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Merchant Accounts
   
Frank Merchant owns a business called "Widgets Are Us". It's his life work. One day, a Credit Card Processing Salesperson enters Frank's store. Joe Salesman declares that he can get Frank the cheapest rates and fees in town for Frank's credit card processing. Joe explains that it really doesn't matter what "Merchant Account Provider" Frank goes with because they all are pretty much the same. "As long as you shop around and get the best rate you are in great shape."

Joe explained that any company that quoted higher than Joe was a rip off. Frank Merchant was skeptical though. Later Frank made a few calls and got some rates over the phone and found out that Joe did have the best deal on both rates and the monthly payment on the terminal Joe was recommending. No one he talked to was able to really explain why they were higher so Frank, who is always looking for the best price, called Joe back and signed the paperwork. Joe Salesman went to work setting him up

Joe brought out a terminal and printer that Frank knew was a really good deal based on Joe's quote. The terminal looked "refurbished" but Joe explained that all the terminals today are refurbished but it was still state of the art. Each day Frank "batched out" his terminal to get the money sent to his bank account. He checked with his bank and the money for each batch of credit card sales were taking about three days to hit his account. Frank called Joe about this delay. Joe told him that the 24 hours he promised was dependent on his bank depositing the money. Joe suggested that Frank consider another bank. Frank liked his current bank though and decided to live with the late deposits.

Frank received his Merchant Account Statement at the end of the month. The first thing he noticed was that the statement reminded him of a telephone company service bill. He couldn't understand it. The rate was on the statement that Joe quoted him - but when he divided the total amount taken from his bank account into his sales for the month the percentage was higher. Much higher.

Not only that, the statement had a lot of terms and fees that Frank had never heard of before. What's this "Representment Fee" of $15.00? "Monthly Paper Reporting" of $10.00? "Deposit Fees" looked like 15 cents per day? And what's this "MC Dues and Assessments"? And what about something called a "Non-Qual" of an extra 2.25% on some transactions? Frank was confused so he called Joe.

Joe told him he wasn't much good at math and Frank should call customer service. Frank called the non-toll free number and got someone on the phone after being on hold for twenty minutes. The person Frank talked to told him they didn't understand the terms either. Frank asked to speak with a Supervisor. The person told him that they were a supervisor. Frank asked about closing his account. The person told him this was fine but he had a two year commitment because of the contract he had signed.

Frank decided to just live with it. About a month later he got a call from Customer Service. They explained that the terminal he was using was not in compliance with MasterCard Visa's "truncation regulations". They explained that he would need a new terminal that met the regulation. Frank asked to speak with Joe Salesperson but Customer Service explained that Joe was no longer with them. They heard Joe was selling mortgage loans.

Frank called the equipment leasing company that Joe had set him up with to lease the terminal. They told him that the lease was non-cancelable unless Frank wanted to pay it off by paying the aggregate of the 42 monthly payments remaining and the "fair market value". Frank explained that he thought this was a lot of money for a refurbished terminal that was not in compliance with MasterCard. The leasing company told Frank that Joe and now Frank were being investigated for fraud because the terminal is not supposed to be refurbished and it wasn't in compliance.

About a month later a new salesperson entered Frank's store. Sallie InternetSpecialist explained to Frank that he was losing a lot of sales by not selling his widgets on the internet. Frank already had a website that generated some calls but Frank wanted customers to order right on his site.

Frank was skeptical about Sallie's pricing so being a little bit computer-savvy Frank got on the internet and shopped around. It looked like twenty thousand, five hundred, and sixty-two companies did the same thing as Sallie. Most of them not only looked pretty good but were much cheaper than Sallie. So Frank, who is always looking for a great deal, called a few. None of the salespeople he talked to could really explain why they were any better than any of the others so Frank went with the cheapest. Frank liked the Salesperson, Bill JustACommodity.com, because he explained that their pricing was less than their cost but they made it up in "volume".

Bill JustACommodity.com explained that Frank needed a separate Merchant Account from his storefront business. Frank signed all new documents.

Frank's web designer helped set up a "shopping cart and catalog" and the Merchant Account Provider ( turns out that Bill JustACommodity.com was a "re-seller") made sure the information was given to the web designer to set the web site up to accept credit cards. There were some major headaches though. It turned out that the Technical Service Provider actually was a different company than the Merchant Account Provider. Frank's web designer explained to Frank that the "technical support software provider" was blaming the "Merchant Account Provider" and vice versa. It seems the "ETC Type" got messed up on the Merchant Account Application. There would be extra labor fees from the web designer to figure this out - but no problem.

Two days later Frank got excited. He was getting orders from his internet store! In fact the first week Frank's sales were about $5,000.00. Frank knew though that a good number of those orders he had "keyed" in because they had stacked up prior to going live due to the delays.

A week later Frank got a call from his banker that Frank's business checks were bouncing. Frank asked about the $5,000.00 in deposits from his internet orders. The banker knew nothing about it so Frank called non-toll free the Merchant Account Provider Customer Service. After forty-two minutes on hold he was transferred to the "Fraud Department". Fraud explained that the money was being held up. It seems Frank's orders were higher than his approved limit. Not only that, but Fraud needed to call Frank's customers to make sure they had placed the orders. No commitments were made on when the money would be released to Frank.

Just as Frank was getting off the phone a customer called. George BigVolumeAccount was a customer and friend of Franks for a long time. George explained to Frank that he was getting unknown charges on his credit card that he used to buy from Frank online. George was mad. George had checked into it and found out that the Internet Merchant Account Provider that Frank had used did not even issue a real Merchant Account. They were some kind of "third party" and were not "PCI Compliant". Worse yet, George had found out that a "hacker" had broken into the computer servers at the company and stolen all the credit card numbers on file. That's how George's credit card got into the wrong hands. George asked Frank how he decided on what Merchant Account Provider to use anyway. Frank explained that they all sounded the same so he just chose the cheapest one.

Now YOU don't have to make a decision about a Merchant Account Provider based on price alone. The Merchant Account Buyer's Guide is meant to bring you up to speed quickly on all of the issues involved so you can make the best choice.

Please provide feedback through the contact source who provided you the Guide. This source could possibly be through the World Payment Services™ member who made the guide available to you - (See "A Word about Our Membership Community"). I have tried to condense the most important information about Merchant Accounts. If I am wrong about something, off base, too self serving, or totally nuts let me know. Your feedback is appreciated more then you know.

ABOUT THIS GUIDE
About the Author
A Word About Our Membership Community
Frank Merchant knows how to get the best price
The Internet Marketplace
   
UNDERSTANDING IT ALL
What are the advantages (and disadvantages) of accepting credit cards for your business?
6 Benefits of Accepting Credit Cards
Disadvantages of Accepting Credit and Debit Cards
Who are the players? How does the money get in your bank account?
Credit Card Transactions Step By Step
Should I go visit my banker for my merchant account?
How can I tell if I will get good customer service?
Be on the Lookout for Deceptive Sales Practices
How to Avoid Your Money Being Held By Your Non-Cash Transaction Processing Company
Banking Terms You Need To Know
Benefits of Debit as a Payment Option
What You Need To Know About Leasing a Credit Card Terminal
Fraud Protection 101
Cardholder Security: Avoid Monthly Fees, Fines, and Penalties What Is PCI Compliance (PCI DSS)?
   
THE PROCESSES
Four Key Components to Conduct eCommerce Successfully: What They Are, and How They Work
Web Site
Your Merchant Account
Secure Payment Gateway / Payment Transaction Software
Shopping Cart and Catalog
Should I use a third party processor like PayPal?
   
ANALYZING IT ALL
Quick Summary of Costs
Detailed Summary of Setup Fees, Recurring Fees, and Risk Estimate
Total Risk Estimate (TRE)
Total Risk Estimate Worksheet (Low-Medium-High)
   
THE DETAILS
Are you being stung with "Non-Qual" fees for keyed orders?
Have You Ever Felt Betrayed By Your Credit Card Processing Company?
Your Customers' Credit Card Numbers at Risk
Visa: Heartland, RBS WorldPay no longer PCI compliant
PayPal
Marketing 101: Gift and Loyalty Smart Card Technology Ensures Customer Loyalty
Check Warranty and Check Acceptance Policies
How Can I Prevent Credit Card Fraud?
Identity Theft
Merchant Account Comparison Worksheet
Glossary
 
Credit Card Terminal
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