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This section will provide you with basic information on Credit Card Processing.

Selecting Credit Card Processing Software

More and more merchants are taking advantage of the powerful credit card processing software products available to them. These are systems for virtually any type of processing environment from retail stores to websites.

All have their advantages, but selecting the right credit card processing software for your business is very important. Before making a decision merchants should ask themselves a few questions:

Will you be accepting credit cards over the Internet?

  • If so, merchants should lean towards using an online payment gateway in conjunction with their shopping cart. Payment gateways are a type of credit card processing software which is hosted by a third party on a server outside of your business. Your shopping cart, or other payment software, communicates with the payment gateway via the internet and it manages the actual transactions. Merchant Industry sells several payment gateways including: Authorize.net, VeriSign, and LinkPoint. We also offer our own product, MerchantWare Payment Gateway, which has all the features, flexibility and compatibility standard to these products.

How many credit card transactions will you need to handle at any one time?

  • For most merchants the answer is usually only one, but some merchants who have more than one user or customer running transactions at the same time will need a more robust credit card processing software solution. If there are multiple internal users and they are on a network you can use PC Charge Pro. If the users are not on a network, then a merchant can use a virtual terminal such as the one offered by of Authorize.Net. This virtual terminal will allow users to log in using their web browsers and charge cards from anywhere they have Internet access. Transaction information is centrally located and can be accessed from anywhere.

Will you be charging the same customer's cards on a regular basis?

  • Merchants whose customers are frequently reordering or those who bill their customers on a monthly basis may wish to use credit card processing software that stores credit card information and can charge customers at specified intervals. PC Charge Pro has this feature built in and makes it easy to manage charging customers.

If you have any further questions regarding credit card processing software, please feel free to contact our sales team for information and advice on selecting software by calling the number at the top of your screen.

 

ATM

Automatic Teller Machine (Direct Connect sells only cash dispensing ATMs - they will not accept deposits.)

ATM / Debit Card

Automatic debit to consumer’s checking account when used. Extends no credit and can only be used if money is in the consumer’s account. Can be used at ATM machines and POS equipment with a pinpad - pin number required.

Authorization

The process of verifying the credit card has sufficient funds (credit) available to cover the amount of the transaction. An authorization is obtained for every sale. An approval response in the form of a code sent to a merchant's POS equipment (usually a terminal) from a card issuing financial institution that verifies availability of credit or funds in the cardholder account to make the purchase.

Auto-Close

Term used when credit card terminal automatically closes at a specified time at time and deposits transactions at the processor, enabling funds to be transferred into the merchants’ bank account. Most merchants set up on auto-close. Exception: merchants accepting tips.

Average Ticket

The average dollar amount of a merchant's typical sale. The average ticket amount is calculated by dividing the total sales volume by the total number of sales for the specified time period.

Batch

The accumulation of captured credit card transactions in the merchant's terminal or POS awaiting settlement.

Charge Back

Term used when consumer unable to settle a return/refund on a credit card transaction with the merchant. Consumer calls credit card issuer to charge back the sale to the merchant and act as a mediator in resolving the dispute. A charge back fee is charged to the merchant if merchant is found at fault.

Mail Order / Telephone Order (MOTO)

Credit card transactions initiated via mail, email or telephone. Also known as card-not-present transactions.

Settlement

The process of sending a merchant's batch to the network for processing and payment. For non-bankcards, the issuer pays the merchant directly (less applicable fees) and then bills the cardholder. For bankcards, the acquirer pays the merchant (less applicable fees) with funds from Visa/MasterCard. The bankcard issuer then bills the cardholder for the amount of the sale.

Thinking about adding electronic processing capabilities? Here are some statistics on the benefits of accepting credit and debit cards. We have also included some of the card types, how processing works, and some of the standard fees.

 

Thinking about adding electronic processing capabilities? There are countless reasons why a business should add credit card and electronic payment processing capabilities - transactional speed, convenience, increased customer satisfaction, improved cash flow, views into sales data; and more. But perhaps the most important consideration is the sheer volume of consumers who use non-cash methods as their primary form of payment. Here are some statistics on the benefits of accepting credit and debit cards. We have also included some of the card types, how processing works, and some of the standard fees. In 2007, Americans racked up slightly more than $2.2 trillion in purchases and cash advances on their major credit cards (Visa, MasterCard, American Express, & Discover) according to CardTrak.com. Ten years ago U.S. consumers ran about $885 billion through their general purpose credit cards. Approximately 51 percent of the U.S. population has at least two credit cards. (Source: Experian national score index study, February 2007) At the end of 2007, there were 420 million cards on the market, up 7.6% from a year earlier (Source: CNN/Money May 13, 2008). Fifty-six percent of undergraduates get their first card at age 18 and 91% of students have at least one credit card by their final year, Nellie Mae reported. By graduation, 56% of students carry four or more cards (Source: CNN/Money, July 14, 2008). "With credit cards, consumers spend 30% more (on purchases) than with cash," [Credit expert Howard] Dvorkin said (Source: CNN / Money, October 22, 2008). Certain sectors are experiencing growth in credit and debit payment usage. For example, U.S. consumers racked up nearly $63 billion worth of fast food on their personal credit and debit cards in 2007 according to CardTrak.com. The average QSR credit card ticket is about $12.65. Americans spend about $170 billion per year at quick service restaurants. After McDonald's began accepting credit and debit in 2004, diners who paid with plastic spent $7 a visit on average vs. $4.50 when they paid in cash. A 2003 survey of supermarket receipts found that credit-card shoppers rang up 30% bigger bills than and carted out twice as much in nonessentials as cash buyers did. (Source: CNN/Money, June 17, 2008). So while the reasons for adding payment processing are clear, understanding all your options and which are right for your business is far more complex.

Card Types

Below are some of the credit and debit cards that you might come across.

General Card Types:

  • Bankcards; Travel & Entertainment (T&E); Non-Bankcards

Specific Card Types:

  • Visa & Off-line Debit Visa Check Cards
  • MasterCard & Off-line Debit MasterCard Check Cards
  • Diners / Carte Blanche
  • American Express / Optima True Grace Card
  • Discover/Novus
  • Japanese Credit Bank (JCB)
  • Co-Branded
  • Affinity Group
  • Debit
  • Smart Cards
  • Cash Cards
  • Corporate
  • Purchasing
  • Payroll Cards
  • Prepaid MasterCard

How Payment Processing Works

Some form of the modern credit card has been in use since the late 19th century, mostly as department store charge cards representing lines of credit. Things have changed and today, the step a merchant needs to take in order to accept credit card payments is to establish a merchant account with a bank or third-party payment provider. Once your account is live, the transaction process generally works as follows:

  • 1. A customer presents a credit card for payment.
  • 2. By swiping the credit card through an electronic point-of-sale (POS) transaction terminal, typically provided by the bank or payment provider, an electronic request is submitted to the processing network for authorization.
  • 3. The processing network receives your electronic request and determines if the cardholder’s account is valid and if the funds are available. If so, a response called an “authorization code” is transmitted, guaranteeing your access to the funds.
  • 4. A receipt is then printed for the customer using the POS terminal or your computer. The customer then signs the receipt and, for their part, the transaction is complete.
  • 5. At the end of the business day, a merchant will electronically submit a final request to the processing network to “capture the funds” for all authorized transactions in a given day. This process is referred to as settlement. Once approved, a response is generated to your electronic terminal or computer.
  • 6. From there, the funds associated with the batch you settled are deposited electronically into your business bank account, usually within 48 to 72 hours. Typically, the rate and any fees paid to your merchant account provider are deducted from your account at the end of the month.
  • 7. At the end of the month, your merchant account provider will send a statement to you, detailing the credit card activity for the month and the associated fees you’ve been charged.

Some Standard Fees

Now that you know how processing works and what the available options are, you’re probably wondering how much all this will cost. While service fees and rates vary from provider to provider, “bundled” pricing is the most common type of agreement used in determining which per-transaction rate applies to which type of merchant. In the simplest terms, pricing is based on risk: the higher the risk involved in the transaction, the higher the rate the merchant will have to pay.

  • Inquiry Fee - A fee that is assessed on the number of credit card transactions a merchant has.
  • Monthly Minimum - The minimum that a processor dictates a merchant must incur on a monthly basis in Discount Fees and Inquiry Fees (in other words, a minimum usage fee for accepting credit cards).
  • Statement Fee - Monthly statement reporting fee.
  • Chargeback Fee - A flat fee charged to the Merchant in the event a chargeback is incurred.
  • Transaction Fee - A flat fee charged to the Merchant every time a payment is processed.
  • (Discount) Rate - A percentage of the purchase transaction charged to the Merchant every time a payment is processed based on card type, risk, and payment method (in person, over the phone, etc.).

Again, these rates are used to determine the cost to the merchant on a per-transaction basis. There are additional costs associated with payment processing, including start- up fees, equipment costs, charge back fees and more.

Credit card fraud has been a thread to the merchants all over the world,  and the electronic commerce has made it even worser. Hence online fraud protection has become integral part of any successful web business. Credit card fraud protection measures protect merchants and customers against unencrypted personal information falling into the hands of fraudsters. The process ranges from installing firewall, using anti-virus software, to more advanced measures like monitoring transactions and validating all information before shipping.

The major components of fraud protection are pre-transaction filters, post-transaction analysis and PCI Compliance

Pre-transaction filters

Credit card fraud protection starts with pre-transaction filtering methods like AVS, CVV2, CVC2 and 3-D Secure.

AVS (Address Verification System) is a system used to verify the address of a person claiming to own a credit card. The system will check the billing address of the credit card provided by the user with the address in the database at the credit card company.

CVV2/CVC2 is a 3 - 4 digit number printed on the credit or debit cards. The number is neither printed on the magnetic stripe nor appear on the sales receipt. CVV2 (Visa) / CVC2 (Mastercard) validates if the card is in possession of the card holder or if the account is legitimate. It is generally required in card-not-present (CNP) transactions on the Internet

3D Secure is a technical standard created by Visa and MasterCard to further secure CNP (card-not-present) transactions over the Internet. It's an added layer of security for online credit and debit card transactions. MasterCard version is called as 'MasterCard SecureCode' and Visa version is called 'Verified by Visa'. 3D Secure payment security creates a trust chain throughout the transaction, changing the liability for fraud from the merchant to the card issuer, under certain conditions.

Post-transaction analysis

Post-transaction analysis include fine tuning billing methodologies, request card issuing bank to make a courtesy call to the customer to verify the charge or call  customer phone number directly to verify the purchase, lookout for suspicious customers from the negative history database before shipping the product.

In addition to all, merchants should develop custom rules and filters to stop or flag specific suspicious orders


PCI Compliance

Merchants can reduce the risk of fraudulent transactions by becoming PCI compliant. PCI Compliance is adherence to Payment Card Industry Data Security Standard (PCI DSS), administered by the Payment card industry security standards council (PCI SSC), which provides technical and operational environment for storing, processing and transmitting credit card information. The requirements are designed to reduce payment card compromises and data theft by helping merchants secure their sensitive information and reduce their vulnerability to attacks.

All these tools, combined with security best practices, protect merchants against online transaction fraud.



Following are the preventive process, procedures and warnings that merchants should be aware to minimize credit card fraud. These process minimize fraud while maximizing transaction throughput. (Click here to download in .doc format)


Address Verification System

The Address Verification System (AVS) is a system used to verify the address of a person claiming to own a credit card. The system will check the billing address of the credit card provided by the user, with the address in the database at the credit card company. AVS verifies only the numeric portion of the address.

Anonymous and Open Proxy IP Addresses

Organized credit card fraudsters often use anonymous proxies, which hide their true location. The IP address sent by their computer can be a open proxy IP address instead of real IP address.

Authorization

Authorization approval indicates that at the time the approval was issued, the card hasn't been reported stolen or lost and the card limit has not been exceeded.

Bin Check

Bank Identification Number is the  first 6 digits of a bank card number. Credit card bin help to identify the credit card holder, issuing bank and the location. Customers sometimes use credit cards issued from another country. The bin database site will provide bank name, card type, and a 3 character code for the country when the Bank Identification Number is entered.

Calling the Card Issuing Bank

The merchant can request card issuing bank to make a courtesy call to your customer to verify the charge. In such case the merchant needs to provide his merchant id , phone umber, customer name, address and phone number to the issuing bank.

Calling the Customer

This is an excellent way to detect fraud. The telephone call also gives the merchant an opportunity to welcome the customer, answer their questions and build solid relationship. Sometimes the fraudster will submit the actual phone number of the person whose card was stolen. If the card holder did not authorize the charge, then should call their credit card issuer to report the card theft.

Card Verification Method

The CVM response provides information that might help you decide whether or not to ship goods to the customer. CVM uses a 3 digit security code that is appended to the credit card account number but not printed on the magnetic stripe. Online Merchants prompt customers to provide the CVM value along with credit card number and expiration date. The CVM value has become part of the authorization request to the payment processor.

Credit Reference Agencies

Merchants can use credit reference agencies like Equifax, Experian, and Trans Union for high value transactions. The customer would be asked to verify some specific information such as the mother's maiden name or their social security number. This process can be expensive and moreover time consuming.

Fax Orders

When an order is received by fax the merchant should request fax copies of both the sides of the credit card. This proves that the customer has possession of the credit card at the time of the order. The merchant should also request a copy of state-issued id or drivers license from the customer which provides additional proof, preventing a chargeback.

Fraud Scoring Systems

Fraud scoring system is used by payment processors to identify the high risk transactions in card-not-present environment that require additional verification. An efficient scoring model use software techniques to capture patterns of fraudulent activity, and to differentiate these patterns from legitimate purchasing activity. Scoring models typically assign a numeric value that provides the probability that a transaction may be fraudulent

Fraud Screening Organizations

The Merchants should attend seminars offered by credit card companies and card processors to educate themselves. Some merchants are joining fraud-screening organizations and beginning to use extra security software that determines the risk assessment. The merchant can decide to accept the card number or not, based on that fraud rate value. Some organizations such as antifraud.com offer tips, databases of stolen credit cards, and web look up tools.

Free Email Accounts

May businesses refuse to accept orders from any free email accounts or any non isp email domains. The fraudsters use free email addresses to remain anonymous. Most businesses purchasing a business product would not use a free email address. Pl note that many legitimate customers also use free email addresses.

Internal Merchant Rules

This method is ideal to catch online transaction frauds. The Merchant sets up rules to stop or flag specific orders from specific IP or country or if the transaction amount is bulk or huge, or if product is often shipped to a specific address. This method reduce repeated or pattern specific frauds.

International Orders

The merchant must weigh the financial benefits of accepting international orders against the possibility of fraud. Merchants cannot always refuse foreign orders since he could be missing potential good sales. However the merchant needs to perform various checks before orders are shipped. Request the credit card processor to provide a list of high risk countries. The high risk countries include Indonesia,Nigeria,Pakistan,Egypt and most African nations. Placing an international phone call to the issuing bank is recommended in case of large orders.

Merchant Rules

Merchants should follow the procedures recommended by the payment processor and the credit card companies. If a merchant suspects a fraudulent order,should contact the registration service to cut reduce the total number of chargebacks

Negative History File

The merchant should keep a database of problematic customers, prior fraud attempts, chargeback records. The record should include customer name, billing address, phone, email and IP address. Incoming orders can be searched for matches in the database. This method reduce the incidence of repeat offenders.

Other Preventive Measures

Always check the data to determine if the buyer is a real person. Check if the zip code really exist  and the email is formatted properly.

Pattern Detection

Pattern detection checks if multiple orders are placed to a specific shipping address with different credit cards. It checks for unusual purchase of a single item since fraudsters may have access to several stolen card numbers. It identify users who repeatedly submit same credit card number with different expiry dates. Since fraudsters will have only credit card numbers, they will just keep submitting that number with different expiration date until they match.

Payer Authentication Program

Payer Authentication program is an optional process to increase the payment security and reduce the risk of fraud. The process verify the cardholders identity directly with the card issuer in real-time.The card issuer remain liable to some losses for the online fraud which was generally borne by merchants.

Processing Orders

The merchant should have a policy of not shipping any order until the charge can be verified by their additional checks. The merchant can send an immediate email confirmation of the order, and explain additional checks are being performed to reduce fraudulent orders. The additional checks may take 30 minutes, or can take days if telephone and email exchanges are necessary. The processing delay may cause the fraudster to hide themselves. Many fraudsters want instant gratification, and wish to remain anonymous, so they will not reply to your emails requesting additional information.

Realtime Authorization

Authorization is a request send by the merchant to the card issuing bank to determine if sufficient money is available for the payment or if the credit card has been reported as stolen or lost. This process takes less than 5 seconds for the approval to take place.

Shared Negative History File

Merchants can exchange their negative historical database. Since this database has fraud data from several merchants, using this file should reduce pattern specific frauds. However a bad customer for one merchant may be good for another.

Data breach happens when a person's identity information such as name, email, social security number, driving licence number or credit card data is put on risk either electronically or on paper. Electronic data breach can be of various forms like hacking, malware, spyware, phishing, or even insider breach. Eventhough the type of data breach vary, they all have one thing in common: Unencrypted personal identity information falling into the hands of fraudsters. The cost of data breach as a result of malicious attacks can be huge and severe.

Ponemon Institute March 2011 report says that the cost of a data breach has increased  from $6.75 million to $7.2 million with an average of $214 per compromised record which is higher compared to $204 in 2009. The Ponemon Data Breach report is based on the actual data breach experiences of 51 U.S. companies from 15 different industry sectors. The annual U.S. Cost of Data Breach Study tracks a wide range of cost factors, including expenses incured on outlays for detection, notification and response,legal, investigative and administrative expenses, customer defections, penalties, opportunity loss, reputation management, and costs associated with customer support such as information hotlines and credit monitoring subscriptions.

The best practices to protect your system against a data breach are:

Penetration Test

Penetration test implements a ethical hacking strategy to identify the vulnerabilities in your data security and the extent to which these vulnerabilities can be exploited by hackers. Several tests are run on software and devices to inspect web applications and databases to search malicious intrusions, such as adware and spyware. Tests are also performed on firewalls and intrusion detection systems.

PCI Complaince

Adhere to the Payment Card Industry Data Security Standard (PCI DSS). PCI compliance standards protect personal information and ensure security when transactions are processed using a credit card. All members of the payment card industry must comply with these standards to accept credit cards.

Firewalls

Install a hardware and software firewall to monitor any suspicious external connection to the network. Firewalls prevent unauthorized Internet users from accessing private networks connected to the Internet.

Anti-Virus

Use regularly updated anti-virus software, install  services, security patches, update virus database and operating system security patches periodically.

Check URLs

Always check the website URL and security certificate before entering your personal information since phishing sites are becoming increasingly sophisticated and identical to the original site and can easily steal confidential data. Host your own secure payment form and submit transactions using an end-to-end secure sockets layer (SSL) connection.

Non Compliant Terminals

Do not use noncompliant or obsolete terminals as they no longer meet the standards for regulatory compliance. Such terminals pose the highest risk for security breaches and subsequent fines.

Intruder Detection tools

Businesses should strive for the tightest security possible against fraud and other data breaches by using standard and advanced detection tools

Third Party processors

Web based centralized payment processing system such as certified TransAction Central integrated shopping cart technology offers merchants comprehensive, flexible and user-friendly processing solutions and maintain the strict security standards for submitting transactions.

Training & Awareness

Training and awareness programs will have positive effect on employees' sensitivity and awareness about the protecting the personal information.

Self-Assessment

Merchant should learn about PCI compliance and best practices. Self-Assessment Questionnaire's can help businesses in self-evaluating their compliance with the PCI DSS.

Passwords

The passwords should be strong enough to resist brute force attacks. Using strong passwords lowers overall risk of security breach. Change your user account password, along with your secret question once in every 45 days.

Monitoring

Monitor your transactions from abroad, particularly those from Nigeria, Pakistan and Indonesia, since such transactions are potential fraudulent practices. Be suspicious if the number of transaction is higher than usual or if the transaction amounts or order is huge.

Storing

Store confidential information such as credit card numbers separate from Web servers in an encrypted database that is not connected to the network. Share access to network drives only when it is absolutely necessary. Never send confidential information such as a Social Security number or credit card number in a nonsecure format or through email.

Contact the authorities

If you've been the victim of an identity theft, contact the credit card authorities as soon as possible.

Call Merchant Industry representative for more information about data breach protection.

ABA Routing Number

The ABA Routing Number or Routing Transit number was developed by the American Bankers Association (ABA) in 1910.The routing transit number (RTN) is a nine digit bank code which appears on the bottom of negotiable instruments such as checks identifying the financial institution on which it was drawn. The ABA Routing Number helps identify the specific financial institution responsible for the payment of a negotiable instrument.

Acquring Bank

An acquering bank or merchant bank is a licenced member of a card association such as visa or mastercard which accepts card payments on behalf of a merchant.In other words it is an institution that serves as a merchant service provider maintaining a direct relationship with the merchant.

Address verification system

The AVS is a security system priovided with any credit card device to verify the address of a person claiming to own a credit card. The system will check the billing address of the credit card provided by the user.

Application fee

An application fee is a fee paid by merchat who is applying for a merchant account to process with credit cards.

Authorization code

Authorization code is the response code from the issuing bank returned to the merchant at the time of authorization. This code is usually 6 or 7 digit number designed to prevent fraudulent or unauthorized transfers. It is generally printed on the receipt. When doing a phone or voice authorization, the merchant should record the authorization code for reference.

Authorization fee

It is a transaction fee charged to a merchant account each time a transaction happens between the point of sale terminal and the authorizing network.The communication generally use a leased line and an internet ip address.For each transaction an authorization fee will be levied.The transaction can be a normal sale transaction,refund or a force post authorization transaction.

Authorization response

An authorization response is generally merchant bank's electronic message reply to an authorization request.The reply can approval or decline or pending transaction.If the transaction is pending the merchant should call the toll free authorization phone number providecd by tthe merchant bank

Authorized cardholder

An authorized card holder is a person who claims to own a credit card account and signs for a particular credit card

Automated Clearing House

Automated Clearing House (ACH) is a secure payment transfer system that connects all U.S. financial institutions. The ACH network acts as the central clearing facility for all Electronic Fund Transfer (EFT) transactions that occur nationwide.ACH processes large volumes of credit and debit transactions in batches.

Average Ticket size

Average Ticket Size is the average amount of the credit card transaction that a merchant anticipates or processes over a certain period. It estimates how much an average customer will spend through the merchant for goods or services over the course of time.

The anticipated average ticket size is always requested by a bank when a merchant opens a merchant account. If the business doesn't process credit cards, then it is appropriate to simply make an estimate of what the amount of the average credit card sale will be. Generally credit card transactions are higher than cash transactions. However If a merchant processes credit cards, then the merchant divides his monthly credit card volume amount by the total number of credit card transactions to arrive at the average ticket size.

Average Transaction amount or Average transaction value

An average transaction amount is the monthly volume or value of credit card transaction amount divided by total number of credit card transaction.

Basis Points

A basis point describe the percentage charged on a credit card transaction. One basis point is equivalent to 0.01% (1/100th of a percent) or 0.0001 in decimal form.

Rate of 1.55% = 155 Basis points

Batch Processing

Batch processing refers to closing or settling the entire batch of transactions at one time. The credit card terminal can be set on manual batch close or automatic batch close.During manual batch close, the merchant will have to batch out at the end of each day which sends a command to the processor to settle all transactions that have been entered. Once a batch is settled, a report is usually printed showing the transaction totals in the batch.

In automatic batch close, no manual intervention is needed by the merchant. Instead the terminal will automatically settle the transactions at a certain time each day.It is advisable for most businesses to be setup on automatic batch close. Many processors will charge a small fee, usually equal to a single transaction fee, at the time when the batch is closed.

Chargeback fee

A chargeback fee is a "penalty" levied on a merchant account when a chargeback has occured or when someone successfully disputes a charge you make.

Credit Card Authorization

Credit card authorization is a validation of a credit card transaction for a merchant or business unit. When a credit card is produced for payment the merchant will typically contact the transaction processor, which pings the card issuer to confirm if there is sufficient credit to cover the purchase. When the card issuer approves the transaction, it creates an authorization on your account. This means that, while the money has not actually been paid to the merchant yet, your available credit is reduced by the amount of the authorization, so that the credit is set aside and cannot be spent at another merchant.The transaction is complete only when the transaction slip that you signed is received by the card issuer, and the fund is transfered to the merchant's bank account.

Credit Rating

Credit Rating is a assessment of the credit worthiness of a card holder. Credit ratings are determined by credit ratings agencies.

Electronic deposit

Electronic deposit is a method by which the credit card association sends fund to the merchant account when the credit card is authorized and the goods delivered.

Encrypted transaction

Encryped transaction is a secured transaction where in a merchant sends an encrypted credit card information to the processing network for approval.

Issuing bank

The issuing bank assumes primary liability for the consumer's capacity to pay off debts they incur with their card.In the case of credit cards, the issuing bank extends a line of credit to the consumer. Liability for non-payment is then shared by the issuing bank and the acquiring bank, according to rules established by the card association brand.

Keyed credit card

The credit card is not present and the merchant keys in the required information from the credit card into the POS terminal.

Mail Order/Telephone Order (MOTO)

Credit card transactions initiated via mail or telephone. It is also known as card-not-present transactions. A MOTO (Mail Order/Telephone Order) account is perfect for a business that wants to accept credit cards by phone. However accepting credit cards by phone or mail order has never been a simpler process or secure.

Member Alert To Control High-Risk Merchants (MATCH)

Member Alert to Control High-risk (Merchants) system, provides acquiring banks with the opportunity to develop enhanced or incremental risk information before entering into a merchant agreement.It lists merchants that have been terminated for reasons like excessive chargebacks or fraud.The account may not be approved by the processing bank if it is on this list. To get the name removed from the list the merchant must resolve all the outstanding issues.

Merchant agreement

Merchant agreement is legal contract that outline the terms of working relationships between merchant and a the bank or credit card processor. A merchant agreement is necessary to establish a merchant account which allows the merchant to accept credit cards as payment for customer purchase.

Merchant bank

A merchant bank is a financial institution which provides capital to companies in the form of share ownership instead of loans. A merchant bank also provides advisory on corporate matters to the firms they lend to.

Merchant Identification Number (MID)

A merchant identification number (MID) is a unique number assigned to a merchant account, that helps identify the specific account throughout course of processing activities.Generally a merchant account comprises a merchant identification number (MID), one or more terminal identification numbers (TID), and a gateway identification number (GID).

Monthly statement or service fee

The monthly statement fee is generally fixed irrespective of the number of transaction occured. The fee is charged by the processor or merchant service provider.

Monthly Volume (MV)

Its a maximum monthly volume a merchant can process a Visa or Master-Card transactions.
The monthly volume that a merchant processes is important for underwriting consideration and also helps to determine exactly what type of documentation will be required in the merchant’s file. Transactions with American Express, Discover, Diner’s Club and the other major credit card brands are not included into the calculated monthly volume.

Personal Identification Number (PIN)

A Personal Identification Number is a code used by an individual to access his/her bank account at an ATM machine.PINs were first used for ATMs and have since been applied to many other technological developments to keep sensitive information secure. PINs can be used to verify debit card purchases, or as part of a login process for websites, cell phones, or other devices.

Pinpads

A PIN pad is an electronic device used in a debit or smart card-based transaction to input and encrypt the cardholder's PIN. PIN pads are normally used with integrated point of sale devices in which an electronic cash register is responsible for taking the sale amount and initiating/handling the transaction.

Point of banking

Point of banking allows merchants to accept credit/debit cards without having to pay the processing fees, using only standard credit card terminal.The approved transaction is charged only a small convenience fee which is added to the transaction amount being charged.

Point of Sale (POS) Termnal

A point-of-sale (POS) terminal is a preferred way of processing credit cards, debit cards, checks, and other electronic transactions. The merchant will swipe the customer’s card through the terminal and key in payment information.The terminal reads customer's bank's name / account number and contact the bank.Based on the fund availablity bank transfers the customer approved amount to the seller's account, and prints a receipt.

Purchase Cards

The purchase cards or Procurement Cards allows goods and services to be procured which streamline the traditional purchase and payment process cutting the cost and time of acquiring routine goods and services. Purchasing Cards can also be used for business travel and accommodation expenses

Qualified Discount Rate

A Qualified Discount Rate is the rate a merchant is charged when a retail transaction is card-swiped and the merchant batch out at the end of the day. (Keyed/Internet merchants can still archive Qualified rates by obtaining an AVS response plus order number, plus batching out.) A Mid-Qualified Discount Rate is charged when a retail merchant keys a transaction or does not batch-out at the end of the day. A Non-Qualified Discount Rate is charged when a merchant keys a transaction and does not batch out at the end of the day.

Refund Policy

A refund policy illustrates how a merchant and to what extent will the merchant guarantee products or services sold to a customer.The refund policy determines the number of charge-backs a merchant receives.

Reserve account

The credit card processing company sets up this account to protect themselves in case of losses due to chargebacks or if the merchant defaults on their merchant account.

Settle batch

Is the process by which the retail merchant sends all the credit card transactionsof a particular day to the credit card processor.

Standard Industry Code/Merchant Category Code (SIC/MCC Code)

The Standard Industry Code is a four-digit numeric identifier of merchant business type used by IRS, processing banks and other institutions. A Merchant Category Code (MCC) is again a four-digit number used by the processing banks to specifically classify suppliers into various market segments.

Swiped credit card

The credit card is present and the merchant physically runs the consumer's credit card through the credit card terminal

Terminal id

A terminal id is a number provided to a merchant by a credit card processor to uniquely identify the credit card terminal.The terminal ID is otherwise called as the terminal number. A credit card processor may assign several terminal Id's to a merchant’s terminals although that merchant has a single merchant ID with that processor.

Transaction fee

A transaction fee is a fixed amount charged every time you process a credit card payment on some small business Web site or a business store. Transaction fees vary according to the merchant account provider.

This section provides detailed information about merchant accounts and merchant services on topics such as debit and online debit card processing.

Have you ever wondered how merchant service providers determine merchant account pricing, or why some credit card transactions cost more than others?

To better understand what you’re paying for, you need to know how merchant account pricing is established.

Simply put, there are two basic fees that collectively, make up the vast majority of the cost of a merchant account. In the credit card processing industry, these costs are referred to as “Interchange and Assessments,” and they are charged by bank card networks like Visa® and MasterCard® every time a merchant accepts one of their cards for purchases.

Essentially, the “Interchange” rate is a percentage that is deducted from each credit card transaction amount, and the “Assessment” fee is a flat transaction fee added to the cost of processing each credit card sale.

There are many components that influence the cost of processing a credit card, but the Assessment fee charged for a transaction is determined exclusively by the brand of the card accepted and is set by the bank card network that issued the card.

Interchange pricing is bit more complex, because each card and transaction type has a unique cost, creating an assortment of over 150 Interchange rate categories. As a result, the Interchange category any one transaction will fall under depends on various factors, including:

  • A business’ processing environment (retail, phone order, internet, etc.)
  • A business’ card acceptance method (swiped, keyed, online, etc.)
  • The information sent along with transaction (address verification, CVV2, tax amount, etc.)
  • The card brand and type accepted (debit, credit, rewards, corporate, etc.)

To lessen any confusion, merchant account providers typically compile all similar Interchange categories and bundle them into a few groupings such as qualified, mid-qualified and non-qualified. However, this is just one way merchant accounts can be priced. Some merchant account providers quote an “Interchange and Assessments, Plus” structure, which combines the actual cost of the transaction based on the Interchange category into which it falls, the applicable Assessment Fee, plus an additional specified value on top of each.

In the end, the bulk of a merchant’s credit card processing expenses and the root of all merchant account pricing structures derive from the combination of the Interchange and Assessment fees, regardless of the pricing structure.

For more information about this, or any other merchant account topic, please contact Customer Service.

Merchant accounts provide businesses with the ability to accept credit card and debit cards for purchases. There are several different aspects to a merchant account, which we will describe below.

A Merchant Account Entails:

  • Processing Services: To set up a merchant account, a business owner, or “merchant” must apply through a merchant service provider (MSP) such as Merchant Warehouse. Approval of a merchant account depends on factors which include, but are not limited to:
    • Applicant and/or Personal Guarantor’s Credit Score
    • Business Type (Goods or Services Sold)
    • Card Acceptance Method (Merchant Type)
    • Monthly Volume & Average Sales Ticket
    • Business’ Financial Condition & Bank Account Type
    • Business Longevity
    • Return/Refund Policies
  • Processing Rates & Fees: There are various fees associated with having a merchant account. These could vary, depending on the type and company providing the service, but all merchant accounts have 2 main costs:
    • Discount Rates: With most merchant service providers, every processed sale is classified into 1 of 3 qualification levels (Qualified, Mid-Qualified, & Non-Qualified), and is charged a discounted percentage rate associated with that qualification. Each sale’s level and rate is determined by the type of card used, and/or how it is accepted and processed.
  • Transaction or Authorization Fee: This fee is charged for each electronic authorization request and transaction made, including all approved and declined sales, returns, voids, and batch settlements.
  • Processing Capability Systems: To process credit card payments, processing equipment or software is required to capture card information, make authorization requests, and close sales. Depending on business needs, equipment options include:
    • Terminals: Wireless, Contactless, Stand-Alone and Terminal/Printer Combination units
    • PC Software: Stand-alone or integrated into other business systems
    • Internet Gateway Solutions: Virtual Terminal or eCommerce versions

To maintain customer satisfaction and increase sales and revenue, it is becoming essential for businesses to have merchant accounts and accept credit card payments. Fewer and fewer customers carry cash, checks involve significant risk, and sending your customers running to the ATM machine could lose you valuable business. For both your business’ and customers’ benefit, sign up for a merchant account today.

The definition of a chargeback is when a cardholder disputes a charge posted to their credit card account. Chargebacks can occur for various reasons, such as when a purchase was not authorized by the cardholder (fraud), or when goods or services are not provided as expected.

You should be able to avoid the vast majority of chargebacks by providing good customer service and ensuring that your products and/or services are advertised, and delivered, as promised.

For those chargebacks related to fraud, there are simple steps every business can take to help avoid any problems. It is up to every merchant account holder to be diligent in accepting charges, and to educate their staff about the precautions to take.

In environments where the business is accepting and swiping cards at the time of the transaction, there are several simple steps which can be taken:

  • Always compare the signature on the receipt with the signature on the back of the card.
  • Always examine the card to ensure it is not altered or suspicious looking.
  • Request identification such as a license or some other picture ID.

In situations where the business is taking credit card without the customer present (over the phone or Internet, for example), the chance of fraud-based chargebacks is much greater. It is very important for these businesses to put systems in place to help determine legitimate charge activity.

  • If appropriate, call customers to confirm their order if the billing and shipping or contact addresses do not match.
  • Ask for the code number on the back of the card (or front with American Express®) to confirm that the card is in the customer’s possession.
  • If you receive questionable orders, call to confirm the order with the cardholder.

If you have reason to believe that a card is fraudulent or otherwise questionable, always call the card issuing company for a voice authorization.

Merchant account statements can sometimes be confusing, especially for new merchants. Generally, questions and concerns pertain to the charging of monthly fees and the timing of account statements, so we hope that this article will help to explain some of these confusing aspects.

As with any credit card processing company, merchant accounts typically becomes active within one business day of the account approval date. Once your merchant account is live, you are able to process credit card transactions and are also responsible for any fees assessed starting on that date. Therefore, any monthly fees will be charged, in full, for every month the account is open, regardless of your processing volume.

Monthly fees are posted to your bank account generally within the first week of the month following your merchant account activation, and continue each month that your account remains live. A statement reflecting the charges for your previous month’s processing activity is then issued and should follow mid-month. If you do not receive your processing statement by the third week of the following month, you should contact customer service to confirm that we have the correct mailing address as specified on your merchant application.

Please contact a customer service representative if you have any questions or concerns about your monthly merchant account fees or credit card processing statement.

Whether you are currently accepting credit cards, or plan on doing so, it is important to know how to save money by avoiding downgrades whenever possible.

A downgrade simply means that you are being charged a rate increase because the type of card your customer is using has a higher processing cost or because a transaction was processed incorrectly by you, the merchant.

You can’t always prevent downgrades from happening, but this article will show you what you can do to keep your transaction costs as low as possible.

As an example, for a Retail or “Swiped” Account where the customer is handing over their card for processing, a transaction will get the Qualified Discount Rate (lowest rate possible) only if the card is swiped, the cardholder is present, and the card is a standard consumer credit card. If any of these criteria are changed, the account will “downgrade” to either the “Mid” or “Non” qualified level. These levels are each associated with a greater cost of processing.

Here is a more detailed description of what can be done to avoid many downgrades, and also what happens if certain criteria are not met.

Retail/Card Swiped Accounts

Qualified Rate

The Qualified Discount Rate is charged when all of the following occur:

  • Standard consumer credit card is used
  • Card is swiped accurately and data properly obtained
  • The customer’s signature is captured
  • The transaction is “Batched” or “Settled” within 24 hours

Mid-Qualified

The Partial/Mid Qualified rate will be applied when any of the following occur:

  • The card info is manually entered, or “keyed” & all AVS info is entered
  • The consumer uses a Rewards card
  • Transactions are not settled/batched within 24 hours

Non-Qualified

If any of the following situations occur, a Non-Qualified rate will be applied to the transaction.

  • Card is manually entered with no AVS info entered
  • The consumer uses a Corporate, Government or International card
  • Authorization code is manually keyed in to your processing terminal.
  • Transactions are not settled/batched within 48 hours

Keyed “MOTO” or Internet Accounts

For these types of accounts, the merchant manually enters credit card information into a credit card terminal or software after the order is placed or is collected through an online payment gateway.

Qualified Rate

The Qualified Discount Rate is charged when all of the following occur:

  • Standard consumer credit cards are used
  • All required Credit Card information is entered including AVS (address verification) for VISA® transactions.
  • The transactions are “Batched” or “Settled” within 24 hours
  • The order/invoice Number entered

Mid-Qualified

For MOTO/Internet Accounts, rates usually fall directly to Non-Qualified, not mid-qualify, but these are the possible reasons why a merchant may be charged a Mid-Qualified Rate

  • AVS information is not entered
  • Transaction/Batch is not settled within 24 hours
  • Card is a Rewards or Business card

Non-Qualified

If any of the following situations occur, a Non-Qualified rate will be applied to the transaction.

  • Any of the required card or transaction information is not entered
  • The consumer uses a Corporate, Government or International card
  • Authorization code is manually keyed in to your processing terminal.
  • Transactions are not settled/batched within 48 hours

As you can see, there are many factors involved in determining which rates are assessed to your transactions. Follow the tips above, and you will keep your processing rates as low as possible. A Merchant Industry representative is always available to answer any questions or concerns you may have.

As a merchant accepting MasterCard® and Visa®, there are basic card acceptance rules that you must follow. By adhering to these rules, you can increase customer satisfaction and ensure that you do not run into compliance issues, which may put your continued ability to accept credit cards at risk. The following are some of the rules outlined in the Visa and MasterCard manuals:

Card Logos & Acceptance: You must display the appropriate card logos for any card types that you accept and advise your customers of their payment options. You must honor all categories of cards (credit, debit, rewards etc.) within each card type that you accept.

Dollar Minimums and Maximums: You may not impose a minimum or maximum amount for any transactions. If you do not accept a customer charge, which is below a certain amount that you specify, the customer can notify Visa and/or MasterCard, who will take the appropriate steps to see that you understand and adhere to the card acceptance rules and regulations.

Surcharges: All credit card transactions must be treated like any other transactions. You may not impose any surcharge on a transaction because your customer is using a credit card. However, you may offer a discount to your customers for paying in cash provided the offer is clearly disclosed to your customers and the cash price is a discount from the standard price charged for any other type of payment.

Laundering: You may only process transactions for your own business. Processing transactions for a business that does not have a valid merchant agreement is called laundering and is considered a form of fraud.

To learn more about the rules and regulations of accepting Visa and MasterCard cards, please contact us or see the Visa and MasterCard guides available through the Visa and MasterCard websites.

While most merchants know they should accept debit cards, it is not always easy to understand how to take full advantage of debit card processing. Merchants can do debit card processing in one of the following two ways:

Offline Debit Card Processing
The most common way to accept debit cards is an "offline debit transaction." In this type of sale the merchant accepts a debit card the same way in which they would accept a normal credit card. The card is swiped through the terminal and the customer signs the receipt. As far as the merchant is concerned, there is no difference in the way a credit card or an off-line debit card is processed. The one thing merchants must remember is that the debit card must have a VISA® or MasterCard® logo on it. Cards that do not bear the Visa or MasterCard logo can not be processed off-line and will not be approved.

Online Debit Card Processing
A potentially cheaper and more secure, method for accepting debit cards at the point-of-sale is called an "on-line debit transaction." In this type of sale the card must be swiped through the terminal and external or internal PIN Pad is used to enter the merchant’s four digit PIN. The terminal will pass the encrypted number to the bank for verification. The merchant will then be paid for the transaction in the same manner and time frame that they would be paid on a credit card sale. The cost of this type of transaction is potentially lower due to the way in which the merchant is charged by the processing companies. Rather than paying a flat fee and a discount rate, or percentage of the transaction, as with a credit card or offline debit transaction, there is only a slightly higher flat fee.

Not all debit card transactions are the same! For those merchants able to use a PINPad along with a credit card terminal, online debit card processing can offer a big savings. The difference between “online” and “offline” debit card transactions is that “online” requires the merchant to input their 4 digit PIN number and have their card swiped while “offline” functions exactly the same as any credit card transaction.

So why is does online debit card processing have such potential savings? Consider the bank’s perspective. When a customer presents their card for payment and then enters a PIN number manually, the chances of fraud are extremely small. Because if this, the costs for pin based, transactions, or online debit card processing, can be much lower.

When conducting pin based transactions, merchants are charged a flat fee for each order instead of a percentage rate (discount rate) plus transaction a fee. Assuming a merchant takes 100 debit cards over the course of a month (about 3 per day) and averages $85 per sale, a conservative cost analysis shows that a merchant could save over $100 a month, or $1,200 a year.

This section will provide you with the tools needed to guide you towards making the most informed decision for your credit card processing technology needs. We provide information on various topics including choosing the best credit card machines or credit card software for your business and new trends in merchant accounts and technology, such as contactless payment solutions.

Is your business suffering because you’re unable to accept credit cards while on the road? Or worse, are you losing sales to declined credit cards processed off-location, without the customer or card present? If so, your business may need a wireless credit card terminal.

For mobile businesses (i.e. Transportation and Towing services, Contractors, Delivery services, Direct Sales, Trade Show and Flea Market merchants, etc.), a wireless credit card terminal enhances business mobility and efficiency, simplifies the billing and payment process, and increases sales and revenue.

Wireless terminals allow mobile merchants to:

Accept payments from anyone, anywhere, anytime:

  • Wireless terminals offer mobile businesses a solution for accepting credit card payments in real time and on-location.
  • With connections to multiple cell phone networks, wireless coverage is provided throughout the country.
  • To enable continued operation in low-coverage areas, wireless terminals have a Store and Forward” security feature that provides an offline capture of transactions.

Enjoy efficiency and convenience:

  • Wireless terminals deliver a rapid check-out process, with verified transactions received in 2-3 seconds.
  • Wireless terminals are compact, and easy to deploy and use.

Reduce the risk of financial losses:

  • By accepting payments real-time, you can avoid losing sales from declined credit cards processed off-site.
  • By accepting credit cards on-site, you can reduce the risk of carrying large sums of cash or receiving bad checks.

Operate with low processing costs:

  • Wireless processing is an affordable solution for mobile merchants; since swiping a credit card with the customer present involves less risk, processing costs are lower compared to manually key-entering card information at a later time.

Wireless credit card terminals offer mobile merchants a simple and dependable payment solution from a handy device. So take advantage of the many benefits and capabilities supplied by a wireless credit card terminal, and start processing mobile credit card transactions today!

 

Ever wonder how credit card authorization really works? Where does the credit card information go once you enter it into a credit card terminal or POS?

When a credit card is swiped and a credit card authorization process is initiated, the information is sent directly to a credit card processor. From there, the information is transmitted to the card-issuing bank through a bankcard association, where the transaction is either approved or declined. Finally, the bankcard association transmits the approval or decline back to the terminal or POS device.

During the credit card authorization process, a card may decline if it is expired or has insufficient funds. The transaction may also be declined if the card has been reported missing or if there has been suspicious activity on it. To further protect your business, banks now require credit card authorization for all paper-based transactions.

In order to process credit cards and initiate a credit card authorization, a business must sign apply for, and receive, a merchant account. Once a merchant account is set up, credit card authorization may take place through the use of an equipment terminal/POS.

Deciding on whether you want to use a credit card terminal or some form of payment processing software to handle card transactions should is usually fairly straightforward. The answer generally depends on the physical environment in which you will be accepting the charges.

Most simply put, the decision usually boils down to whether or not you will have easy access to a computer when you need to charge cards and what kind of transactions systems you already have in place.

If a computer is readily available payment processing software often provides numerous benefits over traditional credit card terminals. Most users love the reporting features available to them and find it helpful to go back and look up a previous transaction. Payment processing software is also usually less expensive and more user friendly than most new credit card terminals.

There are logical reasons why many businesses may be better off with a terminal however. To start with, many businesses already have invested in some sort of cash register or POS system. While some of these can be integrated with payment processing software, many can not. In these cases, it is usually simpler to use a credit card machine rather than cluttering your valuable counter space.

Another circumstance when a terminal may be preferable is when your computer may not always be on or may be in an inconvenient location. If you need to take payments in real-time and can’t be inconvenienced with accessing your PC, then you may be better off with a credit card terminal.

 

While many online payment gateway options are feature rich you still want to spend some time comparing them. This article explains how to go about determining the best online payment gateway option for your business.

Some may prove better in different environments and the reasons can sometimes be quite technical. Take the time to read up on the specs and compatibilities of the different online payment gateway packages. If there is any confusion, or you aren’t certain what might be the best product for you, be sure to call and ask your salesperson questions. Any experienced sales person should be able to fit you with the correct product and describe the pros and cons.

If you already have an ecommerce website and a shopping cart, simply mention this to your sales person when you call. Most off-the-shelf shopping cart packages are compatible with all major online payment gateway products. If your company has built its own shopping cart and database systems you may want to consider having your technical person review the documentation for the gateway you choose.

Merchant Industry carries all of the major online payment gateways on the market today. You can browse through all of them in our section for payment gateways.

More and more merchants are taking advantage of the powerful credit card processing software products available to them. These are systems for virtually any type of processing environment from retail stores to websites.

All have their advantages, but selecting the right credit card processing software for your business is very important. Before making a decision merchants should ask themselves a few questions:

Will you be accepting credit cards over the Internet?

  • If so, merchants should lean towards using an online payment gateway in conjunction with their shopping cart. Payment gateways are a type of credit card processing software which is hosted by a third party on a server outside of your business. Your shopping cart, or other payment software, communicates with the payment gateway via the internet and it manages the actual transactions. Merchant Industry sells several payment gateways including: Authorize.net, VeriSign, and LinkPoint. We also offer our own product, MerchantWare Payment Gateway, which has all the features, flexibility and compatibility standard to these products.

How many credit card transactions will you need to handle at any one time?

  • For most merchants the answer is usually only one, but some merchants who have more than one user or customer running transactions at the same time will need a more robust credit card processing software solution. If there are multiple internal users and they are on a network you can use PC Charge Pro. If the users are not on a network, then a merchant can use a virtual terminal such as the one offered by Authorize.Net. This virtual terminal will allow users to log in using their web browsers and charge cards from anywhere they have Internet access. Transaction information is centrally located and can be accessed from anywhere.

Will you be charging the same customer's cards on a regular basis?

  • Merchants whose customers are frequently reordering or those who bill their customers on a monthly basis may wish to use credit card processing software that stores credit card information and can charge customers at specified intervals. PC Charge Pro has this feature built in and makes it easy to manage charging customers.

If you have any further questions regarding credit card processing software, please feel free to contact our sales team for information and advice on selecting software by calling the number at the top of your screen.

With so many different types of credit card equipment on the market these days, choosing the correct type for your business can be a confusing task. In order to help guide you towards the correct choices, here are some questions you should ask yourself when shopping for credit card equipment.

Will customers be using their credit or debit cards at my physical business location or will I be collecting the card information through another means?

  • If you will be swiping cards directly from your customers, your best option for credit card equipment is probably some sort of credit card terminal and printer combination. If you will not be swiping the cards manually, many merchants will want credit card equipment that is more suited to their specific needs. Software packages are available if there is a PC at the business location or a standard terminal and credit card printer may work just fine.

Is a contactless payment solution the right choice for my business?

  • Merchants who have "quick service" retail operations, and whose average ticket is $25 or less, may benefit from Contactless Payment credit card equipment. The "tap and pay" technology has proven to be most valuable for convenience stores, fast food restaurants, pharmacies, movie theaters and other merchants who rely on faster transaction times and shorter wait times for customers. Merchants can also upgrade their existing credit card equipment to a contactless payment reader without disrupting their operations.

Is there a phone line or broadband internet access available at the business location?

  • Most businesses have at least one phone line at their business location and, these days, most have some sort of “always on” internet connection. For these businesses, there are many choices for credit card equipment. Most credit card equipment can share a phone line with a fax, or even the main phone if calls are infrequent and some of the newer terminals can utilize broadband internet for even faster transactions. If no phone or intent is available, such as at a trade-show or for delivery companies, etc, merchants should consider either a battery powered credit card terminal or wireless credit card machines that work over the cell phone networks.

Will you be accepting PIN-based debit card transactions?

  • For those merchants that think they will be accepting debit cards they should consider adding credit card equipment like a PIN Pad to give their customers additional payment options. As described in this article about debit card processing, accepting PIN based transactions may save you money and add value to your customer’s experience.

How many merchant accounts will you need for your business?

  • For almost all businesses the answer is one. There are examples however where multiple merchant accounts are either desirable or a necessity. These merchants will want a piece of credit card equipment that can handle more than one merchant account. There are inexpensive terminals which handle two accounts and more robust units which can handle up to 99. A qualified merchant account sales person should be able to recommend the correct credit card equipment for your specific situation.

Which terminal brands should I consider?

  • Since most of the major credit card equipment manufacturers are producing high quality and feature rich products these days, you really can’t go wrong whatever brand you choose. That said, some of the processors may work better with a particular brand of credit card equipment and some newer pieces of equipment are not certified at every processor immediately upon their release. Again, this is a situation where it is best to let your merchant account sales representative guide you as to the best options given your particular processor and needs.

If you have any further questions regarding credit card machines, please feel free to contact our sales team for information and advice on purchasing equipment by calling the number at the top of your screen.

Contactless payment terminals have become the present and future of credit card transactions. Also known as "tap and pay," contactless payment provides benefits to retailers and consumers alike, particularly in the areas of speed and convenience.

Contactless payments are simply transactions that do not require physical connection between your customers' credit card and the terminal. Smart chip technology, otherwise known as RFID, is supported by a secure controller, internal memory, and a small built-in antenna that transmits information to a reader through radio frequency.

The primary advantages of a contactless payment reader over traditional swipe cards are speed and convenience. Consumers can just tap the contactless payment terminal, eliminating the need for a transfer of hands with a credit card and a receipt signature. In turn, check-out lines become shorter as transaction times become faster.

Contactless payments are best suited for quick-service retailers, such as convenience stores, fast-food restaurants, movie theaters, pharmacy / drug stores, and gas stations and for those whose average ticket is $25 or less.

Retailers with major POS terminal providers can easily upgrade their existing system with a plug-and-play contactless payment device.

A cardholder may dispute a card transaction for a number of reasons such as billing error, non-receipt of goods or services etc.These disputes may end in a Retrieval or Chargeback.Chargebacks and Retrieval requests are inevitable part of any business and can be both frustrating and confusing. Our tool provides a complete list of chargeback and retrieval request codes which directs you on what should be done to resolve the issue.

A chargeback is the reversal of a previous sales transaction. During Chargeback the chargeback amount is debited from the deposit account. Reasons for chargebacks include a cardholder dispute or a processing error by the merchant's staff. To assist merchants in understanding the chargeback code, let’s take a look at the chargeback reason codes used by Visa, MasterCard and Discover network.

A retrieval request happens when a cardholder's bank requests reproduction of the sales draft used in a transaction. Reasons for Retrieval requests are cardholder disputes, point-of-sale errors, fraud inquiries, etc.

The Housing and Economic Recovery Act of 2008 is a federal regulation that requires "merchant acquiring entities" to report the gross transaction amount of their merchant customers to the IRS. The new requirements from Internal Revenue Service (IRS) will apply to any payment transaction beginning on January 1, 2011, with required reporting and tax withholding to begin in 2012.

The new law requires banks and other payment settlement entities to collect and verify the tax identification number (TIN) along with the merchant’s legal name and address associated with the TIN number.If there is any discrepancies between the merchant’s TIN or associated information in the reporting entity’s records and the IRS’ records, the IRS requires the reporting entity to withhold a minimum of 28 percent of the merchant‘s future payments from card transactions. This withholding provision goes into effect for payments starting in 2012. All merchant acquiring entities must collect via the W-9 Form and verify the Tax Identification Number by performing TIN Matching and associate the legal business name and address for each of their merchants on file.

Beginning in January 2012, every payment processor will file a 1099-K form with the IRS reporting the gross amount of each merchant’s card transactions for the 2011 year, as well as provide a corresponding statement to merchants.

This is a nine digit number used as a tracking number by IRS for tax administration.This number is required on all tax returns filed with IRS.For Individuals it is in the form of Social Security numbers (SSNs), businesses are assigned Employer identification numbers (EINs). Trusts and other non-business units are assigned straight tax ID numbers (TINs).

In the case of payment card transaction it is a merchant acquiring entity or in the case of third party network transaction it is third party settlement organization.

The new law will require payment card processors and third-party settlement organizations to report merchant transactions to the IRS beginning in 2011.

The payment processor will report the gross receipts for all electronic payment transactions to the IRS. A Form 1099-K will be provided to the merchant on or before January 31st of the year for the return to be filed for subsequent year.

It is designed to improve voluntary tax compliance by business taxpayers and assist the IRS in determining the tax returns are correct and accurate.

Merchant must ensure that the payment processor has the correct TIN and legal name on file. Any discrepancy between the TIN and the legal business name in the payment processor records with the IRS' records will lead to IRS mandated backup withholding.ie the merchant may be subject to backup withholding of a minimum of 28% from any future payments made, adhering to IRS guidelines.backup withholding is directly transmitted to the IRS.

No information report will be required if a merchant's total payment transactions for the year does not exceed $20,000, and the total number of transactions does not exceed 200.

The payment processor must collect and verify your TIN and associated legal name and address for your merchant business. Beginning with the 2011 tax year, they are responsible for collecting merchant's total annual dollar amount of payment card transactions to report to the IRS in 2012. In January 2012, the processor must file a Form 1099-K, an information return, with the IRS and provide a copy to the merchant for the 2011 tax year.

Merchants who fail to provide their taxpayer identification number could become subject to backup withholding at a rate of 28% on their payments. To prevent backup withholding, merchants should provide their card payment services provider with the name, address, and EIN for the business. Another concern is that credit card transactions could become subject to backup withholding or garnishment if a business becomes delinquent on their tax payments. Under the proposed regulations, the IRS made it clear that backup withholding would occur on gross card payments. This could leave a business in severe financial difficulties. Business owners who are struggling with tax debts should work with their tax professional to develop a repayment strategy that prevents any withholding on their card payments.

Yes, all merchants must comply with these requirements.

The new IRS requirements were made available throughout the payment processing industry and through various IRS publications. Taxpayers may find additional information on the IRS’ website at www.IRS.Gov or by consulting with their tax professional.

Visit https://npc.my1099k.com

to update the information and provide the corrected data.Contact your processor in case of any doubts

Acquirers are not required to split the reporting. Payment. Processors are required to report the total volume paid to US legal entities.

Under the IRS regulations, if a merchant is a franchise of a larger organization but not owned by that larger organization, then the franchise's "reportable payment transactions" would be reported to the IRS at the ownership level and would be separate from the larger organization. However, if the merchant location is owned by a larger organization this merchant's "reportable payment transactions" would be included in the totals for the larger organization.

Merchants with non-matching IRS information will continue to receive communication along with the necessary actions to take in order to prevent backup withholding in 2012.

Frequently asked questions about chargebacks.
A chargeback is when a consumer is unable to settle a return/refund of a credit card transaction with the merchant directly and contacts their credit card issuer to dispute the sale. A cardholder may dispute a transaction for a number of reasons such as a billing error, non-receipt of goods/services, fraud, goods/services not as described, etc. MasterCard, VISA, and Discover cardholders have 180 days (6 months) from transaction date to dispute a charge, American Express cardholders have one year from transaction date to dispute. The credit card issuer along with the processor will act as a mediator in resolving the dispute. Once a chargeback is issued, funds are immediately debited from the merchant’s bank account and are temporarily held by the processors acquiring bank in a reserved account while an investigation is underway. The merchant is then notified and is given the opportunity to provide an explanation and any additional support backing their claim. A resolution can take up to 30 days. A retrieval request is an inquiry by a consumer’s issuing bank for specified information pertaining to a transaction made to a merchant. Unlike chargebacks, funds are not debited once a request is initiated. However, failing to fulfill a retrieval request will result into the request converting into chargeback.
Review your records and locate any documentation related to the charge. You may know the customer and can try to resolve the dispute directly as it could possibly be a misunderstanding. If so, try contacting them. You will receive a notification via fax or mail including all information pertaining to the transaction, including a case number which must be included in your response. Your response should be as detailed as possible. If further assistance is needed, please call our customer service line. First Data and TSYS’s chargeback departments can also be reached for the most up to date status updates made on cases. First Data Chargeback Department: 800-672-5008 TSYS Chargeback Department: 866-276-4181
A chargeback penalty fee is incurred to the merchant for each incoming chargeback even if a chargeback is decided in favor of the merchant. Excessive incoming chargebacks also count against your threshold which in turn can become a deciding factor to all credit processing providers to service your business.
We offer merchants the ETHOCA service, a chargeback reduction program as an alternative to help merchants actively keep track of chargebacks. Through this program, you are notified of chargebacks prior to them being officially submitted and in thus providing the merchant an opportunity to resolve the issue in real time without it counting against the merchant’s chargeback threshold.
  • We suggest merchants to keep track of all sales receipts and any terms and conditions they may require their customers/clients to sign at the time of purchase up to a year.
  • For individual sales over $1,000, obtain an imprint of credit card used.
  • For delivered goods, we recommend shipments be made to billing address used in transaction. We also suggest including a signature receipt when received.
  • In the event of suspicious activity, verify with the cardholder’s issuing bank of any fraudulent activities on the card prior to servicing or provide goods to customer. If cardholder cannot be verified and transaction has already processed, issue refund right away.
Frequently asked questions about PCI Compliance
The Payment Card Industry (PCI) Data Security Standard (DSS) is a set of requirements for enhancing payment account data security. These standards were developed by the PCI Security Standards Council, which was founded by American Express, Discover Financial Services, JCB International, MasterCard Worldwide and Visa, Inc. to facilitate industry-wide adoption of consistent data security measures on a global basis. The standard aims to increase awareness and promote best practices in the handling of sensitive information as a means to minimizing identity theft and fraudulent transactions.
No. The framework of the PCI data security standards has existed in different forms for some time now and continues to evolve. You may be more familiar with the payment brands programs that promote the adoption of the PCI DSS, which are below:
Yes, all merchants, whether small or large, are required to be PCI compliant. The payment brands have collectively mandated PCI DSS compliance for any and all organizations that process, store or transmit payment cardholder data. Inherent in having a merchant account is the ability to handle cardholder data.
No. Use of a PCI compliant payment application is one aspect of the many PCI DSS requirements, which cover handling of sensitive data. Currently, the PCI DSS lists twelve requirements. These requirements are organized around the following principles:
  • Build and maintain a secure network
  • Protect cardholder data
  • Maintain a vulnerability management program
  • Implement strong access control measures
  • Regularly monitor and test networks
  • Maintain an information security policy
If you choose not to complete the self-assessment questionnaire (and applicable network scans) you may overlook certain data security practices that minimize your risk of a security breach. In the event that your business is compromised, you may be subject to substantial fines per payment brand. These fines would be in addition to the expenses and fraudulent transactions resulting from the breach.
We have established a relationship with PCI COMPLIANCE, LLC, a leading provider of PCI audit and scan services. PCI COMPLIANCE, LLC service includes: assistance in determining which version of the Self-Assessment Questionnaire is appropriate for your business; administration of any applicable network scans; guidance on any necessary remediation efforts; and certification and validation of your account’s compliance. These GOTPCI services are available to you as part of our PCI Compliance Assistance Service Program. You can take advantage of this opportunity by enrolling with PCI COMPLIANCE, LLC via the web site www.merchantindustry.com/pci.
The PCI compliance certificate is valid for one year from the date the certificate is issued. To maintain your compliance, you are required to complete the PCI DSS self-assessment questionnaire annually and conduct any applicable network scan on a quarterly basis.
If you have already been PCI DSS certified or if you choose to use another QSA/ASV, please submit your certification documentation to us via e-mail at pci@merchantindustry.com or fax to 877.659.9936
Frequently asked questions about Terminal Trouble Shooting FD Terminal demo below will provide a basic understanding for downloading terminals, changing time & date, how to print receipts, how to provide a customer copy of receipt and run manual transactions. This demo will work for all platforms except first data terminals. T7 plus, Hypercom terminals, VeriFone terminals. http://http://paxtechnology.us/en/product/index.aspx?n=119002001001&i=100000040228725, http://www.firstdata.com/demos/terminal_demos/, http://www.verifone.com/products/hardware/countertop/vx-520/
ICT220 TERMINAL Video demonstration on how to change date and time on ICT220 only.
http://youtu.be/ttWSE5GN6ws
VERIFONE TERMINAL
1. PRESS THE ENTER BUTTON (THE GREEN BUTTON)
2. PRESS THE BUTTON THAT'S NEXT TO SETUP
3. ENTER PASSWORD PRESS 1 THEN THE ALPHA BUTTON PRESSED TWICE(THE LITTLE BLACK BUTTON IN THE MIDDLE OF THE PURPLE BUTTON) 66831
4. PRESS THE FIRST PURPLE BUTTON ON THE LEFT UNTILL YOU SEE DATE AND TIME
5. PRESS THE FUNCTION BUTTON NEXT TO DATE AND TIME
6. ENTER THE DATE THEN THE TIME
7. ONCE YOU ARE DONE JUST PRESS THE RED BUTTON
PAX S80
1. Press the MENU key.
2. Choose Option 5 System
3. Select option 1 Date & Time – Set Time
4. Enter the date and time
5. Press enter to go to the next line
7. Press enter afterwards to return to the time screen
8. Press the cancel key to return to the main screen.
INGENICO ICT220 /ICT250
1. PRESS THE F KEY ABOVE THE RED BUTTON
2. ENTER PASSWORD 1234562F(ONCE YOU PRESS THE F KEY IT WILL TURN 2 INTO A)
3. PRESS 0 FOR TALIUM MANAGER
4. CHOSE INITIALIZATION
5. THEN PARAMETER
6. PRESS THE F2 BUTTON TO GO DOWN THE MENU AND CHOSE DATE AND TIME
7. ONCE YOU INPUT THE DATE OR TIME IT WILL SEND YOU BACK TO THE MENU SCREEN
8. PRESS THE RED BUTTON UNTIL YOU SEE THE MAIN SCRREN
PAX S80
1. Press the FUNC button.
2. Choose Option 2 Batch.
3. Choose Option 1 Batch Close.
4. Terminal will close the Batch.

VERIFONE TERMINAL
1. PRESS THE FIRST PURPLE BUTTON ON YOUR LEFT HAND SIDE
2. PRESS THE FUNCTION KEY NEXT TO SETTLE
3. IT WILL AUTOMATICALY START'S TO DIAL OR TRANSMIT

INGENICO ICT220 /ICT250
1. PRESS THE NUMBER 7 OR 8 DEPENDING ON YOUR PLATFORM (IF YOUR MID START'S WITH 153 PRESS 7 IF YOUR MID START'S WITH A 5 PRESS 8)
2. IT WILL ASK YOU IF YOU WANT TO CLOSE OUT THE TERMINAL PRESS YES (F1 BUTTON),
3. ONCE IT TRANSMIT YOUR BACTH IT WILL ASK YOU IF YOU LIKE A COPY PRESS YES

http://http://paxtechnology.us/en/product/index.aspx?n=119002001001&i=100000040228725
Swiped/Keyed Sale
• Swipe the Credit Card, OR
o Enter the card number into the terminal using the number keys.
o Enter the expiration date.
• Enter the Transaction Amount. If keyed, the terminal will ask:
o Terminal will ask if card is present input correct answer.
o Enter the CVV Number when Prompted.
o Enter the Zip Code information if requested.
• Terminal will say Processing on screen.
• Terminal will return Approved, Declined or an Error and Print a Receipt.
• Press CANCEL if you don’t want the Customer Copy of the receipt to print.

Swiped/Keyed Refund
• Press the F4 button to change the transaction type to Return.
• Swipe the Credit Card, OR
o Input the card number into the terminal using the number keys
o Enter the expiration date.
• Enter the Return Amount. If keyed, the terminal will ask:
o Terminal will ask if card is present input correct answer.
o Enter the CVV Number when Prompted.
o Enter the Zip Code information if requested.
• Terminal will say Processing on screen.
• Terminal will return Approved, Declined or an Error and Print a Receipt.
• Press CANCEL if you don’t want the Customer Copy of the receipt to print.

Void a processed sale
• Press the FUNC key on the terminal.
• Scroll up to option 7. Void on the Function Menu.
• Enter the Terminal Password. (Today’s date in MMDDYYYY format)
• Enter the Transaction Number.
• The Terminal will display the transaction, if it’s the correct one, press ENTER if not, press CANCEL.
• Terminal will ask if you want to Void that transaction, if Yes Press ENTER, if you don’t than press CANCEL.
• Press Cancel if you don’t want the Customer Copy of the receipt to print.

Manually Batching (Settling)
• Press the FUNC button.
• Choose Option 2 Batch.
• Choose Option 1 Batch Close.
• Terminal will close the Batch.

Running Reports
• Press the FUNC key.
• Choose Option 1 Report
• If required, enter system password. (MMDDYYYY)
• Terminal will print the Default Report.

Change time and date
• Press the MENU key.
• Choose Option 5 System
• Select option 1 Date & Time – Set Time
• Enter the date and time
• Press enter to go to the next line
• Press enter afterwards to return to the time screen
• Press the cancel key to return to the main screen.

Debit Sale (EMV & Swipe)
1. Press [OK] (green) key
2. Select 1- Sale
3. Enter Amount and press OK
4. Pass terminal to the customer
5. Customer swipes or inserts card number
6. Customer selects the language if EMV card is inserted
7. Customer selects the payment method if EMV card is inserted
8. Customer confirms the selected application if EMV card is inserted
9. Customer Presses YES at the confirm amount prompt
10. If Cash Back is desired customer enters amount and presses OK
11. If No Cash Back customer presses NO
12. If Surcharge does apply, customer selects YES to accept the surcharge amount.
13. Customer presses NO at the Surcharge prompt to cancel the transaction
14. Customer presses Accept at the confirm prompt
15. Customer selects the Account Type
16. Customer enters the PIN
17. Customer passes the terminal to Merchant
18. After transaction completed, the receipts will be printed

Credit Sale ( EMV & Swipe)
1. Press [OK] (green) key
2. Select 1- Sale
3. Enter Amount and press OK
4. Pass terminal to the customer
5. Customer swipes or inserts card
6. Customer selects the language if EMV card is inserted
7. Customer selects the payment method if EMV card is inserted
8. Customer confirms the selected application if EMV card is inserted
9. Customer Presses YES at the confirm amount prompt
10. Customer presses Accept at the confirm prompt
11. Customer enters the PIN if EMV card required PIN entry
12. Customer passes the terminal to Merchant
13. After transaction completed, the receipts will be printed.

Manual Credit Sale
1. Press [OK] (green) key
2. Select 1- Sale 4. Enter Amount and press OK
3. Pass terminal to the customer
4. Customer manually enters the card number
5. Customer enters the expiry date
6. Customer Presses YES at the confirm amount prompt
7. Customer presses Accept at the confirm prompt
8. Customer passes the terminal to Merchant

Credit Pre-Auth (EMV & Swipe)
1. Press [OK] (green)
2. Select 2- Pre-Auth
3. Enter Amount and press OK
4. Pass terminal to the customer
5. Customer swipes or inserts card
6. Customer selects the language if EMV card is inserted
7. Customer selects the payment method if EMV
8. Customer confirms the selected application if EMV card is inserted
9. Customer Presses YES at the confirm amount prompt if EMV card is inserted
10. Customer enters the PIN if EMV card required PIN entry
11. Customer passes the terminal to Merchant
12. After transaction completed, the receipts will print.

Manual Credit Pre-Auth
1. Press [OK] (green) key
2. Select 7- Pre-Auth
3. Enter Amount and press OK
4. Pass terminal to the
5. Customer manually enters the card number
6. Customer enters the expiry date
7. Customer passes the terminal to Merchant
8. After transaction completed, the receipts will be printed.

Debit Return (EMV & Swipe)
1. Press [OK] (green) key
2. Select 4- Return
3. Enter Amount and press OK
4. Pass terminal to the customer
5. Customer swipes or inserts card
6. Customer selects the language if EMV card is inserted
7. Customer selects the payment method
8. Customer confirms the selected application
9. Customer Presses YES at the confirm amount prompt
10. Customer selects the Account Type
11. Customer enters the PIN
12. Customer passes the terminal to Merchant
13. After transaction completed, the receipts will be printed.

Credit Return (EMV & Swipe)
Credit Return (EMV & Swipe) 1. Press [OK] (green) key
2. Select 4- Return
3. Enter Amount and press OK
4. Pass terminal to the customer
5. Customer swipes or inserts card
6. Customer selects the language if EMV card is inserted
7. Customer selects the payment method
8. Customer confirms the selected application if EMV card is inserted
9. Customer passes the terminal to Merchant
10. After transaction completed, the receipts will print.

Manual Credit Return
1. Press [OK] (green) key
2. Select 4- Return
3. Enter Amount and press OK
4. Pass terminal to the customer
5. Customer manually enters the card number
6. Customer enters the expiry date
7. Customer passes the terminal to Merchant
8. After transaction completed, the receipts will be printed.

Credit Void
1. Press [OK] (green) key
2. Select 5- Void
3. Select NO at the Void Pre-Auth prompt.
4. Press the key that corresponds to the desired search option in
5. Enter the field that the terminal is asking for from the original receipt.
6. Verify the information on the screen and press OK
7. Press [F4] (Select) to select the transaction.
8. Press [OK] at confirm void amount prompt.

Debit Void
1. Press [OK] (green) key
2. Select 3- Void
3. Select NO at the Void Pre-Auth prompt.
4. Press the key that corresponds to the desired search option in the SEARCH
5. Enter the field that the terminal is asking for from the original
6. Verify the information on the screen and press OK
7. Press [F4] (Select) to select the transaction.
8. Pass terminal to the customer
9. Customer swipes or inserts card
10. Customer selects the language if EMV card is inserted
11. Customer selects the payment method
12. Customer confirms the selected application
13. Customer presses YES at confirm void amount prompt.
14. Customer enters the PIN
15. Customer passes the terminal to Merchant
16. After transaction completed, the receipts will be printed.

Credit Force (EMV & Swipe)
1. Press [OK] (green) key
2. Select 6- Force
3. Enter Amount and press OK
4. Pass terminal to the customer
5. Customer swipes or inserts card
6. Customer selects the language
7 . Customer selects the payment method
8. Customer confirms the selected application
9. Customer passes the terminal to Merchant
10. Merchant enters the Approval Code at the Enter Approval Code prompt
11. After transaction completed, the receipts will be printed.

Pre-Auth Completion
1. Press [OK] (green) key
2. Select 3- Pre-Auth Completion
3. Press the key that corresponds to the desired search option in the SEARCH menu.
4. Enter the field that the terminal is asking for from the original pre auth receipt.
5. Verify the information on the screen and press OK
6. Press [F4] (Select) to select the transaction.
7. Press [F1] (Accept) to confirm the sale amount or press [F4] (Change) to change the sale amount.
8. If [F4] (Change) is selected in the previous step, enter the new sale amount and press OK
9. After transaction completed, the receipts will be printed.

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