Merchants FAQ's

SGP Services has been in business since 2004 and represents numerous processors and gateway service providers. The advantage to you is that we can match your business needs to the processor and the gateway. There are valuable features with each provider that are different and may be the time or cost saving benefit you are looking for. We will guide you to the processor and gateway service that fits your business and support you after you are set up.

For some businesses, their bank is a perfectly acceptable source of credit card processing.

Your bank is trying to be a turnkey source for all your banking needs. They do not actually process credit cards; they are simply the middle man in the process to make it easy for their customers.

Most banks carry the liability for their customers’ transactions, do their own underwriting and have a national processor do the processing. That means that their underwriting guidelines are stricter than a merchant services provider. They typically do not take internet businesses, mobile service businesses or non “brick and mortar” retail businesses. They usually provide a credit card terminal and a tiered pricing method that is more expensive overall and have no internet gateway service option.

If you are not running very many transactions a service like Paypal or Google Checkout may be a good solution.

PayPal and Google Checkout may be a good option for some businesses. The basic Paypal service for example, is quick and easy to set up, there is no set up charge and there is no termination fee. The rate is higher at 2.90%, but that is why there are no other fees.

There is no free lunch. Companies such as PayPal have to make money to stay in business.

Small businesses that are starting up with a monthly volume lower than $2000 would save slightly with PayPal over a merchant service account. However, as soon as you start adding features like the Virtual Terminal or better PayPal service packages, the savings disappear.

The advantage to a merchant service account over Paypal is that your money is automatically deposited into your bank checking account in two business days with better overall rates. You do not need to request your funds as is the case with PayPal.

The application process typically takes a day, but can take as long as a few days to get approved depending on several factors that the underwriters have to consider.

For internet businesses, the website must be complete including:

• Contact information
• Privacy policy
• Refund policy

The information that is required to send in with the application include:

• Voided check
• Sales tax license
• Business license
• Marketing material
• Business financials and tax returns (rare)

Typically the approval process is very quick and averages two business days.

Absolutely. Credit card processors are always looking for new businesses to work with to increase their market share.

Yes. Credit score is only one of the many things the underwriters look at to approve an account. Processors want to find ways to do business with you.

Every processor has a Restricted List of businesses that will be more closely scrutinized before approval.

They also have a Prohibited list of businesses that they will not approve at all. The lists vary from processor to processor so we can often find a better match for your business if it falls into one of those lists.

The cost is for processing falls in two main categories: monthly fees and per transaction fees. The processor and the gateway service each charge a monthly fee that covers account maintenance, customer support and mailing statements.

Transaction fees typically are two-part: a fixed fee and an interest rate on the transaction amount. The fixed fee usually ranges from 20 to 30 cents and pays for all the services in transmitting, verifying and capturing the funds. The interest rate depends on the method the processor uses to price their transaction and can vary from as little as 1.25% for a swiped debit card to almost 4% for corporate cards manually entered.

Years ago when there were only a few transaction types, there was only the three-tiered pricing method in either Retail accounts or MOTO (Mail Order Telephone Order) accounts. Qualified, Mid Qualified and Non Qualified transactions were the only rates. Then the lower rate for swiped debit cards was added to create the four-tiered system. With the birth of rewards cards, corporate cards, fleet cards and purchase cards and the evolution of the Internet and manual entry, in addition to point of sale swiped transactions, the interchange transaction types ballooned to what we have today.

There are over two hundred card transaction types or interchange rates from Visa/Mastercard charged to the processor. Today, there are several pricing methods used by processors. There are three tiered, four tiered, bundled rates, targeted rates and interchange pass through as well as some combinations of those methods.

Which one is the best? That depends on your business and how you take transactions. We can determine the advantages and disadvantages for your business and pick the method that gives you the best overall rates.

Some fees are optional and some are mandatory depending on the processor.

For internet businesses, the website must be complete including:

• Some processors charge an annual fee for
       their service.
• Some charge a monthly minimum for
       various reasons, especially if they have
       provided you with “Free Equipment”.
• Visa/Mastercard is being required to
       conform to new consumer protection laws.
       The processors are passing on the cost of
       implementing PCI Compliance either as an
       annual fee or a monthly fee.
• Some processors may charge separately
       for customer support.
• You may decide to get a Merchant Club fee,
       not so that you can go to the golf course,
       but so that you can have extras such as
       terminal insurance and paper supplied
       to you monthly.

New laws have been enacted to protect customers’ identity and card information. PCI Compliance is a program initiated by Visa/Mastercard to make sure that the systems, service providers and merchants are following these security guidelines. Some processors are passing costs for this program on to the merchants.

Many services charge a minimal set up fee or application fee to cover the cost of reviewing the application and doing the administrative work to set up the service. Every provider is different and you may have a set up fee from the processor or the gateway service. There are often options to reduce the set up charge by increasing the monthly charge.

The credit card processing system is transparent to the end customer. The cost for the convenience to use their card is not apparent and that makes it easier and encourages them to buy more. Businesses that start accepting credit cards on average increase sales by 30%.

However the entire processing network, the time value of money until the transaction is paid for as well as the risk of nonpayment must be covered to keep the system going. The reason the merchant is charged for the transactions is because this cost should be rolled into the cost of goods sold and charged to the customer just like the rent, utilities and cost of employees.

There is no free lunch, and customers do pay for the convenience in the end.

With a merchant service account the transactions will be deposited directly into your business checking account. The typical time from the transaction until the deposit is two business days. This is one of the main advantages over services like Paypal and Google Checkout, where you have to ask for the money to be transferred to your checking account.

Yes, retail transactions can be run through the same merchant service account as your internet store. Many gateway services have a method of running card-swiped transactions through a card reader, wireless terminal or over a cell phone.

The key point is the transaction fee will be affected by the pricing method. If your business is set up with a tiered pricing program, your cost will be the same whether it is swiped or manually entered. The difference in the rates is why most retail businesses have two merchant accounts for the manually entered and swiped transactions. The disadvantages to two accounts include two sets of monthly fees and additional book keeping work to reconcile the two accounts.

We can show you various options that minimize your fees and maximizes your ease of use.

You can accept all credit or debit cards if you wish. The most common cards accepted are Visa, Mastercard, Discover and American Express.

Leasing is one way to provide equipment if you do not have the capital to buy it. Leasing is expensive and there is no way of getting out of the long-term commitment. We recommend other ways to supply equipment that are less costly and restrictive. Some processors even offer “Free Terminals” with some of their promotional programs.

Recurring Transactions are set up to happen automatically at the time interval you choose. The customer must approve recurring transactions happen to pay for the product or service they are receiving. This can be a valuable time saving service for payments that happen regularly, like rent payments or subscriptions.

Yes, Checks can be accepted in many different ways at the point of sale, over the phone and on the internet. Based on a law called Check 21, that allows a paper check to be replaced by the electronic image. Checks can be scanned to be accepted or even run without a paper check through the banking Automated Clearing House (ACH) system. The transaction can also be “Guaranteed” so that you get paid even if the check bounces.

You will get a mailed statement every month. You can also log into an online reporting website to see details of your transactions.

Typically there is 24/7 support through your processor for technical issues as well as business hours support for administrative issues.

Shopping carts and gateway services run your transactions on the internet. If you have a website that you would like to sell products from, then you need a shopping cart on your site that displays your products and prices to your online customers. There are hundreds of shopping carts with various features; some which are free. Talk to your website developer to choose the right one for you.

A gateway service takes the information the customer enters on the payment page and transmits it in the background to the credit card processor. It also returns the approved/declined message to the shopping cart.

Gateway services offer various additional features like virtual terminals, electronic invoices, Quickbooks integration, mobile transaction access, point of sale access and even a complimentary shopping cart software. Gateway services are a separate company that charge a monthly service charge and a fixed per transaction fee for their service. Typically your merchant service provider would supply the gateway service to be compatible with the shopping cart on your website.

A Virtual Terminal is an online secure webpage that is accessed through a password protected login. From the Virtual you can enter credit card or check transactions as one time or recurring items.

A charge back is when a customer calls their card issuing bank and disputes a charge on their card. This is the consumer protection process to return funds for transactions that the customer did not authorize. There is an arbitration process for the merchant to prove that the charge is legitimate.

Discover and American Express are separate companies from Visa and Mastercard. They send you their own statement for the transactions you have run with their cardholders.

Yes. There are service providers can integrate data into Quickbooks. This allows you to easily import your transaction data without being forced to use the processing provided by Innovative Merchant Solutions through Quickbooks. This allows you the flexibility of using other processors with lower rates and more methods of accepting transactions.

A merchant service account is good for one business DBA name (Doing Business As) or one physical location. It will not be approved for more than one business.

No. You cannot run transactions for another business. It is illegal because it is a form of money laundering.