Business Credit card Processing – Merchant Accounts


Has this happened to you? A credit cards merchant account salesperson sold you on a really low credit card discount processing rate. You Credit card processing agent thought you negotiated a pretty good deal. But lo and behold, you realize that you’re paying twice as much as you expected selling credit card processing! What happened? And what can you do about it?

The culprit is merchant lack of understanding of “Interchange”, the price structure of credit card transaction processing. Without this knowledge, the process of selecting merchant account service processors is usually limited to phoning every processor in the yellow pages and signing on with whoever quotes the lowest ‘rate’. The reasoning is: ‘low rate’ equates to ‘low cost’. Therein lays the problem.

Interchange is the wholesale price structure of credit card transaction services charged by Visa USA and Mastercard Worldwide to processors. The processors in turn mark up and re-sell these services to credit card accepting businesses, not unlike any other wholesale-retail relationship. Wholesale interchange is exactly the same for all U. S processors large and small, although low-risk and mega merchants enjoy the volume leverage of being able to purchase processing services from processors at smaller profit margins than small businesses are.

The flaw in the ‘lowest rate wins’ strategy is that merchants mistakenly assume the low rate quoted will apply to all of their transactions. This is not the case. Interchange in fact comprises some 125 separate rate categories, each of which is assigned a unique qualification criteria and corresponding price structure. The typical merchant will knowingly or otherwise process cards in several of these categories, not just one, and will pay appropriate surcharge rates for each. The low advertised rate is nothing more than a starting point for the entire spectrum of interchange charges.

When a credit card processing service is selected solely on the basis of one singular advertised ‘cheap’ merchant account rate quote -often a loss leader–by necessity (unless the processor is able to survive re-selling at or below his cost–which we all know doesn’t happen) the advertised teaser rate will apply only to a limited number (if any) of the credit card transactions processed by the business, based on very narrow interchange criteria. The remainder of the merchant’s transactions that do NOT meet these criteria to qualify for the low rate quoted will be downgraded to a higher rate interchange category, thus allowing the processor to make up his margin and then some.

These non qualified fees compensate for, probably many times over, the low teaser rate afforded by the minority of the transaction volume. As a result, the actual fee paid by the merchant won’t remotely resemble the low rate expected. This results in a quite unusual circumstance that many people find impossible to grasp: The lowest rate quotes result in the highest net cost to the merchant, not the lowest as one might expect.. Strange but true.

A lot of hassle is associated with liquid money. It requires manual labor for handling even after which there are possibilities of errors that are associated with cash transactions. Hence, the importance of a business credit card processing system comes into light.

A business credit card processing program helps your business to grow and provides a hassle free shopping experience to your customers. It is inexpensive and easy to operate and attracts customers looking for hassle free shopping experience. A credit card payment system lets customers shop with peace of mind unlike when making payments with cash. Whether you sell used books or handmade baby clothes, a credit card payment option generally attracts more clients who are willing to spend more than the person who operates on a cash basis.

You can grow your business and move ahead with a retail credit card processing method. You can also use the MOTO system for mainstream commerce. MOTO or a Keyed merchant account is used by businesses that do not sell face to face or those businesses which take orders over the telephone or through mail. A MOTO merchant account lets you process transactions through a credit card machine, a PC processing program, or by keying them in over the internet.

After deciding on opting for business credit card processing, look for credit card processing company that offers the best deal. The credit card processing company provides you with the credit card processing equipment, service, maintenance and other benefits associated with a credit card processor. Only after thoroughly going through the terms, sign the deal for the services that the credit card processing company provides.

In today’s competitive business environment it’s important that you have all the tools possible to achieve success. If you’re planning on doing business online and you need to take payments for your products or services, it’s critical that your website have credit card processing utilizing an internet merchant account.

Customers like to use their credit cards when making purchases from businesses online because they know it adds an extra level of protection. If they buy something and for whatever reason they’re not happy with the product or service, they have more control of the situation. If the business does not fix the problem to the customer’s satisfaction, the customer can dispute (charge back) the transaction and potentially recover their funds. They can’t do that with a money order or check.