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Tuesday, June 12, 2007
We realize a number of our readers are new store owners so we felt we might help some of you with info about your new merchant account.
This means the credit card is being keyed whether it be offline software, a piece of equipment or real-time processing at a gateway.
Discount rate is a small percentage that is deducted from the total cost of an order. The marketplace typically runs between 2.25 % and 3.0 % of the charge. Example: If your rate is 2.5%, $100 sale would cost you $2.50 plus the transaction fee. We can offer you rates considerably lower than the national average.
This is a small fee that is charged each time a transaction is run. A transaction could consist of an authorization or closure of your batch at the end of the day. The marketplace on transaction fees is typically between $0.25 and $0.30. We can get rates for you between 0.12 and 0.18 cents per transaction for a Internet Merchant Account.
A batch is simply taking all of your sales at the end of the day and sending them off to the bank for deposit. Most of the time gateways and terminals are set up to do so at a certain time each night.
Address Verification System (AVS)
This verifies a match with the customer’s billing name and address against the credit card number provided. AVS is mandatory on the Internet to help against fraud. You can find it in the fine print and/or miscellaneous fee section on the bank application. Visa/MasterCard AVS fees typically run between $0.05 and $0.10 per transaction. There is no guarantee that the order is good when you get a full AVS match. The Fraudster might have both. Also, if you don’t have a match, it still might be a perfectly good order; it could mean that the customer just moved. AVS is verified with the billing address.
Card Verification Value (CVV2)Three-digit security number that is printed on the back of most credit cards. Requiring this number on orders can reduce credit card fraud significantly when used in conjunction with AVS. American Express has a four-digit security code printed on the front of their cards. There's no fee for CVV2, it's simply extra protection against fraud.
Fraud Prevention Advise
You want to be cautious on all Internet orders; however, there are some red flags to look for that you will want to be extra cautious with. And they are as follows:
This is the amount of fees you must meet with the processing bank each month, usually $25.00. If month-end sales do not make the monthly minimum, the merchant account holder must make up the difference. The monthly minimum chips its way down with each sale and hits zero when you achieve about $1,100 in sales for the month.
When a customer disputes a charge on their credit card and asks their credit card company (issuing bank) to remove the charge. A charge-back fee isn’t incurred to the merchant unless they lose the dispute. Charge-back fees typically run between $25 and $30. Statistically, the number one reason for charge back is the customer does not recognize the name on their statement.
Statement Fee or Maintenance Fee
This is simply a monthly fee to cover cost of processing of statements and customer service. Typically runs between $10 and $22.95 per month.
Gives you the ability to view your deposits and transaction history online daily.
Non-Qualified Discount Rates
These are transactions that cost typically 1.5% - 2.5% more per transaction - usually because the transactions are riskier, per Visa/MasterCard. Examples: International orders, foreign cards, corporate cards, transactions that are authorized and not captured as sales within 48 hours, transaction is missing information when batched, such as AVS or order number.
Gateways give you the ability to process on the Internet. They bring the customer’s authorizations in for sale and capture and send them out to the processing bank for deposit. Examples: Authorize.net, USAePay.com, Verisign, Yahoo, etc. Gateways typically run between $20 and $25 per month and $0.05 to $0.10 per transaction. Yahoo Store is uniquely a host also.
This is the company that hosts the websites. Provides a shopping cart for customers to purchase and work in conjunction with the gateway. Examples: Yahoo Shopping, Storehost.com, MonsterCommerce.com, etc.
This is an upfront cost to the merchant to set up their merchant account and/or gateway. Set-up fees typically run between $100 and $300. Ccontact us for details on how to get a set up rate as low as $49.99!!
A platform is simply the link between the gateway, software, equipment and the processing bank. Platform follows Visa/ MasterCard regulations and determines transactions as qualified or not and passes that information to the processing bank for deposits.
Merchant Processing Banks
The bank that processes your transactions, your deposits, your money, minus a fee. These deposits typically take 2-3 business days. Processing banks are charged a rate determined by the platform (per Visa/MasterCard) and mark it up.
These are the banks that provide the credit card and represent the customer.
This is the cost the processing banks are charged from Visa/MasterCard. All banks have the same cost. The difference between one and another is how much they mark up their profit and fees to the merchant.
The standard procedure from the merchant account processor is to deduct the fees out of the batch to be deposited. Upon request, the merchant processor can deposit the full amount batched and billed monthly.
by: Shawna Seigel
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