General
To start processing payment card transactions you need:
A payment processing terminal, a physical device or software. Merchant account, the service that payment processing companies offer to enable you to accept electronic payments. Checking account to receive deposits.
Specific for processing online transactions are the following requirements:
A functioning web site with a valid secure server certification. Shopping cart, our virtual terminal is compatible with all major shopping carts. Online payment gateway, the online equivalent of the point of sale (POS) terminal facilitates the transfer of information between your website and your Processor or acquiring bank, quickly and securely.
Merchant Processing Agreement is the written contract between the merchant and acquirer that details their respective rights, duties and warranties.
Swypit Merchant Services is an independent sales organization (ISO). We enable merchants to accept payments by credit cards, debit cards, fleet cards, private label cards, electronic gift cards and corporate cards and other electronic payments. The funds are then authorized and settled through the Card Associations (e.g. MasterCard and Visa) and deposited in the merchants checking account. In addition, we handle adjustments, chargeback processing, merchant billing and account activity reporting.
No. Merchants based outside of the US cannot obtain a US merchant account. Currently, only merchants with a physical business address in the US and a US checking account may process transactions with a Swypit Merchant Services merchant account.
Our web-based reporting tools can provide you with up-to-date transaction information 24 hours per day, 365 days per year.
Visa is a member-owned association of banks that governs the issuing of Visa payment cards and the acquiring of Visa payment card transaction
MasterCard is a member-owned association of banks that governs the issuing of MasterCard payment cards and the acquiring of MasterCard payment card transactions.
Independent Sales Organization (ISO) is a company that is authorized by Visa to provide merchants with merchant services.
Member Service Provider (MSP) is a company that is authorized by MasterCard to provide merchants with merchant services.
Issuing bank is a financial institution that is a member of Visa and MasterCard and opens and maintains credit card accounts.
Acquiring bank, also called an acquirer or a merchant bank, is a financial institution that is a member of Visa and MasterCard and provides merchants with merchant accounts for processing card payments.
Merchant bank is another term for acquiring bank, see above.
Payment processing company, also called a processor, is an organization, which is operated by the acquirer or it has been contracted by the acquirer to process interchange transactions.
Interchange is the flow of information and funds between banks that issue credit cards and banks or service providers that process card transactions for merchants, through the associations data processing networks.
Authorization is a process through which a card issuing bank can approve or decline a payment card transaction.
Voice authorization is provided by a voice operator, usually when an issuer sends a "Please Call" message to the merchant instead of an authorization number.
A floor limit is the payment amount above which credit or debit card transactions must be authorized. The floor limit can vary and is specified in the merchant processing agreement. Be advised that for merchants, operating in a card-not-present environment, the floor limit is always zero. This means that their transactions always require authorization, regardless of the payment amount.
Voiding is the reversal of an authorized transaction that has not been settled. The reversal of settled transactions requires processing of credit.
A request by an issuing bank that an authorization is done by calling the Voice Authorization Center is called a referral.
Clearing is a process through which a card issuing bank exchanges transaction information with an acquiring bank. Clearing and settlement occur simultaneously. Click here to see a diagram of the process.
Capture is the process of collecting and organizing information of credit and debit card transactions for submission for settlement.
Settlement is a process through which a card issuing bank exchanges funds with an acquiring bank to complete a cleared transaction. Clearing and settlement occur simultaneously.
A voice-authorized transaction that is key-entered is called a force or post-auth.
Declined is an attempted transaction for which the card issuer denies authorization. If a request for approval is declined, the merchant must ask for an alternative form of payment.
A chargeback occurs when cardholder disputes a credit card transaction that is posted on his account. Click here to see a diagram of the process. The most common reasons for chargeback resulting disputes are:
- Customer dispute over product or service quality
- Credit not received
- Improper authorization
- Fraud
- Processing error
- Inaccurate transaction information
The process where a merchant or his or her acquirer submits to an issuer documentation as supporting evidence in an attempt to reverse a chargeback, initiated by an issuers cardholder.
After representation and upon a favorable resolution of a chargeback, the disputed amount is returned to the merchant. This process is called a reversal.
A request by a cardholder or an issuer to a merchant or an acquirer for a copy of the original sales receipt is called a retrieval request. If not addressed in a timely and satisfactory manner, a retrieval request can lead to a chargeback.
Bank card is a Visa or MasterCard credit or debit card. Visa and MasterCard are associations of member banks, which have the right to issue payment cards with a Visa or MasterCard logo. American Express and Discover cards, by contrast, are issued directly by the companies.
A Credit Card Network, aka Credit Card Association or Association refers to either the Visa or MasterCard network of member banks, which can issue cards with the respective networks logo and/or acquire card payment transactions.
Bank Identification Number (BIN) is a unique series of six digits assigned by the Associations to a member organization for identification purposes. The BIN comprises the first six digits of a standard credit card number.
In the payment processing industry the term is applied to describe the practice where a merchant uses his or her merchant account to process another merchants transactions. Factoring is not allowed by the Associations
Reserve is a portion of the monthly revenue from a merchants payment card transactions that a merchant account provider may request to hold in an escrow account as an insurance against possible loss from chargebacks and other sources. Used mainly with high-risk merchants, upon satisfactory completion of a predetermined period, reserves are returned to the merchants. In the case of a rolling reserve, a reserve is held every month for a certain period (usually six months). On the following month the first months reserve is released to the merchant, and then the second months reserve and so on until there is no longer a reserve.
High-risk are merchants from industries with high rates of chargebacks. Examples of high-risk merchants are telemarketers, direct marketers, travel services, betting establishments, used car dealerships, adult-oriented websites, etc.
Payment Cards
Swypit Merchant Services offers payment processing for MasterCard, Visa, Diners Club/Carte Blanche and JCB cards. We also support American Express and Discover, which allows our merchants to accept their cards as well.
Debit cards are payment cards, which are connected to the cardholders checking account. When a debit card is used as a method of payment, the funds are debited from the checking account.
Private label is a credit card issued by a credit card issuer under the name of a different organization, such as Home Depot credit card offered by GE Capital.
Stored-value card is a payment card that represents a certain dollar value that the cardholder can use for purchases only at the issuing merchants store.
Smart card is a payment card with a built-in microchip for storing information. Smart cards are used as stored-value cards, loyalty cards or credit cards
Payment Processing
Transaction is any act between a cardholder and a merchant that results in an activity on the merchant account, such as a purchase or a credit.
Step 1: Cardholder presents a card to pay for a purchase.
Step 2: Merchant processes the card and transaction information, and requests an authorization from the merchant bank.
Step 3: Merchant bank submits the authorization request to Credit Card Network (Visa or MasterCard).
Step 4: Credit Card Network sends the request to the card issuer.
Step 5: Card issuer approves or declines the transaction.
Step 6: Credit Card Network forwards the card issuers authorization response to the merchant bank.
Step 7: Merchant bank forwards the response to the merchant.
Step 8: Merchant receives the authorization response and completes the transaction accordingly.
Shopping cart is a software application that is incorporated in a website to collect and record purchasing decisions by a visitor.
Gateway is the service that connects the merchants website with his or her payment processor for transmitting data.
A collection of captured transactions that have not yet been settled is called a batch. Merchants usually settle at the end of the business day.
Interchange fees are transaction-related charges, established by MasterCard and Visa, which merchants pay as a compensation for the payment processing service they receive. These fees are based upon how a transaction takes place and in what type of industry.
The fee that acquirers charge merchants for processing non-Visa and non-MasterCard transactions (e.g. Discover or American Express transactions) is called a non-bankcard fee.
Discount rate is the amount a merchant is charged by his acquirer for processing the merchants transactions. It consists of a percentage fee and a fixed, per transaction, charge.
The fixed dollar amount portion of the discount rate is called a transaction fee.
When a transaction is processed in accordance with the rules and standards established in the Payment Processing Agreement, signed by the merchant and his or her processor, and complies with all applicable security requirements, it is charged the most favorable discount rate. That rate is called a qualified rate and is set in the Payment Processing Agreement. Should a transaction meet some but not all of the above mentioned criteria, it will be classified as either mid-qualified or non-qualified and it will be billed at a higher rate.
When a transaction is processed in accordance with the rules established in the Payment Processing Agreement, signed by the merchant and his or her processor, but does not meet the highest standards for payment acceptance and/or complies with most but not all applicable security requirements, it is charged a discount rate that is less favorable than the qualified. That rate is called a mid-qualified rate.
When a transaction is processed in accordance with the rules established in the Payment Processing Agreement, signed by the merchant and his or her processor, but does not meet the highest standards for payment acceptance and/or complies with some applicable security requirements, but not enough in order to be classified as either qualified or mid-qualified, it is charged a discount rate that is less favorable than the mid-qualified. That rate is called a non-qualified rate.
Monthly processing minimum is a fee that your processor may include in your merchant agreement. If included, for every given month you will pay either the minimum processing fee or the processing fees generated by your processed payments, whichever is higher.
Dues and Assessments are the portion of the discount rate that goes to the Associations.
EBT is an electronic system in the US that allows state governments to provide benefits to authorized recipients via debit cards. EBTs fall into two general categories: Food Stamps and Cash benefits. Food stamp benefits are federally authorized benefits that can be used only to purchase food. Cash benefits include State General Assistance, TANF (Temporary Aid to Needy Families) benefits and refugee benefits.
ECP is a method of payment where a customers checking account is directly debited or credited by a merchant via ACH (Automated Clearing House).
Payment Processing Security
PCI (Payment Card Industry) refers to a data security standard that Visa and MasterCard established in order to create common industry security requirements. It regulates the:
- Building and maintaining a secure network.
- Protecting cardholder data.
- Maintaining a vulnerability management program.
- Implementing strong access control measures.
- Regular monitoring and testing networks.
- Maintaining an information security program.
CISP is Visas Cardholder Information Security Program. It is designed to keep sensitive cardholder data safe from hackers and identity thieves.
MasterCards SecureCode is a unique personal code, used by cardholders to authenticate themselves to their card issuer. Click HERE for a program review.
Verified by Visa (VbV) is a service which allows Visa cardholders to create their own personal password with Visa. Once activated, the service is used as an additional layer of security at participating online stores. Click HERE for a program review.
Transaction scoring is a service that analyzes relationships between various data fields to identify suspicious orders and to distinguish in real-time the probability of fraudulent transactions.
Secure Socket Layer (SSL) is a security feature used to protect communication channels from unauthorized use by encrypting data
The Address Verification System (AVS) service verifies a cardholders address.
Card Verification Code 2 (CVC2) is a 3-digit code, printed on the back of a MasterCard payment card. It ensures merchants in a card-not-present environment that the card is in the possession of the purchaser.
Card Verification Value 2 (CVV2) is a 3-digit code, printed on the back of a Visa payment card. It ensures merchants in a card-not-present environment that the card is in the possession of the purchaser.
A Card Identification number (CID) is a 3- (printed on the back of a Discover payment card) or a 4-digit code (printed on the front of an American Express payment card). It ensures merchants in a card-not-present environment that the card is in the possession of the purchaser.
It is not acceptable to store CVV2, CVC2 or CID numbers under any circumstances. The Credit Card Networks prohibit such storage.