Merchant Account Services

First Funds- An Opportunity Not to Miss!

Posted by Eve Micelli on October 9th, 2008

One of my important responsibilities as an employee of Merchant Warehouse is to assist businesses in having their First Funds application approved. First Funds is our cash advance program offered to businesses. Personally, I think it is a wonderful opportunity for business owners. It allows them the benefit of reaching their goals in a faster timeframe than they envisioned.

Today’s business owners are interested in cash advances for many reasons. Capital can be used to improve or expand the business, pay off debt, advertise, purchase equipment, and make down-payments, just to name a few..

Unlike a loan, a cash advance does not have fixed payments or collateral. Instead, First Funds deducts 20%-25% of the borrower’s daily transactions until the advanced amount is paid in full. Depending on their eligibility, merchants can be approved for a cash advance of up to $150,000.00. In order to qualify the business must be retail/store front, it cannot be out of home, it must have at least 13 months of longevity, and have been processing credit cards for at least 6 months. If the merchant does not yet process through Merchant Warehouse, they will be required to do so before they are funded.

The application is only one page and needs to be submitted along with the four most recent processing statements. The landlord reference or mortgage verification must be listed on the application. In addition, First Funds will be required to conduct merchant interviews and site inspections with all merchants who apply for advances.

Once a merchant is approved, a six page ACH Agreement will be provided for the merchant’s review and signature. This Agreement will disclose the advance and payback amounts. Three days of previous batching (which must be at least 70% of the merchants daily average processing) must also be submitted. Once this information is received, the merchant can be funded as early as the following morning.

Through my experience I find that merchants who applied for First Funds have benefited greatly. Many of them come to realize what a wonderful program this actually is, and decide to renew. Before the advance is paid off, First Funds will contact the merchant and handle the renewal. Renewals are usually funded much faster than the original advance.

The advantages of First Funds are many. There are no personal guarantees required, the payback is completely automatic based on your credit card sales, merchants with bad credit qualify, there isn’t a limited timeframe to pay back the advance, and there are no late, setup or application fees. Those are just to name a few.

If you are interested in making your business the success you dream of, please contact us to get started!

Eve Miceli - Account Manager

MerchantWARE and BINsmart in the news

Posted by Hal Gudmundsen on September 11th, 2008

Merchant Warehouse’s new credit card processing cost reduction tool, the BINsmart Interchange Manager^TM for MerchantWARE, was unveiled back in July, and the response has been overwhelming. Various trade publications covered the release, and both Merchant Warehouse and MerchantWARE have been featured in articles related to electronic payment systems and credit card fraud issues. Here is some of what they had to say:

ISO&Agent Weekly
On July 24, 2008, ISO&Agent Weekly announced the release of Merchant Warehouse’s BINsmart Interchange Manager, the latest addition to the MerchantWARE payment gateway.

BINsmart determines whether a card used is credit, debit, or a corporate card by reading the first 6 digits (called the Bank Identification Number, or “BIN”).

“If the system identifies the card as a debit card, it will send back a response to the point of sale system to prompt for a PIN number”, said Henry Helgeson, President and Co-CEO of Merchant Warehouse.

BINsmart complies with the Payment Card Industry Data Security Standard for payment applications because it does not store credit card number. BINsmart is also free to developers that add Merchant Warehouse’s payment gateway.

Merchants could benefit from lower interchange fees for debit transactions as their system can identify card type.

Cardline
On July 25, 2008, cardline announced the release of Merchant Warehouse’s BINsmart Interchange Manager.

Currently working with integrated point of sale systems, BINsmart enables systems to prompt for a PIN number when a card is determined as ‘debit’.

BINsmart complies with the Payment Card Industry Data Security Standard for payment applications because it does not store credit card number. BINsmart is also free to developers that add Merchant Warehouse’s payment gateway.

Merchants could benefit from lower interchange fees for debit transactions as their system can identify card type.

Transaction World
In the August, 2008 issue of Transaction World, Jim Romeo looks into the effects of electronic payment systems and interchange fees on the current state of the U.S. economy. Henry Helgeson, President and Co-CEO of Merchant Warehouse, discusses the potential affect of the Credit Card Fair Fee Act of 2008 and how important it is to capture the attention of legislators and educate them on the how interchange fees are established.

Beverage Media Group
In the August, 2008 edition of Beverage Media Group, Ian Griffith discusses the rise of credit card fraud over the past three years in the U.S. and how compliance with PCI-DSS (Payment Card Industry Data Security Standard) can help. PCI DSS represents a methodology with 12 requirements to help increase card data protection.

Although very few wine stores process over 6 million credit card transactions per year, stores below this threshold qualify for conducting a self-assessment questionnaire along with a quarterly network scan conducted by a third party.

Henry Helgeson discusses a new product released by Merchant Warehouse called “MerchantWARE”, which encrypts card information at the point of swipe.

RIS – Retail Info Systems News
On August 7, 2008, RIS Online announced that Merchant Warehouse released a new tool to help small and mid-sized merchants reduce their overall processing costs.

The solution, called the BINsmart Interchange Manager, allows retailers to identify card type (credit, debit, or corporate card) at the swipe by reading the first 6 digits (called the Bank Identification Number, or “BIN”).

Debit Card Processing

Posted by Hal Gudmundsen on May 14th, 2008

While most merchants know they should accept debit cards, it is not always easy to understand how to take full advantage of debit card processing. Merchants can do debit card processing in one of the following two ways:

Offline Debit Card Processing

The most common way to accept debit cards is an “offline debit transaction.” In this type of sale the merchant accepts a debit card the same way in which they would accept a normal credit card. The card is swiped through the terminal and the customer signs the receipt. As far as the merchant is concerned, there is no difference in the way a credit card or an off-line debit card is processed. The one thing merchants must remember is that the debit card must have a VISA® or MasterCard® logo on it. Cards that do not bear the Visa or MasterCard logo can not be processed off-line and will not be approved.

Online Debit Card Processing

A potentially cheaper and more secure, method for accepting debit cards at the point-of-sale is called an “on-line debit transaction.” In this type of sale the card must be swiped through the terminal and external or internal PIN Pad is used to enter the merchant’s four digit PIN. The terminal will pass the encrypted number to the bank for verification. The merchant will then be paid for the transaction in the same manner and time frame that they would be paid on a credit card sale. The cost of this type of transaction is potentially lower due to the way in which the merchant is charged by the processing companies. Rather than paying a flat fee and a discount rate, or percentage of the transaction, as with a credit card or offline debit transaction, there is only a slightly higher flat fee.

Interchange and Assessments

Posted by admin on May 9th, 2008

Have you ever wondered how merchant service providers determine merchant account pricing, or why some credit card transactions cost more than others?

To better understand what you’re paying for, you need to know how merchant account pricing is established.

Simply put, there are two basic fees that collectively, make up the vast majority of the cost of a merchant account. In the credit card processing industry, these costs are referred to as “Interchange and Assessments,” and they are charged by bank card networks like Visa® and MasterCard® every time a merchant accepts one of their cards for purchases.

Essentially, the “Interchange” rate is a percentage that is deducted from each credit card transaction amount, and the “Assessment” fee is a flat transaction fee added to the cost of processing each credit card sale.

There are many components that influence the cost of processing a credit card, but the Assessment fee charged for a transaction is determined exclusively by the brand of the card accepted and is set by the bank card network that issued the card.

Interchange pricing is bit more complex, because each card and transaction type has a unique cost, creating an assortment of over 150 Interchange rate categories. As a result, the Interchange category any one transaction will fall under depends on various factors, including:

A business’ processing environment (retail, phone order, internet, etc.)
A business’ card acceptance method (swiped, keyed, online, etc.)
The information sent along with transaction (address verification, CVV2, tax amount, etc.)
The card brand and type accepted (debit, credit, rewards, corporate, etc.)

To lessen any confusion, merchant account providers typically compile all similar Interchange categories and bundle them into a few groupings such as qualified, mid-qualified and non-qualified. However, this is just one way merchant accounts can be priced. Some merchant account providers quote an “Interchange and Assessments, Plus” structure, which combines the actual cost of the transaction based on the Interchange category into which it falls, the applicable Assessment Fee, plus an additional specified value on top of each.

In the end, the bulk of a merchant’s credit card processing expenses and the root of all merchant account pricing structures derive from the combination of the Interchange and Assessment fees, regardless of the pricing structure.

Benefits of Gift Cards

Posted by admin on May 6th, 2008

Paper, or Plastic? These days, consumers prefer plastic. So fulfill your customer’s demand, and replace those old-fashioned, paper gift certificates with plastic gift cards today!

Already throughout the retail industry, merchants are issuing their customers gift cards, and to keep your business competitive, you should do the same.

Gift card services can be beneficial for you and your customers….

Merchant Benefits:

Enhance sales and revenue. By offering customers more options and incentives to remain loyal to your business, sales will automatically increase.
Earn interest from each gift card, from the point of purchase to the time of use.
Encourage, build, and maintain customer loyalty. To redeem the card value, customers will revisit your store and, quite possibly, purchase more.
“Slippage.” Unlike gift certificates, cash is not reimbursed to customers who do not redeem their full gift card value. Estimates state that approximately 10-15% of gift card balances are never used.
Avoid theft and fraud damages. Gift cards require activation to be used and contain other security features to help minimize the risk of theft and fraud.

Customer Benefits:

Save your customers valuable time. With this easy gift solution, customers know the recipient will get something they like.
Let customers give the gift of convenience. Gift cards offer flexibility because they can be used at any time, at any participating location, and toward any store purchase.
Give customers the control. Customers can easily control spending with a pre-paid, “stored value” card.

General Gift Card Information:

Gift cards hold, or “store” a pre-paid value that can be used for purchases.
Gift cards can be customized to fit the branding and image of the merchant.
Magnetic stripe gift cards are processed as secure, electronic payments through most existing Point of Sale systems and credit card terminals.
Merchants can select from various program options to better suit their objectives.
Gift cards can hold value until the balances are redeemed or have expired, or they can be “re-loadable.”
As further incentive to customer loyalty, predetermined rewards can be given back to customers.

With approximately 65% of Americans having purchased or received a gift card in the past year, trends show that gift cards have practically replaced gift certificates. Not only do they supply easy earnings for merchants, but they offer invaluable convenience for customers. So start expanding your business, and upgrade or add a gift card program.

To learn more about gift card program, or any of our other programs, contact your sales representative, or visit our section for other merchant services.

What is a Merchant Account?

Posted by admin on May 2nd, 2008

Merchant accounts provide businesses with the ability to accept credit card and debit cards for purchases. There are several different aspects to a merchant account, which we will describe below.

A Merchant Account Entails:

Processing Services: To set up a merchant account, a business owner, or “merchant” must apply through a merchant service provider (MSP) such as Merchant Warehouse. Approval of a merchant account depends on factors which include, but are not limited to:

Applicant and/or Personal Guarantor’s Credit Score

Business Type (Goods or Services Sold)

Card Acceptance Method (Merchant Type)

Monthly Volume & Average Sales Ticket

Business’ Financial Condition & Bank Account Type

Business Longevity

Return/Refund Policies

Processing Rates & Fees: There are various fees associated with having a merchant account. These could vary, depending on the type and company providing the service, but all merchant accounts have 2 main costs:

Discount Rates: With most merchant service providers, every processed sale is classified into 1 of 3 qualification levels (Qualified, Mid-Qualified, & Non-Qualified), and is charged a discounted percentage rate associated with that qualification. Each sale’s level and rate is determined by the type of card used, and/or how it is accepted and processed.
Transaction or Authorization Fee: This fee is charged for each electronic authorization request and transaction made, including all approved and declined sales, returns, voids, and batch settlements.

Processing Capability Systems: To process credit card payments, processing equipment or software is required to capture card information, make authorization requests, and close sales. Depending on business needs, equipment options include:

Terminals: Wireless, Contactless, Stand-Alone and Terminal/Printer Combination units
PC Software: Stand-alone or integrated into other business systems
Internet Gateway Solutions: Virtual Terminal or eCommerce versions

To maintain customer satisfaction and increase sales and revenue, it is becoming essential for businesses to have merchant accounts and accept credit card payments. Fewer and fewer customers carry cash, checks involve significant risk, and sending your customers running to the ATM machine could lose you valuable business. For both your business’ and customers’ benefit, sign up for a merchant account today.

Credit Card Chargebacks

Posted by admin on March 30th, 2008

The definition of a chargeback is when a cardholder disputes a charge posted to their credit card account. Chargebacks can occur for various reasons, such as when a purchase was not authorized by the cardholder (fraud), or when goods or services are not provided as expected.

You should be able to avoid the vast majority of chargebacks by providing good customer service and ensuring that your products and/or services are advertised, and delivered, as promised.

For those chargebacks related to fraud, there are simple steps every business can take to help avoid any problems. It is up to every merchant account holder to be diligent in accepting charges, and to educate their staff about the precautions to take.

In environments where the business is accepting and swiping cards at the time of the transaction, there are several simple steps which can be taken:

Always compare the signature on the receipt with the signature on the back of the card.
Always examine the card to ensure it is not altered or suspicious looking.
Request identification such as a license or some other picture ID.

In situations where the business is taking credit card without the customer present (over the phone or Internet, for example), the chance of fraud-based chargebacks is much greater. It is very important for these businesses to put systems in place to help determine legitimate charge activity.

If appropriate, call customers to confirm their order if the billing and shipping or contact addresses do not match.
Ask for the code number on the back of the card (or front with American Express®) to confirm that the card is in the customer’s possession.
If you receive questionable orders, call to confirm the order with the cardholder.

If you have reason to believe that a card is fraudulent or otherwise questionable, always call the card issuing company for a voice authorization.

What to Expect in Your Monthly Merchant Account Statement

Posted by admin on March 26th, 2008

Merchant account statements can sometimes be confusing, especially for new merchants. Generally, questions and concerns pertain to the charging of monthly fees and the timing of account statements, so we hope that this article will help to explain some of these confusing aspects.

As with any credit card processing company, merchant accounts typically becomes active within one business day of the account approval date. Once your merchant account is live, you are able to process credit card transactions and are also responsible for any fees assessed starting on that date. Therefore, any monthly fees will be charged, in full, for every month the account is open, regardless of your processing volume.

Monthly fees are posted to your bank account generally within the first week of the month following your merchant account activation, and continue each month that your account remains live. A statement reflecting the charges for your previous month’s processing activity is then issued and should follow mid-month. If you do not receive your processing statement by the third week of the following month, you should contact customer service to confirm that we have the correct mailing address as specified on your merchant application.

Please contact a customer service representative if you have any questions or concerns about your monthly merchant account fees or credit card processing statement.

Visa® & MasterCard® Rules and Regulations

Posted by admin on March 14th, 2008

As a merchant accepting MasterCard® and Visa®, there are basic card acceptance rules that you must follow. By adhering to these rules, you can increase customer satisfaction and ensure that you do not run into compliance issues, which may put your continued ability to accept credit cards at risk. The following are some of the rules outlined in the Visa and MasterCard manuals:

Card Logos & Acceptance: You must display the appropriate card logos for any card types that you accept and advise your customers of their payment options. You must honor all categories of cards (credit, debit, rewards etc.) within each card type that you accept.

Dollar Minimums and Maximums: You may not impose a minimum or maximum amount for any transactions. If you do not accept a customer charge, which is below a certain amount that you specify, the customer can notify Visa and/or MasterCard, who will take the appropriate steps to see that you understand and adhere to the card acceptance rules and regulations.

Surcharges: All credit card transactions must be treated like any other transactions. You may not impose any surcharge on a transaction because your customer is using a credit card. However, you may offer a discount to your customers for paying in cash provided the offer is clearly disclosed to your customers and the cash price is a discount from the standard price charged for any other type of payment.

Laundering: You may only process transactions for your own business. Processing transactions for a business that does not have a valid merchant agreement is called laundering and is considered a form of fraud.

To learn more about the rules and regulations of accepting Visa and MasterCard cards, please contact us or see the Visa and MasterCard guides available through the Visa and MasterCard websites.

How to Avoid Downgrades

Posted by admin on March 14th, 2008

Whether you are currently accepting credit cards, or plan on doing so, it is important to know how to save money by avoiding downgrades whenever possible.

A downgrade simply means that you are being charged a rate increase because the type of card your customer is using has a higher processing cost or because a transaction was processed incorrectly by you, the merchant.
You can’t always prevent downgrades from happening, but this article will show you what you can do to keep your transaction costs as low as possible.
As an example, for a Retail or “Swiped” Account where the customer is handing over their card for processing, a transaction will get the Qualified Discount Rate (lowest rate possible) only if the card is swiped, the cardholder is present, and the card is a standard consumer credit card. If any of these criteria are changed, the account will “downgrade” to either the “Mid” or “Non” qualified level. These levels are each associated with a greater cost of processing.
Here is a more detailed description of what can be done to avoid many downgrades, and also what happens if certain criteria are not met.

Retail/Card Swiped Accounts

Qualified Rate

The Qualified Discount Rate is charged when all of the following occur:

Standard consumer credit card is used
Card is swiped accurately and data properly obtained
The customer’s signature is captured
The transaction is “Batched” or “Settled” within 24 hours

Mid-Qualified

The Partial/Mid Qualified rate will be applied when any of the following occur:

The card info is manually entered, or “keyed” & all AVS info is entered
The consumer uses a Rewards card
Transactions are not settled/batched within 24 hours

Non-Qualified

If any of the following situations occur, a Non-Qualified rate will be applied to the transaction.

Card is manually entered with no AVS info entered
The consumer uses a Corporate, Government or International card
Authorization code is manually keyed in to your processing terminal.
Transactions are not settled/batched within 48 hours

Keyed “MOTO” or Internet Accounts

For these types of accounts, the merchant manually enters credit card information into a credit card terminal or software after the order is placed or is collected through an online payment gateway.