Frequently asked Questions

Everything you wanted to know about credit card processing, and everything you didn’t!

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Merchant Account Questions

Why Should Your Business Start Accepting Cashless Payments

There are very few drawbacks to accepting cashless payments, and a long list of benefits. The main ones are:

  • Optimizing the payment process – Swiping a card is faster and easier than counting cash and giving back change.
  • Expanding your customer base – The more payment options you offer, the more customers you’ll have.
  • Opening new doors – If your goal is to start an online business, cashless payments are a step in the right direction.
  • Increasing reliability – Customers are naturally more inclined to trust businesses that accept cashless payments.
  • Boosting sales – Most importantly, introducing cashless payments is sure to increase your numbers and expand your business.

How Can You Start Accepting Cashless Payments

To introduce cashless payments, you will need to set up a merchant account. You should also find a merchant processing company that offers all the services you need at prices you can afford. Keep in mind that different providers have different merchant service rates and fees, so you’ll need to do some research. A good company will offer the best deals for their price and excellent customer service. It is especially important if you’re new to cashless payments and need someone to explain things thoroughly. Don’t forget that once you start accepting cashless purchases, let your customers know by placing stickers on the door, a sign on the cash register, or an announcement on your website.

What Is a Credit Card Processor

A credit card processor, also known as a payment processor, is a company that handles your cashless transactions. Whenever you accept a cashless purchase, your credit card processor will gather the information of the transaction and route it through the credit card association to your customer’s bank for authorization. Then, the credit card processor sends the data (transaction approval or denial) back to your POS. In other words, a credit card processor is a crucial part of the process of cashless transactions that ties all the other participants together.

What is a merchant account?

Simply put, a merchant account is a type of bank account. It allows businesses (i.e., merchants) to accept cashless payments, be it by debit or credit cards. It is a product of the cooperation of the merchant (you and your business), their chosen payment processor (a company such as Merchant Chimp), and the merchant bank (the bank where your business has an account). When you accept a cashless transaction, this is where your money will go. From there, it will be transferred to your main business bank account, where it will be merged with your other profits.

What are the requirements for a merchant account?

Firstly, you need to have a business registered in the country where you’d like to open your merchant account (in your case, the US). You should also have a US bank account. In addition to them, you’ll most likely also be asked to fill out an application form, submit your financial statements, file articles of incorporation and a personal guarantee. To learn more about which documents Merchant Chimp requires, feel free to contact us.

What is a high-risk merchant account and can I still use your services as a high-risk merchant?

A high-risk merchant account is a merchant account belonging to a high-risk business. Simply put, these are the businesses that pose a higher than usual risk to their banks because they are more likely to have chargebacks. Some examples include airlines, businesses with annual subscriptions or memberships, online gaming websites, casinos, financial services, or any business with poor credit. If you are a high-risk merchant, you will still be able to set up a merchant account, but you might go through a more detailed process than other businesses do. Additionally, you will likely be required to pay fees that are higher than those for low-risk businesses.

What Is a Payment Gateway

A payment gateway is a necessary component of cashless transactions, both for online and offline businesses. Simply put, it is the route that information takes from your POS, through the payment processor, card association, customer bank, and back to your POS.

What Is a Merchant Statement

A merchant processing statement is (usually) a monthly report of all your sales, chargebacks, fees, and so on. In short, all the critical financial information is contained in this monthly report. You will be able to see how much money your business made, how much you had to pay in fees and rates to your payment processor, and how much chargebacks (if any) affected your bottom line. That is why you should put in the effort to understand credit card transaction fees and other components of your merchant statement.

Do I Need Any Extra Software to Start Accepting Credit Cards?

The short answer is yes. To begin accepting credit or debit cards, you will need to acquire specific new hardware and software. The type of software you need depends on the type of transactions you want to implement. It can include anything from a payment gateway to apps that turn your phone into a mobile POS. Usually, the payment processor you choose can provide you with all the components necessary to realize a cashless transaction.

Are There Any Limitations to a Monthly Sales Volume?

So far, Merchant Chimp has never canceled account services because of a low sales volume. However, the system itself won’t accept a processing sales volume lower than $1,000 in a month. There is no upper limit to your monthly sales.

How long does it take to get approved and set up?

You won’t have to wait for too long to get approved with Merchant Chimp. The usual turnaround time for approval is one to three days. That is, if First Data does not ask for additional documentation, in which case it might take a bit longer than those couple of days.

When it comes to setting up, you’ll be happy to hear that all of our devices are shipped already programmed and ready to use. So, once the device is delivered to your location, all you need to do is plug it in, and you are ready to get started.

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

An excellent credit score is not necessary for your account to be approved. However, in case you have a bad credit score, you will be required to submit additional information and documentation to get approved for a merchant account.

We need to know your credit score to make sure that you are a legitimate business owner. However, when working with Merchant Chimp, you can count on our full support even if your credit score is not that great. As long as we are sure that your business is legitimate, we will do everything to approve your account at the lowest possible rate.

What Are the Costs of Credit Card Processing

Credit card payments are beneficial for many reasons, but transaction processing comes with certain costs, too. Some of the credit card processing fees include interchange fees, assessment, and processing, all of which are charged differently. On average, these costs range from 2% to 3.5%, depending on the form of payment. Swiped transactions are charged less than online or keyed-in payments. The reason behind this is that the latter comes at a higher risk. There are also merchant services rates paid to the chosen merchant service provider, such as Merchant Chimp. For specific rates at which we charge our services, do not hesitate to contact us.

To cover these costs, many merchants charge their customers a credit card convenience fee for using a credit card as the more convenient form of payment.

How to Get Started with Merchant Chimp

The merchant processing statement is the first thing that merchants need to provide to get started with Merchant Chimp. This document is necessary to provide a more in-depth insight into the business that the merchant in question is running. Based on that, we create a plan and tailor a pricing model that will suit the merchant’s needs. The final step is quite easy – the merchant only needs to provide us with some basic information regarding their business, along with the voided check. All the rest is up to us.

What Is Your Typical Processing Fee and How Can I Get a Lower Fee

Merchant Chimp uses Interchange Plus pricing. It means that we are fully transparent when it comes to the exact fees you, as a merchant, can expect to pay. The interchange and assessment fees are passed through onto the merchant. We also have a flat markup rate on top of that. The exact fee depends on the size of your business, the way you process and accept credit cards, and some other factors specific for each merchant.

If you want to see some real numbers, the best thing to do is to contact our representatives and tell them more about your business and expectations. You can be sure of one thing – we are always doing everything we can to make the best possible proposal to suit your needs specifically.

If you want to get the lowest fee possible, the best thing to do is to lower the interchange fee as much as possible. It can be done by asking the cardholder for as much information as possible, which will minimize the risk and, as a result, the interchange rate will be lower.

General Processing Questions

What Is Credit Card Factoring

Every merchant account is opened for a specific purpose. When it is used for something else, like accepting transactions of another merchant, the owner of the account is involved in credit card factoring. In its traditional form, it’s an illegal activity, because it can be used for fraud or money laundering, potentially leaving the owner of the account deeply in debt and liable for numerous chargebacks. A proper type of credit card factoring is called Merchant Cash Advance. That way, the merchant gets a cash injection from the lender and pays it off with a percentage of each subsequent credit card transaction.

What Is PCI Compliance

If a merchant wants to start with receiving credit card payments, he needs to deal with the merchant processing company. PCI compliance is the way those companies ensure transaction security. PCI, or Payment Card Industry, encompasses numerous standards, both technical and operational, through which information about credit cards and their owners are protected from theft and abuse. Therefore, PCI compliance sits at the heart of the security protocols of every credit card company. Standards include, but are not limited to:

  • Creating and maintaining a secure system
  • Protection of cardholder’s personal data
  • Managing of vulnerabilities in the system

What Is a Cash Discount Program

Credit card processing costs money, and even with the best merchant services rates, it can build up to quite a large sum. A cash discount program is a way to avoid processing fees by allowing customers to save by paying in cash. If they choose to pay with cash, the customer will pay the listed price lessened by the amount of processing fee. The cash discount program is legal in all US states. On the other hand, the practice of surcharge, where the listed price is for cash, and the customer pays more if he does it with a credit card, is illegal in ten states.

What Is a Credit Card Convenience Fee

Merchants or businesses whose main payment methods are cash or checks, but who have introduced card payment are the primary benefactors of a credit card convenience fee. Some of the best examples are cinemas. They’ll charge more if the ticket is bought online than if it is paid by cash on the counter. Simply said, it is a fee that the merchant charges because of the convenience the customer has. Also, it is a good way to compensate for the fees paid to the processing companies.

All of the biggest credit card companies set clear rules on the circumstances in which the credit card convenience fee can be charged and who can charge it.

What Are CNP Transactions

A card not present transaction, or shortly CNP, is every credit card payment or transaction when the merchant doesn’t see the card and can’t verify that the person making the payment is the actual cardholder. The most common examples of CNP transactions are online purchases and sales ordered by phone, email, or fax. Because of its nature, CNP is one of the biggest sources of fraud with credit cards. CVV2 number, found on the back of credit and debit cards, was introduced to reduce the risk of fraud.

It is not unusual that merchants who use CNP frequently are charged higher fees for processing, because, in the case of fraud, liability for chargebacks lies with the bank that hosts the merchant account.

What Is an Early Termination Fee

If the merchant wishes to terminate a valid contract with a processing company, he will more likely than not be charged the early termination fee. This fee can be flat, in case the exact amount was named in the contract, or can take the form of so-called liquidated damages when the processor calculates the amount based on the calculation of lost profit. So, the early termination fee is the instrument that protects processors. However, if the processor doesn’t hold up to his part of the deal, or unilaterally tries to change the terms of the contract, then the merchant can walk away freely.

What Is Flat Rate Credit Card Processing

We’re talking about flat rate credit card processing when a processing company charges a fixed rate for every transaction. It usually amounts to between 2.7 and 2.9 percent. An alternative method is charging an added fixed amount per transaction, usually 20 to 30 cents. Though it might seem so, the flat rate is not the cheapest option. But, it is not made to be one. Its financial benefit may be the absence of the transaction fee if the processor is willing to extend such courtesy. All in all, flat rate processing is meant to be easy to understand, not to compete in prices.

What is Interchange Plus Credit Card Processing

While with a flat-rate pricing model, processing companies charge fixed amounts, either percent of the total transaction or in money, interchange plus credit card processing means adding a fixed markup to the interchange fee set by banks and credit card companies.

With interchange plus, the merchant will get a clear picture of all charged fees and markups, broken down into categories for the bank that issued the card and the companies that made them. It adds to transparency, and it still is one of the cheapest rates on the market since there are virtually no hidden costs.

What Is Tiered Credit Card Processing

Even though the most common model on the market, tiered credit card processing is probably the worst solution for merchants. With it, the rates are split into so-called qualified, mid-qualified, and non-qualified tiers. It is complicated, if not outright impossible for the merchant to know under which category his transaction will fall, for that depends on the criteria set by a processing company.

What the tiered model has on its side is relative simplicity on the monthly statement, albeit with a significant number of hidden expenses.

What is AVS?

In the world of online purchases, possibilities for credit card frauds are endless. Address Verification Service, or AVS, is a tool meant to prevent fraud with CNP transactions, along with the CVV2 number. AVS asks the person requesting a purchase to enter the billing address, which is then compared to the address given to the issuing credit card company. If two sets of data are a match, it is safe to assume that there is no problem with the transaction, and it can be authorized.

All major players on the credit card market have introduced AVS, even though some banks still don’t support it.

What is CVV, CVC, CV2?

CVV, CVC, and CV2 all refer to the security feature for card not present transactions. The abbreviation CVV stands for Card Verification Value, CVC stands for Card Verification Code, while CV2 refers to the Card Verification Value Code. This number can be found on the back of credit or debit cards, and it serves to prevent credit card fraud involving contactless payment transactions. On Visa, MasterCard, and Discover cards, this is a three-digit number, while on American Express, it is a four-digit code printed on the front of the card. It is crucial to know that CVV, CVC, and CV2 are not the same as the PIN, which is used for ATM withdrawals.

Is the storage of CVV numbers compliant with PCI standards?

Since CVV numbers are considered sensitive authentication data (SAD), storing them would mean violating PCI compliance. To be more precise, it is not allowed to store this piece of information after the purchase or transaction in question has been authorized. However, it is allowed to keep this code before authorization.

All card verification codes and values must be removed from the system after the transaction. Thus, it is not permitted to store these codes for future transactions, either. As for the pre-authorization storing, each payment card brand has specific rules determining for how long exactly the data can be stored.

Keep in mind that Merchant Chimp representatives are at your disposal for any further questions, so feel free to contact us to address any concerns you may have.

What is a chargeback?

Simply put, a chargeback refers to the money returned to a payer. It is not to be confused with a refund, which is paid directly by the merchant. A chargeback, on the other hand, is processed by the issuing bank or other credit card issuing institution. However, it should be noted that the merchant, too, should be notified of the chargeback claim. In case the merchant doesn’t respond to it, the chargeback is usually granted. In that case, the merchant is the one to assume the monetary loss. If, however, the merchant provides evidence that the charge is valid, the card issuer compares the evidence with your claim and renders the decision. If you need more details about how this process goes, feel free to contact our representatives at any time.

Can I process through my website?

Yes. There are three ways to process through your website. If you use a product from e-commerce companies such as Shopify, your website will have a shopping cart included. Customers can directly buy the product online from there using their credit card. So, this will be integrated into the website from the beginning.

Another way to go about it is to use a program or website called Payment Gateway. Payment Gateway is the bridge between your website and the processor, which, if it is compatible, can be also be directly integrated into your website.

The third option you can choose is to use the Payment Gateway as a virtual terminal. For instance, if you have a shopping cart on your website, it can lead customers to a different website where they can submit their credit card information and buy the product.


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