Merchant Account, Credit Card Processing

Merchant Account Questions

A. A merchant account is a relationship with a credit card processing bank, that allows a merchant to accept and process credit cards. The merchant account will allow the merchant to swipe their customer's credit or debit cards through a credit card terminal, or will allow the merchant to manually key in transactions. Merchant accounts can be set up in the name of an individual or by a corporation. Each location of a business with a single ownership must have its own merchant account. And, each website set up by a merchant that either has a different name or sells different products needs to have its own merchant account. When setting up a merchant account, the merchant will specify what method they plan to use for obtaining information from their customers credit or debit cards. This determined method will also determine the cost that the merchant must pay to process their customers credit cards. The lowest cost for processing would be swiping customer's cards through a credit card terminal. Keying in transactions or processing over the internet has a higher cost than swiping through a credit card terminal due to the higher risk associated with this method.

Q. What are the requirements for a merchant account?

A. To setup a domestic or US based merchant account a merchant must have a physical location within the US and an American checking account. Once these conditions are met a merchant can apply for a domestic merchant account. If these conditions cannot be met a merchant must use an offshore merchant account.

Application Requirements for all businesses:
  • Physical Location in the US.
  • Checking account with an American bank in the name of the business or the merchant account signer.
  • Explanation of business type (ie: LLC, Corporation, Sole Proprietorship, etc.).
  • Federal Tax ID Number (EIN).
  • Owner or Merchant Account signers SSN.
  • Owner or Merchant Account signers address information.
  • Product or Services LTD being sold information.
  • Exchange and Refund policies.
  • Intended method of accepting transactions (ie: swipe, internet, keyed, etc.).
  • General business location type (ie: Shopping Center, Home Based, etc.).
  • Copy of a voided check from merchants checking account.

Additional Requirements for some businesses:
  • Marketing material (ie: business card, brochure, advertisement, etc.).
  • State or Federal Business License.
  • Proof of business existence (ie: phone bill, utility bill, etc.).
  • Proof or financial stability (ie: profit and loss statements, bank statements, etc.).

Requirements for all internet businesses:
  • Active website with DBA of website listed on application.
  • Product delivery methods and timeframe clearly stated on website.
  • Product prices in US dollars.
  • Privacy Policy listed on website.
  • Customer Service telephone number listed.
  • Secure checkout system.
  • Domain name registered to merchant.


Q. How long does it take to get approved and setup?

A. The time that it takes to get approved depends on the type of business and the intended method of processing that the merchant is planning on doing. The times listed are based from when our company receives an application.

Retail Businesses (Swiped Transaction):
For retail businesses it is common to get an approval within 24 hours or even on the same day. Including programming the terminal and shipping to the business, the total setup time is around 3 - 4 days.
Internet and Keyed Entry Businesses:
Internet businesses usually take 2 - 3 days to get approved and an extra day to get the payment gateway system programmed. This is also assuming that the merchant's website meets all requirements, otherwise a conditional approval may be granted until the website is fully setup. The total setup time is around 3 - 4 days.
Wireless Processing Businesses:
Wireless businesses are considered the same as a retail business except the terminal will take an extra 1 - 2 days to setup the terminal on the wireless network. The total time to be setup is 5 - 6 days. These times do not include any pending issues or the requesting of additional information, which is uncommon but does happen for some applications.


Q. Do I need to have great credit to get approved for a merchant account?

A. Personal and business credit are factors that are used to qualify a business or individual for a merchant account. Every merchant account application will include a credit check of the business and the person signing for the merchant account. Perfect credit is not a requirement for opening a merchant account, but a better credit rating can help speed up the application process. The only time that credit becomes an issue when opening a merchant account, is if a merchant has an open bankruptcy, or has been terminated from processing in the past. Our company processes through five domestic processing banks which enables us to provide Services LTD to nearly any business, regardless of past credit history.

Q. What is AVS?

A. The address verification system or AVS is an electronic system that verifies the address of the card holder during a credit card transaction. This system is commonly used in internet based and keyed in transactions where the card is not being swiped through a credit card machine. This system can verify the billing zip code of the card holder and if setup properly can verify the street address and sometimes even the telephone number. The merchant gets a response that the AVS is approved or declined and can then chose to run the transaction or not. AVS should always be used for every internet and keyed transaction to avoid downgrade charges and fraud. Even if you can verify who your customer is, if you are setup as a keyed or internet account, you should use AVS for every transaction.

Q. What is CVV, CVC, CV2?

A. CVV is a card verification system that verifies that a cardholder is in possession of a credit card by verifying a set of numbers that is embossed on the credit card and not encoded in the magnetic strip. This way even if the card number is stolen, a transaction cannot be processed if the purchaser cannot verify the cvv number on the card. Requiring CVV in addition to AVS can help to eliminate most fraudulent orders for internet and keyed entry businesses. Each card issuer has a different name for the CVV system, but all are essentially the same thing. Visa refers to it as CVV2, Mastercard is called CVC2, Amex is CID. The CVV number is located on the back of the card except for most Amex cards where it is on the front. Amex also uses a 4 digit verification code whereas all other card makers use a 3 digit number.

Q. Can I process through my website?

A. We offer several options that will allow you to process credit cards through your website. These services will integrate with your website to allow real time transaction processing, and also include a virtual terminal that will allow you to manually process transactions through a secure website.

Payment Gateway and Virtual Terminal Options:
  • Authorize.net
  • Our co-branded gateway
  • Verisign Payflow Link
  • Verisign Payflow Pro


Q. What if my business is not based in the US?

A. Please call for information.



Mobile Credit Card Processing Questions

Q. Is wireless coverage available in my area?

A. Do you live in a rural area? If you answered this question as yes, than there is most likely no coverage in your area. The wireless processing networks do not use the normal cell phone networks, and are subject to extreme blackout areas. Most cities have adequate coverage but rural areas do not. The TDMA and GSM networks are not yet certified for wireless processing, but will be in the future. This will greatly open up wireless processing for the rest of the country. There are already several wireless terminals that can process on these networks as soon as the networks become available. Wireless processing is now available on the GPRS Edge Network from Cingular. The terminal that we offer that works with the GPRS Edge network is the Nurit 8000 wireless terminal.

Q. How much does wireless processing cost?

A. Wireless processing uses that most advanced processing terminals available. With this advanced technology comes a higher price tag than land line processing terminals.

Wireless Processing Cost:
  • Terminal Cost: At least $850.00.
  • Monthly Wireless Fee: $20.00 - $30.00 / month.
These fees are in addition to your merchant account fees. Wireless terminals operate on cellular networks similar to cell phones, and thus require an additional cellular fee for using the wireless network. Make sure your business has a sufficient volume that justifies the extra cost of wireless processing. We recommend that your business processes a minimum of $1500.00 / month or over 100 wireless transactions / month before you look at a wireless solution. There are other options available for mobile type businesses outlined in ourmobile merchant account page.


Q. Do I have to use a wireless terminal?

A. There are several options that we offer for mobile businesses other than wireless terminals, but for true wireless point of sale processing, you must use a wireless credit card terminal. The other options are an ARU account, using a manual imprinter, or calling back to a central location where the credit card information is keyed into a terminal.



Processing Equipment Questions

Q. Should I purchase or lease equipment?

A. If you can afford to pay up front for the equipment that you are looking to obtain, you should definitely do it. Purchasing will save you a considerable amount over leasing.

These are a sample of the difference in price between leasing and purchasing. These prices do not necessarily reflect our exact leasing rates, but will compare the low end industry standard lease price to our purchase price.

Lease vs. Purchase - Nurit 2085

Price to Lease Nurit 2085:

Price to Purchase Nurit 2085:

48 Month Lease
$19.95 / month

Flat Purchase
$265.00 / One Time

48 x $19.95 = $957.60

Total = $957.60 and a 48 month contract.

Total = $265.00 and no contract.

Total savings if terminal is purchased: $692.06


Lease vs. Purchase - Nurit 8000

Price to Lease Nurit 8000:

Price to Purchase Nurit 8000:

48 Month Lease
$34.95 / month

Flat Purchase
$779.00 / One Time

48 x $34.95 = $1677.60

Total = $1677.60 and a 48 month contract

Total = $779.00 and no contract

Total savings if terminal is purchased: $898.60

These lease rates reflect the low end of what is available in the industry.

The bottom line is that even if a lease sounds like a good deal you will still spend much more than if you outright purchase the equipment. Most leases are non-cancelable, and may or may not include a buyout option at the end where you will be required to pay a percentage of the cost of the terminal. We have seen merchants using other companies with a buyout option of the total cost of the terminal that they are leasing.

Q. Can I process over an IP based, or ethernet connection?

A. Many merchants have broadband connections for their business and would like to utilize this connection for their credit card processing. The terminals that we offer for use with this type of connection are the Omni 3740 and the Omni 3750 with the ethernet adapter. PC Charge can also be used through a broadband connection, in conjunction with a PC card swiper. Either of these options will provide a lightning fast method for processing your electronic transactions. Currently there aren't any terminals that can process through any type of connection other than an analog phone line, except the Omni 3740 and Omni 3750.

Q. Will terminals work with VOIP?

A. Since the emergence of VOIP phone systems in the business world, this has been a common question. Most credit card terminals will not work with a VOIP telephone connection. A VOIP connection uses a digital phone network which involves switches and multiplexing to transfer data. Most credit card machines use an analog type connection that is incompatible with a digital circuit. The easiest way to use a broadband connection is to use a Verifone Omni 3740 or Omni 3750 with the ethernet adapter. These terminals in conjunction with a router will allow you to connect all of your electronics easily through the same internet connection. It may be possible to use an analog to digital converter, but since this is a very expensive and technically advanced process it is not documented or recommended.

Q. Can I buy a terminal from another company?

A. Absolutely. We can reprogram most any terminal being used in the processing industry, and we wont charge you anything to reprogram it. If you find a better price on a terminal from a reputable reseller we encourage you to save money. We try to keep our prices the lowest anywhere, but special offers sometimes come around. Also keep in mind that we will not warranty any terminal that is not purchased from us. You will still be entitled to all of our customer service benefits, but if a problem arises with your equipment, you will need to refer to the manufacturer for warranty and service issues. We offer a lifetime warranty with all of our new and refurbished equipment, with free overnight replacement. If you are unsure about the compatibility of a particular terminal please ask us before purchasing it.

Q. Can I buy a terminal on ebay?

A. Yes and No. You can often find excellent deals on ebay for terminals or other processing equipment, but many times these terminals are defective or have other obligations attached to them. Terminals on ebay often include merchant account requirements before the terminal will ever be shipped. These companies usually offer impossibly low rates and will raise these rates after you are committed to their services. Many times defective or outdated terminals are sold at low prices on ebay to the unsuspecting buyer. The most common terminals that are sold to fool the buyer are Verifone Zon series and Nurit 3010 terminals. The verifone Zon terminals are outdated and are unusable on most processing platforms. The Nurit 3010 has a version that cannot be used on any processing platform, because of the outdated wireless network called the CDPD network. These terminals are usually sold with no return policy so once the purchase is made, the buyer is left with a useless terminal. We see merchants on a weekly basis that have been scammed by these ebay bargain terminals. There is nothing that we can do except offering a certified terminal with a full warranty. Unless the terminal is from a reputable seller and includes at least the manufacturers warranty, don't buy the terminal. If you aren't willing to take the risk of loosing your money on a terminal that doesn't work, just stay away from ebay terminals. The benefit of ordering a certified terminal from us, is that all terminals are either new or factory refurbished. Refurbished terminals are properly marked to ensure you know you are purchasing a refurbished terminal. All of the terminals we offer including refurbished terminals come with the manufacturers warranty and a 30 day no lemon guarantee. If you process through our company we will extend the warranty to the entire time you process through us, with free overnight replacement.

Q. What is a refurbished terminal?

A. A refurbished terminal is a terminal that has been remanufactured to restore it to its original condition. Refurbished terminals carry the same warranty as new terminals, but are significantly lower priced than the same new terminal.



General Credit Card Processing Questions

Q. What is a chargeback?

A. A chargeback is where a customer is disputing a charge listed on their credit card statement. A chargeback may get the customer their money refunded, but it is not a refund. Avoid chargebacks at all costs because they can ultimately end up in a merchant loosing the ability to process credit cards completely. The customer will contact their credit card issuing bank to notify them that they want to dispute a charge. The card issuing bank requests a chargeback from the processor who takes the amount of the purchase from the merchants bank account. The merchant will then be sent a letter that notifies them of the chargeback and requests further information from the merchant. The merchant will need to provide the requested information to the processor who will then make a decision on whether the customer deserves to get a refund. Chargebacks can be initiated for a variety of reasons. The most common reason is that a customer doesn't recognize or doesn't remember the name of a merchant listed on their credit card statement. A chargeback can be initiated 6 months after the completion of the sale. This means that if you provide a service that lasts 1 year the customer can chargeback the transaction 6 months after the service is completed, one and a half years after the sale itself is made. This is why chargebacks are more common with long term or custom services.

Common Chargeback Reasons:
  • Not recognizing merchant's name on credit card statement.
  • Customer charged more than once for the same purchase.
  • Merchant did not deliver the agreed upon service.
  • Customer unsatisfied with product or service.
  • Fraudulent orders (mainly internet businesses).
The best way to challenge a chargeback is to first contact the merchant to try and figure out why there was a chargeback. Many times the merchant will withdraw the chargeback. Other times the merchant only asked their bank if they knew what the charge was, and the bank initiated the chargeback without the merchant even knowing. Next, get the required paperwork together and send it to the processor. This information must reach the processor within 10 days of receiving the chargeback letter. The required documents will be listed on the chargeback letter. It is important to cooperate fully with the processor to resolve the chargeback. Remember, it is not the processor that is issuing the chargeback, it is the card issuing bank or the customer. Getting angry at the processor, who is trying to help your business, will only further complicate the process. You may not win every chargeback and your business may never get a chargeback, but operating your business under good standards and having good customer relations will improve your chances of not getting a chargeback in the first place. Also make sure your customers know your business name and return and refund policies, to avoid simple misunderstandings.


Q. How long does it take for funds to be deposited in my account?

A. Funds will be available in your bank account normally between 24 to 48 business hours from the time that a batch is received by the processing bank. It is a common misconception that funds will be available 24 to 48 hours after a transaction, but this time is actually measured from the time of the batch. Once a batch is received by the processing bank, the funds transfer is initiated. The funds are withdrawn from the customers account almost immediately, and the merchant's bank will hold the funds for 24 to 48 hours until the transfer is finalized. This wait period is also a fraud prevention measure. Sometimes a merchant's bank will have a policy to hold the funds for longer than 48 hours. There is nothing that the processor can do to speed up the transaction. If this delay is a problem, the merchant should talk to the bank and see if they can stop the transfer hold. If they cannot, the merchant should find a new bank for their checking account. Changing processing companies will do nothing to help eliminate this delay in the funds transfer. When transactions are processed on the weekend or holiday, the funds will take extra time for the transfer. The banking systems are closed on the weekends, which causes the delay. Again, changing processing companies will not speed up the transfer of funds for transactions processed on the weekend or on holidays.


LTD Merchant Services is a registered ISO/MSP of Wells Fargo Bank, N.A. Walnut Creek CA
and a registered ISO/MSP of BMO Harris Bank, Chicago, IL

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