By: Jim Conley II, MerchantSeek.com
Many merchants are confused as to why merchant account
rates, particularly the discount rate and per transaction fees,
differ between Retail, Internet and Mail Order/Telephone
Order (MOTO) businesses.
In the retail brick-and-mortar world, orders are completed
face-to-face. If a customer pays by credit card they simply
swipe their card through the merchant’s credit card terminal.
This is what is known as “card present.” “Card present”
means that at least 80% of the business’ credit card
transactions are completed face-to-face where the customer
can slide their card through the merchant’s credit card
terminal. It is generally considered that orders completed
through this manner are less likely to be fraudulent, therefore
discount rates and per transaction fees are lower. Discount
rates for retail businesses fall within the range of 1.00% to
2.00%, while per transaction fees range from $0.10 to $0.20.
For Internet and MOTO businesses, credit cards cannot be
swiped through a credit card terminal. They must be either
keyed in manually or automatically transacted using a real-
time credit card processing solution. Since transactions are
not completed face-to-face (card present) then the likelihood
of fraudulent orders is considered to be much higher, so the
rates for these types of businesses are higher. Discount rates
for Internet and MOTO businesses usually range from 2.50%
to 3.50% (even higher for non-US businesses), and per
transaction fees range from $0.20 to $0.50.
For more information about fees and rates associated with
merchant accounts check out this page:
http://www.merchantseek.com/guide.htm#costs
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Jim Conley II is the CEO/Founder of MerchantSeek. MerchantSeek allows merchants from around the world to search FREE for a Merchant Account Provider that best fits their businesses needs and budget. Visit us at http://www.merchantseek.com/