A Useful Overview of Merchant Account Credit Cards
Are you a business owner who’s considering accepting credit card payments? If so, then you need to learn more about merchant accounts.
Vendors or business owners belong to the category of merchant accounts. This depends on the collection and processing of credit card information. Business proprietors must determine the classification of their respective enterprises.
Categories of Merchant Accounts
The major categories for merchant accounts are the swiped and keyed varieties. Swiped means the credit card holder is present and swipes his or her card across the terminal. Keyed is when credit card details are relayed by phone, email or fax. Retailers usually conduct transactions in person. Signatures are captured on the credit card terminals.
Transactions for a merchant account can also be made in wireless environments instead of physical shops. The wireless terminal is used in these circumstances. Web-based sellers transact through a particular site like eBay or Amazon using shopping carts and online payment gateway. Shoppers utilize the cart for browsing and adding products to the cart before checking out. Payment gateways obtain card information and process payment in real time.
Responsibilities of Merchant Accounts
Watch out for important rules regarding use of credit cards. Mention in your application form aggregate monthly volume as well as average ticket for approval by the credit card company. This is a pre-requisite for any merchant account. Once your business starts to expand, ask your provider about requirements for increasing credit limit. Otherwise, the Risk Department may suspend your funds for failure to carry out this procedure.
All retailers are only permitted to display correct card logos on your business website or retail outlet. Logos require approval by credit card associations. Major credit card providers such as MasterCard and Visa require merchant accounts to have a minimum chargeback ratio of two percent. Penalties can be imposed on both acquirer (acquiring bank) and payment processor if the merchant goes over the limit. Majority of processors close accounts exceeding their cutoff points.
The merchant is not allowed to add surcharges to customers using credit cards for payment unless the credit card company gives its approval. State or federal government offices are permitted to do this. However, it is possible for retail firms to give customers who pay with cash some discounts or rebates.
Credit Card Processing
There are upsides and downsides in accepting credit card payments although the advantages of merchant accounts outweigh disadvantages. There is an expected increase in sales because credit card orders are generally bigger compared to orders using cash and checks. It is also less costly to accept credit card payments instead of cash. Checkout is faster for cards with less security issues. Besides, consumers are given more payment options so there is less probability of losing the sale.
The only major drawbacks of merchant accounts are the higher cost of accepting cards for payment which is normal for any business along with possibility of fraud. Nonetheless, this can be easily addressed by implementing stringent security measures governing credit card transactions. Given the scenarios, retailers can easily work on how to set up their accounts before engaging in any retail venture.