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Cash-less Sale by Credit Card Payments –
Get a Merchant Bank Account Today
Today every business house is availing
itself of a merchant bank account to
ensure its ability to accept credit card
payments as more and more customers flip
out the credit card to complete their
sale.
Retail merchant accounts are required by
trade people to enable them to accept
cash-less payments – or payment by
credit and debit/ATM cards in face to
face interactions with the customers.
Merchant account is actually a contract
entered into by the businessperson and
the acquiring bank, according to which
the bank provides the businessperson
with a line of credit. This is done so
at the cost of a certain fee, which in
turn consists of a discount rate,
transaction fee, statement fee and a
monthly minimum as well.
There are two types of merchant accounts
– Over the Counter (OTC) and the Money
Order/Telephone Order (MOTO). Over the
counter type of accounts have lower fees
and discount rates and they cater
specifically to retailers – since here
the buyer and the seller are
vis-a-vis. Money Order/Telephone
Order type accounts are used for
internet based businesses. The payment
is made, the veracity of the payer
confirmed and the amount deducted from
the consumer’s account. The amount is
then placed in a 30-day holding account
and the credit card charged only after
the purchased article is shipped.
The tradesman now gets himself a Credit
Card Terminal – which is an electronic
equipment provided with a magnetic slot
to read the card or, alternatively, a
keypad to punch in the details. Once
swiped, relevant details of the customer
are transferred to the acquiring bank
processor – directly, or via a payment
gateway – and from the processor to the
Card Issuing Bank. The issuing bank
considers the validity of the deal by
scrutinizing the customer’s account and
then sends an authorization or rejection
message to the acquiring bank processor.
The response is transmitted back to the
credit card terminal and contingent on
the response, the customer’s receipt is
printed. The amount obtained from the
customer is then deposited in the
tradesman’s account with the acquiring
bank.
Depending on the amount and type of data
a credit card transaction requires helps
classify the level of the transaction.
The standard deal is called ‘Level 1’.
Those involving a more detailed
information fall under ‘Level 2’. The
highest level is the third level – these
transactions are not carried out by
retail merchants – instead, they are
used when one corporate house is the
customer of another, or if the
government itself plays customer.
Ordinary credit card terminals need
additional software to transact level 3
dealings.
All these transmissions of data as
sensitive as a customer’s credit card
details are made through a 128-bit
Secure Socket Layer (SSL) Internet
Protocol (IP) connection. The SSL
encrypts the data in order to protect it
from computer hackers. In spite of that,
the rate of credit card frauds is high.
Several fraud prevention devices have
been undertaken to check the rampant act
of dishonesty:
·
Address verification
·
Code verification – three
or four digit code called the CVV2 ,
CVC2, CID etc.
·
Age and Name verification
Credit card transactions are
characterized by the ease with which
they are dealt with. Now safety is an
added advantage. |
