There are many ways of accepting debit and credit card transactions from your customers; however obtaining a merchant account from a UK based bank is by far the least expensive method. These banks, such as Streamline, HBOS etc., issue merchant accounts which allow you to process credit cards and debit cards through a variety of methods. Traditionally debit and credit card processing would have been organised via a credit card machine, sometimes referred to as a PDQ machine. However in recent years the Internet has opened other sales channels requiring secure payment facilities.
The humble credit card machine has been joined by virtual terminals and full Ecommerce with shopping carts as more and more people are buying online and banks have to introduce stringent measures to prevent rogue traders from obtaining credit and debit card accepting payment facilities. Due to these efforts the problem from UK based rogue merchants has been all but eradicated but the problem continues to exist with non-UK based traders.
Verified by Visa (VbV) and MasterCard SecurCode are becoming more common in Ecommerce (Internet) credit card processing and have been introduced to negate the fear factor amongst consumers when purchasing via the Internet. It is a simple password-protected identity-checking service which takes a good proportion of risk out of buying on-line and gives the same level of fraud protection as chip and pin. Cardholders can register a password with their card issuer, which they will be prompted to enter every time they use the card online (rather like entering a PIN number into a credit card machine) and they are then protected from fraudulent transactions using their payment card and thus gain the reassurance needed to spend with confidence.
Companies such as Protx provide secure online credit card processing payment facilities for thousands of bona-fide online and mail-order business across the UK. However, a merchant account is still necessary in order to keep credit card processing cost to a minimum.
Applying for a merchant account can be something of a minefield and it is worthwhile doing some research before making any application particularly with regard to the rates offered as these can vary considerably and you may find too late that there are some expensive hidden or unexpected costs. The most time-efficient means of looking into the market is through use of a third party organisation such as Seymour Direct who specialise in obtaining the best rates for their customers depending on the type of business, area of trade and current or forecasted turnover on cards. They have access to rates offered by a number of banks and can advise the best available in a given situation. For further information on low charges telephone 0800 980 4007 or visit Semour Direct website.
Once you've decided or been advised which bank or financial organization best suits your business? requirements there is a certain amount of preparatory work to do in collating the paperwork that will be required to obtain your card processing facility. These may include financial information regarding your business (if your business is less than 12 months old this would take the form of a business plan or forecast), any printed literature regarding your products or services, written details of any guarantees or warranties you offer your customers, proof of identity and if you already hold a merchant account with another bank of financial organisation it can help to have available 3 months current processing statements.
If all this information is at hand you will find that the application process will be much smoother and simpler. It takes on average about three weeks to set up a merchant account from the date you return the Merchant Agreement to your chosen financial institution but could take longer if your business is deemed as high risk by the bank.
If you run a business, there's a good chance that you already accept credit cards. If you're new to starting a business, there are some things you should know about credit card processing that will save you a significant amount of money in the long term. Each business owner will pay a discount rate which is a percentage of the gross volume processed. If the discount rate is 1.7%, the merchant will pay $1.70 for every $100 of volume. So, for merchants processing $10,000 or more per month, each .1% represents $10. So a discount rate of 1.3% vs. a discount rate of 1.9% will save that merchant $60 per month on just the discount alone which is an annual savings of $720. This can add up quickly, so it's important to keep this rate low. Your discount rate is determined by the risk your business may represent to the bank. The more risky your account, the higher the discount rate. The type of cards you process may also influence your discount rate, such as a business credit card vs. a check card, or rewards card for instance. You'll also have a per transaction fee for each transaction. The lower your average ticket or average transaction, the greater percentage of the overall fees the per transaction fee represents. For instance, if your average ticket item is $10, a $.25 per transaction fee represents a 2.5% "effective rate". If you add a traditional discount rate of 1.3% or so, your total effective rate would be 3.8% which is high, or at least higher than it could be. If you take the same $10 transaction and could lower that per transaction fee to $.17, even with a higher discount rate, say around 1.8%, your effective rate would be 3.5% which would lower your overall effective rate on the transactions. You will typically have a monthly fee associated with any merchant account. This is sometimes referred to as a customer service fee, statement fee, or monthly account maintenance fee. You shouldn't be paying too much for this fee. It shouldn't be more than about $10 per month. If you have a merchant account, you most likely have a monthly minimum which is what a flat fee charged every month based on the discount fees. If the discount fees exceed $25, the monthly minimum is met. If the discount fees are based on a slower month or lower volume month, the minimum is charged still at $25. If your volume is only $500 that month, the $25 represents a 5% effective rate, no matter what the discount rate is. Many providers now will waive this fee, so if you anticipate at all that fee being an issue, work with your provider to make sure that fee is either reduced or waived. These fees represent the typical fees charged by merchant providers. There are usually other fees that will show up on your merchant account application, so be sure to ask your merchant account sales representative about any fees that you don't recognize or know. These fees must be disclosed, even if the sales rep doesn't tell you about them. When it comes to pricing, trust what's written on the application because this is what you'll be agreeing to when it comes to processing. Be sure to work with a merchant service provider and a sales representative that you can trust. The industry is a lucrative one and attracts both the honest and dishonest sales reps. Having said that, make sure you review the "fine print" and pricing pages for the application before you commit to work with a merchant services provider.
Both Marco Tomlinson & Brian Armstrong are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Marco Tomlinson has sinced written about articles on various topics from Credit Cards. Marco Tomlinson is an expert in merchant account services at Seymour Direct. For further information and assistance with