How Your Funds Are Transferred From Your Merchant Account to Your Pocket

You will find a number of different techniques on the market today for merchant's to easily accept payments from their customers. Whether they are credit card or debit card transactions, with today's practical solutions a merchant can literally process their transactions anywhere and at any time by using one method or another. There are a wide variety of solutions. There are physical payment processing terminals that use card swipe and chip and PIN insert that require ethernet or telephone line connections. There are credit card machines that accept credit cards that run on a wireless network much like a cell phone, these are often referred to as, GPRS payment processing terminals. There are also e-commerce solutions and over-the-phone products that are all created to ensure that merchants are paid securely by their customers in an effort to protect both parties involved in the transaction.

At the end of every day, and once the merchant has closed their batch, their funds need to be deposited into a merchant account.

We're not going to bore you by getting to technical. The digitalization of funds and how they materialize into your account is a company specific process.

When it comes to the physical connection and fundamental function, all of the merchant solution (credit card machine, wireless payment terminal, and e-commerce) are able to function because of their connection to a bigger network of companies who're processing intricacies from the deposits. So to start, the payment processing solution needs a way to "call out".

Every payment processing company works together with a host or provider company on the technical side. This 3rd party host is important because they process the information received from the credit card machine, and then they turn the data into a processing file at which point they deliver it to the Central Bank of Canada.

Once the merchant has completed a full day, they will normally run a "close batch". which initializes the process of depositing all the transactions to their account. As soon as the "close batch" is completed by the credit card machine, the third party host company or processor transmits the processing file to the Central Bank of Canada. Then the merchant's bank branch searches for that processing file at Central Bank so they can finish depositing the money into the correct account. The merchant's bank receives the information and processes the file and puts "the money in your pocket"! This system of data processing is initiated by the information that the credit card machine machine is processing, converted by the third party provider, and finally completed by the merchant's home branch.

This process is incredibly safe and secure. Each step in the process is encrypted, encoded and merchant specific and more importantly its traceable! This system has been engineered to stand up to the highest security risks and it is guaranteed to be safe for any merchant to use with confidence. The idea of digital money has existed for years,  but it is still incredible to examine and to know how the money can be broken down into 1's and 0's and put back together again at another end to become tangible.

Poor Credit? Don't Worry, You Can Still Be Approved!

Do you think that you can’t be approved?  Well even if you have poor or bad credit (even had a bankruptcy) it is possible to still get approved for a merchant account.  Remember there is always a way to be approved even if you need a co-signer and/or end up paying more in MDR (merchant discount rates) fees.

How and why bad credit affects your application approvals on a merchant account.

No individual wants to face being denied approval. Nothing good can come out of being denied or declined.  You may have already been denied or rejected on a credit card or mortgage application maybe even faced with embarrassing “not approved” in the worst situations.  But you never expected to hear it on a merchant account application. So you would think when you apply to accept payments it wouldn’t matter, you’re taking money and depositing into your bank account, right?  The banks are getting the deposits; you would think that’s what they would want, right?  So why did your payment processing acquirer decline you?

Well, the truth is, the application process of a merchant account is very similar to a credit application.  Even though you’re not asking for money or a loan, right?  Well, that just might be the case.

The way acquirers asses every merchant application they look at the merchants individually as if they are the ones asking for credit. The main reason is the procedure by which payments are accepts and who is ultimately accountable for transactions.  Here is a great example, the travel industry.

This industry is at a very high risk.  The reason for this is often referred to as Future Delivery.  Future Delivery is the period that is delayed between the customers paying for a purchase and the time they actually receive the products, goods or services they purchased.  Say you’re planning a trip, most likely you’re not buying your airline ticket at the airport and instantly leaving to board the plan.  In most cases, there could be days, weeks, or even months that can go by before you actually go on your trip.  There are a lot of things that can happen during this delay.  In worst cases the airline can go bankrupt.  If the airline, or the merchant in this example, goes out of business, what happens to the cardholders who bought the tickets to go on a trip?  They call their credit card companies and issue a chargeback.  Chargeback’s are disputes initiated by the Issuing banks of the credit cards to the Acquirers of the merchants.  The Acquirers would then go back to the merchant to request additional information from the merchant to respond to the Chargeback.  If the Chargeback cannot be won in the merchant’s favor, the Issuer debits the Acquirer who will in turn debit the merchant.  But what if the merchant is out of business?  The Acquirer is then left on the hook for the transaction.

As you see in the example the Acquirers take credit worthiness of merchants very seriously.  If you have bad credit or no credit, the Acquirer needs to consider and way the risks of what the chances might be if your business shuts down and if you will leave them liable for transactions.  Of course, the longer the future delivery, the more difficult it would be to get approved.  And while being a retail outlet accepting card present transactions could make it easier to get approved, without a good credit history, you can expect any Acquirer to be weary of approving your application.  Good credit equals a durable reason of a merchant staying in business because you will be more likely to purchase and make other payments for a mortgage, bills, products or services. Also keep in consideration that having no credit at all can be just as bad as having bad credit because without a credit history, there is no way for an Acquirer to assess your application, leaving  no assurances that you will be able to maintain or uphold your business.

Benefit yourself and your credit; make sure all your finances are checked thoroughly before making the application for a merchant account. Keep in mind if there are any reasons in your history that could affect your application and ultimately be declined, prepared to make additional or alternative arrangements for your application.

If you’re like most people who struggle to be approved and are always denied due to their poor, new or bad credit we can help you be approved for a merchant account, just contact us. We can most likely help you get approval on a merchant account even if you have the worst credit in the world as long as you can get a co-signer and as long as your business model is not on the restricted list or have been added to the TMF List.

Why Payment Processors Charge Setup Fees

Why do credit card merchant account companies charge setup fees and why a merchant should be cautious of companies that don't.

Upon signing a a merchant account contract, there might be some additional fees.  Although this may get on your nerves, you will realize that these fees can be justified. They exist for a good reason and they only exist for a good merchant account company to be able to serve you better.

First of all one should understand that all a merchant account companies, weather they're Independent Sales Organizations or Member Banks, will always be subject to Interchange.

Interchange may be easily described because the "cost to do business" with Visa and MasterCard.  So immediately, merchant account providers must pay a minimal fee in order to provide the services.  In addition to interchange, companies need to profit too, in order for them to profit they cannot offer only interchange pricing, anything added to the base rate is considered a fee, but this is critical to having the ability to offer the service.

Any contract that seems too good to be true, definitely is, and has to be a scam.  A merchant can expect t a myriad of additional hidden rates and fees, as there aren't any merchant account providers that are able to afford to charge just interchange.  You should remember and think about this when looking at an extremely low qualified rate.

Other costs can include processing, or authorization fees.  Much like Interchange, there's a genuine cost towards the banks themselves who control the deposits.  Understanding that there's an authorization fee again, however annoying, essentially solidifies the very fact that certain is coping with the financial institution directly and for that reason offering a feeling of to safeguard the merchant.  When you will find no authorization or push costs, they're creating with this cost elsewhere, so again, watch cautiously in which the profit has been collected.

Claims and monthly service fees are one such facet of any contract.  These costs are usually having to pay for that service a merchant receives.  There's real cost involved with processing your transactions, delivering out claims and so on.  When these costs are apparent about the programs, it's possible to be comforted in the truth that they'll receive customer support, claims and all sorts of other services connected with processing for any merchant.

The actual cost connected with processing for any merchant need to be considered.  To become confronted with a credit card applicatoin which has no fundamental fees, and incredibly really low rates (when they offer rates whatsoever) is one thing to become very careful of.  Once we have clarified, these fees are usually connected using the costs that trickle lower from the collective of companies uniting to provide this particular service.

If you're not paying fees, then the payment processor isn't providing services, so keep an eye out for companies like this.  Remember that you're a customer, they must provide you with all the information you request and you're free to negotiate the fees, so attempt to negotiate the fees that cater to your processing needs. A merchant must realize  that fees result from attaining a service, you cannot get something for nothing, if you're willing to accept a free service don't expect to be good quality.

Declined Merchant Account Application: What Happened?

Sometimes, despite the fact that we have completed a credit card applicatoin for a merchant account, a merchant can nonetheless be the victim of a rejected application.  Not every merchant is guaranteed approval, and although Visa / MC maybe in a position to provide structured home loan approvals it isn't relevant to each profile and there's a realistic look at a straight out rejected application.  In this article we'll look at the factors and focus on a few of the main reasons why a merchant application may be declined.

BUSINESS TYPE: All payment processors have restricted and prohibited types of business.  They are companies who's very product, conduct or particular services are considered too high-risk for Visa and MasterCard. These pre-determined restricted companies usually will include anything illegal, for example gambling, or anything that may pose as a risk to security.  Even "sketchy" businesses whose policy maybe to supply their customer with something the merchant cannot guarantee like financial profit. There is no getting around this, you simply can't offer Visa and MC services.

BAD HISTORY: This is another scenario that we just have no solutions for.  When the merchant has anything within their past for example fraud, they may be rejected.  There's a business "black list" that applications are checked against (referred to as M.A.T.C.H) this database is exclusively produced by the payment processors who've been wronged by merchants that in some way, have gone against their contract with their payment processor thus leading to the payment processor to loose money. In order to resolve this issue, the merchant will have to correct the issue with their previous payment processor and they will be removed from the list.  When the merchant is presently bankrupt or comes with a personal bankruptcy of an unresolved status within their credit profile, they can be rejected services.  A bad credit score history could also cause a decline.  Such things as excessive customer complaints the result in the customer failing to pay Visa (also called a "chargeback") could be another reason why a payment processor would deny a merchant the ability to process transactions. Payment processors will definitely decline any application with a past full of "charge backs".

INSUFFICIENT VALID IDENTIFICATION: When looking at a merchant's applications, Visa and MasterCard look for proper identification, they weant the security in knowing that a merchant is who they say they are.  Not providing a social insurance number, driver's license or any other valid I.D. to aid in proving your identity and your business' existence will guarantee a declined credit card application.  It is advisable to provide precise support documentation for you and your business, to make sure that you can be clearly identified and how you conduct business.

INCONSISTENCY: It is very important that the valid identification a merchant is providing matches all the information in the merchant's application.  If inconsistency is the factor, the merchant will be declined the ability to accept credit cards.  For instance, a business telephone number should link a person directly to the business. This seems like common sense but the application are very long and at times can be confusing.  The worst thing that a merchant could do is provide information and support documentation that contradicts the information on the application. For instance, in the GST Form, that was issued whenever the merchant began their business, isn't the same address as the current location, the support document won't help. If you are submitting an application make sure you are consistent within the application and support documentation you have provided.

BAD CREDIT BALANCE: the word BALANCE is really important here.  Visa and MasterCard adjudicate an individual's personal credit profile for apparent reasons.  They need to justify the lending request.  The company earnings projection is just as much a part of the adjudication as the personal credit assessment, because they need to see how much money you are taking in, on an average transaction.  They require information about how much the company makes in a month to be able to assess the amount of lending needed.  For those who have inadequate personal credit and therefore are doing transactions well over 500.00 and it is a brand new business, there's no balance within this profile. The ticket is high meaning Visa and MasterCard hav a lot to lose without even processing many transactions.  The business is new so there's no reputation for success.  The ticket we just used as an example is simply too high for an applicant with a bad credit score to be trusted with. They will not be approved for this type of large volume transaction request. It is too great a risk for the provider to take.  If the credit and lending request do not compliment each other with a delicate balance the applicant will be declined

Use this article as cautionary advice and take the appropriate steps to prevent or resolve any of the issues with applications we have discussed in this article.

Non-Qualified Transactions: Educate Yourself and Save Money!

Businesses function in another manner and this influences the kind of merchant account they will have. It is important for a merchant account provider to establish a merchant with the proper payment processing account during the application to prevent the many problems that can arise if the merchant is improperly classified. Having the proper merchant account not only helps to keep a merchant's rates to a minimum, thus saving them money, but also helps to protect against fraud and charge back.

A retail business had more one on one with their customers and can swipe and offer payment processing of the customers' credit cards through a credit card terminal, processing the transactions in real time. Merchants who have booths set up at places like the flea market have access to a telephone line and electricity is also considered retail if they use a credit card terminal at their location of business.

 Merchant’s that use a wireless credit card terminal are considered to be retail as well. Some merchants that may be stand on a street corner while payment processing the costumer’s transaction, can swipe credit cards through the credit card terminal and process the payments in real time. As a result the merchants get all of the benefits and advantages only offered typically to a traditional retail store.

The one thing that’s related with this time of payment processing is the merchant is not one on one or face to face with the customer at the point of sale; the transactions are usually keyed into a POS software or credit card terminal.

Even though the very first payment processing may occur in a retail environment, face to face with the merchant or swiping the credit card through a credit card terminal, every transaction after will not be swiped. Because these payment processing transactions comprise the majority of the transaction for this merchant they would be considered a CNP merchant.

The Internet business is related to a CNP business. The distinguishing characteristic between the two is how the customer's credit card information is acquired. An Internet merchant acquires their customers' payment processing and credit card information through their website. The customer's information is physically captured and transmitted through the merchant's website.

A mobile business is like a retail business. They are one on one with their customers at the time of sale. The main distinction is that a mobile business does not have the means for payment processing in real time. This is the result of electricity or a phone line being accessible at the point of sale.

To balance for the lack of resources to payment processing in real time, a mobile merchant uses a manual imprinter to capture an imprint of their customers' credit cards and obtain a verified signature. This allows them to manually process the payment processing at a later time. It also submits the mobile merchant additional charge back protection typically only for retail merchants.

When you are a merchant who processes credit cards, especially card-not-present transactions, like those done over the Internet or phone, you will typically run into two rates on your statement. You will have a markdown or discounted rate for qualified transactions, and you will have a discount rate for non-qualified transactions.

Typically the discount rate for qualified transactions is the headline you see when you sign up for a new merchant account, and sometimes providers will purposefully low ball you a lower qualified rate (2%), but hit you with a bigger non-qualified rate (4%), knowing that many more of your transactions will be processed at the higher rate.

Each provider has rules for what constitutes qualified and what constitutes non-qualified. Typically for an Internet merchant you must run an AVS (address verification system) check and run the CVV code from the back of the card for the transaction to be qualified, but even then. If the card is certain types of reward cards, or business cards, or from a foreign bank, you can still be non-qualified.

If you also send incomplete information to your payment processor, you may also be downgraded to non-qualified. Just because a field isn’t required for the system to work, doesn’t mean it isn’t needed by the merchant or otherwise would be beneficial to include.

When using software, make sure you pass everything possible to your payment processor, even if you think it is redundant, even if it isn’t required, if you have the information, pass the information. And when signing up for a new merchant account, ask for the discount rate for non-qualified transactions as well.