What is a Merchant Account?

A merchant account is a bank account set up between you (the merchant) and a third-party financial institution to manage the settlement of credit and debit card payments. When a customer uses a credit or debit card to make a purchase, a merchant account allows you to transfer the payment amount from the credit card company or issuing bank into your business’ checking account.
If you already have a business checking account set up with your local bank, it is not necessary to create a new checking account in order to set up a merchant account. However, if your business is incorporated or registered as a Limited Liability Corporation, you must use a business checking account as your primary account.

What sort of fees will I have to pay?

Each merchant account is subject to two different types of fees:

 

• Discount Rate: The discount rate is a charge applied for each credit or debit card transaction, based on a certain percentage of each purchase amount. The larger the amount of the transaction, the greater the fee will be. The percentage will be specified in the details of your merchant account. As an example, if your discount rate is 1.75% and the payment amount is $75, your fee would be $75 x 1.75% = $1.31. A fixed transaction fee will also be applied (see below).

• Transaction Fee: This is a flat charge deducted from each transaction, and is the same no matter what the payment amount. A discount rate fee will also be applied (see above). As an example, if your discount rate is 1.75%, the transaction fee is $.25 cents, and the payment amount is $75, your fee would be ($75 x 1.75%) =$1.31 for the discount fee $.25 for the transaction fee = $1.56.

 

The discount rate fee and transaction fee will be retained by the bank with which you have entered into the merchant account agreement, and the remainder will be transferred into your business’ checking account.

What are the Match / TMF File and how is it used?

The Match / TMF file is when a merchant fails to comply or honor the terms and conditions of the merchant credit card acceptance agreement. When this happens, the merchant service provider or acquiring bank can report the information regarding the merchants business practices on the, "MATCH" file database. This database is used by acquiring banks to identify the merchants and principals who were terminated of the merchant account. It is also considered the card payment industries, "BLACKLIST." MasterCard and Visa hold the acquiring banks accountable for the credit card transactions that flow through your merchant processing account. Once chargeback levels increase and / or suspicious activity occurs, it is critical for business owners to resolve the matter immediately. If the issues are not resolved immediately the acquiring bank will have no choice but to terminate the merchant account and place the information on the owner and business on the "MATCH/TMF" list.
In order reduce the chances your business winds up on the “MATCH/TMF list it is important to correct the cause of consumer disputes, chargeback's and suspicious activity. Relying on chargeback's to handle this will have you facing the probability of being placed on the, "MATCH" list. Termination of your merchant account and listing the business and principals information can cost you your business. Make sure there is a customer service number that will appear on your customer's credit card statement. Follow up with your customers, make phone calls, e-mail and newsletters always works. Stay in contact with your customers. Always provide exceptional customer service and treat your customers with the highest respect possible. Respond to your customers quickly with accurate information.

What’s the difference between "Card Present" and "Card Not Present" transactions?

If a customer makes a purchase at a “brick and mortar” store and physically presents a credit card to be swiped at a credit card terminal,or point of sale system, that payment qualifies as a “card present” or “swiped” transaction as long as the magnetic strip is able to be read by the terminal or point of sale system. In a card present transaction, the customer’s personal and financial information is obtained by reading the magnetic strip on the back of the card. This type of transaction requires that the customer and the card are both present at the point of purchase.
The other type of credit card transaction, referred to as a “card not present” or “keyed” transaction occurs when the customer remits payment remotely, usually over the phone, by mail, or by fax. For this type of purchase, the customer’s credit or debit card number is manually entered into a terminal, point of sale system, or a virtual terminal by a customer service representative. Most banks require that the customer also provides the card’s expiration date and card identification number (CID) for security purposes. Typically, a higher discount rate is deducted from “card not present” transactions due to the elevated chance of fraudulent charges.

Will there be any additional fees associated with my merchant account?

Elite Payment Processing does not charge any extra fees, although many other payment processing companies do. Often, business owners don’t anticipate these fees until they show up on their account statement. Some common expenses include application fees, setup charges, fees for early cancellation, and annual fees. When comparing different service providers, be sure to ask about the occurrence of hidden or other charges.

To learn more about Elite’s affordable, customized rate plans, Contact us today.