| Every company that accepts credit and debit card | | | | After the request has been submitted by the card |
| payments must apply for and obtain a merchant | | | | holder, the company will contact the merchant service |
| service account. If you're interested in accepting credit | | | | provider. The provider must then investigate the claim. |
| and debit card payments at your business, find out just | | | | If they conclude that the claim is valid, they will send |
| how easy it is to open a merchant account and start | | | | the credit or debit card company a full refund. Then |
| processing credit card payments. | | | | they will decide exactly how much to penalize their |
| The bank or financial institution that issues a merchant | | | | merchants. More often than not, they will charge them |
| account provides an invaluable service. It is their job to | | | | for all of the cost of chargeback, including the time |
| verify that the consumer has a valid credit or debit | | | | they spent investigating the claim. They might also |
| card account. With advanced software and | | | | raise the merchant's commission fees. |
| technology, this can be done almost instantly. After the | | | | Because the risk of a chargeback is much higher for |
| merchant service provider has approved a transaction, | | | | virtual companies, they are always charged at a higher |
| they will send a bill to the customer's credit or debit | | | | rate than brick and mortar businesses that accept |
| card company. The company will then pay the | | | | payments in person and keep the receipts. On |
| provider and the provider will pay the merchant. The | | | | average, an online business is charged around five |
| entire process takes about three days. | | | | percent for each transaction, compared with only one |
| For the merchant, the single most important | | | | to two percent for traditional businesses. Even so, |
| consideration is the discount rate. This is the fee that | | | | most online companies can locate a reputable |
| he must remit to his service provider for each | | | | merchant service provider, unless their industry has |
| transaction. Typically, it is a variable commission rate | | | | been deemed intractably risky. |
| that is tied to a number of important factors. Some of | | | | So what should a new owner look for? For a virtual |
| these factors cannot be changed, while others can be | | | | business, accepting credit and debit card payments is |
| flexible. | | | | a sine qua non, there is absolutely no way around it. If |
| The two most common ways that credit or debit card | | | | you are competing in a so-called high-risk industry, you |
| information is recorded is by a point-of-sale or virtual | | | | should expect to pay high commission fees at the |
| terminal. A point-of-sale terminal is used when a | | | | outset. The best that you can do is to obtain a |
| customer actually presents his card to the cashier, has | | | | merchant service account at a reputable bank or |
| it processed, and receives a receipt. A virtual terminal | | | | financial institution that has a history of lowering rates |
| sale, on the other hand, is used when a customer | | | | over time. These providers offer variable rates that |
| charges something on the internet. | | | | are tethered to your performance. So, if you increase |
| And though online buying has come a long way over | | | | profits quarter after quarter and keep chargebacks |
| the last few years, it is still not nearly as secure as | | | | below the industry average, they should and probably |
| point-of-sale transactions. For one thing, when a | | | | will lower your transaction fees. |
| merchant actually processes a credit or debit card | | | | When shopping around for a merchant service |
| transaction, he has a physical record of the sale in the | | | | provider, it's also a good idea to take note of how |
| form of a signed receipt. But when that same | | | | quickly your phone calls and emails are returned. You |
| transaction is completed online, the records are not | | | | want a provider with prompt service that holds |
| nearly as reliable. | | | | customer relations at a very high value. The best |
| This brings us to the issue of chargebacks. A | | | | merchant account providers also offer great customer |
| chargeback occurs when a credit or debit card holder | | | | support services to answer all your hardware and |
| contacts his company and demands a refund on a | | | | software questions. |
| specific transaction. There are a number of reasons | | | | These days, signing up for merchant services is fast, |
| why a customer might take this action. Perhaps the | | | | convenient and simple. Take the time to carefully shop |
| product in question was damaged or defective or | | | | around for the right provider, fill out an application, and |
| maybe he was double charged. Whatever the reason, | | | | you'll be processing your customers' credit card |
| a chargeback is extremely expensive for all parties | | | | payments in no time. |
| involved. | | | | |