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| About Accepting Credit Cards for Your Business |
| Accept Visa/ Mastercard, American Express and Diner's Club |
| Rates for merchant processing
can run the gamut. They could range from 1.75% to 5%. Some of the factors that
determine your rate is: 1. The industry you do business in: The riskier your business the more they'll charge you. In fact, they may even hold your money for a week! Most credit card processsing and merchant companies will deposit your credit card transactions overnight. They're as good as cash. But again, if you're in an industry that is notorious for high charge backs, fraud, theft and deception, your rate will be higher. You'll just have to accept this as the rest of your competitors are going to be paying the same kind of rate. 2. Mail order/Internet vs. Retail Store: The bottom line is that if you can show your bank processor that you are "low risk", they'll charge you a lower rate. Purchases that are made in person, in the store, with card in hand, where you can physically swipe the credit card, are considered to be lower risk. Theft can run rampant in internet and mail order transactions. There is no human face, no physical contact and no human interaction. Everything is done behind the veil. How do you know this person didn't steal the credit card number? How do you know this isn't a fraud ring involving the Russian Mafia, Chinese Triads and The Japanese Yakuza all in one? Perhaps it's just a teenager who stold his mom's credit card and decided to buy himself a new computer. All the above will still spell trouble for you the merchant and will result in a charge back refund. This charge back refund will result in higher fees for you. Thus, if you can get a physical signature, the safer you are, and the lower your rate will be. 3. Your Personal Credit: What kind of credit risk are you? What's your credit score? How long have you been in business? All these factors will also determine your processing rate. Other Dangers in Accepting Merchant Credit Cards 1. Charge Backs: We all hate chargebacks. Credit card banks are now charging up to $25 per incident, regardless of whether or not it's your fault. Even if a customer decides to call and inquire about a line item on his credit card, you the merchant will most likely end up paying for it in the form of miscellaneous fees. I think this is very unfair, but our consumer driven society wants to encourage "buying" and protect the customer as much as possible. Even if it's at the expense of the merchant. You'll never hear about Visa/ MC/ Amex deciding to lowe their "cut" of the fees. If anything, they'll decide unilaterally to lower your cut as the vendor/ merchant. Very unfair, I agree. 2. No Fault Chargebacks: Customers many times have the right to request a refund or chargeback for the most ridiculous reasons. Let's say your customer's daughter, son or brother decided to use their parent's card to purchase an item. Because this was unauthorized, you the merchant will take 100% responsibility for refunding and having to make arrangements to get your merchandise back. Continued... |