Merchant Account Credit Card Basics

Today's Merchant Credit Card Industry

The non-cash transaction industry is a multi-trillion dollar industry. Over 75 percent of most merchants' businesses involve credit cards. This means that business opportunities are everywhere. US Business Finance Corporation has the ability to place any type of credit card processing opportunity, whether it is retail, mail order, telephone order, Internet, or government. This is a big benefit to you, since most banks will limit what you can place with a particular processor.

When a merchant starts a business, one of the first things to do is look for the ability to accept credit cards from a merchant service provider. While most merchants know that accepting credit cards is extremely beneficial to their business, some small business owners still do not realize the importance of accepting credit cards from customers. Therefore, we will educate these merchants to the benefits of accepting credit cards. US Business Finance Corporation is happy to accept accounts that have not previously taken credit cards as a means of payment.

Evaluating Criteria of Credit Card Processing

Applying for a merchant credit card processing service account is essentially the same as applying for an unsecured credit line. Because of this, a merchant account is subject to underwriting. Underwriting is essentially the process by which we evaluate the risk posed by a particular merchant, determine whether we will assume that risk, and if so, at what rate. The theory behind underwriting accounts is actually fairly simple to understand. Getting to know this will help you to be a more successful user of credit card processing services. There are three basic levels of risk in underwriting: low, medium, and high risk.

Level 1 - Low Risk Merchant Accounts

Low risk swiped transaction accounts are merchant businesses where the client pays for and receives the merchandise or service at the same-time. The client signs a receipt and is on their way. Should there be any conflict on price or product, the merchant has the opportunity to resolve the issue before the consumer or patron leaves the store.

Some examples of low risk accounts are:

• Restaurants
• Grocery Stores
• Department Stores
• Dry Cleaners
• Cigar Stores
• Book Stores
• Café's
• Movie Theaters

In most cases, the above businesses have small to medium size sales receipts, usually under $100.00. The smaller the ticket, the less likely a consumer is to take the time to dispute a transaction. However, fine dining establishments may often have larger tickets, but are still considered low risk because the buyer and merchant will almost always resolve any dispute before the buyer leaves the establishment. Accounts that fall into the low risk category are preferable, and will be approved in nearly every circumstance, unless our underwriting process uncovers a history of fraud or other risk.

Level 2 - Medium Risk Merchant Accounts

Medium risk swiped transaction accounts are large ticket category merchants. There is a greater chance of consumer dispute with these transactions after the buyer has paid the merchant. In the case of auto or home repair there can be significant concerns about potential faulty workmanship, which could cause a dispute and result in a charge back to the merchant. This category includes more target stores for fraud such as computer and appliance stores. This means that we employ a higher degree of scrutiny in the underwriting process. Some examples are:

• Auto Service
• Furniture Stores
• Home Repair
• Carpet Stores
• Bridal shops
• Computer Stores
• Replacement Door/Windows
• Appliance Stores

Merchants in this category represent acceptable business to US Business Finance Corporation, but will be more carefully monitored and will require additional due diligence in the evaluation process. We will require you to obtain additional information from these merchants, such as return policies, business credit rating, and business history. In addition, we may be asked to perform a site survey in order to secure a merchant's account approval.

Level 3 - High risk Merchant Accounts

High risk swiped transaction accounts are businesses that have all the factors of a medium risk business but may have higher average sales ticket, as well. Other merchants in this category may have poor credit and financial capability. Some examples are:

• Used car dealers
• Sales at Seminars
• Art Dealers
• Jewelry Stores
• Weight Loss Centers
• Travel and Tour Businesses

In order to accept high risk merchant accounts, US Business Finance Corp requires the same level of due diligence as with the medium risk accounts, plus phone interviews with the merchant. The approval process for these accounts may take significantly longer and may involve a higher cost to the merchant./

Other considerations regarding evaluation criteria:

Transactions where payment disputes often arise, such as product liability issues or overspending on impulse purchases. The consumer may regret a purchase or change their mind about a purchase, by right within a certain number of days. A merchant that is subject to these problems may be evaluated as a medium or high-risk account.

Finally, merchants that operate using "keyed transactions", such as those that result from mail, telephone, and/or Internet orders, may also be required to provide additional information on a case-by-case basis.