For processing any online order, a business website should provide an online payment choice. The most common form of payment is through merchant credit card. Marketing studies indicate that if a site is not made to accept credit cards, it would lose 60-80% of its potential orders. A direct merchant credit card account is one of the best ways for any business to boost sales.
Direct merchant credit card applications are somewhat complex in nature. It is not like setting up a consumer credit card application. It is entirely different from opening a business checking account. Direct merchant credit card is a special banking account used for handling the income from credit card deals. The merchant account issuer confirms the credit card, processes the transaction, and deposits the balance into your account normally within 24 to 48 hours.
In general, there are two ways to apply for a credit card – a paper copy application and an online credit card application. Online application is the easiest and fastest way to get a credit card. While applying for a credit card online, it is necessary to check whether the website offers a safe means to protect your private details.
There are three types of merchant account fees. The first is an initial setup fee required to approve and set up your account. The second is the percentage fee which is a proportion of each credit card transaction depending on your total volume of sales. It is inversely proportional to the sales volume. The last one is a monthly service fee, which includes the cost of any credit card processing equipment, software or services. These fees differ from credit card company to company.
Archive for October 30, 2011
Direct Merchant Credit Card Applications
Debit/Credit Card Processing and Some Important Considerations
Normally, as a business owner, you would want to receive cash payments from your customers for every transaction because it is easier, no further processes are required. This is actually true to almost all businesses out there but this is not a very practical choice to stick to considering that many people do not only use cash. Because of the presence of debit and credit cards, many people chose to use these cards to pay for their purchases, their bills and so much more. So for your business to grow and survive in the industry, you should also consider offering credit card processing to your customers. Nowadays, you will only find few businesses that do not accept debit or credit card payments because most businesses understand that they have to cope up with what their customers need. Debit/credit card processing would provide more convenience to the customers and in return, the sales rate of your company will eventually increase.
It is true that there are several advantages or benefits associated to offering debit/credit card processing but it is also associated with some fees. Usually, your merchant service provider will require you to pay a certain amount every month in addition to what you have pay for every debit/credit card transaction. The monthly fees have to be paid in order to keep your account active with your provider. If there are other fees that you will be asked to pay aside from the monthly fees and processing fee, then you have to really check on that.
Aside from the fees, you should also take a look into the security of the debit/credit card processing. You have to remember that all the information from the customer should be treated with utmost confidentiality. In addition, you have to beware of hackers because these people usually attack terminals to get the information that they want from a credit card. So have to make sure that the terminals provided by your merchant service provider are equipped with the updated and latest technology. To become a PCI compliant company is also a good idea in keeping your business safe. It means that your business should follow the rules and guidelines provided by VISA, American Express and MasterCard. So in case your business is not yet PCI compliant, then you can ask some assistance from your merchant service provider in order to become one.
And because all things have their good and bad side, you must take a look into some of the problems that your business may encounter during the actual processing of a payment using a debit/credit card. You should be prepared on what are the things that should be done or the remedies to get the problem solved. Some of the most common problems associated to debit/credit card processing are technical difficulties, declined payments and disputes/charge backs. This may cause some customer service problems and inconvenience to our customers so you have to be prepared with a remedy. Perhaps you might want to ask you merchant service provider on what should be done when these problems are encountered for you not to panic and for your customer not to get angry.
Explanation of T Account, Debit and Credit, and Double Entry Accounting System
In this accounting lecture, we will talk about T-accounts, accounting debits and credits, accounting balances and double entry accounting system.
All accountants know several terms that create basis for any accounting system. Such terms are T-account, debit and credit, and double entry accounting system. Of course, these terms are studied by accounting students all over the world. However, any business person, whether an investment banker or a small business owner, will benefit from knowing them as well. They are easy to grasp and will be helpful in most business situations. Let us take a closer look at these accounting terms.
T-Account
Accounting records about events and transactions are recorded in accounts. An account is an individual record of increases and decreases in a specific asset, liability, or owner’s equity item. Look at accounts as a place for recording numbers related to a certain item or class of transactions. Examples of accounts may be Cash, Accounts Receivable, Fixed Assets, Accounts Payable, Accrued Payroll, Sales, Rent Expenses and so on.
An account consists of three parts:
- title of the account
- left side (known as debit)
- right side (known as credit)
Because the alignment of these parts of an account resembles the letter T, it is referred to as a T account. You could draw T accounts on a piece of paper and use it to maintain your accounting records. However, nowadays, instead of having to draw T accounts, accountants use accounting software (i.e., QuickBooks, Microsoft Accounting, Peachtree, JD Edwards, Oracle, and SAP, among others).
Debit, Credit and Account Balance
In account, the term debit means left side, and credit means right side. These are abbreviated as Dr for debit and Cr for credit. Debit and credit indicate on which side of a T account numbers will be recorded.
An account balance is the difference between the debit and credit amounts. For some types of accounts debit means an increase in the account balance, while for others debit means a decrease in the account balance. See below for a list of accounts and what a debit to such account means:
Asset – Increase
Contra Assets – Decrease
Liability – Decrease
Equity – Decrease
Contribution Capital – Decrease
Revenue – Decrease
Expenses – Increase
Distributions – Increase
Credits to the above account types will mean an opposite result.
Double Entry Accounting System
A double entry accounting system requires that any amount entered into the accounting records is shown at least on two different accounts. For example, when a customer pays cash for your product, an account would show the cash received in the Cash account (as a debit) and in the Sales account (as a credit). All debit amounts equal all credit amounts provided the double-entry accounting was properly followed.
Having a double entry accounting system has benefits over regular, one-sided systems. One of such benefits is that the double-entry system helps identify recording errors. As I mentioned, if one amount is entered only once in error, then debits and credits won’t balance and the accountant will know that one or more entries were not posted fully. Note, however, that this check will help spot errors, but will not identify all cases of errors. For example, equal debits and credits will not identify an error when an amount was posted twice, but was posted to wrong accounts. Keep this in mind when analyzing causes of errors in accounting records.