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First Time Visitors
What's a Merchant Account and how do I start using
credit cards facility?
Let's start with the basics! I'm sure you've heard
of the term
"merchant account". We will examine here,
what exactly is a merchant account and what is required to get
started. Our goal is to get you up to speed with the terminology and
processes involved with getting set up for a merchant account.
A
merchant account is simply a relationship between a retailer and a
merchant bank that enables retailers to accept web-based credit card
payments from their customers. This is the account into which a
Merchant Account Provider deposits payments into your business
checking account from the transactions made online. To qualify for a
merchant account, retailers must meet the bank's requirements.
Armstrong EcoSynergy JV Store offers
YOU an alternative, speedy, secure and cost efficient method to get
a
real-time credit card processing gateway. With EcoSynergy JV Store,
YOU can begin
accepting payments within weeks of completing your
application. Depending on your ability to complete all the required
documents in a timely manner, your approval can be as quick as 24
hours.
The first question you need to ask yourself is: Do I
qualify for a merchant account?
Merchant account providers require merchants to meet certain
requirements for opening an account, requirements that often are
particularly strict for e-commerce businesses. In general, the
riskier the provider deems your business, the more difficult it will
be to open an account and set up your web site for e-commerce.
This is where you will begin finding
Armstrong is trully your business partner. When you sign up with JV
Store, you're also getting our impecable creditability and goodwill
with the banking communities. E-commerce is never easier with
Armstrong EcoSynergy JV Store.
What basic requirements will you have to meet? What goes
into determining whether your business is risky? Why do the
requirements vary so widely?
To process credit cards online, you
need an Internet merchant account. This is the account into which a
merchant account provider deposits payments made through your web
site. All business owners who plan to process credit cards must have
a merchant account.
Requirements for obtaining a Merchant Account:
Almost every merchant account provider maintains the following basic
requirements for opening a merchant account. If your business
expects a relatively low monthly charge volume of less than $5,000
per month, you might merely be required to:
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Have a web site.
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Provide your business name or Doing
Business As (DBA) name
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Clearly display your return
or customer satisfaction policy
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Have a U.S. checking account
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Have a U.S. postal mailing address for the
checking account
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Not be in active bankruptcy
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Not have been convicted of credit card
fraud or a related felony
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Not appear on the Terminated Merchant File
List or MATCH file.
The MATCH file is analogous to a credit-reporting agency. It is a
file maintained by the credit card associations and contains
information about businesses that have failed to handle their
merchant processing responsibilities. You must work with the company
that originally placed you on MATCH to get your named removed. You
cannot get approved for a merchant account if your name is on the
MATCH list
These are the minimum requirements. Merchant Account Providers
often ask for more extensive information and documentation in
addition to that listed above especially for merchants expecting
more than $5,000 per month sales volume. They may require you to:-
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Provide tax returns
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If these are not available, you might be
asked for proof of corporation, partnership, limited liability, or
nonprofit status
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Submit to a site review and answer
questions about the company business plan. * Have good or excellent
credit
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Provide trade references
Why is it so difficult for e-commerce businesses to get a
merchant account in comparison with a brick-and-mortar business?
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In one word: risk. Transactions conducted via the internet are
considered by merchant account providers to be by their very nature
riskier than "normal" transactions. As pointed out on AOTA.net,
e-commerce businesses present three types of risk to the bank
providing the merchant account
-
Credit risk. This is the risk the
merchant account provider takes with respect to the amounts you, as
a merchant, might owe the bank in the future. For new businesses
with, for example, $5,000 in charges per month, this risk will be
relatively low. Nevertheless, personal credit history figures
strongly into the decision-making process for some merchant account
providers
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Fraud risk. This is the risk of
incurring chargebacks due to the fraudulent use of credit cards.
Fraud risk is the greatest concern for merchant account providers.
As described above, if the customer contests a charge, the
customer's bank is required to refund the money it has fronted to
the merchant. The customer's bank passes this loss on to the
merchant account provider, which passes it on to the merchant. Newer
businesses and certain types of products are considered to be at
greater risk for fraud
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Contingent liability risk. This
includes not only fraud but risks associated with unforeseen
consequences of marketing. Businesses that offer a lifetime service
guarantee present a large contingent liability risk because if they
should go out of business, the merchant account provider could be
held liable.
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Of course, e-commerce businesses can vary widely in risk. The
following are factors that are considered when determining risk.
Different merchant account providers place different weight on each
of these factors
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Length of time in business. The longer
you have been in business, the better off you will be when applying
for a merchant account
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Type of product. Retail sales is
generally considered less risky than sales of intangible products
such as downloadable videos or e-zine subscriptions
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Cost of items or volume of sales.
High-volume sales or sales of big-ticket items are generally
considered riskier by merchant account providers. The more money you
make per month, the bigger the credit risk for the merchant account
provider
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Personal credit history. Some providers
consider this to be the most important factor when considering an
application. This is not universally true, however. Many merchant
account providers consider risks associated with fraud and
contingent liability to far outweigh personal credit history. Credit
history takes on added importance with time, however, as your
business increases in sales volume
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Tax returns. The merchant account
provider may look at tax returns and other financial documents for
proof of financial responsibility. Individuals with higher incomes
are considered less risky because they are less likely to file for
bankruptcy if the business fails
Here is a list of the common fees and costs you can
expect to pay from any merchant account provider
An Internet discount rate is a fixed percentage taken from every
online transaction, usually two to three percent. The internet rate
will generally be higher than card-swipe rates, the rate charged
when the merchant can swipe the customer's card through a
traditional point-of-sale (POS) terminal. The internet discount rate
runs at a higher rate because it's not face-to-face and is a riskier
proposition for the bank who provides the merchant account
Merchant Account Providers typically have fixed charges and It
works like this. On a $100 sale, if the discount rate was 2.39%,
$2.39 would be deducted from a $100 sale. There is a transaction fee
charged to each order and we'll use 30 cents is this example.
Therefore, on the $100 sale, the processor would keep $2.69 , giving
you, the merchant a net of $97.31. Note, some banks deduct this fee
at time of sale, while most deduct it as a total of charges at the
end of each month. Visa & MasterCard and the processor take a fee
for every transaction
There is a variety of charges levied on a monthly basis by the
bank, including a monthly statement fee and/or a monthly minimum,
excess usage fees, and others
Your merchant account provider may holdback, or reserve, a
percentage of your transaction receipts to cover any contested
charges. A chargeback is charged to a merchant when a consumer
claims their card has been charged and the merchant has not
delivered the product or performed the service. A chargeback fee is
NOT charged when a merchant processes a return of a charge to a
consumer.
If your business is considered high-risk, you may have to pay
what's called a reserve. The reserve is usually calculated as a
percentage of the monthly credit card volume. It is built up over
time and held by the bank in escrow to offset unexpected chargebacks
The application process may seem daunting, but keep in mind, the
better the merchant account provider understands your business, the
better the relationship is likely to be. Feel free to contact a
us at
support@armstrong-ae.com. We will be happy to
answer any questions you may have regarding the sign up process
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