Glossary - Bardo Provides High Risk, Offshore and No Cap Merchant Account Services World Wide.

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Bardo Provides International, High Risk, Offshore, European and No Cap Merchant Account Services World Wide.

 

Glossary of Merchant Service Related terms

ACH: A form of electronic payment. Automated Clearing House is typically used to process high volumes of relatively small-dollar payments for settlement within one or two business days. ACH transactions are settled in a manner similar to the way checks are settled: The clearinghouse takes all ACH files received daily from its member banks, sorts them by the originating bank (the bank where the check was cashed or deposited) and the paying bank (the bank against which the check was drawn), totals the accounts, and credits or debits appropriate accounts accordingly.

Acquiring Bank: A financial institution that contracts with merchants to settle electronic transactions. The acquiring bank provides the merchant with its credit card processing account. This acquiring bank sends credit card and purchase information from transactions to a credit card association (such as Visa and MasterCard), which forwards it to the issuing bank.

Authorization: The process by which an issuing bank approves the availability of funds for a credit card transaction for a specific amount.

Bankcard Association: The Visa and MasterCard associations.

Batch Processing: A collection of credit card transactions saved for submitting at one time, usually each day. Merchants who do not have real-time verification systems must submit their transactions manually through a POS terminal (Point Of Sale). Batch fees are charged to encourage a merchant to submit his or her transactions at one time, rather than throughout the day.

Chargeback: A payment dispute initiated by the cardholder with their credit card issuing bank. The amount of the disputed transaction is immediately withdrawn from the merchant's bank account, and the merchant can dispute the chargeback with proof of purchase, signature, proof of delivery, etc. A chargeback fee is usually assessed to the merchant on top of the actual transaction. Chargeback is usually generated when a cardholder disputes a transaction because of one of the following criteria:

*Non fulfillment of product or Service

*Un-authorized purchase

*Product/service expectations not met

*When a chargeback is generated, the issuing and acquiring banks must research the facts to determine which party is responsible for the transaction.

Debit Card: A bank issued card that allows its user to access their funds for the purpose of paying for merchandise. A debit card acts like a credit card, the difference being that funds are immediately taken from the cardholders checking or savings accounts.

Discount Rate: A fee in percentage paid to the merchant account provider or ISO for handling an electronic transaction.

E.F.T.: Much like ACH, the Electronic Fund Transfer is the transfer of funds from one financial institution to another.

Interchange Rate: The rate that is set and charged by the bankcard association to the acquiring banks for the transaction. The interchange rate, which is actually a percentage of the transaction amount, also helps account for authorization costs, fraud and the general or average banks cost of funds.

I.S.O.: An Independent Sales organization is an organization that provides a variety of merchant functions (i.e. processing) on behalf of the acquirer. These functions can also include selling new merchant accounts or providing backroom services. An I.S.O. can also be referred to as an M.S.P. (Merchant Service Provider). It is important that the acquirer must register all ISOs/MSPs with bankcard associations.

Issuing bank: The bank that maintains the consumer's credit card account and must pay out to the merchant's account in a credit card purchase. The issuing bank then bills the customer for the debt.

Merchant Account: A bank account established by a merchant to receive the proceeds of credit card purchases. By establishing a merchant account, the merchant/acquiring bank agrees to pay the merchant for valid credit card purchases in exchange for the right to collect on the debt owed by the consumer.

Merchant Bank: A bank that holds a merchant account. After a consumer buys a product using a credit card, the merchant bank places funds into a merchant account in exchange for the right to collect on the debt owed by a consumer. See also merchant account provider.

Merchant Processing: The settlement of electronic payment transactions for merchants. It is a separate and distinct business line from credit card issuing. Merchant processing involves gathering sales information from the merchant, collecting funds from the issuing bank, and payment to the merchant.

Merchant Underwriting: Merchant underwriting & approval policy helps control credit risk. The policy is effective in designating and targeting merchants who meet the acquiring banks processing criteria. The policy also acts as a an agreement between the third party billing agent & the acquiring banks as to what information is needed from the merchants to measure the merchant against the acquiring desired list of criteria. The policy also outlines and lists what information is needed from the merchant, for the merchants agreement.

Merchant services provider: A bank, ISO, or other firm that provides services for processing financial transactions, usually credit card sales. Many MSPs provide merchant accounts, while others require their clients to establish merchant accounts on their own. Some MSPs claim that they do not require merchant accounts; this may indicate factoring, which is illegal in many areas.

MOTO discount rate (mail order / telephone order discount rate): The discount rate charged by the merchant account provider for credit card transaction in which the actual credit card was not available to the merchant. MOTO discount rates are generally higher than swipe discount rates to account for the increased chance of fraud or nonpayment.

POS terminal (point of sale terminal): An electronic device used for verifying and processing credit card transactions. If the credit card is available, the merchant can swipe the card through the terminal.

Real-time processing: The verification and processing of credit card transactions immediately following a purchase. Real-time verification on the Web usually takes less than five minutes. Real-time verification is especially important for Web sites that sell products and services that consumers expect immediately, such as memberships to the site or software downloads.

Retrieval Request: A retrieval request is what happens when a card holder cannot remember a credit card transaction, or the bank wants order information for some reason. The card issuer initiates a retrieval request, in which the merchant has 10 days to respond with the order information or the retrieval request will turn into a chargeback. There is usually a retrieval request fee issued against the merchant also in these cases.

Risk: Until a few years ago, it was not as challenging to obtain a merchant account as it is today. The Internet was new to most banks and their underwriting departments had little information in regards to the level of loss possible with internet accounts. Coupled with the fact that a lot of operators of sites were less then credible, made the mix volatile to say the least. In the old days of merchant processing ( 3-4 years ago) a acceptable level of chargebacks for most banks was 3-4% of your monthly volume. Today, if your account reaches 1% of monthly volume in chargebacks, you are in serious risk of losing that account.

Unfortunately most new merchants are even unaware of where the risk factor enters into the picture, and do not understand such basic concepts as personal guarantor, liability, etc. For the most part, in a conventional merchant account. The signer, or guarantor on a merchant account is liable for the processing volume. In our scenario, we assume much of the risk, hench, the higher discount points, and the need for high tech fraud control features which we utilize.

Rolling Reserve (a.k.a. hold back): A portion of the revenue from a merchant's credit card transactions, held in reserve by the merchant account provider to cover possible disputed charges, chargeback fees, and other expenses. After a predetermined time, holdbacks are turned over to the merchant. Note: Merchant account providers almost never pay interest on holdbacks

Settlement: The process by which funds less applicable fees for bona fide sales are sent to merchants.

Shopping cart program: A software package that runs as part of a Web site to collect and record purchasing decisions by a visitor. Shopping cart programs are stored on Web servers.

Swipe discount rate: The discount rate charged by a merchant account provider for transactions in which a credit card is available. Swipe discount rates are generally lower than MOTO discount rates because the merchant can match signatures and perform other checks for fraud or misuse.

Third-party Organization: Any outside company with which the acquirer contracts to provide merchant processing services.

Transaction fee: A charge for each credit card transaction, collected by the merchant account provider or ISO Transaction fees usually fall between $0.20 and $1 (U.S.).

Bardo Provides Global, Offshore International French European 3D Secure Merchant Account Services, High Risk, Hi Limit, No Cap, Gambling, Offshore and ACH Merchant Accounts Verified By Visa and Mastercard. We also do eu or euro web hosting and new business merchant account start up credit card processing and internet sales for pharmacies.

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