If
you want to sell product
or service through
the first thing you
need is a system where
you can accept the
payment in real time.
And the best solution
for a real time payment
is accept approved
credit card instantly.
Selling
goods and services
on the Internet presents
its own set of challenges
-- like how to set
up and maintain a
secure, reliable,
cost-effective system
for authorizing payment
and managing transactions.
If you don't know
what you're doing
-- and even if you
do -- that can be
difficult, complicated,
and expensive.
High
security base transaction
software takes care
many complex issues
for you,but it is
you who going to control
the transaction process
over the net. You
need a credit card
merchant account ,
an automated payment
system, a credit card
merchant account,
and a computer with
an Internet connection.
You can do everything
with your Web browser.
What is a merchant
account:
A merchant account is
a account with a bank
that is a member of
the Visa and MasterCard
associations. Such a
bank has been certified
by Visa and MasterCard
associations and can
provide you, the merchant,
with all of the services
related to your merchant
account. Once your merchant
account is setup and
"live" on
the credit card system,
you can start the real
time processing of credit
card.
What is Real Time
Processing ?
A
real time credit card
processing system
is a transaction processing
system that functions
as a payment service
using a secure transaction
server on the Internet.
Merchants with a valid
merchant account can
use the system to
submit, authorize,
capture, and settle
credit card or eCheck
transactions without
the need for a separate
transaction terminal
or processing software
So
from where can I setup
a merchant account
?
Here is the list of
some company who will
give you the service
of establishing merchant
account.
Do I always need a
dedicated merchant
account?
Here is list of some
company from where
you can take service
for you e commerce
without establishing
a merchant account
.
OK I finished all
the procedure but
I still don't understand
how it works?
A customer presents
their credit card
for payment...
Using their credit
card number, you submit
an electronic request
to the processing
network for "authorization
to capture funds"
from the cardholder's
credit card account
in the amount of the
purchase. Traditionally,
one would submit this
request by swiping
a credit card through
an electronic transaction
terminal provided
by the bank. With
the system, this request
is provided electronically
to our payment gateway
servers, which then
route the request
along the processing
network.
The processing network
immediately receives
your electronic request
and determines if
the cardholder's account
is valid and if the
funds are available.
If they are, the processing
network returns an
electronic response
to your terminal or
computer. This response
is called an "authorization
code", and is
your guaranteed authorization
to capture the funds.
Typically, this code
is a six-digit number.
The transaction and
its associated authorization
are stored in a "batch",
where other transactions
for that day reside.
You print a receipt
for the customer using
the electronic terminal
or your computer and
the customer signs
the receipt. As far
as the customer is
concerned, the transaction
is complete. As far
as you the merchant
are concerned, there
is one more step to
complete the transaction.
At the end of your
business day (usually),
a final request is
submitted to the processing
network to go ahead
and "capture
the funds" that
you obtained authorizations
for during the course
of business that day.
This is called "settlement"
or "settling
your batch".
With a traditional
physical credit card
swipe terminal, this
settlement process
must be initiated
manually. One of the
key advantages of
our system is that
this settlement process
is initiated automatically
every day on our end.
At settlement time,
the processing network
immediately receives
your response electronically
and determines if
the capture amounts
contained in your
request match the
authorizations for
each item. If so,
the request is granted
and an "Accepted"
response is returned
to your electronic
terminal or computer.
A settlement report
can be printed showing
the grand totals by
card type (Visa, MasterCard,
American Express,
Discover, etc.) for
the settled batch.
Note: any corrections
to your batch, such
as voiding a transaction,
must be made prior
to settlement.
Within 48 to 72 hours
(usually), the funds
associated with the
batch you settled
are deposited electronically
into your business
bank account. Typically,
the discount rate
you pay to your merchant
account provider are
deducted from the
deposit before it
transferred to your
bank account, resulting
in a "net deposit"
of funds.
At the end of the
month, your merchant
account provider will
mail a statement to
you, detailing the
credit card activity
for the month and
the associated fees
you have been charged
for such.
Now that you understand
the basics of how
a credit card merchant
account works, you
can see the role that
the system has in
the processing of
your credit card transactions.
Understanding your
merchant provider's
rates and fees:
All banks and merchant
providers require
"transaction
fees" from you
for accepting credit
cards. Typically,
these fees are broken
down into 3 categories:
a discount rate, a
transaction fee, and
monthly fees.
For the bank's purposes,
a transaction is usually
defined as any communication
between you and the
processing network.
A "credit"
transaction is treated
the same as a regular
transaction. Settling
a batch is usually
considered a transaction
as well, as it involves
communication with
the processing network.
Discount Rates
This is the percentage
of the total transaction
amount that the bank
will usually deduct
prior to transferring
your deposit into
your bank account.
Typical discount rates
range from 2.5% to
5%, depending on your
type of business and
other factors. A higher
rate may be charged
on individual transactions
if the transaction
doesn't conform to
certain qualifications,
as described by your
bank or merchant provider.
For instance, accepting
a "Visa Business
Card" credit
card may cost you
1% more than regular
transactions. The
reasons for these
non-qualified transaction
surcharges and complete
details on all transaction
qualifications should
be discussed with
your bank or merchant
provider. Address
Verification (AVS)
may also fall into
this category when
not used properly.
Address Verification
(AVS) is described
in the
Developer's Guide
of the merchant account
provider.
Transaction Fees
This is a flat amount
that you pay for each
transaction. Typical
transaction fees range
from 30 cents to 50
cents per transaction.
Monthly Fees
These are fees charged
for other account
related services,
such as customer service,
your monthly statement,
network access fees,
and minimum monthly
fees.
All the fees and charges
are required to be
disclosed to you prior
to your commitment
to the merchant agreement
between you and your
bank or merchant provider,
All the fees and charges
are required to be
disclosed to you prior
to your commitment
to the merchant agreement
between you and your
bank or merchant provider,
and are usually enumerated
carefully to you in
the merchant agreement
itself.
