Occasionally I will have an applicant ask me if they are required to obtain an Employer Identification Number (EIN) from the IRS in order to accept Visa/Mastercard.  

The answer is “It depends”.      

The link to the IRS website below provides the general guidelines as to when a business is required to obtain an Employer Identification Number (EIN).  If you meet the exemption standards, then your Social Security Number can be provided as a substitute for the EIN on the merchant account application.  I often see this done by Sole Proprietors who have no employees.

http://www.irs.gov/businesses/small/article/0,,id=97872,00.html

The best part about obtaining an EIN Number is that it can be done over the Internet, and it’s free of charge!  I’m sure new business owners can appreciate that there is no charge to apply for an EIN Number.  (Unlike a business license that will require a fee.  I know in my home town it costs $100 for a business license.)

You can apply for an EIN Number directly from the IRS website by clicking the link below. 

https://sa2.www4.irs.gov/modiein/individual/index.jsp

Most importantly, once you get to the end of the application be sure to print out and save a copy of your Confirmation Notice.  You will need this for your records.

Businesses and consumers alike are dialing in to the advantages that the internet has to offer. One of the most recent advantages is the iPhone application whereas you can run credit card transactions through your cell phone. iPhones in general have become more and more popular due to their accessibility and ease of use. The iPhone offers various applications to it’s users. From games to business tools, it seems only logical that someone came up with the terminal application. Keep in mind that the application needs an Authorized.net or gateway system in order for you to be able to accept transactions. You can sign up for an Authorized.net account with BestMerchantRates.Com.

How does iPhone credit card processing application work?
1. You type in the number of the credit card
2. Type in the expiration date
3. Type in the amount to be charged
4. Make sure you obtain the CVV code on the back of the credit card as well as the billing zip code for security purposes.
5. Hit the charge button
6. If your iPhone has printing capabilities, have your customer sign the receipt. If you do not have printing capabilities, you may want to create a document whereas your customer is authorizing the charge. In case of a chargeback, you’ll want to have these documents available.

What other functions does my iPhone offer?
In addition to processing transactions, you can also: void a transaction that has not been settled, refund a settled transaction, or place holds on a credit card. This function is particularly handy for businesses that require security deposits.

If you are a “on-the-go” business, the iPhone might be something you may want to consider.

Have you ever noticed how many types of credit cards are offered out there? Credit cards to help you build or rebuild your credit history, credit cards for students, credit cards with rewards, credit cards with 0 interest. As a merchant who accepts credit cards, what does this mean to you? Well, it depends on your processor and their method of billing for these transactions.

Most processors offer one of three types of billings for credit card processing: 1.ERR 2.Interchange 3.Tier Pricing. As if understanding all the ins & outs of credit card processing wasn’t difficult to navigate through already, some processors make it even more difficult by throwing ERR & tier pricing at you. With ERR and tier pricing you are charged based on the type of card your customer is using. You get charged a:
1. qualified rate for a “regular” card
2. non-qualified rate for those business cards or keyed in transactions
3. mid-qualified rate for rewards cards or keyed in transactions
As if that wasn’t enough, you can get charged a non-qualified or mid-qualified rate if you don’t settle your batch within a certain allotted time frame, usually 48 hours after authorization is received. Now…most transactions will fall within the non & mid-qualified types of transactions and it just so happens that these types of transactions yield the highest rate charges to the merchant. You should note that if you average $100+ transactions, it’s probably a good bet that you’ll be charged a non or mid qualifed rate because most customers will want to earn points or miles for these high ticket transactions. There is no way of the merchant controlling the type of card they are accepting, that’s really up to the customer, so why should the merchant be charged a higher rate for these transactions?

That’s why interchange is the easiest to work with. The merchant gets billed a flat rate regardless of the types of cards their customers use. It makes it easier for a merchant to understand their billing because their cost of processing is based on the volume of processing times the agreed upon rate during sign up. Most processors also charge a batch fee, settlement fee, statement fee, etc. These fees are negotiable, but it’s the method in which you are being charged for the cards you accept that you want to look out for. Make it easier on yourself and go with a company that provides Interchange billing. Why penalize yourself for something you have no control over?

It is important to always provide a thorough description of your business on the merchant account application.  Occasionally I see applications that have a business description that is too vague. 

Always be as specific as possible in order for the bank to have a clear understanding of your business operations.  Below are some examples of vague business descriptions, and how they can be improved.

Vague : Consultant

Better: Advertising Consultant, Network Consultant, Sales Consultant.  Always specify the type of consulting.

Vague: E-Commerce

Better: Online clothing, Online music. State exactly what is being sold online.

Vague: Construction

Better: General Contractor, Roofing, Drywall, Custom Remodeling, Cabinets

Vague: Automotive

Better: Auto Repair Shop, Tire Shop, Windshield Repairs, Used Car Dealership

Vague: Finance

Better: Financial Planning, CPA, Insurance Sales

Vague: Real Estate

Better: Mortgage, Loan Modification, Property Rentals, Property Management

Vague: Travel

Better: Hotel/Airfare Sales, Travel Tours, Travel Agency

Vague: Counseling

Better: Financial Consultant, Psychiatrist, Mental Health Counseling

Vague: Seminars

Better: Financial Planning Seminars, Real Estate Seminars, Job Training Seminars

Vague: Subscription/Membership Service

Better: Health Club Memberships, Neighborhood Discount Membership Cards, Magazine Subscriptions

Vague: Health & Nutrition

Better: Vitamins, Diet Program, Nutritional Supplements

Vague: Import/Export, Electronics Import/Export, Textile Import/Export

The application process for Visa/MasterCard acceptance requires a quick credit check on the applicant.  This credit check is done by every bank that offers merchant services.  Occasionally we will receive an application from a customer who has a “freeze” on their credit report.  A credit report “freeze” does exactly what is says – it locks down the credit report and prevents creditors (and everyone else) from accessing the report.   The credit report “freeze” must be temporarily lifted for one day in order for the bank to access the credit report.  This is a simple process that can be done by placing a phone call to the credit bureaus.

 A credit report “freeze” should not be confused with a “fraud alert”.  A “fraud alert” is a notation on the credit report that states the consumer has been a victim of identity theft.  Creditors can still access the credit report if a “fraud alert” exists, but are required to take additional steps to properly verify identity.

Now that you have a credit card processing account, let me assist you with understanding how the monthly minimum fee is calculated. See example below:

The monthly minimum fee consists of the following:

• Card Fees
• Batch Fees
• Sales Transaction
• Returns
So your statement should have a line that says – Total Card Fees. You will want to grab that total and add it to the items that are listed above. If it exceeds your monthly minimum, then you will not be charged a fee. If the total is less that your monthly minimum, then you will be charged the difference.

Card Fees – $14.59
Batch Header – $1.75
Returns – $0.15

Total comes to $16.49.

If your monthly minimum is set for $25, then you will be charged is $8.51.

If you add $8.51 + $16.49= $25

I hope this helps you understand your credit card processing statement. If you still have questions, please call into our Customer Care Department and they will be more than glad to assist you.

Last weekend I was out with some girlfriends and we were chit chatting about the gym. How often we go, how often we don’t go, what we like and don’t like about the gym. Each of us belongs to a different one so it was interesting to hear the plus and minuses of each place. My one girlfriend mentioned that she rarely goes to the gym because it’s just hard to find the time but every month she gets a bill on her credit card for $90. She said that even though she doesn’t have time to go, if she were to cancel it would cost more just to sign up or join a new place.

That’s the beauty of recurring billing. The merchant who accepts credit cards can enter the customer’s information into their system and each month it will automatically bill the customer. There is a monthly fee involved however that cost is signficiantly lower than having to pay an employee to process credit cards. Recurring billing is perfect for merchants who own a gym, magazine, church or subscription base business.

If you processing credit cards on Authorize.net and are interested in setting up recurring billing, contact our sales team for more information and start saving time and cost today.

In my last blog I discussed the Fair and Accurate Credit Transactions Act of 2003, and explained how it will result in creditors taking greater steps to prevent identity theft.

Section 315 of the Fair and Accurate Credit Transactions Act of 2003 requires creditors to resolve any discrepancies (“Red Flags”) that might arise during the credit application process.  It is known as the “Red Flag” rule.   One example of a Red Flag that may arise during the merchant account application process is a mismatch between the home address provided on the application and the most recent home address showing on the credit report.

This mismatch will most often occur if the applicant has recently moved or changed addresses.  This is a very common scenario for many of our applicants who are starting a new business.  Often times the start of a new business coincides with a move or relocation. 

Applicants can provide any one of the following documents to satisfy the address mismatch:

1)     Utility bill showing applicant name and new address

2)     Drivers License showing new address

3)     Lease or Rental Agreement showing new address

If none of these documents are available don’t fret.  We have a staff member who specializes in getting alternative documentation approved.

Last week, I had a vendor come in and take me out to lunch for my birthday when he presented me with a new item for us to offer. I realized this new little device is something that will benefit our merchants especially in a time when you can pretty much do anything and have access to everything simply by pressing a button. This is a perfect solution for merchants that offer taxi, limo or towing services and/or delivery services. To sum it up, this will convert your smartphone to a wireless credit card terminal with a click of a button. The new device also won the 2009 Technology Innovation Award at the ETA earlier this year.

Here are a few details related to the smartphone option:

If a merchant owns a Blackberry (supports most Blackberry smartphones), Treo Palm that has Windows Mobile loaded to the smartphone, our vendor will IM (instant message) you a link that will allow you to processing credit cards. With a simple click on the link, you will have access to process credit cards off your smartphone. They are also offering a mobile printer/card reader (bluetooth) which will allow you to qualify for retail rates.

I’m so excited for business owners these days because this isn’t your traditional way of conducting business. Can you imagine if Mr. Olsen from Little House on the Prairie, had this payment option as he delivered flour to Mrs. Ingles? Can you see how this can change the way you do business? Technology changes everyday and the today’s business owner isn’t tied down to the store, they have more options today than ever before.

Please contact our sales department for further details and pricing.

Occasionally the bank may request to see a copy of a trade license to verify the applicant is properly licensed to provide their product or service.  This is standard procedure within the industry and is done to ensure that the bank is enabling properly licensed businesses to accept Visa and MasterCard.

Common businesses for which a trade license may be requested include:

1)     Construction

2)     Cosmetology

3)     Transportation Service – Taxi Cab or Limo Service.

Every once in a while I will receive an application from an individual who is still waiting to receive their trade license.  This recently happened for a customer who is operating a home based child care service and had not yet received the childcare license from the state licensing agency.   I got it approved on time but it required a few follow up calls to the state licensing agency to get the license rushed.

Be sure to get started early on your licensing applications to help navigate through all the necessary steps to start up your business such as your merchant account application.