The Merchant Guide

Everything you need to know to start accepting credit cards

The Merchant Guide Table of Contents Merchant Account Basics....................................................................................................3 The Importance of an Internet Merchant Account...............................................................4 How to Choose a Merchant Account Provider....................................................................5 Everything About Merchant Account Fees..........................................................................7 Other Merchant Account Fees Explained:.......................................................................7 How to Choose the Right Credit Card Terminal.................................................................8 Internet Payment Gateway and How It Works..................................................................10 Authorization.................................................................................................................11 Settling...........................................................................................................................11 Reporting........................................................................................................................11 Unlimited Users.............................................................................................................11 Fraud Screening Tools...................................................................................................11 Other Benefits................................................................................................................11 Additional Things to Look For......................................................................................12 Four Key Points of a Successful E-commerce Site...........................................................12 Your Website.................................................................................................................13 Your Merchant Account................................................................................................13 Your Shopping Cart and Secure Server.........................................................................13 Your Payment Gateway.................................................................................................14

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The Merchant Guide

Merchant Account Basics
If you have a business and you want to accept credit cards as a method of payment, you’re going to need a merchant account. From the small mom and pop shop down the street to the biggest and best of department stores, all businesses that take credit cards must have their own merchant account. So what exactly is a merchant account? A merchant account is the single most cost-effective way of accepting credit cards from your customers or clients. A merchant account involves an arrangement between you and a credit card processor. This arrangement allows you to accept credit card payments from your customers. Those payments are then deposited into your bank account. There are two main types of merchant accounts. A “card present” merchant account and a MOTO (mail order/telephone order) or Internet merchant account. With a “card present” account, the credit card is actually present at the time of the sale and is swiped through a credit card terminal. With a MOTO account or an Internet transaction account, the card is not present and additional approval is required. In order to get a merchant account, you’ll need to fill out an application and have it approved by a credit card processor. While banks offer merchant accounts, they’re not always the best place to turn to for your merchant account needs as their application process is a bit more stringent than other types of merchant account providers, plus they do not typically offer any advanced processing solutions such as wireless or web based processing. Once you’re approved for a merchant account, you’ll need a way to process your transactions. This will involve using either a Point of Sale (POS) credit card terminal, credit card processing software or an Internet payment gateway. Once you decide which is right for you, you’ll need to program your merchant account into the software or the terminal that you will be using. Once your merchant account is programmed and ready, you can begin to process credit card transactions. If the transaction is approved, the amount of the transaction is credited to your merchant account. If the transaction is not approved, the amount will not be credited to your merchant account. At the end of the day, the total of funds in your merchant account are settled and transferred to your bank account. Typically that process takes two business days. Some merchant account providers will require you to set up a bank account with their bank in order to have a merchant account with them. However, there are others out there, like Merchant Accounts Express, that do not require you to do this and allow you to bank wherever you choose.

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The Merchant Guide

It is best to use a merchant account that will let you bank where you choose to bank, as the merchant account is a totally separate account from your regular bank account and you may have needs for your bank account that the merchant account provider can not meet.

The Importance of an Internet Merchant Account
If you have an online business and you want to accept credit cards on your website, you’re going to need an Internet merchant account. An Internet merchant account allows your customers to pay you online by entering their credit card information directly into your website. This enables you to accept credit card orders without your customers having to fax, phone or mail in their orders. When you accept credit card orders through an Internet merchant account, the transactions you process are usually approved in real time via a real time Internet payment gateway. This means that the moment the customer checks out at your website, the transaction is actually processed. It’s important to understand that you do not have to use a payment gateway with an Internet merchant account. It is also possible to use credit card processing software or a credit card terminal. If you do that, the transaction will not be processed in real time, but rather at a later time when you manually key in the transaction. So if you use a credit card terminal, is it still an Internet merchant account? Yes, you can use a credit card terminal and still have an Internet merchant account. What makes the account an Internet merchant account is that the order is taken online. Whether you key the transaction into a keypad on a terminal later on is irrelevant. It’s the method that the order is taken that determines whether the account is an Internet merchant account or not. But you already have a merchant account… If you currently run a brick-and-mortar store and you already have a merchant account, you’re going to need an Internet merchant account if you want to start taking orders online. This is due to the fact that Internet merchant accounts have different rules and regulations than standard retail type merchant accounts do. If you think you can get

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The Merchant Guide around it by processing Internet orders with you regular merchant account, you may be unpleasantly surprised when your merchant account is suddenly shut down. With an Internet merchant account, the merchant rarely, if ever, sees the card or the customer and there is a higher risk of fraud because of this. With this higher risk of fraud comes more stringent processing procedures and a separate Internet merchant account is needed. Regardless of whether you’re an established merchant looking to add an Internet merchant account or a new merchant, you’re going to want to work with a merchant account provider who has expertise in structuring and handling Internet merchant accounts. The Internet is a new world for many merchant account providers, and if you end up applying with one who processes little to no Internet transactions, you’re likely to be either denied or even worse, approved and with a provider who doesn’t know what they’re doing. When you are approved for an Internet merchant account, you’ll be billed at the same fee structure as a mail order/telephone order account (MOTO) account. However, while the fee structure is the same, that is where the similarities end. With an Internet merchant account, the approval process and underwriting criteria are completely different than with a MOTO account. Internet merchant accounts usually have more stringent standards than a MOTO account, and because of this you want to work with a company that understands Internet merchant accounts in their entirety. Merchant Accounts Express has been providing Internet Merchant Accounts since 1998, and has experience with thousands of web businesses from coast to coast. When setting up an Internet Merchant Account, choose someone like Merchant Accounts Express that has the experience, expertise, and knowledge to set you up with the correct merchant account for your business.

How to Choose a Merchant Account Provider
Choosing a merchant account provider can be an overwhelming experience. That’s why we’re going to provide you with the inside information you need to make a wise, welleducated decision for your merchant account provider needs.

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The Merchant Guide First, consider only real merchant account providers and stay away from banks. There is no advantage to going to your bank – in fact, only a disadvantage. In today’s high-tech Internet world, banks have become antiquated and just aren’t up to date on the latest technology in merchant accounts, especially in things like website ecommerce and wireless processing. In addition, banks that offer merchant accounts actually outsource the entire operation to a merchant account provider. As a result, you are better of going directly to a merchant account provider and ignoring the bank altogether. So how do you choose the right merchant account provider? First and foremost, find a provider that has a proven track record. Check their Better Business Bureau report. If there are numerous complaints, turn around and walk away. You’ll need to take your business elsewhere. Second, find out if they offer a 100% money back guarantee. This way you can try them out for a period of time and see if what they provide you with matches what they promised. Any reputable merchant account provider will give you a guarantee. Third, look into their customer service practices and their technical support options. What do current and former customers have to say about them? Do they offer a toll free customer service number? What are their customer service hours? These are all questions you should ask. Next, check out their fees. Make sure they are reasonable, and one of the lower cost options out there. CAUTION: Be careful of those that offer deceptively low rates. If you find a provider offering significantly lower rates than everyone else then something is fishy. Run don’t walk, they are sure to have hidden fees. After all, you can’t get something for nothing and if the merchant account provider is charging well below what everyone else is charging, there’s something wrong and you’re probably going to wind up paying for it with horrible customer service. You also shouldn’t have to pay an application fee, setup fee, installation fee, programming fee or annual fee. Those are a lot of fees that many merchant account providers will try to stick you with. Be careful. If a company is trying to charge you extraordinarily high equipment prices or if they’re trying to push you into a lease, run the other way. Stay away from leases and never pay more for your equipment than what it’s worth. You must also look at your personal needs. If you’re going to be accepting a lot of International credit cards, ask your processor if that’s allowable. Some processors will shut down your account if you take International credit cards. Ask your merchant account provider how they deal with the reserve issue. A reserve is a fee that the processor will keep back as insurance against chargebacks and other issues if you’re considered a high risk. Make sure your provider doesn’t do this.

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The Merchant Guide

Make sure that you’re not given a cap in your monthly volume. Imagine that you’re having a great month in sales, more than you’ve ever sold before. Suddenly, you’re halfway through the month and you can’t accept anymore credit cards. This can be the downfall of your business and it won’t be your fault. Or will it? It may be if you didn’t check into monthly caps before signing up with your merchant account provider. Lastly, consider other things when choosing a merchant account provider such as how long they have been in business, their technical competence, their email and phone availability, any training they provide, online reporting, accurate deposits and statements, and timely deposits. So you’ve done your research, now what do you do? Choose a provider that not only meets all your technical needs but also one that has a proven track record over many years, with thousands of satisfied clients, provides world class customer service and low fees, and offers a 100% money back guarantee so you can try them out. Never settle for second best. Your business is depending on it.

Everything About Merchant Account Fees
One of the most confusing aspects of obtaining a merchant account can be understanding all the dizzying array of fees involved. Understanding merchant account fees is important as you look at various merchant account offerings and select a merchant account provider. Knowledge is power, and knowing these fees upfront will give you a tremendous advantage as contact merchant account providers. But as with any business decision, fees are just one part of the equation, and you should consider other factors such as ease of setup, ease of use, customer service, professional attitude, integrity, and reputation. These are various fees you may run into that you need to look out for when obtaining a merchant account.

Other Merchant Account Fees Explained:
One of the most confusing aspects of obtaining a merchant account can be understanding the dizzying array of fees involved. These articles will explain all the various fees you may run into when obtaining a merchant account, as well as some hidden fees and other junk fees you need to look out for. • Discount Rate

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The Merchant Guide • • • • • • • • • • • • • • • Transaction Fees PIN Debit Transaction Fees Address Verification Service Transaction Fee (AVS) ACH / Daily Batch Fee Monthly Statement / Support / Service Fee Internet Gateway Fee Voice Authorization Fee Monthly Minimum Fee Surcharge Fee / Partially-qualified Fees / Non-qualified Fees Application / Setup Fee Reprogramming Fee Chargeback/Retrieval Fee Annual Fee Cancellation or Termination Fee Hidden / Junk Fees

How to Choose the Right Credit Card Terminal
If you’re applying for a merchant account, you’re probably wondering whether or not you need a terminal, and if you do need a terminal, which terminal is right for you. There are a number of terminals on the market today, and finding the one that is right for you is a simple matter of addressing your specific needs. The first question is whether or not you need a terminal. If you have a business that requires face-to-face contact with your customers, such as a retail shop or a restaurant, a

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The Merchant Guide terminal is probably a good idea. Terminals are generally used in “card present” situations. This means that more than 50 percent of the time, a credit card is actually present at the time of the sale. With a credit card terminal, you simply swipe the credit card through the machine or enter the numbers on the terminal keypad and the transaction is processed. Oftentimes, two receipts will print directly from the terminal. One copy is for the customer to keep, the other copy the customer signs and you, the merchant, keep. It is also possible to use a terminal in a “card not present” situation. For example, if you were to take mail order or Internet orders, you can simply key the credit card information into the terminal. Many online businesses prefer to use a terminal in this manner, although it is usually advisable to use software or Internet programs in this type of scenario. The cost of a terminal can range anywhere from $99 to more than $1000. How much you pay for a terminal will depend on the age of the model you are purchasing, what features are offered and whether or not a printer is included. Now that you know whether or not you need a terminal, it’s time to look at what kinds of terminals are available to you. If you need more than one merchant account in your terminal, there are some terminals that can accommodate this need, with some terminals being able to hold up to 9 merchant accounts. If multiple businesses are sharing one terminal, this type of equipment may be of great value to you. The majority of terminals dial out through a phone line with a transaction time of about 10 seconds. The line that the terminal dials out through can be a shared line and you can have other devices such as a modem or a fax machine hooked up to the same line. However, it is important that this line does not have call waiting or transactions may become disturbed during processing. The newer terminals are using IP connections in lieu of phone lines. If your business has DSL or high-speed Internet access, it is best to use this type of terminal so you can save money on an extra phone line and increase your transaction times to an average of 2-3 seconds per transaction. If a phone line or Internet connection isn’t available, you may want to opt for a wireless terminal. This type of terminal does not need a phone line and can communicate wirelessly much like your cell phone or your wireless PDA. With this type of terminal, you can process your transactions anytime, anywhere, without the need for a phone line or an Internet connection. If a wireless terminal isn’t a viable option but you still need to be able to accept transactions where a phone or Internet connection isn’t available, a terminal with store

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The Merchant Guide and forward capabilities may be your best bet. This will allow you to enter the information into the terminal, but the terminal won’t actually dial out for authorization until later that day when you have access to a phone line or Internet connection. If you want to accept ATM cards through your terminal, you’ll need a PIN pad. A PIN pad will allow your customers to use their ATM cards to pay for your goods or services. If you don’t have a PIN pad, you’ll still be able to accept debit cards, but you’ll need to run it as a check card. When you decide which type of terminal is best for your business needs, research the price. You will want to make a purchase instead of a lease, as leasing will cost you more money in the long run. If a company tries charging you an absurd amount of money for your terminal or tries pushing you into a lease, take your business elsewhere. You shouldn’t pay more for a terminal than what it’s worth and you shouldn’t be pushed into a lease commitment either.

Internet Payment Gateway and How It Works
An online Internet payment gateway allows you to process credit card orders from your website in real time. This way, the customer knows immediately whether or not their credit card was approved. A shopping cart is usually used before the payment gateway. This function allows your customers to pick and choose the various items they want to purchase from your website, including options such as size, color, etc. At checkout the shopping cart totals the items, adds tax and shipping and collects the customers shipping and billing information. The payment gateway captures the credit card transaction, encrypts the transaction information, routes it to the credit card processor and then returns either an approval or a decline notice. This is a seamless process and your customer does not directly interact with the payment gateway as data is forwarded to the gateway via your shopping cart and a secure connection. There are three vital things that an online payment gateway does when a customer attempts to make a purchase from your website using a credit card or a debit check card. These include authorization, settling, and reporting.

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The Merchant Guide

Authorization
Any purchase made with a credit or debit card via a payment gateway must first be authorized by the credit card issuer. The payment gateway checks that the credit card is acceptable. The gateway affords you a secure link between you, your customer and your credit card processor. It also allows for fast and efficient transaction processing with an average response time of 2 seconds.

Settling
At the end of the day, the internet payment gateway groups all of your transactions together and sends them off to your bank in a single batch. This process passes the transaction to your bank so that you receive payment. This process is called settling. Once the funds settle, it normally takes two business days for you to see the funds electronically deposited into your bank account.

Reporting
This process records your transactions and allows you to view them using the payment gateway report facilities. From here you can review them, print them or download them to your computer for further processing. Some payment gateways are even compatible with Quickbooks, making accounting and reconciling a breeze.

Unlimited Users
With an Internet payment gateway, an unlimited number of users can use the gateway at the same time, unlike a terminal or software solution where only one customer can checkout at a time, or one operator can enter transactions at a time. With an Internet payment gateway, you can have multiple users entering transactions from various locations, all at the same time. In effect, you get an unlimited user license fee with a payment gateway.

Fraud Screening Tools
Internet payment gateways also offer fraud screening tools to reduce fraudulent transactions. This includes address verification and card code value (CVV) verification to ensure that the payments made via your Internet payment gateway are legitimate orders and not from fraudulent use. It also prevents fraud by storing the credit card transactions in the Internet payment gateway rather than on your website. This reduces your liability as you won’t have to store any credit card information.

Other Benefits
Payment gateways provide you with a virtual terminal, where you can manually enter transactions you receive via other methods other than your website. This is extremely useful for entering in orders you may take over the phone or through the mail. 11

The Merchant Guide

Another benefit is that many Internet payment gateways offer you a SSL checkout page so you don’t need to spend the $150+ per year for your own secure certificate. And good Internet payment gateways offer 24 hour email support and toll free technical support, allowing you means to get in touch with someone should the need arise.

Additional Things to Look For
When looking for an Internet payment gateway to use, there are a few key things you should look for. These include uptime of about 99.9 percent and a support team that can get the servers back online 24 hours a day, 7 days a week. Anything less is unacceptable. Ease of use is another key factor. The payment gateway should also be easy to integrate to your site through the help of technical support and your webmaster. Scalability is another key concern. If your Gateway provider’s server can’t grow with your business, you can run into future problems. Because of this, it’s important to verify that your gateway provider’s server can handle the growth of your business. Make sure the gateway you choose has all the features you need and use. These may include Quickbooks integration, recurring billing, transaction upload and download, and more. Conclusion There are a number of payment gateways on the market. Merchant Accounts Express offers Authorize.net, the premier payment gateway on the web. Authorize.net has all of the desired features that you should look for in a payment gateway including detailed documentation ability and strong email and phone support. In addition, Authorize.net is pre-integrated with more shopping carts than any other gateway. As a result, there is usually no programming needed to link your website to Authorize.net. This makes setting up your website very easy.

Four Key Points of a Successful Ecommerce Site
In order to operate a successful e-commerce website, you need to pay attention to four key areas: your website, your merchant account, your shopping cart and your secure payment gateway.

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The Merchant Guide

Your Website
Your website design plays a key role in the success of your online business. The website must be professional, attractive and easy for your visitors to navigate. First impressions count, and your website is the first experience that customers have with your business. Your primary goal with an e-commerce website is to provoke your customers to buy. Every single aspect of your website should be focused on one goal – getting your visitors to buy your products and/or services. In order to do this, you’re going to need to clearly list your products with concise descriptions and clear pricing. List the benefits of each product, not just the features. Feature may tell, but benefits sell. The more information you put on your site, the better. Too little information may cost you sales, and that’s the last thing you want. Testimonials are another key aspect of your business. Listing testimonials and comments from your previous customers will provide your potential customers with the confidence they need to trust in your products and/or services. Offering a money-back guarantee will also provide your customers with the confidence they need to make a purchase and will increase your sales. The profit you experience from the increase in sales will far outweigh any money you’ll lose by honoring that guarantee. Also make sure your website offers your visitors several options to choose from when placing an order. Allow them to call the order in or do it online. If allowing online payments, make sure your site is easy to navigate and your shopping cart and checkout options are easy to use.

Your Merchant Account
A merchant account will allow you to accept major credit cards. If you want your online business to thrive, you’re going to need a merchant account. In fact, 99% of online sales are made with credit cards. Not accepting credit cards is like throwing business away to the competition. When setting up a merchant account, you’ll want to go with a provider who is familiar with online sales. The online world is very different from the brick-and-mortar world and you need to work with a company who knows what they’re doing or it can cause you serious headaches in the future.

Your Shopping Cart and Secure Server
If you’re accepting credit cards online, you’re going to need shopping cart software installed on your website or will need it remotely hosted on another server. This shopping cart allows customers to select from the merchandise you are offering and place the items they want into their “basket” just as if they were shopping in a brick-andmortar store. The shopping cart totals the entire order for the customer, allowing them to

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The Merchant Guide see tax and shipping rates. The shopping cart then collects the billing, shipping and payment information and processes the order through the payment gateway. There are a number of shopping carts available on the market. Some require a one-time payment, and others require a monthly fee. Look at what’s available and choose one that meets your needs and your budget. Stay away from shopping carts that require your customers to register first. This extra step may cost you business in the long run. You will need to host the page with the order form on a secure server or hackers will be able to get in and steal your customers’ information. You can get a secure server from your ISP or you can setup your own if you have your own server. To setup a secure server you would need to purchase what is called a digital certificate from a company such as Verisign or Thawte. These certificates run about $150 per year. Alternatively, instead of hosting the order form you can use a payment gateway such as Authorize.Net, who will host the order form for you on a secure server. A payment gateway such as Authorize.Net provides you with a secure checkout page as a part of their service. This will save you from having to get your own secure certificate.

Your Payment Gateway
Your payment gateway serves as the link between your site and the credit card processors. An example of a payment gateway is Authorize.Net. Once payment information is submitted on the Authorize.Net secure order page, the payment gateway sends the data to a credit card authorization network. That network then verifies that the customer’s credit card is valid and has sufficient funds to clear the transaction. The payment gateway then returns the result of the transaction. If the transaction is approved, the sale is completed and the customer is given an online receipt. A receipt can also be emailed to the customer. If the transaction is declined, the customer is prompted to try again with a different card. A payment gateway also helps reduce the number of fraudulent orders you receive. This is done by declining orders where the address and zip code don’t match the credit card billing information, or where the three-digit CVV number is entered incorrectly. Using these two methods of fraud control can reduce the number of fraudulent transactions by 80%. Be sure to pay equal attention to all four areas: website design, merchant account, shopping cart, and payment gateway selection. Doing so will help you have a successful e-commerce website.

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