Unfortunately, in the case of a fraudulent transaction, the merchant it was placed with bears certain financial responsibility. The merchant is just as much a victim as the cardholder whose card information was used to place the order is, yet there are certain transaction fees that have been incurred in processing the payment.
When you set up a small business merchant account, you agree to pay certain credit card payment processing fees and charges on every transaction that you accept. It is important to understand that payments are not actually at your processor until you submit your daily batch at the end of your day. The reason it is important is that it gives you some extra time to try and verify the validity of every payment that you accepted that day. Your creditcardprocessing company will provide you with a set of tools to help you fight fraud. They have a financial incentive to minimize fraud, just as you do. If you employ these tools, along with CVV2 and AVS verification services, you will be sure to reduce and possibly, eliminate fraud.
It is a good idea that you establish a set of credit card transaction processing best practices to fight fraud. Make it a point of always using AVS but try not to use voice authorizations because they bypass the credit card merchant processor’s system and cannot be used as supporting evidence in chargeback representments. Also, personally check a new customer's payment details and make sure there is nothing suspicious. Often, common sense is your most effective fraud protection asset.
Monday, March 30, 2009
How to set up an eCommerce merchant account
Setting up an eCommerce merchant account is pretty similar to establishing a manual credit card processing service, with a few notable exceptions. You will need the following:
A functioning website. This requirement is self-explanatory and does not require a comment.
A SSL Certificate. You need the SSL to ensure that the information that your customers provide is handled in a secure way and it is protected from identity thieves.
A shopping cart. This is the service that collects your customers' purchase details and payment information. It integrates into your website which is usually done by the person who builds the website. There are a great number of shopping carts out there, some of which you can get for free. It can also be built by your developer. Each choice has its pluses and minuses and the decision on which one to select should be made on a case-by-case basis.
An eCommerce payment gateway. A payment gateway is the service that connects your shopping cart with your credit card merchant processor and transmits the payment information. It usually is offered by your internet credit card payment processing provider. It serves the exact same purpose that a physical terminal does, and it performs the same range of functions.
An internet merchant account. This is the service that will enable you to accept credit card transactions and other electronic forms of payment. It links all previously mentioned components into an inter-related system and is your connection with your merchant services provider and the Credit Card Processing Networks of Visa and MasterCard. There are many providers out there and you should have no problem locating them. It will be a good idea to request several proposals and compare the terms before you make your decision.
I have not talked about pricing here, as it has been discussed in great detail in other creditcardprocessing articles. I would like to remind you, however, that you should always evaluate the whole merchant account processing pricing proposal and not just the single rate or fee that usually gets advertised.
A functioning website. This requirement is self-explanatory and does not require a comment.
A SSL Certificate. You need the SSL to ensure that the information that your customers provide is handled in a secure way and it is protected from identity thieves.
A shopping cart. This is the service that collects your customers' purchase details and payment information. It integrates into your website which is usually done by the person who builds the website. There are a great number of shopping carts out there, some of which you can get for free. It can also be built by your developer. Each choice has its pluses and minuses and the decision on which one to select should be made on a case-by-case basis.
An eCommerce payment gateway. A payment gateway is the service that connects your shopping cart with your credit card merchant processor and transmits the payment information. It usually is offered by your internet credit card payment processing provider. It serves the exact same purpose that a physical terminal does, and it performs the same range of functions.
An internet merchant account. This is the service that will enable you to accept credit card transactions and other electronic forms of payment. It links all previously mentioned components into an inter-related system and is your connection with your merchant services provider and the Credit Card Processing Networks of Visa and MasterCard. There are many providers out there and you should have no problem locating them. It will be a good idea to request several proposals and compare the terms before you make your decision.
I have not talked about pricing here, as it has been discussed in great detail in other creditcardprocessing articles. I would like to remind you, however, that you should always evaluate the whole merchant account processing pricing proposal and not just the single rate or fee that usually gets advertised.
What is the risk classification of a wireless merchant account?
Wireless merchant accounts have proliferated with the coming of age of the cellular phone technology. They come in two main offerings - short range and long range. The short range wireless credit card processing terminals can be used within several hundred feet of the base unit. The long range service is available anywhere network coverage is present.
There are several factors that determine the risk level of a credit card payment processing business and a wireless solution can certainly help reduce it. If a merchant accepts credit and debit cards away from his or her office by collecting the customer payment information in a form and later keys it into a terminal or enters it into a phone, this payment mode will be immediately qualified as high risk, without even looking at the other factors. In the case of a wireless merchant account processing solution, the customer would swipe his or her card through a card reader and the transaction will fall into the "card present" category which is the first factor that is looked at when determining the risk level. As an added benefit, the merchant saves time as there is no need for additional manual data entering.
All major small business merchant accounts providers offer a wireless service and there is also a variety of terminals to choose from as well. Although their price tags are still pretty high, they have been falling steadily. There are additional creditcardprocessing fees that are applied to wireless solutions as well. You will be paying an additional monthly fee for every terminal that you have and an additional per transaction fee. There might be an activation fee as well.
The biggest issue, when it comes to wireless card processing, however, is the availability of the wireless signal. You need to make sure that your provider's network coverage is strong in your service area, in order to avoid unpleasant surprises.
There are several factors that determine the risk level of a credit card payment processing business and a wireless solution can certainly help reduce it. If a merchant accepts credit and debit cards away from his or her office by collecting the customer payment information in a form and later keys it into a terminal or enters it into a phone, this payment mode will be immediately qualified as high risk, without even looking at the other factors. In the case of a wireless merchant account processing solution, the customer would swipe his or her card through a card reader and the transaction will fall into the "card present" category which is the first factor that is looked at when determining the risk level. As an added benefit, the merchant saves time as there is no need for additional manual data entering.
All major small business merchant accounts providers offer a wireless service and there is also a variety of terminals to choose from as well. Although their price tags are still pretty high, they have been falling steadily. There are additional creditcardprocessing fees that are applied to wireless solutions as well. You will be paying an additional monthly fee for every terminal that you have and an additional per transaction fee. There might be an activation fee as well.
The biggest issue, when it comes to wireless card processing, however, is the availability of the wireless signal. You need to make sure that your provider's network coverage is strong in your service area, in order to avoid unpleasant surprises.
Payment Card Acceptance Best Practices Guide
Guidelines developed to help merchants process transactions in a way that is compliant with the latest industry regulations for protecting cardholders' personal information and verification of the validity of transactions. Complying with these rules will ensure that merchants increase their profitability by:
- Getting the lowest possible processing rates.
- Minimizing fraudulent transactions.
- Reducing chargebacks.
1. Presentment Requirements
Certain content or features should be clearly displayed on your website. These elements are intended to promote ease of use for your customers and reduce potential disputes and chargebacks.
1.1 Customer service contact information.
Customer service telephone number as well as email address should be clearly displayed on every page of the website, on shipping materials and on monthly statements. If customers cannot contact you, they will contact their card issuer which may result in a chargeback.
1.2 Policies.
Return, refund, cancellation and delivery policies should be available to online customers through clearly visible links on your home page. You should also provide "click-through" confirmation for important elements of the policy. For example, when purchasing tickets for a sporting event, customers should be able to click on a button - Accept or I Agree - to acknowledge that they understand the tickets are non-returnable unless the event is postponed or canceled. This will help your processor fight chargebacks and win representments. Any restrictions on delivery should be clearly posted on the website.
1.3 Order and refund confirmations.
Send email confirmations and summaries within one business day of processing orders and refunds. State time frames for refunds and indicate that a full billing cycle may be needed for the issuer to apply the credit to the cardholder's account.
1.4 Billing descriptor.
It identifies you on the customer's credit card statement. For example:
ABC SERVICES 800-111-2345.
Your customer must be able to easily understand which purchase the billing descriptor refers to. Otherwise he or she might contact their issuer and possibly initiate a chargeback. Also you need to be sure, and confirm regularly, that the phone number is listed correctly, so if the cardholder needs to call you to verify the charge, he or she can do so.
- Getting the lowest possible processing rates.
- Minimizing fraudulent transactions.
- Reducing chargebacks.
1. Presentment Requirements
Certain content or features should be clearly displayed on your website. These elements are intended to promote ease of use for your customers and reduce potential disputes and chargebacks.
1.1 Customer service contact information.
Customer service telephone number as well as email address should be clearly displayed on every page of the website, on shipping materials and on monthly statements. If customers cannot contact you, they will contact their card issuer which may result in a chargeback.
1.2 Policies.
Return, refund, cancellation and delivery policies should be available to online customers through clearly visible links on your home page. You should also provide "click-through" confirmation for important elements of the policy. For example, when purchasing tickets for a sporting event, customers should be able to click on a button - Accept or I Agree - to acknowledge that they understand the tickets are non-returnable unless the event is postponed or canceled. This will help your processor fight chargebacks and win representments. Any restrictions on delivery should be clearly posted on the website.
1.3 Order and refund confirmations.
Send email confirmations and summaries within one business day of processing orders and refunds. State time frames for refunds and indicate that a full billing cycle may be needed for the issuer to apply the credit to the cardholder's account.
1.4 Billing descriptor.
It identifies you on the customer's credit card statement. For example:
ABC SERVICES 800-111-2345.
Your customer must be able to easily understand which purchase the billing descriptor refers to. Otherwise he or she might contact their issuer and possibly initiate a chargeback. Also you need to be sure, and confirm regularly, that the phone number is listed correctly, so if the cardholder needs to call you to verify the charge, he or she can do so.
Getting started
To start processing payment card transactions you need:
A payment processing terminal - a physical device or software. We support all major physical processing terminals and offer the Orbital Virtual Terminal, which is a web-based application that lets you authorize, capture, settle your payments and more directly from your computer.
Merchant account - the service that payment processing companies offer to allow you to accept electronic payments. We provide secure, reliable merchant account services and our processing rates are among the lowest in the industry.
Checking account to receive deposits.
Specific for processing online transactions are the following requirements:
A functioning web site with a valid secure server certification.
Shopping cart - our virtual terminal is compatible with all major shopping carts.
Online payment gateway - the online equivalent of the point of sale (POS) terminal facilitates the transfer of information between your website and your processor or acquiring bank, quickly and securely. Orbital Gateway is a proprietary system that securely delivers and encrypts your customers' payment information during electronic transmittal.
A payment processing terminal - a physical device or software. We support all major physical processing terminals and offer the Orbital Virtual Terminal, which is a web-based application that lets you authorize, capture, settle your payments and more directly from your computer.
Merchant account - the service that payment processing companies offer to allow you to accept electronic payments. We provide secure, reliable merchant account services and our processing rates are among the lowest in the industry.
Checking account to receive deposits.
Specific for processing online transactions are the following requirements:
A functioning web site with a valid secure server certification.
Shopping cart - our virtual terminal is compatible with all major shopping carts.
Online payment gateway - the online equivalent of the point of sale (POS) terminal facilitates the transfer of information between your website and your processor or acquiring bank, quickly and securely. Orbital Gateway is a proprietary system that securely delivers and encrypts your customers' payment information during electronic transmittal.
Card processing from start to finish
Besides you and your customers, several other parties are involved in every card processing transaction.
In the event of a chargeback (when there's an error in processing the transaction or the cardholder disputes the transaction), the issuer returns the transaction to the acquirer for resolution. The acquirer then forwards the chargeback to the merchant, who must either accept the chargeback or contest it. For more on chargebacks, visit the Chargeback Management section of our website.
- Cardholder is the authorized user of a credit or debit card.
- Merchant is any business entity that is authorized to accept cards for the payment of goods and services.
- Merchant Bank or Acquirer is a financial institution that provides card processing services to the merchant.
- Credit Card Network or Association is a membership organization of financial institutions that issue payment cards and/or sign merchants to accept such cards for payment of goods and services. There are two Credit Card Associations - Visa's and MasterCard's.
- Card Issuer is a financial institution that issues payment cards and contracts with its cardholders for billing and payment of transactions.
In the event of a chargeback (when there's an error in processing the transaction or the cardholder disputes the transaction), the issuer returns the transaction to the acquirer for resolution. The acquirer then forwards the chargeback to the merchant, who must either accept the chargeback or contest it. For more on chargebacks, visit the Chargeback Management section of our website.
What are the effects of credit card debt on your credit history?
I recently had to answer this question and here is my answer.
That is really a very broad question, so I will focus only on the effects that bad credit card debt has on your credit file and some of the potential consequences. By bad debt I mean the outstanding account balance on which even the minimum payments have not been made.
There are stages in the delinquency of credit card debt. If even the minimum payment has not been made for up to 90 days, the account will be still at the card issuing bank. It will be reported in your credit file simply as a late payment and it will be specified how late (30, 60 or 90 days). Your credit worthiness is slightly damaged and your credit score will drop a little bit.
If no payments have been made for more than 90 days, the account will be "charged-off". This refers to a debt, declared to be uncollectible and removed from the bank's balance sheet. Once charged-off, the account is sent to a collection agency and reported to the credit bureaus as a charged-off account. This is a lot more damaging than being late on a payment and your score will drop substantially.
The collection agency usually has the account for no longer than 60-90 days and their settlement parameters are very rigid. Typically they will not accept a settlement for an amount smaller than 80%-90% of the outstanding balance (including interest and other financial charges).
After 60-90 days, the bank will recall the account from the collection agency, place it in a pool of charged-off acccounts, that have already gone through the same cycle, and sell it to a debt buyer. A typical bank sells such accounts quarterly.
Once a debt buyer gets the account, they become the new creditor and can report the account again to the credit bureaus. So 1 account can generate several derogatory notes in your credit file, each one further damaging your score.
If it remains unpaid, the debt buyer can and will sell the account to another debt buyer and the story will repeat itself.
The earlier in this cycle the account is paid, the better for the credit history. It will be updated as a "paid collection" account, which is a great deal better than showing as a collection account. Yet, it will take time for the credit score to get back to where it was before the delinquency.
How has credit card debt affected your own credit score? How did you deal with it
That is really a very broad question, so I will focus only on the effects that bad credit card debt has on your credit file and some of the potential consequences. By bad debt I mean the outstanding account balance on which even the minimum payments have not been made.
There are stages in the delinquency of credit card debt. If even the minimum payment has not been made for up to 90 days, the account will be still at the card issuing bank. It will be reported in your credit file simply as a late payment and it will be specified how late (30, 60 or 90 days). Your credit worthiness is slightly damaged and your credit score will drop a little bit.
If no payments have been made for more than 90 days, the account will be "charged-off". This refers to a debt, declared to be uncollectible and removed from the bank's balance sheet. Once charged-off, the account is sent to a collection agency and reported to the credit bureaus as a charged-off account. This is a lot more damaging than being late on a payment and your score will drop substantially.
The collection agency usually has the account for no longer than 60-90 days and their settlement parameters are very rigid. Typically they will not accept a settlement for an amount smaller than 80%-90% of the outstanding balance (including interest and other financial charges).
After 60-90 days, the bank will recall the account from the collection agency, place it in a pool of charged-off acccounts, that have already gone through the same cycle, and sell it to a debt buyer. A typical bank sells such accounts quarterly.
Once a debt buyer gets the account, they become the new creditor and can report the account again to the credit bureaus. So 1 account can generate several derogatory notes in your credit file, each one further damaging your score.
If it remains unpaid, the debt buyer can and will sell the account to another debt buyer and the story will repeat itself.
The earlier in this cycle the account is paid, the better for the credit history. It will be updated as a "paid collection" account, which is a great deal better than showing as a collection account. Yet, it will take time for the credit score to get back to where it was before the delinquency.
How has credit card debt affected your own credit score? How did you deal with it
Invalid Chargebacks
When the Credit Card Networks detect an invalid chargeback, it is automatically returned to the card issuer that originated it and the merchant and merchant bank never see it. Many merchant banks also have systems in place for reviewing disputes, which allows them to resolve issues before a chargeback is initiated. Together, these systems ensure that the chargebacks that you receive are legitimate or that only you can respond to them.
The Chargeback Process
Chargebacks occur when a cardholder disputes a charge to his account.
The most common reasons for chargeback-resulting disputes are:
If the merchant represents sufficient evidence to warrant a reversal of the chargeback, the acquirer will forward the representation to the issuer through the Credit Card Network (Visa or MasterCard). If the chargeback is reversed, the card issuing bank does have the right to re-present the chargeback a second time.
The most common reasons for chargeback-resulting disputes are:
- Customer dispute over product or service quality
- Credit not received
- Improper authorization
- Fraud
- Processing error
- Inaccurate transaction information
If the merchant represents sufficient evidence to warrant a reversal of the chargeback, the acquirer will forward the representation to the issuer through the Credit Card Network (Visa or MasterCard). If the chargeback is reversed, the card issuing bank does have the right to re-present the chargeback a second time.
Why are some businesses more high-risk than others?
In the world of payment processing, the Credit Card Associations of Visa and MasterCard make all the rules. Banks have to be members of the Card Associations in order to issue credit cards or acquire card transactions.
When it comes to risk assessment, Visa and MasterCard rely mostly on historical data. The biggest component of their risk evaluation toolkit is the probability of generating chargebacks. A chargeback results when a cardholder disputes the validity of a transaction, posted on his or her statement. The cardholder has to file an official dispute with his or her card issuing bank, who then returns the transaction to the merchant bank, through the Card Associations. At this point the merchant bank can either resolve the dispute, or, if they need additional information, they will contact their merchant and ask for a proof that the transaction is valid (a receipt would answer just fine). The merchant will then provide (represent) that proof, if available, and the representation will find its way through the chain back to the card issuer and their cardholder, thus resolving the dispute. Now, whether the dispute is valid or not, it generates a certain amount of expenses that the Associations will have to incur. That is the main reason for the premium high-risk businesses have to pay on their payment processing rates.
Naturally, businesses that transact in a non face-to-face environment, tend to generate higher levels of chargebacks. Web-based and direct marketing merchants are automatically included. Higher average tickets add an additional amount of risk, due to the larger amounts that are moved around and the resulting higher transaction fees that are generated. New merchants too add to the risk, due to their limited processing experience. There are other factors as well which can lead to some businesses being completely unacceptable to US-based merchant services providers. For example gambling websites are extremely risky, simply because cardholders may feel like victims and dispute a charge, even if the gambling site played by the rules. Adult-oriented websites, on the other hand, are prone to generating higher levels of chargebacks, because customers may be uncomfortable to admit using their services, even if they have.
The Associations require payment processors to closely monitor their merchants' chargeback levels. Processors get penalized if their merchants' chargeback levels exceed certain limits and, in extreme cases, merchant accounts can be suspended.
If anyone has had issues with high chargeback levels, I would like to hear from you. How much did it cost you? Has anyone had their merchant account suspended because of it?
When it comes to risk assessment, Visa and MasterCard rely mostly on historical data. The biggest component of their risk evaluation toolkit is the probability of generating chargebacks. A chargeback results when a cardholder disputes the validity of a transaction, posted on his or her statement. The cardholder has to file an official dispute with his or her card issuing bank, who then returns the transaction to the merchant bank, through the Card Associations. At this point the merchant bank can either resolve the dispute, or, if they need additional information, they will contact their merchant and ask for a proof that the transaction is valid (a receipt would answer just fine). The merchant will then provide (represent) that proof, if available, and the representation will find its way through the chain back to the card issuer and their cardholder, thus resolving the dispute. Now, whether the dispute is valid or not, it generates a certain amount of expenses that the Associations will have to incur. That is the main reason for the premium high-risk businesses have to pay on their payment processing rates.
Naturally, businesses that transact in a non face-to-face environment, tend to generate higher levels of chargebacks. Web-based and direct marketing merchants are automatically included. Higher average tickets add an additional amount of risk, due to the larger amounts that are moved around and the resulting higher transaction fees that are generated. New merchants too add to the risk, due to their limited processing experience. There are other factors as well which can lead to some businesses being completely unacceptable to US-based merchant services providers. For example gambling websites are extremely risky, simply because cardholders may feel like victims and dispute a charge, even if the gambling site played by the rules. Adult-oriented websites, on the other hand, are prone to generating higher levels of chargebacks, because customers may be uncomfortable to admit using their services, even if they have.
The Associations require payment processors to closely monitor their merchants' chargeback levels. Processors get penalized if their merchants' chargeback levels exceed certain limits and, in extreme cases, merchant accounts can be suspended.
If anyone has had issues with high chargeback levels, I would like to hear from you. How much did it cost you? Has anyone had their merchant account suspended because of it?
How can an international charity accept credit card payments?
To accept credit cards online in the US, for both commercial and non-profit entities, you will need either your own merchant account or a third-party payment processor.
Having your own merchant card processing account will provide the lowest payment acceptance rates - currently no more than 2.19% + $0.25 per transaction. In order to set up a merchant account in the US, you will need your organization to have a legal presence here. In other words you will need at least a subsidiary to be registered in the US and to have a bank account and address here.
If that is not an option, you can open an offshore merchant account, which will allow you to accept payments in the US, but at substantially higher rates - 5% - 6% or more per transaction. The upside is that you can set it up without having to incorporate in the US. To locate offshore merchant account providers, simply Google "offshore merchant account provider".
The third option is a third-party provider like PayPal and they will not be cheap either. You can visit their pricing page and see if you can find your rate. It might be lower than an offshore merchant account service but the downside is that they tend to overprotect and freeze accounts for no good reason.
I'm curious if anyone has had any experience in working with a foreign non-profit entity. How did you solve the payment acceptance issue?
PayPal Rates
Having your own merchant card processing account will provide the lowest payment acceptance rates - currently no more than 2.19% + $0.25 per transaction. In order to set up a merchant account in the US, you will need your organization to have a legal presence here. In other words you will need at least a subsidiary to be registered in the US and to have a bank account and address here.
If that is not an option, you can open an offshore merchant account, which will allow you to accept payments in the US, but at substantially higher rates - 5% - 6% or more per transaction. The upside is that you can set it up without having to incorporate in the US. To locate offshore merchant account providers, simply Google "offshore merchant account provider".
The third option is a third-party provider like PayPal and they will not be cheap either. You can visit their pricing page and see if you can find your rate. It might be lower than an offshore merchant account service but the downside is that they tend to overprotect and freeze accounts for no good reason.
I'm curious if anyone has had any experience in working with a foreign non-profit entity. How did you solve the payment acceptance issue?
PayPal Rates
Is a merchant's license required to sell over the internet from your own website?
Requirements vary by state and the best thing to do is to check with your secretary of state. Different states may or may not require a license for a particular type of business. A great resource is the U.S. Small Business Administration website. It has a lot of useful information different laws and regulations, as well as opportunities. For licenses and permits you can check here: http://business.gov/guides/licenses_and_permits/. Just scroll down and locate your state. It even allows you to search by ZIP code.
Procesing Rates Decline
Payment processing rates have been declining steadily ever since eCommerce came into being a decade ago and today they represent one of the biggest cost-saving opportunities available to web-based merchants. Whereas two - three years ago an internet merchant would have been lucky to get a rate of 2.25% + $0.30 per transaction, today the same merchant will easily get a rate of 2.19% + $0.25 per transaction, or lower. Just last week I reviewed the latest processing statements of an eCommerce business that sells Oriental food ingredients. Their processing rate is 2.48% per transaction. This Pass-Through Comparison Table shows our estimate of what the difference would be if they processed at the rate of 2.15% + $0.25 per transaction. Our estimates show that the savings would be in the range $1,500 - $1,800 per year. They only sell around $40,000 worth of product per month so you can see the potential. The real name of the business was removed to protect their privacy.
What questions should I ask when calling about a MO/TO merchant account?
There are many things you need to know when selecting a payment processing services provider. The most important issue is the payment processing costs - you certainly don't want to be overcharged. The costs are comprised of various fees and charges and I have given you a breakdown below.
Discount rate - the amount a merchant is charged by his acquirer for processing the merchant’s transactions. It consists of a percentage fee (e.g. 2.19%) and a fixed, per transaction, fee (e.g. $0.25). You should not agree to anything higher than 2.19% + $0.25.
Authorization fee - another "per-transaction" fee. You should not pay more than $0.12.
Application and set up fee - one-time fees to apply for and set up your merchant account. You should NOT pay ANY set up or application fees!
Monthly maintenance fee - as the name suggests, it is charged monthly to keep your account on file. You should not be paying more than $10.
Support fee - another monthly charged for customer service. You should NOT pay ANY such fees.
Virtual terminal fee - a virtual terminal is the application that you will open in your browser and enter the payment information as you are taking it over the phone or getting it from a form you got in the mail. It should be provided for free.
Payment gateway fee - an eCommerce payment gateway is the service that connects your website with your processing bank and transmits transaction information between them. You will only need it if you want to let customers pay you over the web and it should not cost you more than $15 per month.
As you can see, there are many rates to consider and this is just the beginning. Merchant account rates are only as good as your ability to process transactions in a way that is compliant with Visa and MasterCard regulations. If they are not, transactions are downgraded to "non-qualified" and processed at a substantially higher rate (on average about a full 1% higher). It is your merchant account provider's responsibility to help you get a grasp of these regulations and ensure compliance.
Discount rate - the amount a merchant is charged by his acquirer for processing the merchant’s transactions. It consists of a percentage fee (e.g. 2.19%) and a fixed, per transaction, fee (e.g. $0.25). You should not agree to anything higher than 2.19% + $0.25.
Authorization fee - another "per-transaction" fee. You should not pay more than $0.12.
Application and set up fee - one-time fees to apply for and set up your merchant account. You should NOT pay ANY set up or application fees!
Monthly maintenance fee - as the name suggests, it is charged monthly to keep your account on file. You should not be paying more than $10.
Support fee - another monthly charged for customer service. You should NOT pay ANY such fees.
Virtual terminal fee - a virtual terminal is the application that you will open in your browser and enter the payment information as you are taking it over the phone or getting it from a form you got in the mail. It should be provided for free.
Payment gateway fee - an eCommerce payment gateway is the service that connects your website with your processing bank and transmits transaction information between them. You will only need it if you want to let customers pay you over the web and it should not cost you more than $15 per month.
As you can see, there are many rates to consider and this is just the beginning. Merchant account rates are only as good as your ability to process transactions in a way that is compliant with Visa and MasterCard regulations. If they are not, transactions are downgraded to "non-qualified" and processed at a substantially higher rate (on average about a full 1% higher). It is your merchant account provider's responsibility to help you get a grasp of these regulations and ensure compliance.
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