US Bankcard Services Industry Blog

Monday, August 29, 2011

Merchant in America: Series Episode 2: Long good-byes and short good buys

It was a bitter-sweet sorrow to leave my homeland, but the “American Dream” will be mine. Well, I have arrived in the US of A and started looking for rental space. I was just thinking of how will I start my business exactly and on the train ride to the apartment rentals office, I saw a US Bankcard Services, Inc. advertisement in the World Journal. So I started reading….

Credit Card Processing

What do I need for a merchant’s credit card processing?

First I will need to establish a merchant account with a merchant services provider (MSP). This account is used for the settlement of credit card transactions processed by my business.

And the funds derived from the merchant account will need to be deposited into a checking account belonging to any bank of my choice.

In order to establish my merchant account I might need to obtain the following information:

  • A business checking account or a personal account if I am a sole proprietorship
  • A copy of a voided business check
  • Articles of incorporation, business license or reseller license
  • A web site (if you are Internet based) or a retail storefront
  • Provide 2 trade references
  • A photocopy of my driver's license or other accepted form of ID
  • I can then submit the application to an MSP like US Bankcard Services, Inc.

But I am wondering what charges are assessed to a merchant by accepting Credit Cards?:

There are many fees to consider based on the type of business and volume of business I do. Many of the fees associated with credit cards are fairly standard in every business. Here is a small sample of the type of charges that I may encounter:

Discount Rate:

The amount charged to a merchant for processing daily credit card transactions.

Transaction Fee

A fee charged by an MSP for each credit card transaction completed.

Chargeback Fee:

A credit card transaction that is billed back to the merchant after the sale has been settled. Chargebacks are initiated by the card issuer on behalf of the cardholder. Typical cardholder disputes involve product delivery failure or product/service dissatisfaction. Cardholders are urged to try to obtain satisfaction from the merchant before disputing the bill with the credit card issuer.

Non-Qualified Surcharge:

This surcharge applies to business and corporate cards as well as other downgrades, such as manual entry sales that do not pass Address Verification. A merchant's failure to batch out their point-of-sale device within the allotted

24-hour period can also cause additional processing fees to be assessed. When accepting credit cards, it is important to understand this fee. Please contact a USBSI sales support representative for more information.

Voice Authorization Fee:

This fee is charged only if a merchant calls in a credit card sale using our voice automated system. For instance, a merchant needs to accept credit cards off-site and does not have access to their point-of-sale device. The merchant can then call our 800 number to process the credit card transaction…and there could be more depending on a number of other variables.

And of course I will need terminals to process purchases at my business…:

There are various types of terminals for a multitude of merchant environments and needs. There are fixed terminals sometimes called desktop, there is POS software used on PCs and there are mobile terminals, which can be part of a smart phone as an attached device or a wireless terminal unto itself. There are some good terminal explanations.

….Wow there is so much to think about. I hope I have not missed anything…Ah, I have finally arrived at the apartment rental office. I will ask them about commercial rental space for my restaurant, too….If the commercial rental cost is too high, I may consider starting an e-Comm restaurant supply business instead and see what happens from there. OK then…more credit card processing decision-making later…

Previous Episodes:

Merchant in America: Series Episode 1: From the Homeland to the New Land - USBSI Blog

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