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All About Credit Card Processing

More and more transactions are made each day via credit and debit cards. Credit cards bill the amount of the purchase to your account. Debit cards, are used to withdraw the money from your checking account.

For the merchant, the important aspects of credit card sales can involve the processing method and merchant accounts.

A business may want to accept credit cards, but has to understand how the cost of merchandise charged to Credit Card XYZ eventually ends up in the bank account and how quickly the payment will arrive.

The typical merchant has two ways of handling credit card processing and debit card transactions.

The two methods include:

1. Merchants can swipe the card through a terminal that is attached to a cash register.
2. The system can take payments through credit card processing software.

The decision regarding which method to use will be determined by the type of the business and how payments are already accepted.

The next step decision is based on whether the business is operating from a fixed location, such as a store in a shopping mall, or does most of its business over the Internet.

For a business or company that is already taking payments with a cash register or point-of-sale computer, it may be easier just to add a terminal that is dedicated to credit card processing and debit cards. Both can be swiped through the system. This will get the transaction to the right company for processing.

Adding point-of-sale software in this situation will necessitate the need for a separate computer terminal to take care of the credit transactions. This will be an extra expenditure, sometimes major, and is usually unnecessary. Additional steps will be involved throughout the transaction process that both the staff and customer will find irritating.

Now, if the business is completely based online, a virtual terminal is needed, which is software that provides the functions of a point-of-sale computer. This type of software can come with a shopping cart and checkout options that are easily integrated into the ordering process.

The only other options would be to accept orders by telephone or mail. These methods had merchant accounts. Both processes are subject to errors being made. Verifying credit card numbers and tracking shipments will become more difficult if not impossible.

With the merchant account system, customers only have to press a button to add their items to the virtual shopping cart. They then enter their shipping and credit card information. The transaction is processed in a matter of seconds.

The owner of merchant accounts then has to acquire the product from his warehouse or supplier and ship the order to the customer. The software will track the purchases, inventory, and the profits.

There are other variations for companies having online and physical store locations. For example, some store locations may offer big-ticket items, but do not have them on-site. In these cases, the store will act as a merchant account using point-of-sale software.

The store will probably have computer terminals connected to online distribution points that customers can use to place orders themselves or with the assistance of a store employee.

The most important thing to do is to make transaction as easy as possible and that all sales secured and properly handled.

How Does Electronic Check Processing Work?

In days gone by, writing checks took several days. Not only did the merchant have to accept the check, but then had to wait for the check to clear through a bank and be verified as being good. While this system worked for many years, technology eventually took over. Much like credit card processing, electronic check processing has made the process not only easier for businesses with merchant accounts, but also more reliable and efficient.

Electronic check processing’s main advantage to businesses has been allowing them to get paid faster while having almost instantaneous verification as to if the customer has adequate funds to cover the amount of the check. Once a customer writes the check, the sales clerk then runs the check through a reader that captures such information as check number, account number, and the routing number of the customer’s bank. By then entering information directly related to the merchant, permission is then sought to complete an electronic payment from the specified account.

Based on the specifics of the merchant accounts agreement, the check can then be guaranteed by the provider on the spot, ensuring the business will get paid. This usually occurs within 48 hours, when the funds are deposited into the merchant’s account. Most merchants keep the paper check given to them by the customer, but others void it and return it to the customer once the transaction is completed.

Electronic check processing offers numerous benefits to businesses. Perhaps the most important is it speeds up the deposit process by eliminating the need to take checks to the bank. It also reduces the risk of checks being lost or stolen prior to being deposited, and also makes check processing virtually as safe as credit card processing. As an added bonus, most payment providers offer merchants online access to account activity, letting them coordinate record keeping and centralize their funds into one main account if desired.

To entice more business owners to use electronic check processing, many payment providers offer incentives designed to make the process as easy as possible. Reimbursements for returned checks, multi-check acceptance, check verification and business check conversion are some of the ways providers help business owners make the move to electronic check processing. These programs can be tailored to virtually any business, so taking time to research exactly what is needed by a business will result in having only the services deemed necessary.

Tips for Choosing the Right Credit Card Terminal

For virtually any business today, accepting payments by credit card is a must. However, because merchant accounts vary, credit card processing can be complex. To determine which credit card terminal is right for a business, there are many factors to take into consideration.

Does A Business Need a Terminal?

If the business is one that entails credit card processing face-to-face with customers, such as restaurants or retail shops, a terminal is a necessity. For businesses that do not deal directly with customers, such as mail-order or online companies, terminals can also be used to key in the credit card information.

How Much Should the Terminal Cost?

What a business pays for a terminal depends on several factors, such as how old the terminal is, the model, whether a printer is included and what features it offers. As is often the case, the older the terminal the less it will cost. For newer businesses that are just starting out, cheaper terminals are usually recommended. Many companies will offer a business the option to purchase a lesser-priced terminal starting out, then allow them to upgrade to newer models as their business needs dictate.

Phone line, IP or Wireless Terminal?

Businesses that purchase older terminals for credit card processing often use ones that dial out through a phone line. The advantage is these can use a shared line, enabling other devices such as modems or fax machines to use the same line. Newer terminals rely more on IP connections, which are considerably faster and can be more reliable. These terminals are best for businesses using DSL or high-speed internet connections, and also allow for saving money by eliminating the need for an additional phone line and having transaction times 2-3 seconds faster than phone line models. However, with mobility becoming more commonplace in the business world, wireless terminals are becoming very popular with merchant accounts. These are great for businesses that often go off-site to sell merchandise, such as at festivals or trade shows. These terminals can be used anywhere at anytime, and can be connected to mobile devices to download information onto a smartphone or tablet.

It’s also a good idea to buy rather than lease a terminal, since leasing will cost more over time and may come with some restrictions or hidden fees. By knowing exactly what a business needs, choosing the right credit card terminal can be a stress-free experience.

What is a Terminal Identification Number?

The way we pay today is different than in the past. Cash or check has turned into credit or debit. Most businesses have a small card sliding machine off to the side of the cash register or behind the counter to read your bank or credit card It actually seems an oddity when a business doesn’t.

A business that supplies the machine is charged by the use. Sometimes you will see a request or even refusal to allow debit or credit card use in store if the total cost of purchase is under a certain amount. That’s due to the cost to swipe.

Those special machines have a Terminal Identification Number (TIF). The terminal identification number is a series of numbers used by financial institutions to monitor how many times it’s used and enables the store to receive their money from the purchases of many customers or clients. A large hotel might have more than one terminal identification number while most businesses only need one number. In that case the purchases might be split into different accounts for the business such as taxes supplies or fees. Whatever the case may be or however the business has it set up with their financial institution.

The card you use can be monitored by not only you but also by the use. Don’t get scared. It’s a protective tool. In the past if you lost cash. You simply lost it and dealt with the consequences of not being able to find it. It was just gone. If you lose your credit or debit card then there are steps to help you recover the card without losing your money. It can also help to get some or all of your money returned with fraud protection in cases of a stolen card. If you make an unusual or out of character purchase then your financial institution can alert you. You can also check the locations your card was used by simply checking your bank or credit card statements. This is an added benefit to a terminal identification number.

Times have certainly changed. It’s nice to know that we have some safeguards in place.

What is a Recurring Transaction?

A recurring transaction is an agreement between a cardholder and a company providing goods/services that essentially authorizes the charging of periodic, automatic payments during a set amount of time. The transaction can be charged on a weekly, monthly, or yearly basis. The cardholder is typically charged in exchange for goods or ongoing services.

How Do Recurring Transactions Work?

A cardholder might have recurring transactions in place to fund an internet service or magazine subscription. Recurring transactions often repeat for an indefinite length of time. However, they can also be scheduled to last for only a certain period of time. In most cases, recurring transactions will continue until the cardholder cancels or defaults on the plan.

It’s not entirely uncommon for recurring transaction plans to end with customer disputes or conflict. Once recurring transactions are set up by the cardholder and company in question, they can remain active for months or even years. If a recurring transaction plan extends for a long period of time, it becomes easy for the cardholder to forget about them.

How to Prevent Chargebacks and Fraud

If enough customers attempt chargebacks against your company, you run the risk of the credit card company flagging your company as being suspicious.

When you arrange an agreement between your company and a cardholder for a recurring transaction plan, the cardholder must submit written authorization of these periodic payments for the goods and services received. This authorization must be given to your company before the plan outlined in the agreement can begin. The document outline the recurring transaction plan should detail the recurring rates, the frequency of the transactions, and the length of the term that the agreement will last. It’s critically important that you retain this document for as long as the cardholder’s recurring transaction plan lasts.

Should there be any changes whatsoever to the agreement or contract, the cardholder must re-submit a form authorizing the recurring transactions to continue.

It is inevitable that, at some point, cardholders will wish to cancel recurring transactions that they perceive as no longer useful. It is practically unavoidable. However, in order for the cardholder to officially cancel these services and recurring payments, they must submit a cancellation notice in some form. Likewise, a cardholder can be removed from a recurring transaction plan if their credit card is flagged as dishonorable, expired, cancelled, or invalid.

All About the Electronic Transactions Association (ETA)

When running a company, even if it’s a small one, a person will usually want to accept credit cards. When doing so, it’s easier to make money, bring in clients and ensure that everyone is happy. While true, without a payment provider, one will struggle. For this reason, the electronic transactions association, or ETA, exists, and here are a few things this organization does for members.

Networking events:

First and foremost, when one needs credit card processing services, they will want to go to a well-run and organized company. But, this is hard for the average person to do as they don’t know how to choose a company and what to look for. While true, with a little hard work, it’s easy to find a networking event that hosts all the best and greatest companies and industry leaders. For this reason alone, one should check out the electronic transactions association. Then, they can meet a potential person who can help them with their electronic transactions.

Regulatory debates:

When thinking about credit card processing, a lot of people are worried. There is a good reason for this as companies make mistakes, and the government is always breathing down people’s backs. To combat this, it’s wise to understand the debates raging within the government and between business owners in the industry. For this reason, when joining the ETA, one can figure out where they stand and how to proceed. Otherwise. If a person doesn’t do this, they are going to have a hard time running their company. Simply put, merchant accounts are important, and it’s wise to understand how things work and what challenges one faces.

Certifications:

Finally, when looking to regulate the industry and make sure things are in order, one should consider a certification. Luckily, ETA has people covered, and it’s easy to keep things in order with a certification. When getting one, a sales professional can understand the ins and outs of the industry, and he or she can provide better services to excited customers. So, remember, when thinking about merchant accounts, one should remember that the ETA can help a person understand them better.

When getting to the bottom of it, one will realize that the electronic transactions association is important. Yes, when going to the website, one will see that the group provides a lot of information, and people can get more out of the experience if they join.

Choose a Credit Card Processor That Can Handle Scale

Business owners evaluating different credit card processing solutions should carefully evaluate the sales volume that each solution can handle. In many cases, merchants are limited to a certain amount per month to prevent problems from occurring. Unfortunately, these merchant accounts are often limited to amounts as low as $5,000 per month. During a month of good sales, this could result in not being able to accept payment after a certain point in time.

1. Compare Limits

Businesses that are potentially sensitive to volatile monthly sales should be careful to find a provider that offers sales volume well in excess of monthly averages. Without this, businesses risk a catastrophic loss of revenue due to not being able to accept payment due to arbitrary limits. Therefore, businesses exposed to these risks should proceed carefully when attempting to pick the right merchant accounts.

2. Remember Other Criteria

While volume is certainly important, it still should not be the sole criterion by which a business decides on. Businesses should still carefully consider the terms of the agreement and avoid providers that do not fit their needs. Even if the provider is willing to offer a greater amount of monthly sales volume, the terms and conditions are still the most important factor. Weigh the costs associated with the increase in sales volume carefully before proceeding.

3. Talk to the Company

In most cases, a credit card processing company is willing to make exceptions in order to acquire a new customer. Businesses should take advantage of this by developing a close relationship with their account representative in order to develop a more effective partnership. Once this relationship has been nurtured, businesses can often convince a merchant account provider that they are worthy of higher monthly revenue limits. Without this, businesses are at risk of losing critical revenue unnecessarily.

4. Consider Collateral

Even if the credit card processing company is unwilling to bring up the revenue limit, in many cases they will reconsider if collateral is put forward. Since these companies rely on just a small portion of the revenue in order to break even, they are often quite wary of what they view as high-risk accounts. As with all debts, their risk can be greatly reduced by collateralizing the debt. Businesses can do this either by putting cash forward, offering valuable assets as collateral, or promising to be held liable for certain damages. By doing this, businesses are often able to increase their monthly revenue amounts permitted by their account provider.

Reasons for Customers to be Unhappy with Their Credit Card Processing Company

Without a doubt, when using a credit card terminal for a business, one will have a lot of work on their hands. Think about it, when using a credit card processor, not only will a small business owner deal with potential fraud and other issues, but he or she will pay high fees to take credit cards. With this in mind, here are four reasons why there will always be some unhappy people who don’t like their credit card processing company.

High prices: As mentioned, when using credit card processing services, one will pay high, and sometimes unexpectedly high, fees. Whether an entrepreneur uses an iPad, POS system or other methods, he or she will spend money to accept payments. Not only that, companies often tack on dozens of fees. For example, some merchant accounts will charge customers a fee to send out statements every month; other companies will charge a fee to rent equipment. Either way, this leaves plenty of consumers with a bad taste.

Little to no customer support: Now, it’s one thing for a provider to open an account and help a company owner accept payments via check, money order or credit card. It’s quite another to provide support. In fact, plenty of companies will offer substandard chat and email support. When this happens, people are often stuck waiting days for an email response. However, when using merchant accounts that offer 24/7 support, one can largely avoid this time-consuming and extremely annoying issue.

Few options: With the advent of the Internet and other technologies, one can now accept payments on the phone, through a tablet and via the Internet. Sadly, some of the older and more established companies are holding out. When this happens, a client will experience frustration as many independent contractors and small business owners alike want to accept payments from a variety of sources. Otherwise, one will miss out on a host of benefits.

Doesn’t work: Finally, as mentioned, plenty of providers don’t offer much in the way of support. However, most of the time, this isn’t a big deal. On the other hand, when using new technologies, one will often struggle to get started as some programs are difficult for the average person to use.

Sadly, it’s not easy to find a reliable company offering credit card processing. No, companies routinely make serious mistakes that leave clients in the dark.

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