Merchant Account Processors: Frequently Asked Questions

Professional meeting between a merchant and ISO representative discussing merchant services, with a visible BBB logo for credibility.

To succeed today, merchants need merchant accounts. These accounts can come from banks or independent sales organizations (ISOs). However, many don’t realize that a bank always processes these accounts. Here, we clarify some common questions about ISOs, their associated banks, and their mutual benefits.

What do ISOs do if they don’t process transactions?

ISOs, also known as merchant service providers, set up and support merchant accounts. They allow merchants to accept payments via debit, credit, checks online, in-store, or remotely. The payments are processed by the ISO’s partnering bank, known as the acquiring bank. Both ISOs and banks work together for mutual benefit.

How do you verify an ISO’s credibility?

To be recognized as a legitimate ISO, a bank must first sponsor the ISO to a credit card company, which then needs to approve it. This approval process requires the ISO to demonstrate solid finances and business planning. Legitimate ISOs must partner with an acquiring bank that has a physical presence and should be listed on the ISO’s website. However, it’s wise for merchants to check the ISO’s record with the Better Business Bureau (BBB).

What fees are associated with a merchant account?

Merchant accounts typically involve transaction fees and monthly fees that benefit the merchant service provider and the processor. Common transaction fees include:

  • Authorization fee: Charged for each transaction sent to the bank for approval.
  • Discount rate: A percentage of each sale covering various fees and dues.
  • Batching fee: Charged when transactions are sent to the bank for payment at day’s end.

Monthly fees can include:

  • Gateway fee: For using a payment gateway.
  • Statement fee: For monthly statement preparation, applicable to both digital and paper statements.
  • Monthly minimum fee: Charged if transaction fees don’t meet a certain threshold, covering the difference.

The exact fees vary depending on the account type and the merchant service provider.

What about hidden fees?

While not all merchant service providers have hidden fees, some do. These can include annual fees, over-limit fees, and encryption fees, among others.

How does AVPS stand out?

AVPS distinguishes itself by offering over 25 years of experience, transparent pricing without hidden fees, and a variety of account options aimed at minimizing costs. For those needing merchant accounts or processing equipment, AVPS aims to provide tailored solutions with competitive fees.

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