Privacy Policy

Frequently Asked Questions

What is a merchant?

A merchant is an entity that contracts with an acquirer or member bank to accept card payments for goods or services provided.

Why should I accept Credit Cards?

Customers recognize and trust the Visa and MasterCard brands, and enjoy the convenience of shopping with their credit cards. That means that as a Merchant, you realize increased revenue and increased satisfaction from your customers.

  • Increased Sales: Consumers spend more when they're not constrained by cash on hand. You may see increased purchases of higher-margin products as well as specialty items. And customers may visit your store more often.
  • Customer Satisfaction: Your customers will appreciate the fact that you allow them the flexibility to pay the way they want to pay - including by credit or debit card. Happier customers are more loyal customers.
  • Speed of Checkout: You'll speed your customers through checkout with rapid electronic payment. No more counting change or waiting while customers write checks.
  • Improved Efficiency: Card transactions today are conducted electronically. These paperless payments can save you time and money by minimizing cash handling and payment reconciliation, giving you more time to do more important things - like managing and growing your business.
  • Safety: With lower volumes of cash, you're less vulnerable to theft and pilfering.

How does a Credit Card transaction work?

When a credit card is used for payment, the following process occurs:

  • A consumer selects a product that he wishes to purchase from a merchant that accepts credit cards and brings the item to checkout. The merchant calculates the total amount of the purchase and asks the consumer for payment. The consumer hands the merchant a Visa or MasterCard.
  • The merchant runs the credit card though a point-of-sale unit that reads the data contained on the magnetic stripe located on the back of the card. That data identifies the type of card, the issuing bank, and the cardholder's account number.
  • The point-of-sale device transmits the credit card data, the amount of the sale, and a request for authorization of the transaction to the acquiring bank that maintains the merchant account for that merchant.
  • The acquiring bank, or a third party processor acting on behalf of the bank, routes the authorization request to the issuing bank.
  • If the consumer has enough credit in his credit card account to cover the sale, the issuing bank authorizes the transaction and generates an authorization code. If the account has insufficient credit, the issuing bank denies the transaction and generates a denial code. The authorization or denial code is then sent back to the acquiring bank. If the transaction has been approved, the issuing bank puts a hold on the consumer's credit card account for the amount of the sale. At this step in the billing for the cardholder is initiated and the fees (Interchange) are assessed on the transaction.
  • The transaction is captured by the Processor for statement and billing purposes.
  • The approval code is received at the point of sale and a receipt is generated.
  • At the end of the day the merchant reviews all the authorizations stored on the point-of sale device against his signed sales drafts. When the credit card authorizations have been verified to match the actual sales drafts, the merchant will transmit the data from the authorized credit card transactions to the acquiring bank for the deposit. This is in lieu of depositing the actual signed paper drafts with the bank. (The acquiring bank assumes responsibility for the merchant on all credit card transaction).
  • Finally, the acquiring bank deposits the total amount of all sales drafts into the merchant's bank deposit account, minus what is called a discount fee which the acquiring bank keeps to cover the interchange fee paid to the issuing bank, its' own overhead, and a profit.

Is it safe to accept Credit Cards?

Yes, credit cards offer protection for you, your customers, and the banks involved. In fact, protection is why credit cards are safer for everyone.

  • Merchants: When you accept a credit card (and the transaction is authorized) you can be sure you’ll receive the funds.
  • Banks: The credit card system protects issuing banks from unscrupulous merchants. When you submit a deposit, you are promising the issuing bank that you have delivered the goods and services promised to the cardholder. If you don’t, the issuing bank has the right to charge back the transaction.
  • Consumers: Cardholders are protected from merchants who fail to keep their promises. They’re not liable for payment if a merchant fails to deliver as expected.

Chargebacks – What are they?

Almost everyone has an idea of how a credit card SALE works. But even some experienced merchants don’t know the other side of the system; chargebacks. Understanding chargebacks can save you a lot of money.

If a cardholder believes a charge is not legitimate, or that their expectations weren’t met, they could come to you for a refund. But they have another option; a Chargeback.

Here’s how chargebacks work: Regardless of merit, the issuing bank is obligated to investigate complaints from cardholders, including:

  • You never delivered the goods and services you promised.
  • The Cardholder never ordered the goods that showed up on their credit card bill.
  • The Cardholder received the goods and services, but they didn’t meet their expectations, so they want a refund.

In these circumstances, the issuing bank initiates a Retrieval Request and/or a Chargeback to resolve the matter.

Chargeback Causes -- Some common causes of chargebacks can be easily avoided:

  • If your company name appears one way on your advertising and your receipts, but a different way on the customer’s credit card statement. Call your processor to have this fixed. In some cases, this problem results from two businesses attempting to process transactions from the same account. This is frowned upon, so call us if you have a second business.
  • When you charge the customer before the goods have been shipped. In other words, don’t submit the “deposit” transaction before you have shipped the goods or performed the service.

What is a Retrieval Request?

Traditionally, the dispute process begins with a Retrieval Request that asks for documentation.

  • The issuing bank sends a Retrieval Request (often called simply a “Retrieval”) to the processor Sometimes, they start with a chargeback and skip the Retrieval Request altogether.
  • The retrieval asks for proof that you delivered the disputed goods or services to the cardholder.
  • When you provide proof that you delivered the goods or services to the cardholder it is forwarded to the issuing bank that informs the cardholder. The proof is usually a document (delivery receipt, credit card receipt and/or your store receipt) signed by the cardholder. TIP: Reply PROMPTLY to these requests. Late responses almost always result in chargebacks.
  • At this point, the complaint is usually dropped (but not always).

What If you don’t have the required documentation:

If you don’t have documents for the retrieval, or if you don’t deliver a copy of the documents to your processor in time, the cardholder is deemed to be right. When this happens, several things occur:

  • The issuing bank submits a chargeback to your processor through the Visa/MasterCard network.
  • Visa/MasterCard debits the original transaction amount from your bank account. (Or, it is deducted from your most recent deposit transactions).
  • Your sponsoring bank records the chargeback on your account record. Besides the obvious financial loss to you, chargebacks are also bad because of that final step. Here’s why. Everyone in the credit card system knows that eventually a few transactions will result in chargebacks. They’re a cost of doing business. But, if you cause too many chargebacks, the credit card system will start to doubt you and your standing as a credit card merchant. When chargebacks become too prevalent, your merchant account may be terminated by your sponsoring bank. Then you may find it impossible to find another sponsoring bank.

How long does a Cardholder have to Chargeback a transaction?

In most cases, chargebacks must be initiated within 120 days of the original transaction. However, if a merchant is alleged to have violated Visa or MasterCard rules, a “compliance” case can be disputed up to 180 days after the rules violation.

How can I avoid Chargebacks?

Make sure shoppers know your warranty and return policy. Make sure you consistently live up to it. When consumers can resolve problems directly with you, you avoid the hassles of dealing with the Associations.

If you have a “no refund policy,” the customer must acknowledge this with a signature. The words “No Refunds” must be printed at least 1/4" high and be within 1/4" from the signature space.

Do not submit a deposit transaction until you deliver the goods or services.

If you rent equipment or sporting goods, do not attempt to cover damage to your products by charging the customer’s credit card without doing the following: You must run a separate transaction for the damage after swiping the card again and having the customer sign a separate sales draft and invoice for the damage claim. You cannot attempt to charge for damage or loss using only the credit card draft obtained when performing your rental transaction.

What is a Credit Card Authorization?

Every sale requires both an authorization and a deposit. An Authorization Code indicates that the cardholder has the credit to pay for the purchase. This assures you of payment, as long as:

  • A valid card was used by the authorized cardholder.
  • The cardholder (not someone else) has signed a sales draft.
  • The signature on the sales draft was matched against the signature on the back of the card.
  • You have proof that the card was present (a receipt created by your printer as the result of a magnetic stripe read, or an imprint of the card created by your imprinter.) You won’t have this for mail order, telephone order, etc., increasing the risk.
  • The transaction is not disputed later by the cardholder. (If this happens, you’ll have to fight for your money through the chargeback process.)

When the goods or services are provided at the time of the sale, the authorization and deposit are simultaneous. However, if the customer is paying hours or days before she’ll receive the goods or services, transact the authorization first: this reserves the amount from the cardholder’s credit balance for you. Perform the deposit transaction when the goods or services are delivered.

TIP: To avoid a pass-through fee on the transaction, make sure you deposit as soon as possible after the goods are delivered. After three days, the pass-through will be applied, but that’s no excuse to make the deposit before the goods are shipped. Do not wait longer than 30 days, or you’ll need to obtain a new authorization.

What is a Credit Card Deposit?

Deposits take funds from the cardholder’s credit line and deposit them into your account. For an in-store purchase, the deposit is simultaneous with the authorization (unless the goods will be delivered at a later date).

REMEMBER: In mail order or telephone order businesses the deposit should not be run until the goods are shipped.

When Are My Credit Card Funds Available?

Visa/MasterCard funds are posted to accounts at the sponsoring bank two business-days after the date of the transaction. Transactions processed over the weekend may have an additional day delay because of the bank closure on Sunday.

Ask about our NEXT DAY funding options. In most cases, we can have your credit card deposits funding the very next day if you submit your batch before 6:00 PM CST.

What is a Sales Draft?

A sales draft is a legal and binding contract between you and your customer. If you have a retail store, a sales draft must be completed and imprinted for every credit card sale. So, even if you’re not using a POS terminal that prints a draft for you, you should still imprint the card and obtain a customer signature on a sales draft, transaction Slip.

For your protection, a manual imprinter can be used to imprint the credit card when any of the following are true:

  • You’re not using a POS terminal
  • You have to manually enter (not swiped) the credit card information into your POS terminal
  • You do not have a POS printer
  • You are accepting credit cards which are not electronically deposited (Diner’s Club or Carte Blanche) Information That Must be on a Sales Draft
  • Credit card number (recorded from the card’s magnetic strip or imprinted)
  • Authorization Code and Reference Numbers
  • Signature of customer
  • Card expiration date
  • Date of sale
  • Amount of sale, including tax
  • Description of goods/services

What do I do with my Sales Drafts?

Keep drafts for three years (even if you sell your business), and even then, check with your accountant for guidance before destroying them. In case of a chargeback, you may be required to produce sales drafts quickly, so file them so they’re easy to find.

TIP: Keep the white copy of all receipts: they photocopy better. Also, handle carbonless paper and carbon/silverback paper carefully. Pressure on the paper during handling causes black blotches that make your documents illegible.

TIP: You will be asked to find chargeback documentation based on the card number, transaction date, and amount of the transaction. Therefore, filing your retrievals by cardholder name will make your research process more difficult unless you also have a cross-reference system.

What’s my responsibility in keeping cardholder numbers safe?

We’ve all heard about companies who have become victims of thieves who steal credit card information stored by merchants. To avoid this, your responsibilities to safeguard data include the following:

  • Don’t share, sell, purchase or exchange cardholder names and account numbers in any form.
  • Secure all records, electronic or otherwise, that include cardholder names, account information, transaction information etc. to prevent access by anyone other than your processor.
  • Never store magnetic stripe data.

In the electronic commerce arena, a number of best practices to help protect data from unauthorized access include:

  • Encrypt cardholder data and only store that data in encrypted form.
  • Back up files only in encrypted form.
  • Secure encryption and communication keys in a secure hardware device or tamper-resistant security module.
  • Limit personnel access to computers.
  • Encrypt and decrypt within a secure hardware device. This isolates the encryption keys and minimizes their exposure.
  • Manage all keys using split knowledge and dual control so no one person can have access to data in the absence of other employees.
  • Protect access to file servers.

What is Skimming?

Skimming is the act of capturing card data and then using the data to create counterfeit credit cards, or to make purchases. Typically, a crooked employee such as a store clerk or restaurant waiter will use a small device, such as a Personal Digital Assistant equipped with a card reader, to swipe a customer’s card when no one is looking. The data can then be re-injected onto a magnetic stripe on a fraudulent card.

While skimming is often a high-tech endeavor, it has a low-tech angle as well. Simply put, an employee who gathers credit card information and writes it down is just as much of a threat as his tech-savvy counterpart. Prevent this from happening. MasterCard will assess fines on merchants who are determined to be a “point of weakness” in preventing employee fraud.

Meanwhile, Visa pays a reward of $1,000 to anyone who provides information leading to the arrest of a “skimmer,” so it can literally pay to be vigilant about employee fraud.

When will I receive my Merchant Statement?

You will receive a Monthly Statement (“Automatic Deduction Notice”) detailing the month’s total debit to your account. That debit to your bank account occurs on the first banking day of each month and transaction fees, Visa/MasterCard pass-through fees, supplies, etc.

What financial tools or business resources are available to me?

Visa provides information, online services and tools that can benefit both small businesses and merchants in managing their finances. These offerings include bill payment, online interactive workshops, and a calendar of relevant conferences & events, all of which can be accessed through Visa's Business Resources. Additionally, you can obtain informational articles from the Download library on Tips & Tools – visit www.visa.com. MasterCard offers similar resources to small and medium size business at www.mastercard.com.

What are Visa and MasterCard Gift cards, and how do I accept them?

The Visa and MasterCard Gift card is a prepaid card that is accepted for payment everywhere that debit cards are welcome. They look like any other MasterCard or Visa credit or check card, but the value is limited to the amount of money placed on the card by the purchaser.

Where do I get Visa decals and point-of-sale signage?

To order free Visa decals and point-of-sale signage visit the Marketing Center. If you would prefer to order from a Visa representative, please call (800) VISA-311 [(800) 847-2311].

What is Verified by Visa?

Verified by Visa is a password-protection program that can improve the security of payment transactions for participating merchants in the e-commerce environment over open networks. It is designed to increase confidence in Internet transactions for both participating merchants and cardholders who have activated their cards for this service and created personal passwords, as well as to reduce disputes and fraudulent activity related to the use of Visa payment cards. Learn more about Verified by Visa at www.visa.com. Visa provides reassurance that only you can use your Visa card online.

What is an acquirer?

Also referred to as a merchant bank an acquirer is a financial institution licensed by MasterCard that helps a merchant in fulfilling its processing obligation to accept MasterCard cards. The acquirer is set up to connect and process transactions over the MasterCard network. Acquirers or MSPs either sell their processing services directly to merchants or hire agents to sell on their behalf. However, these agents must be registered with MasterCard and clearly identify the MasterCard member they represent on their business cards and stationery. The merchant agreement should also have the name of the bank clearly identified.

Is MeritCard Registered?

Yes, MeritCard is a Registered ISO/MSP of Wells Fargo N.A. and First Data. MeritCard has representation on the Southeast Acquirers Board as well as with the Electronic Transaction Association and a proud member of the Better Business Bureau.

What is an Interchange Rate?

MasterCard and Visa interchange rates are established by the Associations, and are fees paid by acquirers to card issuers on purchase transactions conducted on these cards. Interchange fees are only one of many cost components included in a Merchant Discount Rate, and are a necessary and efficient method by which MasterCard and Visa maintains a strong and vibrant payments network. Learn more about InterChange rates at the Card Association websites: www.MasterCard.com and www.Visa.com.

Can I accept Diners Club® Cards?

Yes, MasterCard and Diners Club have partnered to establish an alliance that will provide enhanced global acceptance to Diners Club North America cardmembers, and enhanced U.S. and Canadian acceptance for Diners Club International cardmembers.

Can merchants surcharge customers?

Yes, as part of a recent legal settlement Visa and MasterCard have altered their rules to allow merchants the ability to surcharge customers.

Here are a few important points regarding the regulation changes:

  • Merchants may begin surcharging effective January 27, 2013
  • Merchants who wish to surcharge must register with the Card Brands thirty days prior to implementing
  • Signature Debit, Pin Debit and Prepaid transactions are excluded
  • 10 states currently prohibit surcharging on credit cards – CA, CO, CT, FL, KS, ME, TX, MA, NY, OK
  • If a merchant surcharges they must clearly place notice at the point of entry and at the point of sale
  • For e-commerce and mail order/telephone order transactions the cardholder must be given the opportunity to opt out of a sale
  • Surcharges will be combined in the purchase amount total and must be detailed on the receipt as a separate line item
  • Surcharges are based upon the merchant’s average discount rate
  • Surcharges cannot exceed 4%

For information pertaining to the financial settlement portion of the lawsuit please consult your legal counsel.

Visa and MasterCard have created websites further detailing these rule changes. For additional information please visit:

http://usa.visa.com/personal/using_visa/checkout_fees/index.html
http://www.mastercard.us/merchants/support/surcharge-rules.html
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