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  1. #1

    Merchant Account contracts

    Hi all,

    I'm starting an online site for selling handmade clothes. I'd like to be able to accept credit cards, and I'd like the charge on buyer's CC bills to have the name of my company.

    I got an application form from CDG Commerce, and actually read lots of the small print.

    I assume all mechant providers have this (5+ pages) small print. A lot of it is very dense and seemingly has large consequences.

    For others in the same position as me, maybe answers to these questions can be of some use:

    1. Under "Merchant Account Rates", for Visa/MC, there is a percentage column next to them that says ISP*. On the CDG Commerce application, this term is never defined. What does it mean?

    2. What exactly is a "batch settlement"?

    3. What counts as a "recurring charge"? More specifically, does this count: I would like people to be able to have accounts on my site, where they can run up a tab. Once a month I will charge the amount on their tab to their credit card on file. The amount of this charge will be different every month (depending on what people bought). But I will only charge their card once per month (most likely the same day of each month).

    4. Amex & Discover cards seem like rip offs, the fees are over double what they are for Visa/MC. Can I get by with just accepting Visa/MC?

    5. Liability: the CDG Commerce application makes it clear I am personally liable for any lawsuits etc. Is there some kind of liability insurance out there I should get? (either for myself or for my company, which is a C Corp.)

    6. CDG says you can only process transactions within the "approved monthly volume" your account was approved for. How is this amount determined?

    Any help on these matters is much appreciated. I'm most curious to know about what exactly counts as a "recurring transaction."

    Thanks!
    Rokali

  2. #2
    Join Date
    Aug 2003
    Location
    Chesapeake, VA
    Posts
    3,379
    Hi Rokali,

    Hopefully I can help clarify some answers to your questions.


    I'm starting an online site for selling handmade clothes. I'd like to be able to accept credit cards, and I'd like the charge on buyer's CC bills to have the name of my company.

    Sure, this can be readily done with any direct merchant account.

    I got an application form from CDG Commerce, and actually read lots of the small print.

    I assume all mechant providers have this (5+ pages) small print. A lot of it is very dense and seemingly has large consequences.

    Merchant agreements can definitely be pretty lengthly, as with any financial transaction service. There are a lot of topics to cover since there is a definite element of financial risk and exposure that exists to both processors and merchants.


    For others in the same position as me, maybe answers to these questions can be of some use:

    1. Under "Merchant Account Rates", for Visa/MC, there is a percentage column next to them that says ISP*. On the CDG Commerce application, this term is never defined. What does it mean?

    If you are using one of our Industry Specific Pricing programs, then there should be a separate page in the PDF agreement which outlines the full Visa/MC discount & per fees.

    For any other typical merchant program of ours and with most other programs overall, the regular discount rates and per transaction fees would be listed on that page.


    2. What exactly is a "batch settlement"?

    A batch settlement takes place when all of the authorized sales for that day are "settled" and "cleared" through the Visa/MasterCard Interchange networks.

    It is at this point in time that the Issuing Bank transfers funds to the Acquiring Bank and then subsequently, the net funds are deposited to your local bank account.


    3. What counts as a "recurring charge"? More specifically, does this count: I would like people to be able to have accounts on my site, where they can run up a tab. Once a month I will charge the amount on their tab to their credit card on file. The amount of this charge will be different every month (depending on what people bought). But I will only charge their card once per month (most likely the same day of each month).

    Well - that would be a form of recurring charge but it depends in what context you are talking about "recurring" in.

    4. Amex & Discover cards seem like rip offs, the fees are over double what they are for Visa/MC. Can I get by with just accepting Visa/MC?

    Yes, you can opt to only accept Visa/MC if you wish - Amex & Discover are optional.

    Discover is pretty reasonable - a one-time $25 fee, no monthly cost and rates that are comparable to Visa/MC for most merchants.

    Amex is not bad for some merchants - no setup/app fee, $5/month with a 0% discount rate unless you exceed $5,000 in Amex sales. At that point - they are much more expensive at around ~4% depending on biz type & ticket size.


    5. Liability: the CDG Commerce application makes it clear I am personally liable for any lawsuits etc. Is there some kind of liability insurance out there I should get? (either for myself or for my company, which is a C Corp.)

    You are personally liable only for the activities on your merchant account with respect to fees payable. This is completely separate and outside of your business activities pertaining to anything else.

    In other words, if your business owes $100 for unpaid chargebacks - as an example... and your business could not make the payment or refused to do so, you would be personally liable for that $100.

    However, this has no bearing with any other aspects of your operations. This is also a standard provision of any merchant processing agreement.


    6. CDG says you can only process transactions within the "approved monthly volume" your account was approved for. How is this amount determined?

    You specify this amount yourself on the first page where you indicate your anticipated monthly sales volume, average & max ticket sizes. You can also increase these by requesting it from us once you are an active merchant as well.

    Any help on these matters is much appreciated. I'm most curious to know about what exactly counts as a "recurring transaction."

    Regarding this... not sure quite what you are asking, could you clarify?

    Hope this info is helpful, let me know if I can further clarify on anything - thanks!
    CDGcommerce.com - Trusted Merchant Account Solutions since 1998
    Many thousands of successful, growing businesses benefit from our expertise every day. You can, too!
    We help merchants to eliminate gateway costs, reduce & mitigate fraud and achieve streamlined PCI compliance.
    Learn more today at http://www.cdgcommerce.com - we look forward to helping your business grow!

  3. #3
    We use CDGcommerce for our credit card processing and I can verify that they are VERY good. Their service and support is extremely efficient, and they are excellent to explain the concepts and work with you to understand what is happening.

    Highly recommended.

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  4. #4
    Join Date
    Apr 2005
    Location
    Holland
    Posts
    40
    Recurring transaction is a rebill. It's used mostly for membership based website when THE SAME amount is charged for the same service say monthly.
    In your case, with "tabs", you won't need it I think, but of course just consult with CDG.

    As for lengthy contracts, almost all PSPs and acquirers have them this way. For one thing, there is a great deal of merchant fraud outside there and a good contract is the first step of protection and more over, in fact certain contract provisions and paragraphs are REQUIRED to be in the PSP or Acquiring Bank contract by Visa and MC rules, such as urgent contract termination and other risk relevant factors.
    Ido Schiferli
    Marketing Manager

    ChronoPay

  5. #5
    Hi all, thanks for the answers. I'll try and clarify how I'd like to bill people.

    The site I will be running will also let other people sell their own stuff. For each item they list there will be a small ($0.20) fee, and when they sell something there will be another small fee (like eBay, I guess, though I won't have auctions, just fixed price sales).

    I won't have anything to do with how the sellers on my site collect money from the buyers of their clothes, but I do need a way of collecting money from the sellers for their listings & sales.

    So I was going to require that sellers have a credit card on file (both to verify their identity and to be able to charge fees to).

    Since the vast majority of fees I need to collect will be $0.20, I certainly don't want to charge them at once. I want each seller on my site to run up a tab, basically. Then once a month I will add up all their charges and actually run them through their credit card on file.

    When a seller lists an item on the site, they explcitily click on a button that says "I agree to pay $0.20 for this action." Is that enough of an approval to then add it to their tab and process their tab once a month, without me being required to have their signature on file?

    I will never be charging the same amount. I can even run the charges on different days, if it's the same day that makes a charge "recurring."

    And one more question for CDG Commerce: I'm a US corp w/ a US bank account. Can I accept credit card orders from other countries?

    Thanks again!

  6. #6
    Join Date
    Aug 2003
    Location
    Chesapeake, VA
    Posts
    3,379
    In answer to your question - yes, you can definitely accept credit card orders from other countries. As long as they are using a Visa, MasterCard or Amex/Discover/Diners/JCB (depending on which of these optional card types you want to setup)... it will work just fine.

    BTW, one suggestion for you to consider... instead of having a customer "run up a tab" and then pay post-tab, you may want to think about having a small deposit requirement (maybe even just $10 or something) to ensure that you don't run into a situation where someone places just 1-2 items on their tab and then stops... leaving you with the uncomfortable option of having a $0.40 balance owed but by processing it - the transaction fees would wipe away the profit.
    CDGcommerce.com - Trusted Merchant Account Solutions since 1998
    Many thousands of successful, growing businesses benefit from our expertise every day. You can, too!
    We help merchants to eliminate gateway costs, reduce & mitigate fraud and achieve streamlined PCI compliance.
    Learn more today at http://www.cdgcommerce.com - we look forward to helping your business grow!

  7. #7
    Could you please tell me if the scenario described above would count as "recurring charges"?

    Again, the charges will never be for the same amount, the person agreed to the small charges tht make up the larger charge, and they don't even have to be processed the same day each month.

    Can I do this without being required to have their signature on file?

    Thanks.

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