Is a business checking account required in opening a merchant account?

When applying for small business merchant accounts with UniBul, applicants are asked for a checking account. Credit card processing companies need a bank account so that they can deposit the funds into it. It does not make a difference whether it is a business or a personal checking account, the money will go in either way.

So from a credit card processing perspective, there is no need to open a business account. You still might want to consider doing so, however, in order to separate your personal from your business finances. A separate account will allow you to easily keep track on your merchant services credit card processing activity and, come tax return time, to quickly find the information that you need. Moreover, using a check with the name of your business on it will give you a more professional look.

Although opening a business bank account is optional, there are compelling reasons to do it. Unless it is more a hobby than a business, your company will benefit from it.

Can I open a US merchant account if I live abroad?

In order to open a US-based small business merchant account, your company has to have legal presence in the United States. You don't have to live in the States but your business has to have at least a subsidiary, that is incorporated in any one of 50 the states. You will also need a physical address and a domestic bank account into which your funds will be deposited.

So as you see, if a foreign business wants to open a merchant services credit card processing account in the US, it will have to be prepared to invest a certain amount to cover the legal and procedural expenses. It also will need a locally-based officer to represent the company before the US authorities.

Clearly, it is a good idea that a foreign business should consider all available credit card payment processing options before deciding to open a US merchant account. Other possibilities are a third party credit card merchant processor, such as PayPal, and an offshore credit card processing account. Both alternatives have their advantages and disadvantages and may be suitable under certain conditions.

Third party processors offer credit card processing service accounts that are easy to establish and maintain. If your card volumes are going to be low, this is probably your best choice. The processing rates that these accounts offer, however, are substantially higher than a direct merchant account's. After the break-even point, the cost of establishing a domestic account will be offset by the savings that will come with the lower credit card processing rates.

Offshore credit card processing companies provide the convenience of a direct merchant account processing solution, without the hassle of dealing with the US legal and procedural requirements. The downside, however is a substantial rate premium that you will be charged, much bigger than the premium, charged by third-party processors. Processing rates, charged by offshore companies, are more than twice higher than the ones that domestic processors charge.

UniBul can help you set up a merchant account in the U.S.

UniBul Merchant Services Launches New Payment Processing Program

Press Release

June,04, 2008 - UniBul Merchant Services announced today the planned launch on June, 23 of a new small business merchant accounts program for eCommerce merchants.

Evaluation of the processing statements of fifty web-based merchants showed that, as a whole, the group was excessively overcharged by their credit card processing companies. Two thirds of all merchant services credit card processing rates were higher than 2.45% per transactions. Today the same merchants should easily get rates lower than 2.20%. In addition to that, 55% of them were paying various service charges, like a monthly minimum processing fee or a customer service fee, in the range $10 - $25. Such fees should not be charged at all. The biggest issue, however, was found in the large volumes of non-qualified transactions. Non-qualified is a transaction that is processed in accordance with the rules established in the Payment Processing Agreement, signed by the merchant and the processor, but does not meet the highest standards for credit card payment processing and/or complies with some applicable security requirements, but not enough in order to be classified as qualified. The average surcharge for non-qualified transactions was 1.10% over the qualified rate. The average volume of non-qualified transactions was 55%.

To address the issue, UniBul Merchant Services has created a unique payment processing program. The eCommerce will be segmented into multiple categories and merchants will be classified into the most appropriate one. Small support teams will be created that will specialize in working with just one of these groups to ensure that they become intimately familiar with each group's characteristics. UniBul Merchant Services' new Payment Card Acceptance Best Practices Guide is developed as a manual for the support staff and the merchants they work with in implementing a set of payment acceptance procedures into the sales process. These procedures will ensure that transactions are processed in a way that is in compliance with Visa and MasterCard regulations and significantly reduce or even eliminate the resulting non-qualified surcharges. Implementing these best practices will also reduce the high levels of chargebacks to which eCommerce merchants are particularly vulnerable. There is a provision for manual credit card processing merchants as well.

The first program to be launched is designed to accommodate the specific needs of online groceries. Later this summer several other platforms will be released for a wide range of different eCommerce merchant types, including auto part dealers, flower shops, airline ticket vendors, etc.

By launching this program, UniBul Merchant Services is seeking to bring eCommerce credit card processing costs down to acceptable levels and to contribute to a sharper focus on the processes and practices that are necessary to ensure that merchants get the best out of their credit card payment processing.

Contact:

UniBul Merchant Services LLC

617-861-6101, ext. 1170 - phone

sales@unibulmerchantservices.com - email

https://www.unibulmerchantservices.com - web

http://blog.unibulmerchantservices.com - blog

What are the benefits of having a merchant account?

Small business merchant accounts require a certain effort to apply for and set up and then they have a certain maintenance cost, in the form of a monthly statement fee and, in some cases, other credit card payment processing fees and charges. Moreover, merchant services credit card processing contracts are usually for two or three years (although UniBul offers month-to-month services). So it is a legitimate question to ask what benefits you get from your credit card processing service and is it worth the investment of time to set one up.

Well, the answer is that yes, it is worth it and you should consider establishing one as soon as your processing volumes grow large enough to justify it. By that I mean that there is a break even point, different for every business, beyond which the lower processing rates, associated with credit card processing accounts, fully offset the fixed monthly fees, which are absent with third party solutions. The main benefits of having your very own retail, direct marketing or PC based credit card processing are:

• Professional image. Every type of processing capabilities, including manual credit card processing is perceived as a sign that the business is of a certain size and it is committed to providing a complete shopping service. Actually, taking into account the strict requirements that credit card processing companies demand that applicants meet, it is true that a merchant card processing account comes with a certain level of commitment.


• Lower processing cost. The difference in processing rates that a direct merchant account provides over a third party credit card merchant processor is significant and cannot be overstated. A comparison between an eCommerce merchant account and PayPal shows that the difference can be as high as 0.8% + $0.05 per transaction for merchants that process less than $3,000 per month.


• Control over your account. With a third party solution, your processor has a complete control over your card payment processing activity. They can hold on to your money and even freeze your account if a suspicious activity is thought to have occurred. The direct solution gives you complete control over your account. CVV and address verification fraud prevention services help you decide whether or not a transaction is legitimate.

What documents are required when applying for a merchant account?

Different credit card processing companies may ask for different documents from their applicants (UniBul is different from others as well). Yet, all merchant services credit card processing providers are registered with Visa and MasterCard and have to follow their regulations. There are certain requirements that are mandatory and I have listed them below.

• You will need to have an incorporated business or at least a DBA-registered sole proprietorship. You can obtain a Tax ID (which is free) for your corporation or sole proprietorship but it is not required by payment processing providers. If you don't have one, you will use your SSN as a substitute.


• A completed Merchant Application. You will need to enter your business and personal information, including SSN and to sign it. Please note that even if you have a Tax ID, you will still need to provide your SSN in the personal information section of the application.


• A personal guarantee. Small business merchant accounts providers ask for a personal guarantee as an additional insurance against potential losses.


• Financial statements. Unless you are a new business entity, you will have to provide your financial statements for the last three years.


• Tax returns. Small business owners are required to provide their tax returns for the last two years.


• A voided check. Credit card payment processing providers need your checking account information for funding purposes. This will be the account you will be getting your money deposited into.


• Business license. If your business requires some type of permit or certificate, you will need to provide it.


• Processing statements. If you are switching credit card processing providers, you will need to provide your payment processing services statements from the last 2 months.

Assessments for Noncompliance in Account Data Compromise Events

If an account compromise was a result of a violation of MasterCard Standards regarding disclosure and securing of cardholder account and transaction data, the member bank may be subject to noncompliance assessments. MasterCard may assess up to $100,000 for each violation, with a maximum aggregate assessment of $500,000 for additional or continuing violations during any consecutive 12-month period.

If the member bank fails to comply with the procedures required in data compromise events, MasterCard may impose an additional assessment of up to $25,000 each day until the it achieves compliance. Continued, extended, or repeated noncompliance may lead to the suspension or termination of the member bank's participation in the MasterCard payment system.

In addition to the assessments listed above, MasterCard may assess all investigation and other related costs against the acquiring bank. With regard to accounts identified as potentially compromised, MasterCard may require the acquirer to reimburse affected card issuers.

• Potential exemption from noncompliance assessments. MasterCard may exempt an acquiring bank from noncompliance assessments and investigative costs, and other related costs; and MasterCard may grant up to a 100% reduction from the card issuer reimbursement costs. MasterCard will base any exemption that may be afforded on the the circumstances, including compliance with the Payment Card Industry Data Security Standard. The factors that MasterCard will consider are the following:
  
  • Verification that the merchant or TPP associated with the account data compromise event was registered in accordance with MasterCard's Registration Program.
    
  • Proof of compliance with the Payment Card Industry Data Security Standard by the merchant or TPP associated with the account data compromise event.
    
  • Demonstration by the acquiring bank that the entity associated with the account data compromise event was compliant with the Payment Card Industry Data Security Standard and applicable MasterCard SDP Program requirements at the time of the applicable account data compromise event.
    
  • Notification to and cooperation with MasterCard and, as appropriate, law enforcement authorities.
    
  • Verification that the forensics examination was initiated within 72 hours of the account data compromise event and completed as soon as practical.
    
  • Timely receipt by MasterCard of the forensics examination findings.
    
  • Evidence that the account data compromise event was not foreseeable or preventable by commercially reasonable means and that, on a continuing basis, security practices were applied.
  
  MasterCard generally will not grant a full or partial exemption for an internal compromise, which is a compromise facilitated by persons authorized to have access to the system or process compromised.

Is it difficult to get a merchant account?

In order to set up their credit card processing service, businesses need to go through a strict application process (we try to make it as simple as possible, but we can only go so far). Sometimes it may seam as if the credit card processing companies are being excessively demanding but they have to follow certain regulations, introduced by the Credit Card Associations (Visa and MasterCard) and their member banks. Establishing a business merchant account is not necessarily a difficult process but it may be delayed by every small omission in the application form. You will be asked to produce the following documents:

• Sole proprietors - your tax returns for the last two years.
• Corporations - your financial statements for the last two years.
• A voided check for the bank account where you want your funds to be deposited.
• If you are switching credit card payment processing providers you will have to submit your processing statements for the last three months.

In addition you will have to submit your personal information, including your SSN, and to personally guarantee your credit card processing account. Small business merchant accounts come in many shapes and forms and you may be asked for additional paperwork as well.

Be advised that if your business falls into a high-risk category, you will need a high-risk merchant account provider as not every processor will be willing to work with you. There are however certain business categories for which no US bank will underwrite a merchant account processing service. Prime examples are adult-oriented websites, third-party collection agencies, online gambling sites, etc. If you operate such a business, you will need to look for an offshore solution or a third-party processor.

Selecting a Merchant Account Provider

There are many credit card processing companies out there and selecting the one that will offer the best solution to your needs can be challenging, to say the least. There are several factors to consider when choosing a small business merchant accounts provider, whether you are looking for a virtual, physical or a manual credit card processing solution. First and foremost, you want to be sure that you don't get overcharged. The payment processing cost consists of several components and you need to know exactly how much you will be paying for each one of them:

• Discount rate - the amount a merchant is charged by his acquirer for processing the merchant’s transactions. It consists of a percentage fee (e.g. 2.25%) and a fixed, per transaction, charge (e.g. $0.25). For an internet or direct marketing account it should be no more than 2.20% + $0.25 per transaction. For Retail accounts it should be no more than 1.70% + $0.25 per transaction.


• Authorization fee - another "per-transaction" fee. You should not pay more than $0.12 for any type.


• Application and set up fee - one-time fees to apply for and set up your credit card processing service. You should NOT pay ANY set up or application fees!


• Monthly maintenance fee - as the name suggests, it is charged monthly to keep your account on file. You should not be paying more than $10.


• Support fee - another monthly charged for customer service. You should not pay any such fees.


• Payment gateway fee - specific to the eCommerce industry. An eCommerce payment gateway is the service that connects your website with your processing bank and transmits transaction information between them. You will only need it if you want to let customers pay you over the web and it should not cost you more than $15 per month.

If you see any other charges for your merchant services credit card processing account, you will be well advised to look elsewhere. Also, when evaluating a new credit card processing service proposal, your prospective processors should provide you with comparison tables to make your choice a better informed one.

Other important factors you need to consider when selecting a merchant services provider are:

• Experience - this can be a double-edged sword. On the one hand, you want to be sure that your processor will have the expertise to get the job done. On the other hand, many well established card processing companies offer substantially higher rates, justifying it exactly with their long record and the piece of mine that it brings you. You should not be overpaying just because they've been in business for a while.


• Customer support - you will want to make sure that you will be getting knowledgeable support when you need it, because you will need it.


• Chargeback management - chargebacks result when customers dispute transactions and can be costly and time consuming. In extreme cases, you may even lose your business merchant account. You will want to make sure that your merchant account provider has the expertise to help you reduce the level of chargeback-generating disputes. We have developed our Payment Card Acceptance Best Practices Guide to do just that.

There are other factors as well and you will need to do you complete due diligence, as selecting the right merchant payment services company will reduce your processing costs and help grow your business.

You can review our latest pricing here.

Regular Merchant Account vs Third-Party Processors

There are many things to consider when evaluating your payment card processing options. There are no universal solutions that would be perfect for everyone. When it comes to a choice between a direct merchant account and a third-party processor, there are several factors that come into play.

First of all, one thing should be made clear - third-party payment processing rates are substantially higher than a direct merchant account's. So the question is, if that is the case, why would anyone want to subscribe for a third-party solution? Usually the answer is very simple - because a merchant account is not an option. This is the case when any one of the following is true:

• Your credit is exceptionally bad. A bankruptcy less than 7 years prior to the application is a good example.


• You don't have a registered business. A direct merchant account cannot be opened under a personal name.


• You have been blacklisted by the Associations (Visa and MasterCard). If you have been included in the Terminated Merchants list, you will never be able to open a merchant account service again.


• Your business operates in a very high-risk area. Some businesses tend to generate higher levels of chargebacks (disputed transactions) and process credit cards at higher rates. There are several groups that are so high risk that US banks will not underwrite their payment processing accounts. Prime examples are adult-oriented websites, online gambling establishments, third-party collection agencies, etc.


• You process low credit card volumes. Card payment processing services come with certain fixed costs which are due whether you use the account or not. You will be paying a monthly statement fee (or an equivalent) and an eCommerce gateway fee and maybe other fees as well. These fees are not usually associated with third-party processing services where you simply pay as you go. So if you will only process one or two small volume transactions per day, you will need to do the math and see if a dedicated card processing account is the way to go or you should outsource the service.

There are of course a few other factors to consider but these are the main ones. If you process sufficiently large volumes and meet the other criteria, your best option is your own business merchant account. It gives you complete control over your card payment processing and a more professional image.

How can you accept payments outside of your office?

Today's technology allows payments to be accepted at your customer's location or anywhere else outside of your office through a wireless merchant account. There are two types of wireless service - long- and short-range. The long-range solution relies on network connectivity and is ideal for those of you who will be processing credit card transactions at different locations outside of your office, but on your premises. The short-range service comes with a main terminal, which is connected to a phone line, but the wireless device can be operated within a radius of a few hundred feet. With both solutions transactions will be processed quickly and securely. What you need to make sure is that you have network connectivity in the area where you will be using the device and that is actually the biggest issue with wireless credit card processing. These devices use the same technology that cell phones use to transmit information and are affected by the same limitations.

Another potential issue is cost. Mobile credit card processing devices are pricier than regular terminals and you will need to account for that premium when considering the service. On the other hand, using a wireless merchant account will reduce your processing costs. Because you will accept credit card payments in person and the card will be swiped through a terminal, you will be eligible for receiving the lowest processing rates, reserved for face-to-face merchants. If you have to key in the transaction information afterwards, you will pay the higher rates.

On balance, a wireless credit card processing account is the best solution for businesses that routinely accept credit card orders in a mobile environment. If such payments are more of an exception, you might be better off using the old-fashioned payment slips for now.