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!