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Terminology
 Definitions of Common Merchant Account Terminology
There's a lot of terminology associated with Merchant Accounts. Following is a list of some of the common terms associated with credit card processing, and they relate to Modular Merchant's services.
If there are additional terms you have questions about, contact us! We're here and happy to help you!
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| Merchant Account & Credit Card Processing Gateway |
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Merchant Account - A merchant account is an account, supplied by a financial institution, that allows a business to accept credit card transactions. The Merchant Account is applied for by a business, or merchant. A Merchant Account allows the merchant to process "card present" credit card transactions, using either an electronic or physical "card swipe" terminal. Once a merchant account has been established, the bank agrees to pay the merchant for all valid credit card purchases in exchange for the right to collect the debt owed by the consumer.
Gateway - Credit Card transactions placed over the Internet are "card not present" transactions. (The merchant never has the customer's credit card in their possession during the ordering process.) In order to process "card not present" transactions, the merchant also needs a "Payment Gateway" account. The Payment Gateway account is essentially the Internet version of the merchant's electronic or physical "card swipe" terminal. The Payment Gateway account. It is in ecommerce to allow communication between the merchant's website and the bank's computer networks, acting as an interface between the two; i.e., a Payment Gateway. |
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| Application Fee |
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| The Application Fee is the cost to review a potential merchant's application and determine if they qualify for a merchant account. Modular Merchant only charges this fee if an applicant is approved. |
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| Setup Fee |
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| This is the one-time fee charged to set up a new Merchant's account. This fee varies greatly from one Merhcant Account provider to the next. Modular Merchant keeps our setup fees as close to our cost as possible. |
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| Statement Fee |
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| The statement fee covers the costs of generating and mailing the merchant a statement of their accounts activities. |
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| Internet / Mail / Phone Order Discount Rate |
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The Discount Rate is a percentage rate charged by the bank for processing a merchant's credit card transaction. This rate is usually determined by the type of business and/or how the credit card is processed. Retail based transactions (card present) will always have a lower discount rate than mail, phone, or Internet transactions (card not present).
When shopping for an online Merchant Account for your website, be sure to compare the Discount Rate for Internet and/or card not present transactions. That is the rate you will be charged when doing business through your online store. |
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| Internet / Mail / Phone Order Transaction Fee |
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This is a flat fee charged by the bank for processing a merchant's credit card transaction. This rate is usually determined by the type of business and/or how the credit card is processed. Retail based transactions (card present) will sometimes have a lower discount rate than mail, phone, or Internet transactions (card not present).
When shopping for an online Merchant Account for your website, be sure to compare the Transaction Fee for Internet and/or card not present transactions. That is the fee you will be charged when doing business through your online store. |
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| Gateway Transaction Fee |
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This is the per-transaction fee charged by the provider of the Payment Gateway account. (A Payment Gateway account is required for processing credit card transactions over the Internet. It validates the customer's credit card. It is the Internet equivalent of a physical "card-swipe" terminal.)
Modular Merchant offers no Gateway Fee on the first 250 transactions per month. |
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| AVS Address Verification Fees |
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In 1996, VISA/MasterCard headquarters introduced a new regulation requiring all businesses who manually key in the majority of their credit card transactions to have a special fraud prevention feature on their credit card processing equipment. This feature is referred to as an address verification system, or AVS, (it checks to see that the billing address given by the customer matches the credit card).
Enabling AVS in your merchant account is optional, but if you opt not to use AVS, VISA and MasterCard may not support your transactions and may charge you an additional 1.25% on those sales. Some merchant account providers also charge a per-transaction fee to perform the address verification during the purchase process. |
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| 24/7 Customer Support |
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| Have a problem with your merchant account? FREE customer support is available 24/7 via email, phone & support tickets. |
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| eCheck Processing Available |
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| An eCheck is a form of payment that deducts funds directly from a customer's checking account. eCheck services are usually managed by third party companies that interface with a number of different banks. An eCheck provides a more fraud resistant option in terms of ecommerce transactions. |
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| Instant Activation |
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Unlike other Merchant Account service providers that require written applications to be mailed or faxed to them in order to begin the application process, we offer a secure online application that can help get you started in less than ten minutes.
The secure online application helps minimize the time it takes to setup and activate new accounts. Once the online application is submitted and approved, account activation is instant. |
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| Secure Online Service Application |
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Unlike other Merchant Account service providers that require written applications to be mailed or faxed to them in order to begin the application process, we offer a secure online application that can help get you started in less than ten minutes.
The secure online application helps minimize the time it takes to setup and activate new accounts. Once the online application is submitted and approved, account activation is instant. |
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| Monthly Minimum |
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Monthly Processing Minimum: There is a $25.00 Monthly Processing Minimum on every merchant account. This is the minimum amount you must pay each month for your Visa/MasterCard processing. The monthly minimum does not apply to monthly fees or transaction fees.
Example: If your rate is 2.29% and you sell $1200 in goods or services during one month, your total Visa/MasterCard credit card processing fees would be $27.48 ($1200 x 2.29% = $27.48). This amount is greater than the $25.00 monthly processing minimum, so you do not have a minimum during this month. |
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| Merchant Account Agreement Contract Term |
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| This is the length of the contract singed with merchant account provider. Modular Merchant does not require a fixed term contract. Our Merchants are allowed to operate their merchant accounts on a month-by-month basis and terminate their account at any time, with no penalties. |
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| Merchant Account Agreement Early Cancellation Fee |
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| Our Merchants are allowed to operate their merchant accounts on a month-by-month basis and terminate their account at any time, with no penalties. |
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