MO/TO Merchant Account Rates

Mail order and telephone order merchants (MO/TO) operate in a card-not-present environment, just as their eCommerce counterparts and, just as them, they pay higher processing rates than brick-and-mortar merchants. Once again the culprit is the higher probability of generating customer disputes and the resulting chargebacks. Yet, payment processing fees that merchant account providers charge MO/TO businesses are not quite the same as the ones web-based merchants pay. There are certain differences between the two major card-not-present merchant types in the way they accept credit cards and, as a result, the payment acceptance capabilities that are needed are also different. Following is a list of the processing fees that MOTO merchant account users should expect to be charged:

• Discount rate. The discount rates should be the same as the ones for web-based merchants. A reasonable rate would be 2.19% or lower, if you can find it. Make sure your small business merchant account provider charges you a lower rate for debit cards - 1.98% would be acceptable. Ask your prospective merchant services provider what pricing model they are using. The pass-through model would be your best option.
• Transaction fee. The majority of the merchant account providers now charge a $0.25 transaction fee. I have not seen anything lower than that. Application and set up fees. You should not pay any set up or application fees.
• Virtual terminal fee. Virtual terminal is the service that allows MO/TO merchants to enter their customers' payment details, through a web browser, directly into their merchant processing bank's system. You should not be charged for setting up a virtual terminal. There should not be a monthly fee either.
• Monthly statement fee. Every merchant processing account comes with a monthly fee (its name varies by provider). You should not consider anything above $15.
• Support fee. You should not agree to paying support fees.

The biggest difference in processing fees between web-based and direct merchants can be found in the eCommerce gateway-related charges. Direct merchants do not use payment gateways, as their customers do not place orders over the internet. What they use instead is a virtual terminal to manually enter the already provided payment details. Overall, a direct marketing payment acceptance solution should provide for a cheaper payment processing service than an online one.

DBA and Business Legal Name in Merchant Accounts

When you fill out a merchant account application for a credit card payment processing service, you provide both your "Doing Business As" (DBA) name and your legal business name. Small business merchant accounts providers need your DBA name to set up your billing descriptor. The way your company's name shows on your customer's credit card statement is called a billing descriptor.

Credit card processing companies will want to make sure that it is done properly. It is important because, if consumers do not recognize your business name, they may dispute the transaction and initiate a chargeback which can be both costly and time consuming. If your company only provides one service or sells one product, your business name alone will be sufficient as a billing descriptor and your merchant account processing provider will use it by default.

In the case where your company offers more than one product or service, as with most businesses, your creditcardprocessing provider can utilize the so called "soft billing descriptor". It allows the use of an abbreviation of your business name plus a short description of the item that was sold. Your company's phone number is included in both versions. Check with your credit card merchant processor to make sure that they support the soft billing descriptor.