Credit card payments are becoming more popular online. Find out which advantages and disadvantages this method has and what you should take into consideration.
In order to accept credit cards, merchants need a credit card acceptance contract. Comparable to a loan agreement, this contract is not concluded with the credit card issuing companies, but with a credit card bank, known as acquirer. The latter handles the payment of the dealer with the customer. Upon conclusion of a credit card acceptance contract, the online entrepreneur receives a merchant identification number (MID). This is required for the payment service provider, who takes over the technical connection of the online shop to the payment gateway of the credit card companies.
A credit card acceptance contract is similar in meaning and risk to a home loan. The criteria that an issuing credit card bank applies are equally strict. It is therefore recommended to prepare well for the interview with the acquirer. Companies requesting a credit card acceptance contract must have been on the market for at least six months - either offline or online - and have a positive balance sheet or a positive business evaluation. Acquirers often require a convincing presentation of the business model and order process before concluding. In some cases, banks even conduct an on-the-spot check.
On average, online businesses generate a third of their turnover through credit card payments. Acquirer have a variety of fee models, which vary significantly. The costs include: basic charge, discount, cancellation fees (chargeback) and charges per transaction. Costs are dependent on the business model, the payout frequency and the average transaction totals or quantities. Therefore, it is worthwhile to check the terms of your own credit card acceptance agreement from time to time. Significant savings can be performed through small changes, such as the discount rate.
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