Merchant account discount rate and what it means to you
When setting up a merchant account, sifting through economic euphemisms and bank jargon can be a daunting and perplexing task. All you really want to know is what do these terms mean to for me?
The Merchant Discount Rate, for instance, is a confusing term that, simply stated, means the amount you will pay to have funds from a credit card transaction deposited into your bank account. There are several factors that determine your fee scale, including your industry, the type of credit cards you accept, debit as opposed to credit transactions, and the volume of your sales. Here are some factors you should keep in mind when shopping for an optimal discount rate:
- The Interchange Fee is the fee that the bank that issues the credit card pays to your bank for accepting the risk of the transaction. The credit card companies will pass this fee on to both the cardholder and the merchant. There are several rate “tiers” that merchant service providers can offer you. This rate is always in flux and you should shop around to secure the lowest rate available for your industry and business size.
- The Authorization Fee is a flat fee levied when a request for authorization of the transaction is sent to the issuing bank. This may be itemized on your invoice or bundled into the invoice total.
- Communication Costs depend on how the transactions are made. Different fees apply for transactions made in the store, over the phone, and on the Internet. Generally, on-line transactions incur the highest fees. You should work with your merchant service provider to determine which will be the most cost effective for you.
- Downgrades occur when there a problem with your transaction—missing or incorrect data, a settlement time longer than two days, or authorization failure. Downgrades can really drive up your fees and should be avoided as much as possible.
You and your merchant service provider will agree to terms of the discount rate prior to settling on your service but these are a few things you should keep in mind when entering into an agreement.
iPhone Charge Card Processing for Small Businesses
Just as the iPhone has changed many of the ways that people interact and do business, it is revolutionizing credit card processing. iPhone charge card terminals usually cost between $80 and $150. They connect to iPhones and process all major credit cards much like a traditional terminal. They are generally just as secure as traditional terminals, but less expensive and more mobile.
Security of iPhone Charge Card Terminals
Business owners and customers sometimes fear change. However, there is nothing inherently less secure about an iPhone terminal as compared to traditional charge card terminals. The same encryption technology ensures that the cardholder's information is not shared with an unauthorized party, and the mobility of the device allows the card to be swiped right in front of the customer. Some restaurants have even begun having their waiters and waitresses carry iPhone terminals with them in order to assure the customer that nobody is illegally copying the credit card information.
Some customers may be under the impression that the iPhone itself stores the credit card information. This is simply not the case. Much like a traditional terminal does not store information, neither does an iPhone terminal.
Cost of iPhone Charge Card Terminals
In general, the upfront cost of iPhone terminals is less than for traditional terminals. There usually are not monthly fees associated with iPhone terminals, either. Most services charge transaction fees of between 1.5% and 2%, just like any other credit card processing service.
Mobility of iPhone Charge Card Terminals
An iPhone terminal can go anywhere an iPhone can go, which means it can go virtually anywhere. Although mobile credit card processing is certainly not a new concept, most processing systems were bulky and not user-friendly. Not only can an iPhone be carried anywhere, it usually is carried everywhere, reducing the chance of missing a sale. They are also useful for much more than credit card processing. Employers planning to issue iPhones can be confident that their employees will be receiving many other capabilities that will enhance the business.
The use of iPhone charge card terminals may have other positive effects, as well. iPhones are cutting edge. They are efficient but also chic, and businesses may gain credibility with a variety of demographics by incorporating iPhones into a business model.
5 Credit Card Processing Pitfalls Merchants Should Look For
For a merchant, Internet credit card processing is a viable way to grow your business. However, there are certain areas where you can run into trouble, causing a loss of money or business down the road. Here are five key ways a merchant can avoid these pitfalls:
- Look out for quoted low rates from companies offering to process credit card transactions. Always scrutinize each quote received to view all of the cost factors involved in signing up; this will ensure the best deal is acquired for the business.
- Do a comprehensive search to ensure the cheapest processing equipment is used for the business. Avoid leasing equipment, as it can drain financial resources quickly while hooking the business in for a long-term contract you may not want.
- Negotiate your contract term, many business fail to ask if the contract term can be shortened. In many cases it can so be sure to ask.
- Watch out for termination fees; they can be a sign that a company is not invested in helping the business grow, and would rather see a customer terminate his/her agreement early so that it can collect the pricey termination cost.. Also keep an eye out for reprogramming fees, as although a company may try to convince your business that it must lease or buy equipment in order to avoid having to re-configure the devices, this typically is not the case; in generally the virtual terminal used for Internet credit card processing is easy to set up or re-configure.
- Pick out the proper merchant account for the business. Ensure the strengths and weaknesses of each account are known before entering into any agreements with companies to use their equipment. By choosing the account that best suits the business' cost and service needs, the business ensures it will remain profitable once the equipment is deployed.
Internet credit card processing can be a straightforward and profitable way to get a business going online, and by exercising caution before entering into any agreements, a business has the best chance to grow in a market beyond a retail store or warehouse.
For more information on Internet credit card processing please give us a call at (800)917-8026.
Small Business Startup – Setting Up a Merchant Account
Starting a small business can be equally vexing and liberating. Any given enterprise can present the ambitious entrepreneur with a wide array of perplexing variables. Paramount to the success of any consumer based business, particularly one in a metropolitan environment such as Denver, is the ability to accept the widest possible selection of payments.
- Denver credit card processing can be handled by an assortment of merchant banks, easily found and readily available. What follows is a concise list instructing the determined business owner on how to obtain such an account.
- Complete a merchant account application. This is a standard form in which basic information relating to both the business as well as personal information about the owner is collected. Details such as social security number, address, contact info, and bank account information are all required inclusions.
- Agree to a personal guarantee, accepting liability for all debts should the business fail.
- Provide necessary documents of business identification. These include Articles of Incorporation, or, if the business in question is a sole proprietorship, a list of all Doing Business As (DBA) names. In addition if the business requires a license to operate this must be presented as well.
- Three months of financial statements pertaining to the business are typically required. In the event that the business has already been accepting credit cards and is simply looking for new service, recent processing statements will also be necessary.
- Provide a voided check from the bank account associated with the business, opened with the listed DBA name.
- Submit to a credit check.
- A local inspection is required to determine if the physical facilities of the business are sufficient to conduct the owner's intended service.
- The owner must clear a check of the Terminated Merchant File.
- Lastly, a satisfactory examination must be made of the owner's previous merchant agreements if applicable.
The process of starting a Denver credit card processing
account is quick and easy once your business is organized and ready to go. Please give us a call at (800)917-8026
if you would like to get started with a credit card processing account.
How to Find a Good Merchant Services Provider
Partnering with a strong Denver merchant services provider not only enables a business to facilitate timely payment processing, but to deliver quality end-user customer service. If your business isn’t currently utilizing merchant processing to accept debit and/or credit cards, you are certainly missing out on a significant piece of consumer or business-to-business sales.
Locating a Merchant Services Provider
As with most professionals, the best are often discovered through referral networks. When seeking to partner with a new organization, be sure to ask for referrals from trusted business associates, clients and your network of friends. In addition to scanning your current network, you can also locate a merchant services provider via completing an online search. Once you have narrowed your initial search to several organizations to evaluate, you will need to develop a list of questions of which will provide you with answers to compare against.
Selecting a Merchant Services Provider
When choosing a good Denver merchant services provider, keep these factors in mind:
- Experience - How long has the organization been in business? What are the company’s customers saying about the services offered? What does the Better Business Bureau have to say about the firm?
- Services Offered - Competitive merchant services providers offer a wide range of services, extending beyond addressing the basic processing needs of your business. And most, will offer these basic services at no cost to their customers.
- Rates and Fees - What are the monthly or ongoing rates and fees for the services offered? Can you review those terms in writing? Is there a monthly limit on the transaction volume? If so, what rates will be assessed? Will you be assessed an application fee, set-up fee or installation fee?
- Technology - Does the company use the most up-to-date technology for processing transactions? How often can you expect the technology to be updated?
- Customer Support - Does the company offer 24/7 live customer service? What is the expected response time for addressing technical issues?
The most important decision when selecting a merchant services provider should be the level of value you are receiving for the level of service provided. Spend time performing not only your initial research, but with gathering facts about the firms you are considering to ensure that you select a Denver merchant services partner that meets or exceeds 100% of your requirements.