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e-Commerce Merchant Account
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What is a merchant account?
A merchant account gives a business the ability to accept credit cards
and/or echecks as payment for the company's goods and services.
What do I need in order to obtain a merchant
account?
In order to obtain a merchant account you need to have some sort
of business. This could be retail, home-based, internet-based, network
marketing, etc.., but it needs to be a business. One cannot obtain a merchant
account for personal use. To open a U.S. merchant account one needs either
a Social Security number or Federal Tax ID number, a U.S. based checking
account and a U.S. based address. If you do not have these three, proceed
to apply for an international merchant account.
Would it be easier to go to my local bank
to get a merchant account?
In addition to offering outstanding programs, we work with the kinds of
businesses that most banks consider too risky, such as new enterprises,
Internet businesses, or phone and mail order businesses. We usually offer
lower discount rates and fees than banks, however, we will match any rates
quoted by any bank.
How does a merchant account work?
The merchant account provider authorizes the credit card transfer from
your customer and deposits the funds for their purchases directly into
your business checking account.
What will my rates and fees be?
Although there are merchant service providers out there that advertise
the best and lowest rates, your Discount Rate depends on several factors
that every merchant service provider is subject to. These factors include
Monthly Transaction Volume, Transaction Method and what type of business
you have.
Which bankcards can I accept?
You can accept the most popular credit cards: MasterCard, Visa, American
Express, Discover. In addition to these credit cards. Additional cards
are also accepted, please inquire for more information.
When does my money deposit into my bank
account?
Deposits to your business bank account occur within two to five business
days after the transaction settles. Settlement usually occurs the day
of or the day after the transaction is batched out depending upon the
time of the batch.
Discount Rate
The Discount Rate is the percentage that gets discounted (deducted) from
the transaction amount. The Discount Rate is the rate that gets paid for
the most part to the bankcard company (Visa, MasterCard, etc.), the Issuing
Bank (the bank that issued the bankcard to your customer) and the Acquiring
Bank (the bank that the merchant processes with).
It is called a Discount Rate since this is the percentage that gets
discounted off the transaction amount at the time of payment processing.
Thus, if the transaction amount totals $100.00, and your Discount Rate
is 1.50%, then a total of $98.50 will be deposited into the merchant's
account.
The most important factor in determining the merchant's Discount Rate
is the transaction method the merchant uses. There are other factors as
well, such as monthly processing volume and type of industry the merchant
is in. Therefore a Discount Rate is predetermined by the Acquiring Bank
or Processor and can not be set by the merchant.
Transaction Fee
The Transaction Fee is the fee a merchant pays every time he or she enters
the network. For example, when a bankcard is Swiped or Keyed in, when
the merchant Batches Out or when the merchant performs a Return or Void.
The Transaction Fees are assessed at the end of the statement period.
As with the Discount Rate, the most important factor in determining the
merchant's Transaction Fee is the transaction method the merchant uses.
The Transaction Fee is predetermined by the Acquiring Bank or Processor
and can not be set by the merchant.
Average Ticket Amount
This is the dollar amount of the average transaction that is (or will
be) processed. For example, if you only sell computers for $800.00, then
every time you sell a computer your ticket amount is $800.00. But if you
sell one type of computer for $1,200 and another type for $800.00, and
you sell equal amounts of each, figure out the average:
$1,200.00
+ $800.00
========
$2,000.00 ÷ 2 = $1,000.00
In this case your Average Ticket Amount is $1,000.00.
Business Method
In what type of environment do you do business? How do you interact with
your customers? If you are a storefront then this is Retail; if you advertise
in magazines and take mail orders or telephone orders then this is Mail
Order / Telephone Order (MOTO). Should you have a web site on which you
sell products, then this is Internet.
Transaction Method
This is the method by which you perform the bankcard transactions. There
are two distinct methods: 'Swiped' and 'Keyed'.
Swiped:
By this is meant that the bankcard is actually swiped through a Point-of-Sale
Terminal magnetic strip reader. This is a low risk transaction as the
merchant is in possession of the customers credit card, meaning that the
customer is present at the transaction. Hence there is less risk of a
dispute / chargeback. Examples of Swiped transaction businesses are Retail
Merchants and Restaurants. As there is less risk, a Swiped Discount Rate
is far lower than a Keyed Rate. FOR A MERCHANT TO BE QUALIFIED AS A SWIPED
MERCHANT HE NEEDS TO SWIPE AT LEAST 51% OF ALL HIS OR HER TRANSACTIONS.
Keyed:
By this is meant that the merchant keys in (using the touch keys on the
Point-of-Sale terminal) the bankcard number and expiration date. With
a Keyed transaction the bankcard does not have to be presented by the
customer and thus there is more risk involved than a Swiped transaction.
A Keyed Discount Rate is higher than a Swiped Rate. Examples of Keyed
Merchants are Mail Order/Telephone Order (MOTO), and also internet transactions
(as the card is not presented to the merchant at the time of the transaction).
A MERCHANT WHOSE TRANSACTIONS ARE OVER 49% KEYED IS SET UP AS A KEYED
MERCHANT.
Monthly Transaction Volume
This is the total dollar amount of transactions processed through your
merchant account on a monthly basis. In essence there is a limit on this
amount as this is an unsecured credit line given to the merchant. Just
like a credit card's "credit limit", the Monthly Transaction
Volume is an amount that you will have to get approved for. Based on your
credit and other business factors, a merchant is approved for a certain
Monthly Transaction Volume. U.S. Merchant Systems is one of the merchant
service providers that does have liberal approval criteria and regularly
approved high volumes for it's merchants.
NOTE: Please refer to your merchant services agreement for all fees, charges
and rules associated with your merchant account.
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