Posted by Jeff Shavitz on Thu, Feb 11, 2010 @ 04:11 PM
Internet merchant accounts are fast becoming the most popular merchant accounts due to the e-commerce boom. Internet merchant accounts are also being utilized by business that require portability and easy access.
Internet Account Qualifications
Internet merchant accounts are most commonly utilized by web-based e-commerce businesses, but may also be used by other business types. Unlike a retail merchant account where a business is expected to have a credit card present at the point of sale, an Internet merchant account is a card-not-present account (CNP). An Internet merchant account is considered a relatively high-risk account and will carry higher merchant account fees than those of retail, lodging, and grocery accounts. It is this higher risk that would allow a retail business to downgrade their account to an Internet account, but would prevent an Internet business from upgrading their account to a retail account.
Account Guidelines for Internet merchant accounts are more strict due to the higher risk factor associated with the accounts. Many processors will have guidelines that govern if and when a business will be able to obtain an Internet merchant account. Some of the businesses that would be unable to obtain an Internet merchant account fall into the high risk merchant account category and will have to search for a processor that is able to meet their needs. Some processors may also place age restrictions on acceptance where a business must be at least a year old before they are able to obtain an account.
Internet merchant accounts are also more likely to require rolling reserves or ACH delays for approval.
Business Types & Usage
Internet merchant accounts are most popular among e-commerce businesses that utilize a gateway and virtual terminal to process online transactions from a web site. A shopping cart is linked from the web site to the gateway to process real-time transactions and the virtual terminal is used to process mail or phone orders.
A gateway or virtual terminal allows a merchant to process credit card transactions from any computer with Internet access. Laptops with wireless Internet connections have become popular with many small businesses that require portability but cannot afford the up-front cost and monthly fees of a true wireless merchant account. By bringing a laptop with Internet capability to craft or trade shows or a new market is quickly discovering the convenience of processing credit card transactions online.
Account Set-UpThe thought of acquiring an Internet merchant account can be very intimidating to some business owners because of the implied technical know-how that the accounts emulate. In fact, acquiring and using an Internet merchant account is very easy. Linking the gateway to a shopping cart to enable real-time transactions is also something that someone with minimal technical know-how can accomplish. Gateway providers and most processors have customer service available to assist with integration and set-up of an account and gateway.
For more information on Internet Merchant Accounts or to find out if you are paying the lowest possible rates on your merchant account,
click here for a free rate analysis. Article courtesy of:
MerchantCouncil (www.merchantcouncil.org)
Posted by Jeff Shavitz on Tue, Sep 22, 2009 @ 01:26 PM
Typically, it can take 3-5 business days for a merchant service provider to approve or decline a merchant account application. For the most part this is true, but a number of different factors have an affect on how long it takes for approval, including:
Personal Credit - this is the single-most important factor a processing bank considers when determining whether or not to issue a business a merchant account. Personal credit will not only determine the length of time it takes a processing bank to approve a merchant account, it is likely to determine whether they approve the merchant account at all. A strong credit standing will speed up the merchant account approval process whereas weak credit history will slow the approval process and may cause the merchant account application to be declined.
Business Type - the type of business or the way a business conducts itself carries different associated risks to processing banks. There are a number of different factors that can make a business fall into a high risk category where the business would need to obtain a high-risk merchant account. If a business is considered high-risk, the bank will scrutinize the application more closely and the merchant account approval process will take a little longer. It is important to note that individual processing banks use different criteria to determine if a business is high risk, so if you are having trouble getting approved you may want to try applying through another provider.
Monthly Processing Volume - When applying for a merchant account, you'll need to specify how much you expect to process each month in dollar volume of credit card sales. The higher your processing volume, the longer it may take a processing bank to approve the merchant account. Declaring the correct processing volume for your business is very important and you should never declare a lower processing volume than what you actually expect it to be just so you can get approved for a merchant account quickly.
Season - When you apply can also affect how long the approval process takes. A merchant account application submitted just before the holidays will take longer fore a processing bank to approve than an application submitted during a slower time of year due to the volume of business that a processing bank must deal with.
Instant Merchant Account Approval - although it is certainly possible for a merchant account to be approved almost instantly or well within a 24-hour period, it is not the norm and it is difficult for a merchant account provider to guarantee.
Posted by Jeff Shavitz on Wed, Aug 19, 2009 @ 04:14 PM
The two basic types of merchant accounts are "card present" and "card-not-present". Each basic type of account has subcategories that are defined by business type or how a credit card transaction is processed. Here are a few of the basic categories:
Card-Present Merchant Account: Any merchant account where the credit card and customer are present during the transaction, and the merchant is able to swipe the customer's credit card through a credit card machine or a magnetic card reader that is connected to a physical phone line. Typically this is a Retail Merchant Account - which are considered low risk and have the lowest merchant account fees and rates.
Wireless Merchant Account: A wireless merchant account is a card-present account where credit card transactions are swiped through a portable credit card machine or magnetic swipe reader to obtain a real-time authorization. Wireless merchant accounts typically have the same low rates and fees as retail merchant accounts, but higher monthly fees and initial equipment costs.
Store-and-Forward Merchant Account: Similar to a wireless merchant account, except this type of account does not provide real-time authorization. Transaction information is stored in the terminal's memory and forwards to the processor when hooked up to a phone line. This type of merchant account is ideal for business types that require portability, but may not have the budget for a wireless merchant account.
Card-not present Merchant Account: Any merchant account where the credit card and customer are not present when the transaction takes place, these accounts are considered to be higher risk by acquiring banks and are therefore charged higher processing rates and fees than Card-present accounts.
Internet Merchant Account: A card-not-present account that is used by an online business to transactions through an electronic payment processing gateway. When processing online it's just as important to get a good payment processing gateway as it is to get a good merchant account provider.
Mail Order Merchant Account (MOTO): The most common form of card-not-present accounts, this type of account assumes the businesses will not have the customer or card present for a transaction and that most transactions will be manually entered into a credit card machine. Mail Order merchant accounts are given the lowest possible processing rates and fees of all card-not-present account types.
Touchtone Telephone Merchant Account: Just like it sounds, no credit card equipment is needed with this type of account. It's a good alternative to wireless processing for businesses that require real-time authorizations while on the go but can't afford the upfront investment that is required for wireless processing terminals. Touchtone processing usually has significantly higher rates and fees than other card-not-present accounts, because there is usually another company aside from the merchant service provider that supplies the touchtone system, and they charge a fee for their services. Even with the higher rates and fees, the initial cost of a touchtone merchant account it usually very reasonable.
Posted by Jeff Shavitz on Tue, Aug 18, 2009 @ 08:37 AM
Each merchant service provider has underwriters that are responsible for determining the risk factor associated with certain types of business and accounts. When determining whether a business type is unacceptable or restricted, a provider considers criteria such as:
- Chargbacks: Certain business types are prone to having a high occurrence of chargebacks to sales. Any business type that has a typical chargeback ration that is 1% or higher, is usually considered high-risk or unacceptable by most credit card processors.
- Credit Card Fraud: Credit card fraud is more common in certain industries because of the products or services offered. Any business type that has a higher than normal fraud rate will be considered high risk or unacceptable by many providers.
- Charging too far in advance for services: Merchants that charge for products or services too far in advance heighten their exposure to excessive chargebacks. Subscription publications, online memberships, and other similar services are most affected by this guideline. Typically, a provider will limit the time in advance that a merchant is able to bill their customers to around 4 months.
- Target Market: Specifically, businesses with an international client base are considered high-risk. Exporters, international freight forwarders, and shipping businesses can all be considered high-risk merchants due to their international client base.
- Business Operation: Businesses that use outbound telemarketing, door to door sales, multi-level marketing, and third party order fulfillment are all considered by most providers to be high risk merchants. This type of businesses operation increases the likelihood of chargebacks for various reasons.
- Type of Merchant: Card-present merchants are always considered lower risk than card-not-present merchant accounts. For example, a courier services that utilizes a wireless terminal to swipe cards at a customer's residence may be considered high-risk, when the same business would be prohibited if they were to take credit card numbers over the phone.
- Legality: Businesses that offer services that are illegal, or are closely related to illegal activities, will be considered high-risk or prohibited by most providers.
- Marketing: Products or services sold using marketing that exaggerates results are at a high risk for chargebacks. Customers will ultimately issue chargebacks once they realize that the product or service that they purchased does not deliver the results promised in the marketing.
For a list of typical 'high-risk' business types or more information on credit card processing for high-risk merchant accounts, check out Alternative Merchant Processing at http://www.ampworldwide.com