Merchant Account Reviews

Merchant Account Responsibilities

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When you accept credit cards, you are agreeing to abide by the rules and regulations of Visa & MasterCard. You are also agreeing to the terms and conditions set by the agreement between you and the processor. By following these rules, you ensure you do not run into compliance issues. If you do not follow these rules, you may end up finding yourself on a list called MATCH or TMF, which is administrated by MasterCard. Once you are placed on this list by a processor, it is very difficult to get approved anywhere else. Listed below is a summary of some of the most important rules:

  1. Monthly Limit / Average Ticket - when you apply for a merchant account, you state on the application the total monthly volume and average ticket you want to get approved for. If your business is growing and you plan on exceeding either of these two numbers, contact your internet merchant account provider for details on what is required to increase these limits. If you do not take any steps in advance, you may find yourself with issues with the risk department, which may include them holding your funds.

  2. Credit Card Logos - you are only allowed to display the appropriate card logos on your web site or in your retail store. The card logos must be approved by the card associations. You must honor all cards within each category that you accept (i.e. credit and debit).

  3. Chargeback Ratio - Visa & MasterCard require that all merchant accounts must maintain a chargeback ratio of less than 2% (approximate). If a merchant exceeds this limit, the acquirer and processor could be liable for fines that are passed down from Visa & MasterCard. Therefore, most processors will closely watch or shut down a merchant that exceeds this limit. Every case is different, but it is best to never exceed this limit as you run the chance of running into problems with the risk department.

  4. Dollar Maximums & Minimums - you are not allowed to impose a minimum or maximum dollar amount a customer may charge. If you do this and the customer reports this to their card issuer, then word will get back to your merchant service provider and your account will be shut down.

  5. Surcharges - You are not allowed to add a surcharge for customers paying by credit card unless you are one of the few industries that are allowed to by Visa & MasterCard. An example industry would be a municipality or government organization. One way around this is you may offer a discount to your customers for paying with cash. However, it must be clearly disclosed to your customers that the cash price is a discount from the standard price charged to all other payment types (credit card, checks, etc).

  6. Factoring or Laundering - You are only allowed to process transactions for your own business. If you process transactions for another business under your own merchant account, this is called factoring or laundering. This is strictly prohibited.

  7. Paying Fees - Most merchant providers bill on a plan they call daily discount. They take out the percentage before making the deposit. Your checking account is then debited for the remaining fees at the beginning of the following month. You are then mailed a statement showing what was taken out. Be sure there is always sufficient funds in there to cover these debits. If there isn't, it will start to cause issues with your processor.

Credit Card Processing Articles
  1. Why Should you Accept Credit Cards?
  2. The Different Types of Merchant Accounts
  3. How to Avoid Credit Card Processing Downgrades
  4. Merchant Account Responsibilities
  5. The Different Types of Credit Card Machines
  6. What is a Merchant Account?
  7. Why Avoid Credit Card Terminal Leases?
  8. 3 Ways to Save Money on Credit Card Processing
  9. Credit Card Processing Checklist
  10. Pros & Cons of Credit Card Processing
  11. What to Expect in Your Monthly Statement
  12. The History of Credit Card Processing
  13. Recent History & Future of Credit Card Processing
  14. The Different Organizations of Merchant Services
  15. The Glory Details of Disputes, Retrievals & Chargebacks
  16. Understand All the Risk with Merchant Services
  17. Factors & Guidelines to Merchant Service Underwriting
  18. The Life Cycle of a Credit Card Transaction

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