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Discount merchant account
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You just get a discount merchant account at a quoted discount rate of 1.79% for your store. But, lo and behold, when your account statement for your initial month's processing come up, you are surprised to discover that many of your customers' transactions were processed at a much higher rate than the one quoted to you. Believe me its not a pleasant surprise.
Fact remained that you are not alone. In fact, no one can deny that the majority of merchants don't really understand how merchant account discount rates are applied and calculated. Thats why, it is important to throw a little light on what's happening here. In simple terms a Discount Rate is a charge that is levied on each transaction you process through your merchant account and is calculated as a percentage of that transaction's dollar amount. Furthermore it is worthwhile remembering that the discount merchant account Rate that most applicants are quoted when searching for a credit card processing solution is what is known as the Qualified Rate. Your processing company judges the Qualified Rate by initially analyzing the InterBank Exchange rate that VISA and MasterCard levy - this InterBank Exchange fee charged by the credit card companies is the same for all banks and processing companies. Then after that the banks and processors add on a further percentage to that fee (this is part of the profit they make) to come up with the Qualified Rate they charge to their merchants. On the other hand in the case of a retailer, the current Qualified Rate is in the 1.70% to 1.85% range - and for phone and mail orders, as well as internet processing, the range is commonly 2.25% to 2.49%. The latter range is higher because of the simple reason that in those types of transactions, the merchant does not have the customer's physical credit card present - so the risk of fraud is greater than it is for retail 'card present' sales. So far so good large chunk of merchants understand things to this point. But it is worth mentioning in this regard that there are certain risk factors that can cause your transaction to be levied with an additional percentage charge. More often than not these surcharges are extracted on 'Mid Qualified' and 'Non Qualified' transactions. Theoretically speaking the surcharge for Mid Qualified transactions is usually in the .75% to 1.25% range and for Non Qualified is generally 1.50% to 2.00%. Point to be noted in this regard is that these are charges on top of the standard Qualified Rate. So the million-dollar question is: What are the most widespread circumstances when either Mid or Non-Qualified surcharges may apply * Mid Qualified: (a) for phone and mail order in addition to internet transactions, where there is no AVS (address verification) match; and (b) furthermore where a retail merchant manually keys-in the transaction because the credit card is present but fact remained that it cannot be swiped, or keys in an order where the card is not present (e.g. a phone order). * Non Qualified: (a) for phone and mail order as well as Internet sales, where the transaction is keyed-in but is not find a place in daily batch out of that day's transactions. (Note: where a person keys in his information on a website, the major chunk of gateways do the 'batching' automatically. Thats why for internet processing, this is not generally a concern); (b) where a retail merchant doesn't batch out daily; or (c) where the transaction is made utilizing a corporate, a non-U.S., a business or a government credit card. Keeping these things into account, if many of your customers reside outside of the United States, or use corporate, government or business cards, you can always do yourself a big favor by negotiating as low as possible Non Qualified Discount Rate. Its your bad luck, there are another fifty or so other factors that can affect the discount rate you'll be charged (no-one said it would be easy to understand all this!). These include: * high risk merchants as is evident with the name can expect higher discount rates across the board * Moreover Visa Signature Reward Cards and MasterCard World Cards have surcharges applied * On the other hand if the customer's order is not shipped within 24 hours, a surcharge may be levied Because of this simple reason prior to signing on for your discount merchant account make sure that you carefully read the provider's complete array of criteria for evaluating what discount rate will be applied to a particular sale. And most importantly speak with your agent if you have any questions.
It is essential to find out if discount merchant account services are available for your company by browsing Websites of potential lenders. Of course by checking application guidelines, you will soon see whether you quality, and if so, how to apply and enhance your chances of being approved for this account. It is worth mentioning in this regard that getting a merchant account makes you eligible to accept credit card payments. After that just give a thought of how greatly your sales volume could increase when you allow customers to pay with credit instead of insisting on cash or checks. There is no hiding the fact that they will love you for providing this option, and your sales volume could quickly skyrocket when happy customers come to visit with plastic in hand. In an ideal scenario a discount merchant account lets you provide credit payment options at one low price. To illustrate this point consider an example, after paying a possible application and setup fee of perhaps $100, you may be charged just $19.95 per month for the options of accepting credit card and debit payments as well as e-check processing and related services. But for that to happen you have to be careful when shopping for a merchant account, as there may be all kinds of hidden fees that are not listed on the home page. More often than not, these may be buried in fine print or posted on a distant link from the home page. In that case you need to find out in advance what the costs will be and how you will be expected to pay them. For example, it is advisable to ask about an online application fee, a membership fee, and a setup fee, among others, if you dont see these posted. Other Articles |
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