To be more specific, check your wireless credit card terminal for the following features:

 1. ability to process ATM, credit card, and debit card transactions; 

 2. ability to process stored value cards and loyalty programs;

 3. ability to connect to other accessories, such as bar code scanners;

 4. a working LCD display (it should also be able to display other languages); 

 5. an integrated network modem; and

 6. a long life, heavy-duty battery pack.

Ask your acquaintances for models or brands they can personally recommend.  Our company advises prospective customers to consider the Nurit 8000 GMPS, the Way Systems1510 MTT, and the less expensive Comstar wireless unit.)  While such recommendations can save you a lot of time and steer you in the right direction, always perform your own due diligence.

When I look at our competitors’ sites (it is always worthwhile to know what competitors are doing), I marvel at their astonishingly high percentage of credit card processing application approvals. It is commonplace to see the banner, "Over 98% approval rating." It remains incredulous to me that 98 out of 100 applications receive a positive determination when there exists criteria/factors that may easily jeopardize an application’s "passing grade," outlined below:

The merchant’s personal credit rating:  Many business owners are surprised, and at times, disgruntled, to discover that their personal credit rating is obtained and evaluated by underwriters. It may help merchants to realize that a such a risk assessment is performed because granting credit card processing capability is tantamount to providing a loan, or at least a short term line of credit. Merchant funding, which generally takes two to three business days, can supercede the time when customers’ receive products or services. Merchant account providers need to employ a safety net, ensuring merchants carry out their responsibilities.

This is particularly important when chargebacks are issued (i.e., when customers dispute the authenticity of a transaction). Consider the untoward circumstance if a merchant just closes his/her bank account prior to anticipated chargebacks. The customer’s card-issuing bank will refund the funds to the customer and then look to the acquiring bank/merchant account processor for its reimbursement. The merchant account processor is left holding the proverbial bag, and may lose thousands of dollars due to merchant-related fraud. This necessitates due diligence performed by the merchant account underwriting department to mitigate its risk for providing credit card processing service.

During the course of my work, I’ve heard and sympathize with the collective complaint from prospective clients (at least those with poor credit) that it is unfair to categorize them as a high risk. Indeed, the vast majority are hard-working, ethical and honest who would never try to swindle anyone. However, merchant account companies are also worried that merchants with a low credit score may not even have sufficient funds to repay them if a chargeback is lost. The Law of Probability suggests that business owners with high(er) credit scores may be more able and likely to fulfill all obligations set forth by Visa and MasterCard regulations and statistically less likely to engage in any fraud or deception. (One’s credit rating affects perception of credit worthiness and those who have a low credit score are not able to secure the best loan rates, if they can even secure a given service itself.)

Unfortunately, not all merchant applicants enjoy ample credit rating scores. Some merchant account providers will permit business owners to get a cosigner – someone with decent/good credit. Those who are unable to secure a cosigner and/or choose not to do so may be compelled to use a third-party provider, open an off shore account, or decide not to accept credit cards at all.

The merchant’s type of business:  Merchant account processing underwriting groups not only evaluate a merchant’s credit but his/her line of business. Even if the credit rating score is high, an application decline will materialize if the business is considered too high risk. (Of course, the term, "high risk," is a subjective one and may be interpreted differently by different underwriters.)

One common perception, shared by all underwriting groups is that retail businesses are less risky to approve than online businesses. Indeed , there is much less fraud perpetrated when merchant and customer have face to face interaction. Moreover, merchants who have retail, brick and mortar establishments are considered "safer prospects," – less likely to commit fraud than merchants who open up Internet, potentially "fly by night" businesses. This is not to suggest that merchant account providers do not actively seek to expand their base of online business clients. They just do so with a greater degree of caution than exercised with retail merchant candidates.

Consider a guns and ammunition business. While almost all underwriting departments will approve an application from a guns and ammunition retail enterprise owner, most will not grant application approval if the same business is conducted online.

Certain types of businesses are on the merchant account application bubble – and may fall in the approval pile if other conditions are met. Selling custom items, vitamins, and electronics online, for instance, all fall in the "gray area," and may be deemed acceptable if the owner has good credit, prior processing history, a liberal return policy, etc. As Frank Nunamacher, Manager of the Underwriting Department at United Bank Card, states: "Every account is judged on its own merit."

But certain businesses are automatically declined, instantly dismissed as too high risk and prohibitive. Among these type of "taboo businesses" include debt consolidation companies, telemarketing, travel, adult entertainment, purveyors of cigarettes and cigars, pharmaceutical accounts, international businesses, etc. These industries share a common thread: The notorious high rate of chargebacks. Merchant account providers want to stay clear of problematic chargebacks at all costs.

The merchant’s method of operation:  The manner in which a merchant conducts business and receives payment has a bearing on underwriting decisions. For example, consider the scenario where a merchant decides to sell information, planning to make it accessible to his/her readers via a download. Some underwriting groups would be averse to issuing an approval, concerned that it is too easy for the customer to initiate a chargeback. (The customer can aver that the material was not as advertised or cite other reasons.) If that same merchant changes the mode of product delivery and decides to mail the information to customers, the chance for application acceptance dramatically improves since the possibility of chargebacks is greatly reduced.

Similarly, from an underwriter’s point of view, weigh the prospect of a business that has an annual membership and only bills once a year (e.g., magazine subscription business). What happens if a customer wants to cancel after 6 months and the merchant does not readily forward the pro-rated amount back to the customer? A customer chargeback can prove problematic for the merchant, and ultimately, the merchant account processor. Due to this reason, an underwriter would feel much more comfortable approving an application from a business owner who bills monthly.

The merchant’s specified limits:  On a credit card processing application, the merchant must write his/her anticipated monthly volume, average ticket and highest ticket. While these amounts may be estimated, and even reflect pure conjecture on the part of the merchant, they can determine whether an application receives a "thumbs up" or a "thumbs down." A new online, home-based business, for instance, requesting a monthly volume of $100,000, may foment an underwriter’s concern. How can such a business substantiate this high of a credit limit? For an application to be accepted, authorizing the high monthly volume, the merchant would have to have excellent, nearly flawless credit and probably be instructed to have a reserve. A reserve is an amount, belonging to the merchant, held at the merchant account processor’s acquiring bank. In essence, it can serve as a hold on the merchant’s funds if fraud is detected and can cover any future chargebacks. If this business owner decides to lower his monthly volume to $10,000, an underwriter is much more apt to approve the application without any restrictions, such as a reserve. (Please note that some merchant account providers mandate that merchants open an account with their affiliated bank, regardless of monthly volume.)

High ticket amounts can also be "deal breakers." A few years ago, I spoke with the owner of a furniture sales business who needed to have a high ticket of $50,000. He admitted that his credit was not good and the company financials were not strong. Based on what he told me, I let him know that it would be impossible to secure this amount for a high ticket. The underwriters would perceive this high amount as a potential threatening liability. He understood and reduced this amount considerably on the application, subsequently approved. (I informed him that he could still accept a transaction that was higher than the specified highest ticket but he would need to provide proof of the transaction (e.g., invoice) and prior monthly bank statements (hopefully showing sufficient funds to cover a possible chargeback.)

Merchant’s Tenure of Ownership:  While most merchant account processors welcome accounts from new business owners, others refuse to grant approval to any merchant who has not operated a business entity for a period of time (generally, at least a year). Perhaps it is the human condition to tend to trust experience. For example, most of us would rather fly on a plane with an experienced pilot than one who is relatively new at piloting. Similarly, merchant account providers feel more comfortable with experienced business veterans, preferably with a proven track record, than business newbies.

In a similar vein, it is a little easier for merchants who have obtained prior credit card processing to get their applications accepted than those who have never taken credit cards – as long as the business’ record is good. Underwriters like to receive prior credit card processing statements and look at the chargeback history. A clean history generally results in underwriting approval.

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The aforementioned underwriting criteria are all employed when underwriters perform a risk analysis. Unless agents/ISO’s can weed out applications they know will not be approved (based on applicable factors), it is inconceivable that underwriting staff can issue an almost universal application acceptance.

There exists several companies in the merchant account field that do seem to grant almost 100% initial approval. But several weeks later upon closer examination – at least on some of the higher risk accounts – the merchant account provider puts those accounts on hold or places a reserve and/or increases the rates to reflect this deemed higher risk. Obviously, these practices are blatantly unfair to the merchant and cast a dark, dismal shadow on the entire merchant account field. Fortunately, most merchant account providers do not employ such tactics.

For the most part, underwriters are diligent, responsible, analytical and fair-minded, employing a number of criteria to make an important decision (i.e., whether a business owner can obtain credit card processing capability). While the underwriting process is mostly an endeavor based on objective facts, there is definitely a human, subjective element to it. I remember speaking with one underwriter who issued an acceptance to a merchant despite the fact that this merchant had a seemingly too low credit card rating score. He noticed that the merchant’s rating was adversely affected by medical-related expenses and took that into consideration.

So while underwriters employ concrete principles in their decision-making process, they also utilize some degree of personal perception – how they feel about ancillary issues (e.g., extenuating circumstances, for example, affecting one’s credit). They may also emphasize one criterion over another. (One’s personal credit rating seems to play the pivotal role, the majority of cases, in whether an application gets accepted.)

By becoming more acquainted with the rules, policies and practices of underwriting, a merchant can better win underwriting application approval.

I had a physical examination last week and was ready to pay the deductible when I realized that I had no money in my wallet.  (This is not a surprising occurrence as my wife always helps herself to the contents of my wallet, generally without telling me. )  I was unshaken about the inability to pay in cash as I was armed and ready to use my old, reliable credit card.  Handing the plastic to the receptionist, she politely declined, informing me that they don’t accept credit cards.  “Your kidding,” I meekly offered, hoping that she was jesting.  “No, she answered, “It’s just something that we haven’t felt the need to do yet.”  “Maybe, you should start thinking about adding this payment option now … right now … as I have no money to pay you,” I countered.  We shared a nervous laugh before I called my wife to come to the physician’s office to bail me out.  When my wife arrived, I handed the receptionist a check and my business card.  She seemed more eager to grab the check.

I read an article online that indicated my physician was in good company, one of 220,000 doctors who embrace a “do not accept credit cards” rule.  In the changing landscape of insurance policies, doctors may need to reconsider this payment policy.  Consider this sobering fact: The average family medical insurance deductible is steadily increasing.  (From personal experience, I can attest to a burgeoning deductible as mine is now $2,500 under the “Family Plan.”)  Insurance payments will not be dispensed to a physician until deductible is met.  Consequently, patients are now responsible for payment, and doctors are now more reliant than ever on such payments.

As payment responsibility shifts to a greater extent to patients, it behooves physicians to expand payment options.  Indeed, if the objective is to receive full payment, it seems imperative to enable people to pay in as many ways as possible.  Furthermore, patients may feel more comfortable dispensing funds via a credit card where 30 days can elapse before any restitution is made, and a minimum payment is acceptable; paying by check, one that clears in a few days, may prove very problematic to some.

In this vein, patients may be more readily inclined to pay a larger portion of the owed funds (if not the entire amount) with a credit card because of its inherent grace period.  This reduces the practice’s exposure to bad debt and helps to simultaneously increase  cash flow.  Even patients who are concerned about how they will pay off credit card debt may be more inclined to charge and pay their bill in full before they leave the office.  (Although it is blunt to note, the individual’s financial problem remains then with that individual and not shared with the doctor.)  Another domino effect: As payments are received in full, the office has less of a dependence on the use of invoicing (too often, many invoices are sent before any response is returned).  In addition, full payment precludes the use of collection agency services, reducing the practice’s billing expense.

A credit card option can also help to diminish a physician’s reliance on collection agencies in another way.  If a patient can be set up on recurring payments, debt, particularly involving a large amount of money, may be more easily and readily paid off.  A recurring payment option can be initiated with the use of a virtual terminal (internet-based mechanism), and not a physical terminal.  An automatic payment option prevents further time delays (waiting for a check that may never have been mailed), and obviates cash flow problems.

While many doctors may not be aware of exact credit card processing-related expenses, they realize it is a definite expenditure, impacting the practice’s profit.  However, credit card processing fees should pale in comparison to the total costs engendered from invoicing, billing, collection efforts and write-offs, not even factoring labor costs in performing these aforementioned activities.

Doctors are getting sick and tired of mounting administrative costs and escalating patient debt, much of it uncollectible.  A credit card payment option should prove to be an ideal remedy, though admittedly, not a cure.

I remember when I obtained my first credit card during my college years. In my mind, I had taken my first steps towards financial independence, anticipating paying my own bills, paying off the balance owed. With credit card in hand, I ran my fingers over the raised credit card numbers as if I were learning Braille, excited that these digits would open up a world of unexplored territory – of higher-priced goods and services, if not independent decisions as to what I wanted / needed to buy.

With the proliferation of unembossed cards, fewer people will get to feel the raised, Braille-like numbers and letters. (OK, maybe I am the only one who likes this type of tactile sensation.) Still, embossed cards are giving way to its glossier and smoother counterpart, changing the landscape of the merchant account field. Indeed, unembossed cards necessitate immediate electronic authorization. The wording featured on a MasterCard credit card, “Electronic use only” emphasizes this point. The old-fashioned, “knuckle-buster,” the manual imprinter, will be rendered useless – as merchants will be unable to make a suitable copy of the card.

In this lies the rub. Business owners who are handed an unembossed credit card card from a customer, who rely on the manual imprinter, can no longer protect themselves from potential chargebacks. They will not have proof, at least evidence that will satisfy the major card Associations, that an unembossed card transaction was authorized. For example, we have small business clients who participate in trade shows. Many take an imprint of the customer’s card and subsequently return to the home office to key in the transaction. Now if such an imprint is impossible to take, these merchants are taking great risk in facilitating the transaction. Any customer that disputes the charge, even if the chargeback is spurious, will win.

Business owners who conduct wireless transactions will similarly be adversely affected. Again, the inability to imprint a customer’s credit card will lay a foundation for a greater frequency of chargebacks – chargebacks that the merchant will be unable to win. Fraudsters who are savvy with Visa and MasterCard credit card processing stipulations, certainly aware of the loopholes, may just hit “paydirt,” knowing that the merchant cannot provide suitable authorization proof of the transaction. Please note that merchants cannot merely present a handwritten sales slip with customer signature as valid documentation.

With the advent of these unembossed cards in the United States (they have been used in Canada and in other countries), various business segments will be ripe pickings and incur unfair chargeback losses: Trade/craft merchants, home appraisers, general contractors, plumbers, electricians, home fix-it professionals, certain delivery merchants and others will share a common problem: untenable chargebacks.

Why would Visa and MasterCard deliberately open these types of businesses and acquiring banks to greater risk? Visa’s company line: “Unembossed cards help mitigate the risk of fraud by ensuring that a real-time authorization is always received at the time of the transaction.” Visa adds that this has particular relevance to prepaid cards with lower balances, ensuring that customers will not gain access to goods and/or services when they’ve gone over their balance. Furthermore, with a real-time authorization mandate, card-issuing banks can be more predisposed to providing credit card capability to those who have heretofore been ignored or dismissed: consumers with poor personal credit, first-time cardholders, etc.

The operative question remains: “What if a merchant receives an unembossed card that he/she cannot swipe (i.e., no credit card processing equipment is accessible) or cannot be read by a POS terminal (magnetic swipe is not readable)? Visa matter-of-factly advises the merchant to just ask for another form of Visa payment – easier said than done. MasterCard, with its “electronic use only” declaration, has not offered a business owner with (m)any viable solutions. Of course, the merchant can always ask for an embossed card or a different form of payment, refuse to take the card … or ante up, and just get a physical credit card terminal. Alternatively, the merchant can always key in the order later on (i.e., deferred processing) or call it in (Dial Pay), yet the risk of a possible chargeback gravely looms overhead in these scenarios.

On a positive note, the embossed card will be cheaper to produce. But merchants who cannot electronically process the card may very well assume the brunt of cost in indefensible chargebacks.