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Home > Merchant Resources > Frequently Asked Questions
Frequently asked questions about accepting credit cards
What is a merchant account? Why would I need one?
How does a merchant account work?
How do I apply for a merchant account?
What all do I need in order to obtain a merchant account?
What is the difference between a POS terminal and an Internet Gateway?
What will my rates and fees be?
Would it be easier to go to my local bank to get a merchant account?
Which bankcards can I accept?
My business is not in the U.S., can you still open a merchant account for me?
How many days will elapse from customer purchase to account funding date?
Discount Rate
Transaction Fee
Average Ticket Amount
Business Method
Transaction Method
Transaction Volume
Merchant Account Basics
What is a merchant account? Why would I need one?
A merchant account gives a business the ability to accept credit cards as payment for the company's goods and services. It provides your customers with an extremely popular payment option, beyond cash and checks.
How does a merchant account work?
The merchant account provider authorizes the credit card transfer from your customer and deposits the funds for their purchases directly into your business checking account, typically within two business days.
How do I apply for a merchant account?
U.S. Merchant Systems offers a simple manner to apply for you merchant account online. After filling out our online application for pre-approval, you will be contacted by one of our New Account Representatives that will explain the benefits, the best processing solution for you and what rates and fees apply. You can also call us between the hours of 8:30A and 5:30P PST (M - F) to apply over the phone.
What do I need in order to obtain a merchant account?
In order to obtain a merchant account you need to have some sort of business. This could be retail, home-based, internet-based, network marketing, etc., but it needs to be a business. One cannot obtain a merchant account for personal use. To open a U.S. merchant account one needs a Social Security number of Federal Tax ID number, a U.S. based checking account and a U.S. based address. If you do not have these three, proceed to apply for an international bank account.
What is the difference between a POS terminal and an Internet Gateway?
If you are a retail business and do a lot of face-to-face transactions, a POS (Point-of-Sale) terminal is best for you. Mainly because you are able to swipe the card and you also get signed customer receipts; hence you obtain a better discount rate. If you do business over the Internet, a Gateway is recommended, as your customers themselves are able to pay for goods online in a secure environment. For mail order or telephone order business, either a terminal or Gateway can be used. A Gateway has a 'virtual terminal' built in that allows you to log in and process transactions like a terminal online – you can perform these transactions at any computer that has Internet access.
What will my rates and fees be?
Although there are merchant service providers out there that advertise the best and lowest rates, your Discount Rate depends on several factors that every merchant service provider is subject to. These factors include Monthly Transaction Volume, Transaction Method and what type of business you have. If you want to find out what your rates will be, please fill out the short form on our Rates & Fees page.
Would it be easier to go to my local bank to get a merchant account?
U.S. Merchant Systems actually handles the merchant account business of many local banks. In addition to offering outstanding programs, we work with the kinds of businesses that most banks consider too risky, such as new enterprises, Internet businesses, or phone and mail order businesses.
Which bankcards can I accept?
You can accept the most popular credit cards: MasterCard, Visa, American Express. Discover, Diners Club and JCB. In addition to these credit cards, U.S. Merchant Systems can provide you with the additional ability to accept many ATM and debit cards.
My business is not in the U.S., can you still open a merchant account for me?
The answer is "yes." U.S. Merchant Systems is one of the few merchant service providers that has relationships with international banks and processors and can provide you with an international merchant account. We even handle multi-currency processing. Just use our regular approval process.
How many days will elapse from customer purchase to account funding date?
For our retail merchants, funds will be credited to your business bank account within 48 hours of when you batch out. For merchants that process payments in a card-not-present environment, (such as mail order, phone order and Internet) or Retail merchants with larger amounts of keyed transactions, funds are deposited within three days due to additional risk evaluation.
Glossary of Terms
Discount Rate
The Discount Rate is the percentage that gets discounted (deducted) from the transaction amount. The Discount Rate is the rate that gets paid for the most part to the bankcard company (Visa, MasterCard, etc.), the Issuing Bank (the bank that issued the bankcard to your customer) and the Acquiring Bank (the bank that the merchant processes with).
It is called a Discount Rate since this is the percentage that gets discounted off the transaction amount at the time of payment processing. Thus, if the transaction amount totals $100.00, and your Discount Rate is 1.50%, then a total of $98.50 will be deposited into the merchant's account.
The most important factor in determining the merchant's Discount Rate is the transaction method the merchant uses. There are other factors as well, such as monthly processing volume and type of industry the merchant is in. Therefore a Discount Rate is predetermined by the Acquiring Bank or Processor and cannot be set by the merchant.
Transaction Fee
The Transaction Fee is the fee a merchant pays every time he or she enters the network. For example, when a bankcard is Swiped or Keyed in, when the merchant Batches Out or when the merchant performs a Return or Void. The Transaction Fees are assessed at the end of the statement period.
As with the Discount Rate, the most important factor in determining the merchant's Transaction Fee is the transaction method the merchant uses. The Transaction Fee is predetermined by the Acquiring Bank or Processor and cannot be set by the merchant.
Average Ticket Amount
This is the dollar amount of the average transaction that is (or will be) processed. For example, if you only sell computers for $800.00, then every time you sell a computer your ticket amount is $800.00. But if you sell one type of computer for $1,200 and another type for $800.00, and you sell equal amounts of each, figure out the average:
$1,200.00
+ $800.00
========
$2,000.00 ÷ 2 = $1,000.00
In this case your Average Ticket Amount is $1,000.00.
Business Method
In which type of environment do you do business? How do you interact with your customers? If you are have a storefront this is Retail, if you advertise in magazines and accept mail or telephone orders this is Mail Order / Telephone Order (MOTO), if you have a website and sell products this is Internet.
Transaction Method
This is the method by which you perform the bankcard transactions. There are two distinct methods: 'Swiped' and 'Keyed'.
Swiped:
By this is meant that the bankcard is actually swiped through a Point-of-Sale Terminal magnetic strip reader. This is a low risk transaction as the merchant is in possession of the customers’ credit card, meaning that the customer is present at the transaction. Hence there is less risk of a dispute / chargeback. Examples of Swiped transaction businesses are Retail Merchants and Restaurants. As there is less risk, a Swiped Discount Rate is far lower than a Keyed Rate. FOR A MERCHANT TO BE QUALIFIED AS A SWIPED MERCHANT HE NEEDS TO SWIPE AT LEAST 51% OF ALL HIS OR HER TRANSACTIONS.
Keyed:
By this is meant that the merchant keys in (using the touch keys on the Point-of-Sale terminal) the bankcard number and expiration date. With a Keyed transaction the bankcard does not have to be presented by the customer and thus there is more risk involved than a Swiped transaction. A Keyed Discount Rate is higher than a Swiped Rate. Examples of Keyed Merchants are Mail Order/Telephone Order (MOTO), and also internet transactions (as the card is not presented to the merchant at the time of the transaction). A MERCHANT WHOSE TRANSACTIONS ARE OVER 49% KEYED IS SET UP AS A KEYED MERCHANT.
Monthly Transaction Volume:
This is the total dollar amount of transactions processed through your merchant account on a monthly basis. In essence there is a limit on this amount as this is an unsecured credit line given to the merchant. Just like a credit card's "credit limit", the Monthly Transaction Volume is an amount that you will have to get approved for. Based on your credit and other business factors, a merchant is approved for a certain Monthly Transaction Volume. U.S. Merchant Systems is one of the merchant service providers that does have liberal approval criteria and regularly approved high volumes for its merchants.