Merchant Account Services

Archive for the 'Merchant Accounts' Category

Major Third Party Processor No Longer Accepts MasterCard

Friday, January 19th, 2023

CCAvenue, one of the larger third party processors, has lost its ability to process MasterCard credit card payments. At least temporarily. Below is the notification they have sent to their merchants:

Dear Merchant,

For over 5 years, CCAvenue has been striving hard to get you the best of payments facilities and technologies that are available. You may be aware that the payments industry is a rapidly evolving one and there are new developments every day. There have been ups and downs and we have handled many challenges together by supporting each other.

One significant development that has occurred a few days ago is that MasterCard International has revised some of its rules and has implemented a program called the MSP (Member Service Provider) Program across all of Asia, Europe and the Middle East. Due to this development, all third party payment processors like CCAvenue in these regions will have to make certain changes in the work processes and meet certain norms before they can continue to accept MasterCard online. As per MasterCards new rules, the acquiring banks are required to stop the MasterCard payment facility to third party payment service providers with immediate effect till they comply with the new requirements.

Under the new MSP Rules, every sub-merchant has to enter into a tripartite agreement between the sub-merchant, the acquiring bank and ourselves. The MasterCard payouts will be done directly by the acquiring bank to the sub-merchants bank account. The sub-merchants website name will be reflected in the card holders statement and not CCAvenue (as it is currently happening). Please note this process is only for MasterCard and CCAvenue will continue to offer all other payment options and there will be no changes in the payout process for these.

Since the implementation of the MSP Program is going to take time, we regret to say that we are compelled to stop offering the MasterCard payment option for a few weeks. Therefore, as of January 15th, 2023 the MasterCard payment option will not be available on our gateway.

We are deeply aware of the loss to your business due to this action and we can’t say enough about how sorry we are for this. Do remember, as we are your partners, it severely affects our business too. We regret to say that this is entirely out of our hands and beyond our control.

On the way forward, our acquiring banks have already initiated the registration process of CCAvenue as a MSP. We assure you that we are trying our best to get the MasterCard payment option live again as soon as possible. However, as per the feedback from our acquiring banks, the process will take at least a few weeks. We have always believed in transparency and I seek your co-operation and support in complying with the new MasterCard Rules and Bye-laws.

What does this mean? If you are a CCAvenue user you no longer can accept MasterCard payments. As MasterCard is the second most popular credit card this can have a serious impact on your business. Assuming they do intend to do what is necessary to become MasterCard compliant again, you should find an alternative form of processing until they can accept MasterCard once more.

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Some Questions To Ask When Looking For A Merchant Account

Monday, December 18th, 2023

When shopping around for a merchant account provider, discussing rates and fees seem to be what the discussion focuses on. But are you asking the right questions that will help you determine that the merchant account is right for you? Below are some questions that should help to take the discussion to a deeper level and reveal some details that will help you determine if the provider is a contender or a pretender.

  1. Am I locked into a contract?

    When establishing a merchant account every merchant must sign a contract specifying the responsibilities of both parties. You must agree to abide by Visa and MasterCard rules as well as those of the merchant account provider. However, this does not mean you have to be locked into a contract for any length of time (to learn more about contracts and term lengths see Understanding a Merchant Account Contract’s Length of Term). Visa nor MasterCard require merchants to use their services for any length of time. Contracts that require a merchant to keep their merchant account for any length of time is solely at the discretion of the merchant account provider. The fee associated with terminating a contract early is also at the discretion of the merchant account provider and thus can vary.

    Contract lengths are not always disclosed up front so you must be sure to ask your provider what yours is. Make sure you don’t ask, “Is there a contract?” because the answer is always, “Yes”. You want to be sure to find out how long your contract is for.

  2. Is there a monthly minimum fee?

    The monthly minimum fee, while seen by merchant account providers as a way to guarantee themselves an account is worth establishing, is seen by merchants as a penalty for being small or having a slow month. (To learn more about the monthly minimum see The Monthly Minimum Explained). The monthly minimum fee is not required by Visa or MasterCard. Larger merchant generally don’t have to worry about this fee as they will process enough sales during a month to never see it. Smaller merchants or seasonal merchants can see their costs for accepting credit cards be as much as double of what they should be without this fee.

    A good follow up question to this would be, “Why do you charge a monthly minimum fee”? If they tell you it is a required fee from Visa and MasterCard, you now know they aren’t being very honest with you and you can end your discussions with them.

  3. Is the equipment/software you are selling proprietary?

    Just like computer software not all credit card terminals and software is compatible with all merchant account providers. This is intentional as the merchant account provider selling the equipment is hoping by selling you proprietary equipment they will make it more difficult for you to leave them for another merchant account provider. (See Avoid Proprietary Credit Card Machines). It’s one thing to be locked into a contract with a merchant account provider, but to also be locked in because your credit card processing equipment won’t work with most other merchant account providers is overkill. A good follow up to ask is if there is any equipment they can offer you that is not proprietary and can be used with other processors.

  4. How long does it take to get my funds?

    In the past, a merchant didn’t get paid on their credit card sales until they mailed their credit card slips in to their bank. It could take days or weeks for a merchant to get their funds. Nowadays it is all done electronically. As a result funds for processing Visa and MasterCard transactions should never take more then two business days to arrive in your account. Keep in mind these a business days and not calendar days. Holidays and weekends are not considered business days and anything that occurs after 2 PM are considered as happening the next business day (just like your local bank). If a merchant account provider tells you that it will take more then two business days for your funds to reach your account ask them why.

  5. My average sale is $xx.xx. How much would I pay with you?

    This question gives you an opportunity to see how their rates and fees will apply specifically to your business. It’s one thing to see their sales pitch and the numbers as they present them, but these examples are generic and may not reflect what your business will be paying. Have the merchant account provider calculate what an average transaction will be for you. Follow up by having them figure out what a typical month will cost for you. If you can, even go so far as to try to have them calculate what a month would cost for you with some downgraded transactions. If you have an existing merchant account and are considering switching to a new provider this would be a good way to compare the two. An even better test would be to compare their results with those from our Advanced Fee Calculator and Advanced Account Comparison Calculator.

  6. What will my fees be if I don’t do AVS?

    When advertising merchant account rates the vast majority of merchant account providers advertise their qualified rate and other basic fees like monthly statement fee. This is to keep the advertising simple and is what most merchants will be concerned with as it should constitute the majority of their processing costs. But other fees apply and for non-retail businesses a common reason to pay additional fees is related to doing AVS. Non-swiped credit card transactions require AVS to be performed every time. Not performing AVS will result in the transaction downgrading to a higher rate. By asking this question you will find out what your non-qualified rate will be as this is the rate charged for failure to do AVS as well as other processing errors and some special credit cards.

  7. Is this an introductory rate? Can my rates change?

    A common tactic amongst some merchant account providers is to quote a merchant one rate and after a set period of time raise their rates significantly. Naturally this kind of bait and switch is unethical and harmful to the merchant. Rates should only ever change whenever Visa and MasterCard make a change in Interchange. This happens on average once a year, although it can happen three times in a year or it can go years without happening. In these cases all merchants will experience a rate change so your business is not being singled out. But if a merchant account provider gives you any other reasons for your rates to go up then it is in your best interest to find a new merchant account provider.

  8. What makes you different then the other guy?

    Although there is some advice that can be given related to this question, the best reason to ask it is so your gut can weigh in on the decision. It is a wide open question that forces the merchant account provider to really describe themselves as an entity and reveal a bit about themselves not only as a company but as a person. This is a great time to get a “feel” for them. Numbers and technical specifications are important when making many decisions, choosing a merchant account provider included. But how many times have you wish you listened to your gut feelings?

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Google Checkout Free Through 2023

Monday, December 11th, 2023

Google is stepping up the pressure on Paypal yet again. Apparently they feel the free processing has been a great way to get merchants on board with their system. So much in fact they are extending it through 2023 .

With the holiday season quickly approaching, we wanted to do something to say “thank you” to our merchants. To help out during this very busy shopping season, we are processing all of our merchants’ Google Checkout sales for free during the holidays. From November 8 through December 31, 2023 , Google Checkout merchants will receive free processing for all of their Checkout sales, regardless of whether or not they use AdWords. If you don’t currently use Checkout, don’t worry—new Checkout merchants are eligible for this offer as well, so sign up now. To all of our merchants: thank you for contributing to the success of Google Checkout and Happy Holidays!

In addition, they have open Google Checkout to allow purchases to be made from other countries outside of the United States.

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Understanding a Merchant Account Contract’s Length of Term

Friday, December 8th, 2023

One thing that isn’t often mentioned up front is the term of the contract you have to sign to accept credit cards. When signing a contract to establish a new merchant account you are usually, but not always, committing to staying with the merchant account provider for a minimum length of time.

There are three different kinds of contract terms a merchant may be subject to. They are:

  1. Open Ended

    There is no term specified in the contract. The merchant can terminate the contract at any point in time without penalty. This is the ideal term for merchants.

  2. Specified Length

    The merchant is locked into the contract for a minimum period of time. This is typically two or three years but can be as liitle as one year or as much as four years. If the merchant terminates the contract prematurely they may be subject to fees and/or penalties for doing so. If the merchant terminates the contract after the term has expired no penalty will assessed.

  3. Auto Renew

    This is similar to the specified length contract except the contract automatically renews itself when it ends. If the merchant does not indicate to the merchant account provider that they wish to terminate the contract when its term expires they will automatically be locked in for another term subject to the same penalties of early termination. This is the worst kind of contract a merchant can subject to.

When shopping around for a new merchant account provider, be sure to find out what type of contract they offer. If there is a contract term involved, make sure you are aware of the termination fee (also known as a cancellation fee) and whether the contract is auto-renewing. The last thing you want to do is get locked into a contract for a long period of time and find leaving difficult because the termination fee offsets any savings you may have gotten from a new merchant account provider.

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Top 5 Reasons to Avoid a Merchant Account Provider

Friday, December 1st, 2023

After seeing top lists elsewhere for a variety of other topics, we decided that one would be appropriate for our site. Below are the top five reasons to avoid a merchant account provider:

  1. They do not publicly disclose their rates

    Although there are a variety of potential fees involved with credit card processing, there still is a core set of fees a merchant can expect to pay regardless of the specifics of their merchant account. These fees will be structured the same regardless of which processor the merchant chooses. As a result, there is no reason a merchant account provider should not disclose their rates and fees on their website or any other form of solicitation. When the merchant account provider uses terminology like, “call now for a free quote” or, “plans customized for your business” you know they are really just sizing you up to try to get every last penny out of your business.

  2. They sell proprietary equipment/software

    A common problem merchants run into is there grow unhappy with their current processor and attempt to leave them for another processor. This is when they find out the credit card equipment or software they were sold by their current company won’t work with the new company. The real problem with this is that their current company knew this when they established their merchant account but did not tell the merchant. As a result the merchant has to make a decision: either stay with their current processor whom they are unhappy with or essentially throw away their old proprietary equipment and buy a new one.

    When shopping around for a merchant account provider ask them if the equipment or software they are selling you can be used with all processors. As them if it is proprietary to any processor or processing network. Common names that should immediately set off red flags is LinkPoint and Eclipse.

  3. They obfuscate their fees

    The fees associated with merchant accounts, even though simplified several times over by the processing banks, can still be complex and more then most merchants can understand. Some merchant account providers take advantage of this by trying to position their fees in a way that is very misleading.

    An example is the AVS fee. AVS must always be performed, or more accurately, is always performed for all non-swiped transactions. Unfortunately some merchant account providers prey on their potential merchants by not telling them this. Then when they disclose their fees they separate their AVS fee from their transaction fee. This causes the merchant to think their rates are actually lower then they think they really are. Of course the merchant doesn’t realize their mistake until they get their first statement and at that point they are almost certainly locked into a long term contract. The merchant account provivder can always say they disclosed the fee. The fact that they did it in a potentially dishonest manner doesn’t matter to them.

  4. They have a comparison chart on their website

    Ever see a comparison chart where the company being compared to the “industry standard” just looks like their offer is an amazing deal? Their rates are so much lower then the “industry standard” and must really be a good deal. Right? Not quite. For starters, there is no industry standard. Merchant account providers can charge whatever they want to charge. Each company has different fees that they can choose to charge apart from the typical processing fees. But no provider is required to charge these fees and thus there is no “standard”.

    Naturally, the rates and fees you see listed in the “industry standard” are not accurate. Although technically there can be an industry average for fees there is no way to accurately determine this. This information is not publish and would require hundreds of companies disclosing their rate structures. Needless to say this has not happened and is not likely to happen. And, of course, these numbers are guaranteed to be inflated above any true average or what a merchant can find if they spend more then 5 minutes comparing providers.

  5. They charge you fees that only serve to make them rich

    There are a myriad of fees that a merchant may encounter while accepting credit cards. Most of these are normal and many of them a merchant will never encounter if they process their credit cards properly. Most of these fees are designed to encourage merchants to process their credit cards properly and to cover the costs of handling transactions that are not processed properly.

    However, there are some fees that exist solely for the purpose of the merchant account provider’s benefit. These fees are meant to penalize merchants, punish them, or take advantage of their lack of knowledge about merchant accounts. An example would be a set up fee. Establishing a merchant account is not difficult to do if a merchant account provider is even remotely organized and experienced. And since they stand to make a lot of money from establishing the account there is no need to make the merchant pay for the privilege of making the merchant account provider more money.

    A cancellation fee exists only to lock a merchant into an existing contract. This fee means once a merchant account provider has locked a merchant in, they don’t have to worry about losing the merchant as if the merchant leaves they get paid a hefty sum of money from this fees. It also means merchant account providers will do anything to land a merchant including using some of the tricks mentioned above. A cancellation fee combined with proprietary equipment usually means a merchant is stuck with their provider for years no matter how unhappy they are.

    Lastly is the monthly minimum fee. This fee exists for one reason only: to penalize small merchants. Although it is understandable that without this fee small merchants would be far less attractive to merchant account providers, for how little work is required to establish a merchant account, an efficient and organized merchant account provider can make it cost effective to sign up those merchants without penalizing them for being small.

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