Merchant Account Know How

Finding an offshore merchant account provider for your high-risk business can be a challenge.  Offshore merchant account providers are an option to keep open if you are having a difficult time meeting the criteria for traditional providers.  Having a merchant account provider is essential in order for your business to process credit cards.

Without being able to accept payments efficiently, you lose a large amount of business.  Did you know that consumers will spend an average of 20% more when not having to pay with cash?  By offering the option to accept credit card payments, you open your customers up to more impulse purchases – which is good for you.

Some of the reasons you may want to choose an offshore merchant account provider as opposed to a US bank include owning a high-risk business, poor credit, or needing to process global payments.  Finding the right provider can help you grow your business.

Offshore merchant account providers are more lenient with the credit approval process.  As the US banks experience problems with clients with poor credit, it is getting more difficult than ever to get approved, and if you are, often the merchant account fees are ridiculous.

Many domestic providers have stringent requirements for providing credit card processing services.  If your business falls into one of the high-risk categories – adult products, phone orders, or marketing products, to name a few, you may have already discovered the difficulty in getting a domestic account.   Often high risk businesses are required to pay a high “deposit” and may have funds withheld in case of charge-backs. Offshore providers will often take more high-risk clients because the competition is not as steep.  Expect to pay premium prices, but the return for your business will be worth it.

Offshore providers are more flexible when your sales increase.  Many domestic providers will close accounts for “suspicious activity” if sales increase exponentially over a short period of time.  This is due to the American paranoia of money laundering.

When marketing on the internet, your product becomes internationally available.  Having an offshore merchant account provider will make it possible for you to accept payments from global sources.  Being able to expand your market to an international audience means there is no limits to your growth potential.

Having an offshore merchant account will also put you in a favorable position tax wise, since you will be in a “virtual jurisdiction”.  Research this fully before making your decision.

When looking for the right offshore merchant provider, keep in mind that many people unfortunately try to scam people through this outlet.  Make sure that you are getting a reputable provider with an established history and a person you can talk to.  Once you have found the right one, it’s time to get started.

By spending a little time doing the legwork, you can make sure that your business will be able to operate fully on the web to an international clientele by finding an offshore merchant account.  Who knows how far your business can go?

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Having a basic understanding of the language of internet financing providers will make it much easier to navigate to find the right one for you.  Here is a basic breakdown of the most common terms.  When looking for your merchant account provider, make sure to read the fine print, understand your contracts and have an understanding of merchant account vocabulary.

Acquirer: This is a bank or processor alliance in the business of processing the credit card transactions.  Called and acquirer since they are always acquiring new merchants.

Acquiring Financial Institutions: The institution that contracts with the bank and the merchant to enable a credit card transaction.  The acquirer (from above) is responsible for depositing the daily credit card sales, while debiting the processing fees.

AVS: This is an abbreviation for an address verification service.  This will protect the seller from fraudulent credit cards since the provider will give an authorization code that gives the accuracy of the address for the issuer’s records.

Authorization:  Important before sending the product, the authorization is the verification of funds in the cardholder’s account before approving the sale.

Batch: This is simply a statement of the days transactions run from the merchant’s terminal that once run, frees the merchant account provider to transfer funds.

Chargeback: When the consumer files a disputes the delivery or product dissatisfaction, the credit card transaction will be billed back to the merchant after the sale has been settled.  Much like a refund, but issued through the provider and not the seller.

DDA Account: This is simply the merchant’s demand deposit account, or the hometown bank account where the merchant wants funds deposited from credit card transactions.

ISO: This is an independent sales organization.  This represents the bank/processor alliance.  The ISO is allowed to mark up fees upon signing up merchants.  Consider this either the “middle men” (the sales force who links the merchant with the service).

MID: Merchant identification numbers, used by the merchant account provider, are simply an account number to track sales, adjustments, and fees.

Secure Payment Gateway: A company that helps processors by providing secure socket layer technology – or basically, a system that passes the secure information through the internet using encryption technology.  This is often used by banks and processors so that the banks don’t have to create their own secured web system.

Settlement: Going to the batch, this is the process of sending the merchant’s batch report to the network to process for payment.  The bankcards will pay from the bank, and the non-bank issued cards will be paid from the merchant provider and billed to the credit card company.

Shopping  Cart Software: This is a program attached to the merchant’s website that captures the credit card information, by employs the secure gateway provider.  This allows secured transactions.  This is done through a computer code to designed to communicate with the gateway and shopping cart application.

Terminal: The equipment provided to the merchant to capture, store and transmit all credit card transactions.

TID: Terminal identification number.  This is much like an account number, so that the processor knows which merchant to credit monies to.

This will give you a general overview of some of the terminology associated when choosing the right merchant account providers.  As you start to explore your options, you will come across more, but by asking questions and researching, you should be able to find the right provider easily. Remember, it is necessary to understand merchant account vocabulary to communicate effective with your providers.

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With the internet evolving into one of the primary shopping resources for consumers, as a business owner you want to compete.  Have you thought about how your business will stay on the cutting edge?  By offering your products or services online, you literally open your product to the world.  Once consumers are looking at your product, you will need a way to accept payments.  Choosing the right merchant account service provider is a step in the right direction.

While the old-fashioned manual credit card terminal is an option, using a merchant account provider is a much more efficient way to let you focus on your business.  A merchant account provider is a credit card processing company that links to your business site.  By having a provider, your customers can purchase products with their credit cards through a secure site.

Much like a business account will help you track income and expenses, a merchant account provider will track all of your credit card sales, send a statement, and transfer the funds.  There will be fees associated with this service, but it is well worth it to have a cashier around the clock.

If your business already has a store front and your use merchant account providers for your in-store credit transaction, then see if they can offer you online services.

*** For more information on merchant account services providers, CLICK HERE

When selecting merchant account providers, keep in mind that since these are generally banks, they will have criteria for you to meet before you are extended services.  You may be asked to provide a detailed business plan, account and trading history, as well as a credit check.  Having an established history will make this process a lot quicker, but getting through this process will allow you to get started.

Once you have selected your merchant account provider, you will pay a sign up fee in order to cover the administration cost.  In addition, there will be a fixed monthly or quarterly fee, or a commission on each transaction.

Once your customer has run the credit card, then the merchant provider will transfer funds less the fees to your account if you have a per transaction fee.  These generally run between ten to thirty cents each transaction.

While all the fees may seem to add up, keep in mind that the convenience of these sales make it well worth the cost to make it.  By establishing an online presence in today’s shopping world, your sales may skyrocket more than you can imagine.  This all starts with choosing the right merchant account service provider.

***To learn more about choosing the right merchant account service provider, CLICK HERE!***

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