What You Need to Know About Merchant Accounts – Part 1

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If you’re involved in marketing information products on-line then there’s no disputing the need for you to accept credit cards in order to increase your overall sales. Typically in a retail environment your sales will increase anywhere from 15 to 40% when you have the ability to accept credit cards.

Visa and MasterCard account for over 90% of all credit card transactions, so the acceptance of those two card types is mandatory. Amex and Discover are the other two significant players, but account for only 5-7% of the market. If you’re selling higher priced information products acceptance of Amex is highly recommended.

There are four primary components involved in the processing of credit cards. The first is the actual card issuing entity, be it Visa, MasterCard, or other. The second is the company that sets you up to be able to accept credit cards, which is called the Merchant Account Provider. The third component needed for online processing of cards is a payment gateway, such as Authorize.net or Plug ‘n Pay. And the fourth is your online shopping cart system. All are required to do business on the Internet.

When a new information marketer applies for a merchant account the primary thing the merchant account provider is looking at is the personal credit of the requestor. The underwriters for the company will be looking to see if you pay your bills on time first and foremost. Then they’ll be looking to see if you own real estate. In the processing industry, owning real estate and having decent credit says to them this is a stable merchant.

Another big component of the underwriting process is your refund warranty policy. What type of refund policy are you giving? From the viewpoint of the merchant account provider the longer the guarantee period the less desirable it is. Why? Because it stretches out the risk of a refund even longer. The greater the length of potential liability the increased chances there are for a chargeback of the sale.

There can be many different reasons for a chargeback, but the bottom line is the customer is saying they don’t agree with something regarding that transaction. It could range from the product not being received to the wrong product received, to the product not being as described to any number of other reasons.

Chargebacks can typically be made anytime from six months up to a year. In fact, on international sales there are some regions that may allow customers up to a year and a half to request a chargeback on a purchase.

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