will be critical from the cost-feasibility point of view as well as smooth transaction processing of credit card payments.

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