Jan
3
2010
Third party Credit Card Processing
Author: adminSeveral lucrative firms employ one or more 3rd party payment processing services to process their credit card orders on Internet, since this doesn’t require one to obtain a direct merchant account or setup costly ssl certificates. The 3rd party payment processing services handles fee by credit card(and typically can manage checks and other forms of payment as well) , and sends the vendor a monthly(typically) check or wire transfer, minus lots of processing fees, which vary from service to service.
Many 3rd party payment processing solutions allow the seller a link to a secure webpage where they can redirect their users to, for completing the order. While the system has many benefits, it too has its disadvantages.
Below is a list of the common terms and concepts used by the standard payment processing providers, to help sellers understand better what they need to compare when choosing a payment processing service.
Payment Cycle- The time interval during which orders are considered for one payment. This can be carried out monthly, bimonthly, weekly, and etc. After each payment cycle finishes, the payment must be sent to the seller.
Payment Hodling Time- Unfortunately each payment processing service deliberately holds the payment for an amount of time that varies between a few days up to a couple of months. They do not give the payment instantly after the payment cycle has finished, but rather they hold the payment for the specified payment holding time. They say this is to safeguard them against fraud, chargebacks, and it also assists them with increasing their revenue(by holding the revenue in the bank for interests) . As an example, for a monthly payment cycle and a payment holding period of 15 days, the money resulting from orders for the period of October will be sent to you on or after 15th November. Such is not an enormous issue if the payment holding time is not long, but some services have a payment holding time of 2 months or even more, and you will get your payment for October income in January the next year.
Payment Processing Day- is the date of the month(for montly payment cycles) when the payment cycle should end, and the payment calculated. Usually this may be the last day of the month, however quite a few services let you specifically arranged it.
Signup Fee- the fee intended for signup. Quite a few charge non- refundable fees, other application fees, other don’t charge a fee at all.
Transaction Fee- the per transaction fee, typically a percentage with a minimum fixed cost.
Chargeback Fee- when a chargeback happens(it takes place in case of fraudulent orders or when the customer is not contented with the product) not merely that the payment processing service takes back the amount of the order, but it also charges you with a chargeback fee.
Some payment processing services have additional fees such as item download cost(for virtual goods) , monthly payment, statement charge, refund payment, wire transfer fee, and even contract canceling cost. That you have to inquire them regarding most of these expenses, because many services usually do not obviously specify it on the website or in quick to find documentation. You might have unpleasant surprises later if you fail to ask beforehand. Especially with the payment holding time, it’s disappointing to expect to receive the first payment just to find out that it’ll be sent to you months later.
It is a great practice to study the TOS(terms of services) and also the contract prior to signing up, as many payment processing services state they reserve the right to terminate or suspend their services to any patron, for any and no reason at all, without notice, and they moreover state that the final payment is going to be held 6 months, for chargeback protection.
Tags: ecommerce merchant accounts, internet merchant account
