In this article we will move past the confusing and
vague terminology to get directly to the heart of what you need to know
in order to make an informed decision as a business owner when
selecting an internet credit card processing system.

If you have
the right product and the right website then the sky can be the limit.
All you need is a reliable, cost efficient payment \'gateway\' system
which will allow you to take online payments by debit and credit card
from willing buyers around the world.

When you select an internet
credit card processing service be sure to read the fine print of the
account agreement closely before signing. It may seem confusing. You
will come across terms like \'Address Verification Service\' fee,
\'Qualified\', \'Mid Qualified\' and \'Non Qualified\' rates, \'per
transaction\' and \'per authorization\' fees. These are just some of the
costs that you must understand to select the right merchant account for
your business. Let\'s take a closer look at what all of these terms and
fees really mean.

\'Address Verification Service\' (AVS)

The AVS is a security (fraud prevention) measure which checks
whether the address (street number and zip code) of the online
purchaser actually matches the information that the credit card\'s
issuing bank has on record. Ask your credit card processing provider
about the AVS - some of them charge for this every single time that
there is an online transaction. Other providers may bundle the AVS
charge as part of the standard monthly admin fees. Addresses for
customers from outside the United States cannot be verified so they are
categorized as higher risk and the business owner is charged a higher
transaction cost for these purchases. Be aware of what this charge is
if a large percentage of your business comes from outside the US.

\'Qualified\', \'Mid Qualified\' and \'Non Qualified\' Rates

If the credit card being used is a Visa or Mastercard you will be
charged a Qualified Discount Rate. Because these cards carry a high
security rating and are issued directly by banks there is the least
likelihood of fraud and the business owner is charged a low rate - the
\'discounted\' rate per transaction - typically between 2% and 3% per
transaction. If other credit cards are used, for example from Discover,
American Express, or Diner\'s Club then an additional fee (\'Mid
Qualified\' or Non Qualified\' Surcharge) is levied as they are not
issued directly by banks but from private companies. If a \'Mid\' or \'Non
Qualified\' Rate is charged then typically you could end up paying over
5% fees per transaction. Some merchant services may charge lower
Qualified Discount Rate than others but be careful that they do not
\'downgrade\' many of your transactions to high cost Mid or Non Qualified
Rates because of the type of credit card used by the purchaser

\'Per Transaction\' and \'Per Authorization\' fees

Be sure to find out from the merchant about all the costs that make
up a transaction fee or an authorization fee. Often hidden costs may be
added or even left out of these, only to reflect elsewhere. Ask for a
full breakdown of what these entail from your provider before you sign
the agreement.

\'Administrative Fees\'

Besides minimum monthly and annual fees there may be extra costs
for \'Batch Headers\' (when a provider settles the batch of your daily
accounts this fee may be added), termination fees (certain merchants
charge high cancellation fees within the first year to prevent you from
leaving to take up another service) and statement fees. Be sure to ask
for a detailed list of all such fees which are passed off as
\'administrative\'.

By understanding the terminology of the
merchant account agreement, you will be able to make an informed
decision on which service is right for your business. The service you
select should be based on a careful analysis of your requirements,
monthly turnover and business profile. While certain merchant accounts
are geared towards reducing the overall costs for small, start up
businesses, others target the higher volumes from more established
organizations and will adjust their fees and rates structures
accordingly.

If you choose the wrong merchant service it could
make inroads into your profits and slowly strangle your business growth
with excessive and unnecessary costs.