- Whether your business is just starting or has existed for some years, you should need only a few steps to open a credit card merchant account. A simple one-page application, a copy of your business license, estimation of your monthly sales, including average and maximum amount per sale, and your bank account information should be sufficient. Typically, merchants are approved for a credit card processing account within 48 hours.
- There are two primary rates assigned to merchants. One is the rate for card use sales volume expressed as a percent typically between 1.6 and 3.5 percent of the transaction amount. The second is a per transaction fee often around 15 to 30 cents per card use. Sales volume rates are usually broken into three categories. A swiped rate applies to a credit card that the merchant swipes into his credit card terminal. The second category applies to a card that won't swipe properly, usually because of a damaged magnetic stripe. The third category applies to those transactions wherein the customer cannot produce his card. The merchant must manually enter names and account numbers. The lowest rate is for swiped transactions and the highest applies to card-not-present purchases, as they carry higher risk.
- After swiping the customer's card, the merchant sends the transaction to her processor. In less than 5 seconds, the processor analyzes the data, checks the cardholder's account, approves or rejects the transaction amount and responds to the merchant. An approved transaction will also have a unique identification number for verification and tracking purposes. At the end of the day, the merchant sends summary transaction information from her credit card terminal to her processor for proof and daily totals.
- Credit card processors compare the daily totals with the individual transactions they've processed. If the numbers balance, they authorize a wire or ACH transfer of the funds due to the merchant less the processing fee. The net amount of the merchant's daily sales totals is directly placed in the merchant's bank account, usually within 48 to 72 hours. At the end of the month, the merchant receives a statement showing the daily totals, processing and transaction fees and any other fees or pertinent information.
