One of the most common ways to prevent fraudulent transactions is to ask for a Card Verification Value. A CVV is a three digit code located somewhere on the card that is in a separate location from the account number. Because this number is not listed on documents that contain credit cards, it prevents thieves who have stolen numbers from using the card to make purchases through merchant accounts.

Another good method to prevent the costs of criminal purchases is to ask for the billing address. If the numbers (often the zip code) do not match with what the credit card company has on file for that card, the purchase will be declined. It is unlikely that the person using the card fraudulently will know the address that goes with the card.

Payer authentication is another tool to prevent fraud. With these programs, cardholders set up a personal password with their credit card company and a pop-up window will appear when they are ready to make a purchase. One major drawback is that this method doesn't completely protect the merchant account because it will be responsible for a portion of the fraudulent purchase. The pop-up boxes aren't always reliable either, adding another level of uncertainty.

Manual settlement is an option for those businesses that don't have a large number of transactions. With manual settlement, the merchant must approve every transaction before it can be charged. This gives the merchant the ability to check for false data, verify information, and look for unusual patterns that may appear from unauthorized users. Although this method is effective in catching fraudulent transactions, it can be very time consuming depending on transaction levels, and by making legitimate customers wait for approval real sales might be lost.

When protecting a merchant account from fraudulent transactions it is also important to consider what the effect will be on actual customers. Although prevention is necessary, companies shouldn't make it so difficult for real customers to buy that they go elsewhere. Use one or two of the methods above to keep fraud low and keep customers buying.

When business owners begin the search for a merchant account provider, they need to be aware of how banks handle these accounts. Smaller banks tend not to have the resources available to dedicate to merchant account processing and may outsource these accounts to larger banks. This does not lead to business efficiency for the merchant account holder since he or she is then forced to work through two different companies to manage transactions. Costs may also be higher with smaller banks since they must pay larger banks to take over the management of customer merchant accounts.

In the interest of saving money, the business owner who desires a merchant account may be better served by dealing with a bank that specifically handles them. This may entail hiring a bank that is not in the immediate vicinity of the physical location of the business. The business owner needs to weigh cost savings by going with a larger bank verses costs of retaining a merchant account with an out of town bank.

One such consideration is the cost of fuel if the chosen bank is close enough to drive to. If the bank holding the merchant account is out of state, the business owner needs to consider any inconvenience that comes with that. To aid in making the decision, it may be helpful for the business owner to list approximate costs of each on a spreadsheet. He or she can then analyze the data and choose the right merchant account provider. Before making any arrangements, the business owner should estimate monthly sales so the right type of account is established.

To keep costs under control, business owners must be aware of all fees that a merchant account provider is charging them to have the account. Providers may charge an annual fee, a set-up fee, a monthly maintenance fee, a per-transaction fee and possibly a statement fee. There is also the likelihood of being charged an additional amount to accept high-risk credit cards and process charge backs. While the fees may be legitimate, it is up to the business owner to understand and budget for them. By knowing what is going out in merchant processing fees each month, the business owner can reduce the amount that is ultimately taken out of the company's profit.

Waiting up to two weeks for a customer's personal check to clear delays the shipment of goods. If a customer sends you a bad check, your bank could charge you for having to return the check due to non-sufficient funds. Trying to collect payment through an alternate method has the potential to turn into a hassle. You may never receive payment for the services you provided. Using a merchant credit card processing provider allows you to collect guaranteed payment, speeding up order processing time and ensuring that you receive compensation for the time you have invested. In the event that your merchant credit card processor declines a customer's credit card due to a lack of available funds, your customer has the ability to use a different credit card for providing payment.

Establishing a merchant account gives your business venture credibility. Small businesses who do not have the ability to accept credit cards give the impression of an unprofessional set up, and prospective clients may take their business elsewhere. If you provide goods or services on a repeat basis for customers, your merchant account may allow you to schedule recurring monthly payments for clients. This takes the headache out of submitting monthly invoices for payment and chasing customers who don't pay on time.

You can report set up or annual fees associated with opening a merchant account as a valid business expense. Your online credit card processing provider typically takes a percentage of the total amount of the credit card payment as a transaction fee. Although this means that you will not receive the full payment amount for an order, you may also claim transaction fees as a business expense, lowering your overall tax liability. Once you know the transaction fee percentage, consider increasing your prices by that percentage amount, so you do not lose revenue.

Processing online credit card sales through a secured merchant account gives your customers a sense of safety, by knowing that the credit card processing system securely stores sensitive financial information. Quicker order fulfillment times and payment convenience keeps customers and clients happy, which leads to repeat sales and more income for your business.

There is a variety of fees the new business owners need to become educated about prior to signing up for credit card processing for the first time. Before the gateway payment is established, the merchant must pay a set-up fee. Some credit card processing companies wave this fee in an attempt to attract new merchants to their services. It is up to the merchant to analyze the rest of the fees to make sure they do not offset the initial savings.

Companies that are providing services to their clients instead of merchandise require a different type of payment gateway account and need to pay special attention to the per-transaction fee and the discount rate. The per-transaction fee is an amount charged by the credit card processing company that is in addition to taking a percentage of each sale. A typical per-transaction fee is around 30 cents. That is going to be far less significant to a company selling $1,000 in legal service than one selling a pen for a dollar.

The discount rate is the fee that is of most concern to service providers. This is a percentage of the total sale paid to the credit card processing company in order for the merchant to accept payment from the customer. If the discount rate were three percent, the law firm would pay a $30.30 swipe fee on a $1,000 transaction while the dollar store would pay 33 cents for a purchase of $1.00.

In order to determine if their company is getting the best possible rate, the business owners needs to have three figures available. These include the company's average ticket price, the per-fee transaction and the discount rate. If the average ticket price is $50, the business owner takes that figure and divides it by the per-transaction fee. With the sum of that transaction, the business owner should add the discount rate percentage to arrive at the total. By experimenting with different amounts, the business owner can compare the overall rates of several different companies and make an informed decision.

When a company or business decides to accept credit cards as a form of payment, they get the advantage of not having to judge the credit worthiness of each customer. However, in return, they are required to pay a certain number of gateway fees. Various payment gateway services charge to allow the transfer of funds from the buyer to the credit card through the banking system to the seller. To process credit cards, a firm must first obtain a bank account to interact with the banks that issued the consumer's credit card. This account is called a merchant account and is the start of the fee process. Although time consuming, it pays to comparison shop merchant banks and other credit card processing companies to compare rates and services. All banking costs and gateway fees contribute to a company's overhead.

Merchant accounts charge any number of fees relating to the operation of the account. Some of these are a percentage or per item cost and some are periodical. There are fees called discount rates that cover assessments, network charges and dues associated with accepting credit cards. The largest in this group is the interchange fee charged by the credit card company, for example Visa or Discover, for the processing of each transaction. These interchange fees reflect the costs of processing a transaction and have differing rates or tiers which depend on the way the transaction is entered into the system or if the card is a rewards program card. The credit card company sets the exact percentage for each type of transaction and the tier system varies between companies.

There are additional fees related to the costs of when a transaction goes wrong. There are nuisance fees for swiping a card a second time after being declined, chargeback fees when a customer disputes a charge and wins or identity theft victims, batch fees for sending the daily charges to the merchant account for processing and statement fees, annual fees and early termination fees.

Due to the time and cost of sifting through and identifying these various fees, many businesses choose an Independent Selling Organization/Member Service Provider to provide a complete service. A reputable ISO/MSP will have a comprehensive merchant fraud protection program and be committed to low credit card processing rates. Additionally, these types of firms offer tools to help with accounting issues and technical support as well as provide terminals and website payment

Before a new business owner buys credit card terminals and signs on with a processing company, he or she needs to devote time to research the best deals on the various processing fees. There are three main categories of fees that are paid by all types of companies utilizing credit card terminals to collect payments from customers.

The first is the set-up fee or the one-time fee which covers the cost of setting up a new gateway payment account. The payment processing company has the option of dividing this amount into an application fee and a gateway setup fee or charging it as one total fee. Next, the business owner needs to consider the recurring monthly fees, including the gateway fee and the statement fee.

The third category of payment processing fees is transaction fees. The per-transaction fee refers to a set amount charged for every sale, while the discount rate is a percentage of each sale charged on top of it. For example, if the per-transaction fee is 30 cents and the discount rate is two percent, the merchant would pay a 50-cent fee to collect a $10 credit card payment from a customer.

When the business owner is evaluating different payment processing companies, he or she needs to do side by side comparisons and choose the one with the lowest overall cost. Some other factors that may play into this decision include how long of a contract is required and if there is a penalty for early cancellation if the merchant is not satisfied. Additionally, the business owner should ask each potential payment processor about fraud protection policies and the available technical support.

One final step for business owners to take to insure the lowest possible gateway fees is to choose the right business category when initially setting up the account. Payment gateway accounts are designed to work with different types of business models, such as Internet sales or mail order catalog companies. There are also several options for credit card terminal types within each business model, and the credit card processing company should provide enough information about each to make a decision.

Before that information can be transmitted to the authentication center, however, it must be processed through a credit card gateway, a type of ecommerce software that guarantees the transaction will be secure and that credit card information will not be intercepted in transit.

Gateway Services

Gateway fees pay for the important services gateways provide.

Gateways protect the security of each individual transaction between a merchant and a customer.

Gateways are essential to negotiating many different types of network protocols. Every major credit card processor has its own processing network, and each of these networks has its own protocol for checking to make sure the credit card in question has not expired or been reported lost or stolen, and that the funds in question are, in fact, available. Implementing these protocols among millions of merchant transactions, aggregating that information, sending it to Visa, MasterCard and the other companies that facilitate electronic fund transfers is difficult, expensive IT work.

Gateways provide a valve in the flow that allows nonpayment-related transactions to be implemented, as is the case when a transaction needs to be reversed.

Gateway Fees

Credit card gateway fees vary from provider to provider. These fees are generally the basis for competition among gateway providers who will often waive the initial set-up fee in order to obtain a higher percentage fee, which, in the long run, will earn them more money.

Initial Set-up Fee: The initial set-up fee can range anywhere from between $200 to $600.

Secure transactions fee: The secure transaction fee ranges from between $15 to $30 per month.

Percentage Fee: A percentage of each sale is taken as commission, and assessed on a monthly basis. Percentage fees range from between 2.5 percent to 3.5 percent.

Transaction Fee: A flat transaction fee of $0.25 is also assessed on each sale.

A monthly minimum must be maintained. If it is not, most gateway providers will impose an additional fee.

Gateways provide the secure technology that allows customers to present their credit cards, and merchants to accept them, with full confidence.

In many communities, small businesses are using cash registers and inventory sheets to track sales. This inefficient, antiquated methodology can stifle growth. However, the right card processing service can help businesses quickly progress.

Often in business, time is money. Most companies are interested in merchant services that will lessen customer payment processing time and instantly record transactions. Efficient credit card processing services offer quick connections, instantaneous approvals and electronic transaction records, which eliminate unnecessary processing steps. In addition, customer signatures are often not required at checkout, further increasing transaction speed.

Using the right card processing services can also increase flexibility. For instance, restaurant businesses can offer clients the option of an ongoing tab or enable the application of tips following transaction authorizations. Customizable options help businesses strategize to receive the full benefits of the services offered.

When company workers do not have to manually separate and tally same-tab purchases from different customers, business efficiency improves dramatically. With the right merchant services, businesses can have the ability to filter all transactions by customer name or client number.

Additionally, the proper card terminal technology will enhance payment processing and simplify the checkout process. Some terminals offer superb portability. Staff can pass the handheld terminal to customers to facilitate the checkout process, and customers can key their own information without having to instruct the checkout staff. An effective terminal may also include other efficient options, such as PIN pads, intelligent card readers and magnetic strip readers. These options allow workers to slide a credit card quickly instead of manually keying card numbers. Card readers may even include check-reading functions to process client checks as easily as credit cards.

Wireless options offer more opportunities for expanding business efficiency. Business representatives can meet with customers at additional locations and offer offsite sales or curbside services. Customers love the convenience, but businesses enjoy the elimination of travel time back to the office.

Credit card processing services can even improve company websites, and online processing systems help keep phone lines free. Internet checkout options allow customers to make online orders and payments through a secure connection, but the credit card processing service should include fraud protection to safeguard the customer's privacy. In addition, merchant service plug-ins can help your customer order products or services with greater ease, eliminating the need for site navigation instructions.

By using the right merchant services provider, businesses can access services that will boost efficiency and increase productivity. Credit card processing and offsite sales are simplified, and companies can focus on expansion strategies.

The first line of defense is the AVS, or Address Verification System. The card user supplies his address when ordering over the phone or online. At a certain point during the swipe, the merchant service provider checks the address numbers and zip code against the address that the customer has on file. If the two match, the charge is considered to be legitimate. In the situation where the information provided by the buyer is not correct, a message along the lines of "declined due to AVS mismatch" shows up for the merchant. The charge does not go through at this point and can be deemed a fraudulent transaction.

Next is the CVV/CVD/CSC/CVVC, also known as the card security code. It is form of "physical" defense against a thief as it proves that the card is in the possession of the card owner at the time of the transaction. A majority of credit card processing companies require the use of the CVV when the card is run for a purchase. The purpose of the CVV is to validate the data that is stored on the magnetic card and verify that it was generated by the credit card bank. Some cards have three digits while others have four.

The payment gateway is another method to protect the merchant. The gateway is a "stopping point" for the credit card data in between the retailer, the merchant service provider and the credit card bank. All of the information is encrypted via Secure Socket Layer, preventing a third party from obtaining the information as it is transmitted. Payment gateways also have tools that look for markers that denote a fraudulent transaction. Some of these tools are purchase amount filters, hourly transaction limiter, shipping-billing mismatch filter, transaction IP check and more. Payment gateway providers regularly identify how thieves manage to process fraudulent transactions and create filters for retailers to utilize. These tools take a look at what, where and how the information is being transmitted to the retailer.

Credit card security technology is constantly changing, and the thieves do what they can to get around it. However, vigilance by the credit card processing company and retailer stops a majority of theft.

Many people use credit cards for both online and offline transactions. If you are unable to accept credit cards for payment, you're missing out on a large revenue stream. If customers are not able to pay for their items or services in the method that they prefer, they may also go looking for another company to do business with.

Merchant credit card processing provides a convenience factor for both small and large businesses, whether you're implementing credit card payments for the first time or you're adding an additional merchant account. The merchant company sets up your processing for you and often provides virtual terminals, card readers and other devices to facilitate accepting credit cards. You do not have to handle the technical details required to set up processing with a bank. The third party merchant account already has that in place, so you can focus on your business while they focus on the payments.

Another way that a merchant account increases business efficiency is by providing support for a business. If you have a problem with a payment, credit card or customer, you can talk directly to your merchant account provider. The provider troubleshoots the problem, processes refunds and handles any other issues that might arise during processing.

Merchant accounts provide a third distinct advantage to a company: fraud protection. Fraud screening services come with a processing account and protect your business from losses due to stolen credit cards and cards without the necessary balance to pay for purchases. When you submit credit card information to the merchant account, the company runs the card through a series of verification and fraud checks. The merchant informs you when cards are declined and the decline reason, such as a mismatch on the card address or security code number.

Merchant credit card processing is a service that businesses should look into for a payment option. You free up a great deal of time that would otherwise be spent setting up and dealing with payment processing. This time can be spent on other areas of your business such as marketing and training. Merchant account services should be considered by businesses that want to expand into credit card payment options, those who want to use an easily implemented script or online solution for payment processing and those who are interested in having a third party deal with fraud detection and credit card regulations.