Online Payments and Merchant Account Providers
The process of setting up online payment processing may appear confusing at first, but the hard work is choosing the right service provider. In my search I spoke to everyone from sales agents to bank representatives and I now have a collection of contracts with very tiny print. I put together a summary of the process, things to watch out for, and a comparison of rates. I hope this helps.
How it works: Credit Card Payment Flow
Customer enters payment information into our secure sites Shopping Cart or Checkout area.
The payment details are sent to the Payment Gateway for approval. Gateway forwards the transaction to our Merchant Bank. Our Merchant Bank forwards the transaction to the Credit Card Issuing Bank for verification. Credit card bank verifies transaction and sends response code back to our Merchant Bank. Our Merchant Bank forwards the response to the payment gateway. Payment gateway stores the results and response back to our online store. Payment information is displayed to the customer; i.e. “credit card was charged”, “credit card was denied”, etc.
This process happens in a matter of seconds.
MSP have many bank affiliates and third-party account database, which mean higher approval rates (especially if your business is considered high risk). MSP will make recommendation on the best suited solutions or packages. Banks are limited on options. Better chances of negotiating lowers rates and contract terms with vendors than at a bank.
To start requirements only needed a Tax ID or SS#, business checking account, and an address. Submits application to the underwriter and the underwriter will request additional information for approval. Most underwriters will ask for both application and website information as follow:
The Applicant & Business Info:
Applicant must be a principal owner of the business Business License (Tax ID) or DBA (SS#) Checking Account Address Driver’s License and Contact Info of Principal Credit check – for new business, the personal credit history is a influential element
On the Website:
Varying fees and rates can be applied to specific card type (MC, Visa, AMEX, Discover, personal, business, and rewards card). The industry term for this is Qualified vs. Unqualified cards (unqualified having the higher unadvertised rates of course). Read your contracts carefully.
Keep in mind rates are not fixed, most companies can change the rate with 30 days notice. Finding a service provider with a solid reputation, flexible policy, provides good customer service, technical support is important. An indicator of a good Merchant Service Provider is if they ask in-depth questions about your business.