Below are sections to different FAQ’s asked by merchants like yourself. Have a question not answered below? Submit your question to us! Once answered we’ll add it to the appropriate FAQ section.

Merchant Account Basics

Merchant Account Rates & Fees

Other E-commerce Solutions


What is a merchant account?

A merchant account is an account that a merchant, like yourself, has with a bank in order to accept credit card orders from customers. There are many different merchant account providers. Click here to search our online database of merchant account providers FREE!
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Is is better to lease or purchase? …rent?

Always remember if you choose to lease you will end up paying more than if you would just purchase the processing solution from the beginning. Lets say you find a merchant account provider who will charge you $350 to purchase the real-time Internet credit card processing solution. Or they will lease you the same solution for $30 each month for the next 48 months. After figuring that up, in the end you will end up paying $1,440 for that solution if you chose to lease it for 48 months. That’s $1,090 more than you would of had to pay if you just purchased the solution right at the beginning. Also, be aware the above calculations do not include your state sales tax on the lease or the amount charged for the damage/loss waiver. With these two additional costs you can end up paying as much as $20 more along with the lease amount charged for the solution. Another thing you may not realize is the 48 month lease is not cancelable, so even if you go out of business you may still have to pay on that lease until the 4 years (48 months) is completed.

There are some merchant account providers that can even set you up on a month-to-month rental program. The nice part about this is you can cancel at any time, unlike if you signed a contract for a 48 month lease. It’s also nice if you don’t have the money up front to purchase the solution. Right now there aren’t very many that offer this type of program, however. Be sure to check off that you’re interested in a rental program when you use our search function to find a provider. The rental program can only be offered to US-based merchants at this current time.
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Can I use someone else’s merchant account to do my transactions?

No, this is an illegal practice known as “credit card laundering” or “factoring.” Using someone else’s merchant account to do you credit card transactions can lead to heavy fines and perhaps more.
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I have a swipe terminal for retail sales, and I will soon be selling online, will my rates be higher as an Internet merchant?

Yes, as an online merchant you will be charged higher rates because the fraud issue is considered much higher online than it is in the retail world. The only rate changes you should see are in the discount rate and transaction fee. Discount rates for Internet merchants range around 2.50% and transaction fees around $0.30. Fees are different from provider to provider, but in general you can expect to pay around those terms, maybe even lower. It might be in your best interest to sell your terminal (if already paid for or the lease is up) and use the money to upgrade to a Real-Time solution. With a Real-Time solution you will be able to do transactions automatically when someone orders from your site and also manually whenever a sale is made at your retail store. If you also do MO/TO (Mail Order/Telephone Order) the manual processing would work the same as for retail (face-to-face). Check with a Merchant Account Provider for details.
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What kind of processing solutions are available?

Real-Time Internet processing, retail swipe terminal, and computer-based processing. Check out our Solutions Guide for detailed information on each available solution, and to help you determine which is best for your businesses needs.
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What credit cards can I accept?

This depends on the provider. The most common cards processed are Visa and MasterCard. American Express and Discover accounts are also widely available by almost all providers. Some can even offer Diner’s Club and JCB merchant accounts. Out of US merchants will be able to get a merchant account for Visa and MasterCard much more easily they can can for American Express and Discover. In fact, it may be nearly impossible to obtain a merchant account for American Express and Discover cards if you are located out of the US.
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How long does it take to get my account set up and to start processing credit cards?

Many providers can have you up and running in a week or less. Some do take longer, however. If you are an out of US merchant, you can expect the process to take as long as a month or more.
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When are my funds available?

It will take between 1 to 2 days for money from credit card purchases to show up in your account. It should never be more than 3 days, though. Some may even be able to offer same-day funding, however, at the time it’s only available to retail merchants.
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What is a chargeback?

Click here to view our glossary listing on chargeback.
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How long does it take to setup a merchant account?

Usually anywhere from a few days to a week if you are located within the US. If your outside of the US you can expect it to take several weeks. The turnaround time frame varies from provider to provider and which banks they are dealing with in order to get your merchant account approved.
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I lost my merchant account from too many chargebacks, what can I do?

An excessive number of chargebacks on your merchant account can cause your Merchant Account Provider to drop you without notice. Once this occurs you are added to the MasterCard MATCH list (formally known as the Terminated Merchant File). All Merchant Account Providers have access to this list and if they find you on here they can refuse to issue you another merchant account. If you get on the list you may stay on there for several years. But, if you’re on this list there is help. Bank Card Law ( http://www.bankcardlaw.com ) specializes in helping companies remove their name from the MasterCard MATCH list and educate them on how to virtually eliminate future chargeback episodes.

For more information on how to reduce and eliminate chargebacks visit our articles section.
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Are 3rd party credit card processing companies better than having your own merchant account?

In short, no. Third party services tend to add a cheap and unprofessional look towards your business. There are also other downfalls to using a third party processing service such as late funding payments, the hassles of going through a middleman, and lack of control of payment processing. Third party services should only be used if you don’t have enough capital at the start-up of your business to support a real merchant account. Once your capital has grown some it is best to obtain a real merchant account for your company.
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I’m just interested in buying equipment or software, where can I go to get the best prices?

Four companies that offer both new and refurbished equipment and software are Terminal Outlet, MerchantWarehouse, and POS Credit Card Machines. You can actually save bundles by buying your equipment from one of these companies then obtaining a merchant account elsewhere or with them. Be aware if you go elsewhere for a merchant account you may be subject to a programming fee.
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What does “Authorization Only” mean when trying to process a credit card transaction?

By processing an Authorization-Only (often referred to as “Auth-Only”) transaction, you are simply obtaining authorization for requested charges to a card, without immediately designating the transaction for batch settlement. Such a transaction type is useful for merchants who ship products and need to ensure that they receive all necessary address information. After submitting authorization only transactions, you can select them for batch. Batch is nothing more than taking all the credit card orders you completed that business day and submitting them all at one time, usually at the end of the business day.
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What does “Capture Only” mean when trying to process a credit card transaction?

When an authorization code has been obtained for a transaction (e.g. voice authorization), a merchant can capture these funds using the Capture Only method. The transaction will then be settled in the next Batch.
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I process transactions using the phone, but my rates are high. What can I do to lower them?

Your best bet would be to make use of a Virtual Terminal option. Just as with telephone-based processing you have to manually give credit card information. A virtual terminal is accessible via any computer connected to the Internet. You just type in the URL to the login page, enter in your ID and password and you are securely logged in to complete credit card (and even check) transactions. Again, I want to make note that transactions are protected using SSL security. Processing fees for using a virtual terminal range from 2.30% to 2.50% discount rate and $0.30 to $0.35, depending on which merchant account service you choose. Monthly fees vary from provider to provider. Typical purchase costs for a virtual terminal range from $99 to around $200, again this will vary from provider to provider.

Should you decide to use a virtual terminal solution, another key way to reduce higher processing fees (and largely reduce fraud and charge backs) is to collect the 3-digit security code found on the back for Visa, MasterCard and Discover credit cards. A 4-digit security code can be found the front of American Express cards.
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Are there application fees involved?

All providers have an application fee. Some charge it right out at the beginning, others add it into the purchase/lease costs for equipment/solutions. Application fee costs can be as high as $100+.
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What are statement fees, usually?

Most providers usually charge between $10 and $15 per month. The statement fee is charged because at the end of each month you will receive a statement from your processing bank that will list all the transactions that went through for that particular month. It’s very much like a credit card or telephone bill.
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What is a gateway fee?

A gateway fee is charged by the processing bank for maintenance of the system that is used to “pipeline” credit card transaction information from your business or web site to the network of banks that further process the transaction. Usually a typical gateway fee is around $10 per month.
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Are there monthly minimums associated with accepting credit cards?

Usually the monthly minimum is around $25; for some banks it might be higher. This processing fee is collected by your transaction and discount rate fees from your credit card sales each month. So, for instance, say your bank charges $25 as a monthly minimum, if the transactions and discount rate fees collected by the bank equal or go over $25 that month, no monthly minimum will be charged. However, if the fees for that month do not meet the $25 monthly minimum, you will then be charged the difference.
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What is a chargeback and are there any fees?

A chargeback occurs when a customer has their credit card credited for a for an item they returned, etc. Fees for a chargeback are usually around $15 to $20. There are ways to reduce chargebacks for more information please go to our Articles Section.
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Is voice/telephone authorization available?

Yes. However, most providers do not mention it on their site. You will have to inquire for availability. Touch-tone telephone credit card processing is a great option for low volume merchants. There’s no equipment to purchase. Setup fees vary. Transaction fees associated are usually around $1 per call plus a slighter higher discount rate (2.50% and up). One touch-tone phone processing solution is able to reduce chargebacks and fraud by using “voice stamp” technology, you can get more information on them by clicking here.
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Are there any programming and/or installation fees?

Usually not. However, some providers do charge $100 or more. If you are a retail business and purchased a terminal from somewhere other than from the merchant account provider you are obtaining a merchant account from they may need to do some slight programming modification to the terminal unit so it can work properly with the processing bank they represent.
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What is a discount rate?

This is a fixed percentage rate that is deducted from the purchase cost when an order is made. A small transaction fee is also deducted in addition to the discount rate, see below for details.
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What kind of transaction fees are associated?

These can vary depending on what processing solution you are using and what credit cards you accept. An overall ballpark figure would be between $0.15 to $0.35 per transaction. Retail card swipes are usually the cheapest, followed by computer-based processing, then real-time internet processing. For detailed information regarding the different processing solutions available read our solutions guide.
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Are there any setup fees?

Most of the time no, but some providers may charge up to $50.
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What is the daily close-out fee?

This type of fee is associated with software or terminal processing solutions where at the end of every business day you close-out all your transactions. Most of the time there is no fee for this.
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Do providers require a reserve account?

Some providers will require you to have a reserve account where the amount is determined by your businesses estimated sales receipts. Dealing with this type of reserve is NOT recommended. Usually a reserve is almost always charged to an out-of-US merchant who is trying to obtain a merchant account. Also, businesses that do a high volume of sales each month may be charged a reserve fee.
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How can I offer electronic gift certificates from my website?

Electronic gift certificates work in the same fashion as paper ones except you use these to shop online. For more information and to locate a company that can hook you up to offer gift certificates, click here.
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What is check guarantee/verification?

Check guarantee is a program in which you are guaranteed to be paid on your checks. There’s no need to worry about accepting checks or collection on returned checks. Usually, the cost for this solution is about the same as credit card acceptance, however, some may offer it for a lower price. Check with your Merchant Account Provider for further details. Click here to view more detailed information.
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What is checks by phone/fax/e-mail?

Checks by phone/fax/e-mail is a GREAT alternative solution to credit card acceptance which allows you to collect payment via check over the phone, by fax, and even off your order form on your web site. Click here to view more detailed information.
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What is debit card processing?

Debit card processing is almost like accepting credit cards except for the fact that your using a debit card to process an order. Click here to view more detailed information.
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What is Electronic Funds Transfer (EFT)?

EFT is a method for transferring money automatically by using the facilities of the Automated Clearing House (ACH), an entity associated with the Federal Reserve Banks. EFT is the only system by which a merchant can initiate a transaction to collect money from the bank account of a customer located anywhere in the USA. In addition, it can be used to transfer money outwardly to pay bills.

One of its most important functions in collecting money from customers is the money is automatically transferred on the DUE DATE as CASH, not uncollected funds. The cost of collection via EFT is less than the cost of conventional methods of bill collecting, using statements, mail, postage, employee costs, etc. EFT costs are based on the number of transactions, regardless of the dollar size, and this cost with very large volume is negotiable. In conjunction with lower per transaction costs, there are lower charges for a bounced check. Click here to view more detailed information.
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What is Electronic Benefits Transfer (EBT)?

Grocery shopping is one of the most widely performed activities around the world. If you are food merchant, you probably know that not everyone pays for their food with cash or credit cards, but many use food stamps as well. Now that paper is becoming a less and less common form of the food stamp. Many purchases are made with the use of a single card called Electronic Benefits Transfer card. Click here to view more detailed information.
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What is SSL secure order protection? Why is it required?

Secure order protection is commonly known as SSL (Secure Socket Layers), secure certificate, etc. This solution is a MUST for all Internet-based businesses who are going to be using the real-time credit card processing method. Securing your order form acts as a barrier to eliminate hackers from accessing your customers important personal information, like credit card numbers, social security numbers, etc.

NOTE: Check with your Merchant Account Provider to see if SSL secure protection is included with their real-time processing solution. In many cases, it is, thus saving you money and time from having to purchase your own secure certificate from a separate company. Click here to view more detailed information.
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What is a shopping cart? Do I need one?

If you’re an Internet merchant, then having a shopping cart solution is an absolute MUST. Especially, if you sell more than one product or service. A shopping cart has some other great benefits like automatic shipping cost information provided to the customer, automatic tax cost inclusion, shipment tracking, etc.

NOTE: If you already have a shopping cart solution you’d like to use be sure to check with your Merchant Account Provider to see if their real-time solution can support it. Click here to view more detailed information
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