Retailers can apply for a credit card merchant account to accept credit card payments. The account comes with fees, including application, monthly service, and transaction fees. Merchants can reduce fees by maintaining good standing and sales volume, and by following security procedures.
Retailers can open a credit card merchant account to accept and process credit card payments. The provider must submit an application to each network for the different types of credit cards they want to accept. Some popular networks include VISA, MasterCard and reg:, American Express and Discover. Sellers can submit these applications through a bank or other credit card processor.
When the credit card merchant account is approved, the merchant will be assigned a merchant number. When a customer uses a credit card, the processor will forward the payment request to the appropriate network. The network sends this request to the customer’s bank. If the bank approves the transaction, the payment is forwarded to the merchant’s bank account, which is attached to the credit card merchant account number.
Several fees are associated with a credit card merchant account. These can include application fees, monthly service fees, and transaction fees. A transaction fee can be a flat fee or a percentage of each sale. For online merchants, a gateway fee may also be charged. A gateway is a secure web page that encrypts customer credit card information before it is sent to the merchant over the Internet.
Processor and network application fees are generally non-refundable. Vendors can keep their merchant accounts in good standing and maintain network approval to avoid paying extra application fees. Networks may suspend or revoke credit card merchant account approval for merchants with a history of complaints or fraudulent activity.
Credit card processors may add other fees based on a vendor’s credit card transaction history. Vendors with a history of chargebacks may be charged higher transaction fees on their credit card merchant account. A chargeback occurs when the customer disputes a credit card charge and the bank credits the customer’s account.
Typically, the bank will contact the merchant for more information before processing a chargeback. Merchants can help avoid chargebacks by keeping proper records for all transactions. Responding promptly to all bank inquiries can also help limit chargebacks.
Following the security procedures recommended by banks and networks can also help you avoid chargeback charges and fraudulent transactions. In retail stores, merchants may require a valid photo ID before accepting a credit card for payment. Online merchants may require customers to enter credit card expiration dates and security codes on the secure checkout page.
Merchant sales volume can also help reduce transaction fees. Typically, credit card processors charge lower credit card merchant account transaction fees for higher volume stores. Vendors with low sales volume may choose to use payment options offered by wholesale processors, such as PayPal and Google.
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