A merchant account is vital to merchants wanting to market and sell its goods and services online. Merchant accounts give a business the ability accept debit and credit card payments for goods and services sold via the internet.
How Can We Help You as a Merchant?
We can help you:
- apply for a direct merchant account;
- set up a company in the EU, if necessary
- process credit cards online, using your merchant account;
- set up a hosted sign-up page or shopping cart to be “commerce-ready” consistent with Card Association expectations;
- manage member access to your subscription-based website; and
- manage your affiliate marketing program and take care of commission payouts to your affiliates.
If you are a merchant who is about to launch your e-commerce site, the next consideration is likely to be how to accept payments. There are several factors you need to consider and the first is not about rates and fees. They are:
Merchant Account Type
I. Card Present
Card present merchant account is where a merchant is able to swipe the credit card through a terminal (fixed or wireless terminal) in a retail-like business, such as a clothing store. Furthermore, the merchant is able to identify the cardholder on a face-to-face basis.
Card not present merchant account is where a merchant accepts payment by:
- email; or
and there is no face-to-face interaction between the cardholder and merchant. Clearly, by its nature, transaction of these types can be considered riskier than card present transactions. Ultimately, it means the merchant will be subject to higher rates and fees.
III. Internet / e-Commerce
At first, this might seem to fall into a Card-Not-Present merchant account type. In fact, on some application forms it will be combined as “MOTO/e-Commerce” (where MOTO is mail order/telephone order). The difference is an internet/e-commerce business acquires the cardholder’s credit card and personal information on its website. The difference is a fine line and there is no major benefit in rates or transaction fees. It’s more than likely such a merchant would be classified as Card-Not-Present.
Merchant Service Fees
A credit card transaction is, essentially, a short term loan without any security. Generally, a cardholder will use his credit card to make a purchase, but he would like the merchant’s bank (merchant acquiring bank) to loan him the money. The merchant’s bank is happy to loan him the money because the cardholder’s bank (credit card issuing bank) will pay the merchant’s bank immediately. All this happens in seconds! The cardholder will have to repay his bank (credit card issuing bank) the purchase price sometime later and be charged interest. Credit cards are convenient for the merchant and the cardholder. For the convenience, the cardholder is charged interest. The merchant is charged a merchant service fee for the convenience of offering credit card payment as an option.
All transactions are charged an “interchange fee” which is the cost of exchanging and transferring data between the four parties involved in any credit card transaction: cardholder, merchant, card issuing bank and card acquiring bank. In addition, the merchant service rate charged to a merchant depends on the categorization of the transaction. A transaction can be “qualified” or “non-qualified”, but there’s also an in between: “mid-qualified” rate.
I. Qualified Rate
If you meet a set of criteria prescribed by Visa and MasterCard, you are being charged the theoretical lowest merchant service fee rate. A brick and mortar merchant will receive a qualified rate because it is able to swipe a credit card using a terminal, answer the prompts at a point of sale terminal and also be able to sight the cardholder.
II. Non-qualified Rate
If you don’t meet the criteria, you are likely to be on a non-qualified rate – the highest rate. Some ways a merchant does not “qualify” a transaction is by not swiping and not performing AVS – generally, anything that would raise the risk exposure to loss for Visa and MasterCard.
III. Mid-qualified Rate
Of course, there is an in between rate where a merchant partially qualified the transaction by swiping the card through a terminal but doesn’t perform an AVS verification. Furthermore, a transaction put through by a cardholder who is using a co-branded card (e.g. department store credit card).
If you have any questions, please contact us and we’ll quickly respond to you.