My decision to write this article is in result of my awareness that new business owners, usually, are totally confused about how credit card acceptance really works. Regardless of the type of business you may have, the procedures are always the same and are really quite elementary.
The following is a list of names of all the pieces involved in the merchant account puzzle:
1) Merchant Service Provider
2) Merchant Bank
3) Clearing House
5) Merchants’ Business Checking Bank
6) Required Software or Hardware
How you collect or receive your orders has no bearing on the Merchant Account at all. Whether you collect your orders from an Internet web site, by telephone, fax or face-to-face with your clients, the transactional procedure is the same.
First, you must find a Merchant Service Provider. The Merchant Provider is a representative of the Merchant Bank whose job is to generate potential clients for the Bank and to assist, in every way possible, in gathering all the information necessary for account approval. Please beware of a Merchant Provider the tries to lead you to believe that they will be responsible for authorizing your credit card transactions. This, simply, is not true! The following is what the Merchant Provider is to do:
1) Generate clients for the Merchant Bank.
2) Explain the different hardware and software available which are used to perform transactions.
3) Explain all costs and procedures involved.
4) Collect all required documentation and send it to the Merchant Bank for approval.
5) Upon approval, assist the new Merchant with the installation of the software or hardware so that transactions can be authorized electronically.
Once the Merchant Provider has the required documents, you should be installed and processing your transactions within 4 business days. If you experience a time frame longer than 4 days, you might consider cancellation as this is a clear sign of disorganization. This disorganization may have already overflowed into the customer service department which will put you on eternal hold when you need help the most. (Customer service is a NOW service, not 24 hours from now!)
After installation, this is how it works. If you chose software to perform your transactions, you either have a manual system that authorizes through the modem and phone line on your computer (manual meaning that you have to type in all transactions on your keyboard) or you have Internet software that gets authorization automatically online without requiring your presence. If you chose hardware/terminal, you must either swipe the card or manually key-in the transaction on the key pad and authorization is accomplished through the phone line. (There are terminals for Mobile merchants that get approval through a cell phone or by way of radio waves).
Regardless of the system you choose, the transaction travels from your system to the Clearing House. The Clearing House checks for the appropriate security flags and relays the transaction to your Merchant Bank. The Merchant Bank issues the approval and sends the approval number back to your terminal or computer screen. All of this is done in less than 5 seconds. Receiving the approval number means the credit card has successfully been debited and you can ship your product or perform your service. Upon approval, the money is transferred electronically out of your customers credit card account into your Merchant Account. The Merchant Bank then deducts the processing fees for the transaction and forwards the balance of your money into your Business Checking Bank. This process, from start to finish, should take no more than two days if you key-in your transactions or use the Internet system, and one day if you are swiping the credit card. (If you are told it will take 4-6 days to receive your money, this, again, is a clear sign of disorganization or a lack of ability in keeping up with the advancement of technology).
In conclusion, the sole importance of the Merchant Provider is to aid you in the process of acquiring a merchant account and setting you up with the hardware or software solutions needed in order for credit card acceptance to occur. Be sure to ask your Merchant Provider what rates and fees are involved before committing to purchase a merchant account from them. Do the research, asking questions from the get go may save you some unwanted headaches down the road. And lastly, deal only with a Merchant Provider who is truly interested in helping your business succeed to the next level.
Article by Mike Mack of Electronic Card Service
http://www.acceptvisamastercard.com ECS specializes in providing
low cost credit card merchant accounts and more to all types of
businesses in the USA.