Thread: Glossary

This guide is designed for beginners to understand some of the common terms used. By the end of this article you should have a good understanding of the terms used to explain merchant accounts and gateway accounts. This will make choosing the right accounts much easier.

A downloadable version of this glossary is also available [URL="http://www.merchantaccounttalk.com/attachment.php?attachmentid=16&stc=1&d=1274198302"]here[/URL], although you will need to [URL="http://www.merchantaccounttalk.com/register.php"]sign up[/URL] before you can download it.

Charge back Fee

A charge back is where a credit card owner disputes a charge on their statement with their bank. These aren't very nice to experience but are fairly common. High risk businesses such as casinos can experience a high proportion of charge backs.

The merchant account provider will charge you a fee for handling these charge backs.

Discount Rate

The discount rate is the fee charged by the Merchant account provider. The fee will vary considerably depending on your country and chosen merchant account provider. The fees can vary between 2 and 10% or even higher for some high risk businesses.

The discount rate will be charged per transaction. This means that the amount due will depend on your monthly turnover. Although it's normally desirable to minimize your costs you will also want to consider any additional services included.

Settlement Time

The settlement time is the period between when your customers card is charged and when you receive the money.

Depending on the merchant account and type of business you run the settlement time will be different. This can vary between instant to a month or longer. A reasonable merchant account should settle within 2 or 3 days. Third party companies often take 2-4 weeks to pay the money into your account.

It's very important to consider the settlement time because this will affect your cash flow. The sooner you get your hands on your money, the sooner you can use it.

Monthly Fees

The monthly fee is another flat rate fee which is charged by almost all merchant account providers. This is the amount that's due regardless of your turnover. It covers technical support, and general account maintenance.

Don't worry too much about this because it's normally a nominal fee. Just ensure that you are getting good value for money.

A third party payment processor normally will not charge a monthly fee. Instead they opt to charge higher discount fees.

Reserve Funds

Reserve Funds are kept to limit the banks exposure to risk. This money is held back from being paid into your bank account just in case there are lots of charge backs applied against the charges. This reserve fund will typically be larger for newer and higher risk businesses. It shouldn't be necessary for anyone to ever touch these as long as the business is run sensibly and honestly.

While the reserve fund isn't actually costing you money it does tie your money up for a long time. Find out when you will get this back. Some providers will allow you access to this money within 6 months while others might hold it until your account is closed.

Also consider the fact that you won't receive any payments until you charge more than your reserve fund limit.

Processing Limit

Something else that will need to be considered is the processing limits. There are two types of limit, a turnover limit and a per item limit. If monthly turnover is limited then this will put a cap on the maximum price you can charge for each item. This is unlikely to be of much a concern as you should be fully aware of this.

The other type of processing limit is a turnover limit. This will limit the maximum amount of credit card payments you can accept every month.

Merchant Account

A merchant account is an account designed to accept credit cads. This is provided by your bank. One example of a merchant account is Natwest Steamline.

MAP or MSP

MAP or MSP can stand for Merchant Account Provider or Merchant Service Provider. This is the company which provides your merchant account.

Third Party Payment Processor

A third party processor is a company like Clickbank or Paypal which does not work like a traditional merchant account. The main advantage for using these third party processors is because the accounts are very easy to apply for. However the fees are higher. Another problem is that the third party processors name will normally feature on your customers credit card statement.

Payment Gateway

The payment gateway works in combination with your merchant account and makes it possible to accept payments on the internet. These payment gateways are secure payment processors which then pass on the payment details onto your merchant account provider.

Sign up today! http://phoenix-adult-dating.blogspot.com/
We offer free adult dating online services for singles. If you are looking also for adult personals and adult dating we can offer it to you free!
You can register for free and search for profiles, photos, make online dating contacts fin new friends.