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  1. #76
    SitePoint Enthusiast cdgcommerce's Avatar
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    I think a lot of the information in the initial post here is quite good and valid. I would like to offer a few clarifications on a couple items, though.

    First, it is important to keep in mind that merchant processing is a team effort. Merchant processors all operate on very low margins with the majority of all fees going right back to the issuing banks as part of the Visa/MC interchange costs.

    Merchant processors incur a multitude of costs to keep an account up and running. There are BIN sponsorship costs, account-on-file costs, network processing fees, customer service costs and then you also have to account for the risk losses that are taken on merchants due to chargebacks & NSF's that are left unpaid.

    One of the myths about credit card processing is that many merchants believe that the rate charged on a merchant account (the 2.xx%) is "mostly profit" when in reality only a small portion of this represents net profit.

    Another area that is often not even mentioned and quite frequently confused are "downgrade costs." And this is an essential piece of information to understand when comparing merchant pricing.

    For example - you could get a rate of 2.10% with one provider and pay MUCH MORE than you would with a rate of 2.35% with another provider, based on HOW downgraded transactions are classified.

    Some processors will classify different types of transactions on a "mid-qualified" or "non-qualified" level which has a much higher % rate... but this is often not part of the sales pitch to you and quite frequently this is hiddien the fine print.

    Yet, it can have a major impact on your pricing so you will want to ask any prospective processor: (a) what are the mid and non-qual fees specifically and (b) what exactly, specifically determines what types of transactions fall into the different tiers and (c) statistically speaking, what are the break-downs portfolio-wide?

    Also, in terms of the business checking account issue - this is often required but not always required. It is perfectly acceptable to some processors to use a sole proprietor's personal bank account sometimes.

    Lastly, regarding the "2% chargeback rate" - this rate was actually reduced to 1% by Visa. However, to be automatically placed on the Visa chargeback monitoring program, you would need to have at least 100 interchange & chargebacks in a given month as well.
    CDGcommerce - Accept Credit Cards Online with a Trusted Leader
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  2. #77
    SitePoint Addict fabrizio's Avatar
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    Quote Originally Posted by cdgcommerce
    For example - you could get a rate of 2.10% with one provider and pay MUCH MORE than you would with a rate of 2.35% with another provider, based on HOW downgraded transactions are classified.

    Some processors will classify different types of transactions on a "mid-qualified" or "non-qualified" level which has a much higher % rate... but this is often not part of the sales pitch to you and quite frequently this is hiddien the fine print.

    Yet, it can have a major impact on your pricing so you will want to ask any prospective processor: (a) what are the mid and non-qual fees specifically and (b) what exactly, specifically determines what types of transactions fall into the different tiers and (c) statistically speaking, what are the break-downs portfolio-wide?
    I never heard about such "downgraded transactions". Can you tell us more?

    Thank you in advance.

    Sincerely,
    Fab.
    Virtual Sheet Music®, Inc.
    http://www.virtualsheetmusic.com
    Musicians Page
    http://www.musicianspage.com

  3. #78
    Texan at Heart Corey Bryant's Avatar
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    It varies a little from acquiring bank to acquiring bank, but usually if the AVS (address verification) does not happen, the transaction can be called a mid-qualified or non-qualified transaction keyed transaction. This is because with no AVS, the transaction has more of a chance of being fraud.

    Unfortunately, processors are relying on this archaic method of verifying a transaction which in this day and age, is not all the best. A lot of processors are now taking VBV into consideration as well.

    Most U.S. purchase & now some UK purchases are being counted as qualified transactions. For some of the other countries, unfortunately not but most merchant's business does not comes from those countries or maybe the merchant does not even accept business from those countries due to the already high risk of fraud

  4. #79
    SitePoint Addict fabrizio's Avatar
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    Thank you Corey for your information.

    So is AVS required by all the merchant account services? Or the Merchant can decide if use or not use it?

    Also, I don't know about the new VBV... is it something similar to AVS?

    Thank you.

    Fab.
    Virtual Sheet Music®, Inc.
    http://www.virtualsheetmusic.com
    Musicians Page
    http://www.musicianspage.com

  5. #80
    Texan at Heart Corey Bryant's Avatar
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    Well not required but preferred. But you should always use AVS & look at the AVS code to see if it matches. If there is not a match, you need to consider if you really want to accept that transaction

    VBV is Verified by Visa. This basically protect you on the orders that say 'I didnt do it' chargeback reason & helps to cut down on the fraudulent transactions.

  6. #81
    SitePoint Addict fabrizio's Avatar
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    Ok, I will surely do it. I had not enough knowledge about such issues...

    VBV system looks great. I hope it will be implemented soon!

    Thank you again.

    Fab.
    Virtual Sheet Music®, Inc.
    http://www.virtualsheetmusic.com
    Musicians Page
    http://www.musicianspage.com

  7. #82
    Texan at Heart Corey Bryant's Avatar
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    It actually already is. I know LinkPoint & Auth.net connects. I am sure verisign would as well. We tried to sign up as a reseller but they seemed to have different numbers & wanted a pretty large sum of money. We wanted to become an all-in-one place. But you also might want to check out http://www.fraudgate.com - working on something with them to help cut down fraud at least

  8. #83
    SitePoint Zealot CardinalCentinel's Avatar
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    Visa and MasterCard have been pursuing gateways and processors to reach compliancy for the past several years. As these payment systems reach compliancy you will notice a much higher rate of adoption in the merchant market.

    There will be several large marketing campaigns in the next several months concerning card-holder adoption, which will be done by Visa and MC. Many merchants are actually using these beneifts they recieve, and turning them into savings and benefits for cardholders that are enrolled who shop with them. They can do this because the transaction is as secure and reliable as a brick-and-mortar transaction, regardless of the typical fraud indicators.

    I'd love to chat, but STAY TUNED. We will be submitting a large post to SitePoint which breaks down each program, how it works, who needs it, who should want it, international coverage, who has it now, how to get it, etc.
    CardinalCommerce
    www.cardinalcommerce.com
    The Leaders in Authenticated Payments

  9. #84
    SitePoint Addict fabrizio's Avatar
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    This sounds really interesting...

    Fab.
    Virtual Sheet Music®, Inc.
    http://www.virtualsheetmusic.com
    Musicians Page
    http://www.musicianspage.com

  10. #85
    He's No Good To Me Dead silver trophybronze trophy stymiee's Avatar
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    CardinalCentinel has something very informatrive planned. Once it is ready it will be a must read for any ecommerce members here.

  11. #86
    SitePoint Enthusiast cdgcommerce's Avatar
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    In the mean time, for anyone interested in learning more about online fraud and the benefits of Cardholder Authentication programs - even prior to the upcoming post by CardinalCommerce... you may want to peek at their Web site at http://www.cardinalcommerce.com
    CDGcommerce - Accept Credit Cards Online with a Trusted Leader
    now offering a FREE Internet Payment Gateway & VBV/MSC!
    Click for more info! 99.1% Client Satisfaction Rate since 1998.

  12. #87
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    Just settling into the whole merchant acc/payment gateway thing. Thanks for your suggestions it has been my sorta little bible as I stampede in head first.



    A couple of questions to Stymiee, if you have the time. I have been thinking about BOA / Cybersource


    =================
    Stymiee:
    You will need to open a business checking account with your local bank. You should never be charged by the processor or your bank to have your funds deposited into it. If you are, get a new bank or processor.

    -

    Ques: My new business has a buisness account in good standing, as well as my parent company for 10-15 years in great standing.

    There is a $30 month fee, for Bank of America / CyberSource, should I still be paying for the BOA half, at the very least???

    =================

    Stymiee:
    The processor will do a credit check on you. This shouldn't have much of an effect on anything unless you have an open bankruptcy or extremely derogatory credit. There are some picky processing banks out there but there are some who'll take anyone. (We've gotten some unbelieveable accounts open at my day job).

    -

    Ques: BOA has asked for a 2003 tax return, is this necessary, or should my current business accounts suffice.

    =================


    On a side note I'm not sure if I was clear I had BOA accounts, but he took my name and business name and ran some kind of search. At the initial stage I was just looking for starting quotes, which were:

    Basic set, without more advanced fraud protection, or visa Payer Authentication etc.


    Setup-$150
    Monthly-$30, BOA and Cybersource
    Trans Rate- .10 + .10 (auth and visa merchant)
    Month %- 2.5% / monthly, or $25 flat, which ever is greater.


    thanks
    Greg

  13. #88
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    Quote Originally Posted by CardinalCentinel
    Visa and MasterCard have been pursuing gateways and processors to reach compliancy for the past several years. As these payment systems reach compliancy you will notice a much higher rate of adoption in the merchant market.

    There will be several large marketing campaigns in the next several months concerning card-holder adoption, which will be done by Visa and MC. Many merchants are actually using these beneifts they recieve, and turning them into savings and benefits for cardholders that are enrolled who shop with them. They can do this because the transaction is as secure and reliable as a brick-and-mortar transaction, regardless of the typical fraud indicators.

    I'd love to chat, but STAY TUNED. We will be submitting a large post to SitePoint which breaks down each program, how it works, who needs it, who should want it, international coverage, who has it now, how to get it, etc.
    any news, I'm interested in hearing about it.

  14. #89
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    Quote Originally Posted by cdgcommerce
    I think a lot of the information in the initial post here is quite good and valid. I would like to offer a few clarifications on a couple items, though.

    First, it is important to keep in mind that merchant processing is a team effort. Merchant processors all operate on very low margins with the majority of all fees going right back to the issuing banks as part of the Visa/MC interchange costs.

    Merchant processors incur a multitude of costs to keep an account up and running. There are BIN sponsorship costs, account-on-file costs, network processing fees, customer service costs and then you also have to account for the risk losses that are taken on merchants due to chargebacks & NSF's that are left unpaid.

    One of the myths about credit card processing is that many merchants believe that the rate charged on a merchant account (the 2.xx%) is "mostly profit" when in reality only a small portion of this represents net profit.

    Another area that is often not even mentioned and quite frequently confused are "downgrade costs." And this is an essential piece of information to understand when comparing merchant pricing.

    For example - you could get a rate of 2.10% with one provider and pay MUCH MORE than you would with a rate of 2.35% with another provider, based on HOW downgraded transactions are classified.

    Some processors will classify different types of transactions on a "mid-qualified" or "non-qualified" level which has a much higher % rate... but this is often not part of the sales pitch to you and quite frequently this is hiddien the fine print.

    Yet, it can have a major impact on your pricing so you will want to ask any prospective processor: (a) what are the mid and non-qual fees specifically and (b) what exactly, specifically determines what types of transactions fall into the different tiers and (c) statistically speaking, what are the break-downs portfolio-wide?

    Also, in terms of the business checking account issue - this is often required but not always required. It is perfectly acceptable to some processors to use a sole proprietor's personal bank account sometimes.

    Lastly, regarding the "2% chargeback rate" - this rate was actually reduced to 1% by Visa. However, to be automatically placed on the Visa chargeback monitoring program, you would need to have at least 100 interchange & chargebacks in a given month as well.
    Hi,

    I have 3 questions for you.

    Is it 100 transactons per month over 1% or 100 chargebacks per month to get terminated or be put on the monitoring program?

    Are the rules the same for mainstream and adult merchants?

    Is it true that there is a fine program for any merchant that has more than 15 Mastercard chargebacks in a given month for mainstream ecommerce or adult 5967 merchants?

    Thanks, Mark

  15. #90
    Texan at Heart Corey Bryant's Avatar
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    The rules are not necessarily the same for adult merchants depending on what location their processor is in. For example, the high registration fee is only applicable to merchants who use a North American processor.

    Each processor is different as far as how they handle the chargebacks. It depends on your previous processing history with them or a previous company. It is always best to consult your current processing company to find out that their policies are. There are some standards, but a lot of processors will work with you

  16. #91
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    Quote Originally Posted by Corey Bryant
    The rules are not necessarily the same for adult merchants depending on what location their processor is in. For example, the high registration fee is only applicable to merchants who use a North American processor.

    Each processor is different as far as how they handle the chargebacks. It depends on your previous processing history with them or a previous company. It is always best to consult your current processing company to find out that their policies are. There are some standards, but a lot of processors will work with you
    I understand about the registration fees for adult. How about my questions above? Anyone?

    Thanks, Mark

  17. #92
    Non-Member foodbiz's Avatar
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    I process 10K per month and have 1.5% 20cent per

  18. #93
    SitePoint Member youyi's Avatar
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    Post

    Quote Originally Posted by stymiee
    American Express: For Internet merchant's their program is simple. You pay 3.5% for every sale on their card. Cut and dry. Nobody but American Express can control these rates. If someone tells you they can "hook you up" or give you a special rate, they are flat out lying to you.
    This is not what I am getting from AsiaPay.com (a Hong Kong based 3rd party processor, one of the largest in Hong Kong, even endorsed by VISA Hong Kong). I am getting a quotation from them saying the "transaction handling fee" for American Express is 0.6-0.8% with a minimal fee of 1.5 HKD per transaction. I would be happy to forward you the quotation if you want. According to AsiaPay, American Express and JCB is reviewing my application, by the way.

  19. #94
    SitePoint Addict fut's Avatar
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    Well said. Thanks for bringing us this information.
    ATTENTION: Affiliates in the Health Niche
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  20. #95
    He's No Good To Me Dead silver trophybronze trophy stymiee's Avatar
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    Quote Originally Posted by youyi
    This is not what I am getting from AsiaPay.com (a Hong Kong based 3rd party processor, one of the largest in Hong Kong, even endorsed by VISA Hong Kong). I am getting a quotation from them saying the "transaction handling fee" for American Express is 0.6-0.8% with a minimal fee of 1.5 HKD per transaction. I would be happy to forward you the quotation if you want. According to AsiaPay, American Express and JCB is reviewing my application, by the way.
    You might want to clarify that. They may be charging you an "transaction handling fee" on top of Amex's rates. American doesn't charge .6-.8% for anybody.

  21. #96
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    Quote Originally Posted by cdgcommerce
    I think a lot of the information in the initial post here is quite good and valid. I would like to offer a few clarifications on a couple items, though.

    First, it is important to keep in mind that merchant processing is a team effort. Merchant processors all operate on very low margins with the majority of all fees going right back to the issuing banks as part of the Visa/MC interchange costs.

    Merchant processors incur a multitude of costs to keep an account up and running. There are BIN sponsorship costs, account-on-file costs, network processing fees, customer service costs and then you also have to account for the risk losses that are taken on merchants due to chargebacks & NSF's that are left unpaid.

    One of the myths about credit card processing is that many merchants believe that the rate charged on a merchant account (the 2.xx%) is "mostly profit" when in reality only a small portion of this represents net profit.

    Another area that is often not even mentioned and quite frequently confused are "downgrade costs." And this is an essential piece of information to understand when comparing merchant pricing.

    For example - you could get a rate of 2.10% with one provider and pay MUCH MORE than you would with a rate of 2.35% with another provider, based on HOW downgraded transactions are classified.

    Some processors will classify different types of transactions on a "mid-qualified" or "non-qualified" level which has a much higher % rate... but this is often not part of the sales pitch to you and quite frequently this is hiddien the fine print.

    Yet, it can have a major impact on your pricing so you will want to ask any prospective processor: (a) what are the mid and non-qual fees specifically and (b) what exactly, specifically determines what types of transactions fall into the different tiers and (c) statistically speaking, what are the break-downs portfolio-wide?

    Also, in terms of the business checking account issue - this is often required but not always required. It is perfectly acceptable to some processors to use a sole proprietor's personal bank account sometimes.

    Lastly, regarding the "2% chargeback rate" - this rate was actually reduced to 1% by Visa. However, to be automatically placed on the Visa chargeback monitoring program, you would need to have at least 100 interchange & chargebacks in a given month as well.
    So do you have to go over 1% AND get 100 chargebacks/ What if you are a very large merchant doing 100,000 or more transactions per month and can easily get 100 chargebacks and srill be way under 1%?

  22. #97
    SitePoint Enthusiast
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    What are the top 5 payment processors that you guys think are worth?

  23. #98
    Texan at Heart Corey Bryant's Avatar
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    Quote Originally Posted by fbiboy
    What are the top 5 payment processors that you guys think are worth?
    Well in 2004, the top five were (from the Nilson report):
    1. Chase processing $254,949.8 million in 3,448.8 million transactions
    2. BA Merchant Services processing $247,248.0 million in 5,070.0 million transactions
    3. First Data Merchant Services processing $212,160.0 million in 4,442.1 million transactions
    4. Paymentech processing $189,782.5 million in 3,353.3 million transactions
    5. Nova Information Services processing $119,254.9 million in 1,191.8 million transactions

  24. #99
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    No I mean, let's say you will be doin less than 2k$ what will be the best options?

  25. #100
    Texan at Heart Corey Bryant's Avatar
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    The top five that I just listed trusted? Yes. If they were not, they would not be in business


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