Bank
A
bank or other financial institution is required to set
up a Visa or MasterCard merchant credit card account for
you.[Note 1] Ideally, this is your own bank, where you
already have a checking account. Banks don't let you forget
that they are taking a risk with you. If, for example,
you failed to deliver the product or service paid for
with a credit card, they would be responsible for making
it good. Of course, they are getting paid enough to cover
this risk, the processing charges, but they check you
out pretty carefully before issuing you an account. Assuming
that you have decent credit, they will help you set up
an account.
I
was fortunate. My bank was already conducting online banking
and is comfortable with the Internet. But exercising due
diligence, I asked my credit union if they offered merchant
accounts, and was given the phone number of a company
that performed that service for them. "Yes, we can help
you with a merchant credit card account," the lady answered
cheerfully. But when I mentioned the Internet the climate
changed. "Oh, we don't allow credit cards taken over the
Internet," she muttered, somewhat taken aback. Then she
recovered somewhat: "Maybe we should, and maybe we will
in the future, but for now we don't offer that."
So
what do you do if your bank or financial institution won't
set up an account that allows you to take credit card
information over the Internet? You go to a broker.
Merchant
Credit Card Broker
You
don't have to look long on Yahoo to find that there are
many, many people who want to help you set up an account
-- for a fee. Some of these people are very reputable,
some are shysters. In industry parlance these are called
Independent Sales Organizations (ISOs). Make sure you
check them out before you plunk down your money. Brokers
aren't an essential part of your online transactions,
they only set you up with a bank and then step out of
the picture. They make their money in one or more ways:
a finder's fee from a bank (which you might see in the
form of an application fee, a percentage of the hefty
fees you'll pay for a card-swipe machine or PC software,
and perhaps an up-front fee). They will place you with
a bank that is able to take someone with your credit history,
and that is comfortable with Internet transactions.
Transaction
Processing Clearinghouse
When
you finally get set up with a bank you'll find that they
probably contract out processing the credit card transactions
to a transaction clearinghouse. When you get ready to
process the purchase made on your online (or physical)
store, they're the people at the end of the modem who
tell you the credit card number is valid and doesn't have
its credit limit maxed out. We'll explain more a bit later.
You don't usually pay the transaction clearinghouse directly
(though they may deduct bank fees and make net deposits),
but you'll have a lot of interaction with them. Examples:
First Data Corp. and First USA.
PAGE
1 of 2 -NEXT>
