1. A how to merchant account discussion mandates attention on your projected credit card processing volume -- particularly the anticipated highest ticket. On the merchant account application, a business owner performs a guestimate on the monthly/annual volume, average ticket, and highest ticket. It's always best to OVER-estimate these totals ... within reason. Here's why:
Suppose you indicate on the application that your highest ticket will be $500. One day, a customer purchases $1,000 worth of goods and you process that amount. This raises a red flag and the funds from that transaction are held by the processor. The risk department may request a copy of the invoice and/or customer agreement to validate the authenticity of the transaction, and perhaps bank statements to ensure that you can cover a potential chargeback for this $1,000 charge. Moreover, the processor will likely call the customer's card issuing bank to ensure that the transaction is valid.
The delay in receiving funds affects cash flow, and you may feel uneasy about the customer's role in confirming the transaction. Furthermore, the risk department may demand that you credit the customer and seek an alternate form of payment if your bank reserves are deemed too low. In the scenario that you credit the customer, you'll still, at the very least, have been charged the processing fees for the original $1,000 transaction.
Consequently, it's crucial to avoid going over your credit card processing limits, specified on the application. If you believe that such amounts are not high enough, you can request a merchant limit increase but it's up to the processor whether such new limits will be permissible.
2. Before you batch out or before automatic batching takes place, review your daily transaction log! If you inadvertently charge $5,000 instead of $500, for example, VOID the sale! You should NOT credit that same erroneous amount. If you do, you'll likely pay the processing fees for the sale and for the credit -- a clear waste of money.
Some generous processors may return the processing fees for such a mistake but will only do so if the sale and the credit ran through the same batch. Again, double and triple check your list of transactions on a daily basis and don't avoid the void function, if necessary.
3. Part of learning the how-to merchant account game is to become more familiar with the terms and conditions. Yes, these stipulations are written in legalise and very difficult for the layperson to understand, but you can circumvent problems by using good, old-fashioned common sense. Here are some of the more common lapses in judgment: a) Allowing a friend or acquaintance to use your merchant account; b) Charging customers for goods or services that are not part of the business you mentioned in your application; c) Closing or changing your bank account without notifying the merchant account provider; d) Failing to respond to chargebacks or requests for information pertaining to your account; and e) Shipping the customers' goods well after their credit cards have been charged. (Any merchant should not process a given credit card until the item has been shipped.)
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Learning "how to merchant account" should not pose too many challenges but by following the aforementioned advice, credit card processing headaches may be more readily avoided.
