Let's start with the basics! I'm sure you've heard the term merchant account bandied about the internet. We will examine here, what exactly is a merchant account and what is required to get started. Our goal is to get you up to speed with the terminology and processes involved with getting set up for a merchant account. A merchant account is simply a relationship between a retailer and a merchant bank that enables retailers to accept web-based credit card payments from their customers. This is the account into which a Merchant Account Provider deposits payments into your business checking account from the transactions made online. To qualify for a merchant account, retailers must meet the bank's requirements.

charge4u.com is an industry leader in merchant accounts and e-commerce. We offer a speedy, secure and cost efficient payment real-time processing. With charge4u.com, merchants can begin accepting payments within a week of completing our on-line application. Depending on your ability to complete all the required documents in a timely manner, your approval can be as quick as 24 hours.

The first question you need to ask yourself is: Do I qualify for a merchant account?

Merchant account providers require merchants to meet certain requirements for opening an account, requirements that often are particularly strict for e-commerce businesses. In general, the riskier the provider deems your business, the more difficult it will be to open an account and set up your web site for e-commerce.

What basic requirements will you have to meet? What goes into determining whether your business is risky? Why do the requirements vary so widely?

To process credit cards online, you need an Internet merchant account. This is the account into which a merchant account provider deposits payments made through your web site. All business owners who plan to process credit cards must have a merchant account.

Requirements for obtaining a Merchant Account:
Almost every merchant account provider maintains the following basic requirements for opening a merchant account. If your business expects a relatively low monthly charge volume of less than $5,000 per month, you might merely be required to:

• Have a web site.
• Provide your business name or Doing Business As (DBA) name.
• Clearly display your return policy.
• Have a U.S. checking account.
• Have a U.S. postal mailing address for the checking account.
• Not be in active bankruptcy.
• Not have been convicted of credit card fraud or a related felony.
• Not appear on the Terminated Merchant File List or MATCH file.

The MATCH file is analogous to a credit-reporting agency. It is a file maintained by the credit card associations and contains information about businesses that have failed to handle their merchant processing responsibilities. You must work with the company that originally placed you on MATCH to get your named removed. You cannot get approved for a merchant account if your name is on the MATCH list.

These are the minimum requirements. Merchant Account Providers often ask for more extensive information and documentation in addition to that listed above especially for merchants expecting more than $5,000 per month sales volume. They may require you to:

• Provide tax returns.
• If these are not available, you might be asked for proof of corporation, partnership, limited liability, or nonprofit status.
• Submit to a site review and answer questions about the company business plan. * Have good or excellent credit.
• Provide trade references.

Why is it so difficult for e-commerce businesses to get a merchant account in comparison with a brick-and-mortar business?

In one word: risk. Transactions conducted via the internet are considered by merchant account providers to be by their very nature riskier than "normal" transactions. As pointed out on AOTA.net, e-commerce businesses present three types of risk to the bank providing the merchant account:

Credit risk. This is the risk the merchant account provider takes with respect to the amounts you, as a merchant, might owe the bank in the future. For new businesses with, for example, $5,000 in charges per month, this risk will be relatively low. Nevertheless, personal credit history figures strongly into the decision-making process for some merchant account providers.

Fraud risk. This is the risk of incurring charge-backs due to the fraudulent use of credit cards. Fraud risk is the greatest concern for merchant account providers. As described above, if the customer contests a charge, the customer's bank is required to refund the money it has fronted to the merchant. The customer's bank passes this loss on to the merchant account provider, which passes it on to the merchant. Newer businesses and certain types of products are considered to be at greater risk for fraud.

Contingent liability risk. This includes not only fraud but risks associated with unforeseen consequences of marketing. Businesses that offer a lifetime service guarantee present a large contingent liability risk because if they should go out of business, the merchant account provider could be held liable.

Of course, e-commerce businesses can vary widely in risk. The following are factors that are considered when determining risk. Different merchant account providers place different weight on each of these factors.

Length of time in business. The longer you have been in business, the better off you will be when applying for a merchant account.

Type of product. Retail sales is generally considered less risky than sales of intangible products such as downloadable videos or e-zine subscriptions.

Cost of items or volume of sales. High-volume sales or sales of big-ticket items are generally considered riskier by merchant account providers. The more money you make per month, the bigger the credit risk for the merchant account provider.

Personal credit history. Some providers consider this to be the most important factor when considering an application. This is not universally true, however. Many merchant account providers consider risks associated with fraud and contingent liability to far outweigh personal credit history. Credit history takes on added importance with time, however, as your business increases in sales volume.

Tax returns. The merchant account provider may look at tax returns and other financial documents for proof of financial responsibility. Individuals with higher incomes are considered less risky because they are less likely to file for bankruptcy if the business fails.

Here is a list of the common fees and costs you can expect to pay from any merchant account provider:

Internet discount rate.
An Internet discount rate is a fixed percentage taken from every online transaction, usually two to three percent. The internet rate will generally be higher than card-swipe rates, the rate charged when the merchant can swipe the customer's card through a traditional point-of-sale (POS) terminal. The internet discount
rate runs at a higher rate because it's not face-to-face and is a riskier proposition for the bank who provides the merchant account.

Transaction fee.
Merchant Account Providers typically have fixed charges and It works like this. On a $100 sale, if the discount rate was 2.39%, $2.39 would be deducted from a $100 sale. There is a transaction fee charged to each order and we'll use 30 cents is this example. Therefore, on the $100 sale, the processor would keep $2.69 , giving you, the merchant a net of $97.31. Note, some banks deduct this fee at time of sale, while most deduct it as a total of charges at the end of each month. Visa & MasterCard and the processor take a fee for every transaction.

Monthly fees and minimums.
There is a variety of charges levied on a monthly basis by the bank, including a monthly statement fee and/or a monthly minimum, excess usage fees, and others.

Charge- backs.
Your merchant account provider may holdback, or reserve, a percentage of your transaction receipts to cover any contested charges. A chargeback is charged to a merchant when a consumer claims their card has been charged and the merchant has not delivered the product or performed the service. A chargeback fee is NOT charged when a merchant processes a return of a charge to a consumer.

Reserve.
If your business is considered high-risk, you may have to pay what's called a reserve. The reserve is usually calculated as a percentage of the monthly credit card volume. It is built up over time and held by the bank in escrow to offset unexpected chargebacks.

The application process may seem daunting, but keep in mind, the better the merchant account provider understands your business, the better the relationship is likely to be. Feel free to contact a charge4u sales associate at: 1-877-791-9969. We will be happy to answer any questions you may have regarding the sign up process.