Non-US Merchant Services for American Merchants

In order to provide small business merchant accounts to American businesses, credit card processing companies must be registered as Independent Sales Organizations (ISO) and Member Service Providers (MSP). The former designation is provided by Visa USA and the latter - by MasterCard. Both authorizations are given solely to US-based businesses, after the applicants to provide credit card payment processing service have been thoroughly evaluated and have paid the registration fees.

Similarly, a US-based credit card merchant processor cannot provide merchant account processing services to non-US organizations. All applicants must have their businesses based in the US, maintain an American office and have a checking account with a US bank.

It is very easy to check if a credit card processing account provider is based in the US. The Credit Card Associations have mandated that ISOs and MSPs display the name of their sponsoring bank on each page in their website and on all marketing and promotional materials. A sponsor bank is a bank that is a member of the American branches of Visa and MasterCard and can, therefore, operate as an acquiring bank in the US. Acquirers, also called merchant banks, authorize, clear and settle merchant's card payment processing transactions. Usually acquiring banks also are credit card issuing banks as well.

Merchant Account Processing Minimum

Your merchant account contract may include a provision that will allow your credit card merchant processor to charge you a minimum processing fee if you do not reach a predetermined processing level. What this means is that if your credit card processing provider does not get a certain minimum of processing fees from you in any given month, they will just charge you the minimum fee instead. If your payment processing fees exceed the minimum, it becomes irrelevant, as your merchant account processor simply gets what has been charged already and there is no need to charge anything in addition.

Although some credit card processing companies still charge a minimum processing fee, specifically to small business merchant accounts users, it has become an increasingly rare occurrence. You should carefully review every proposal that includes such a charge and compare it to other proposals you have received. Although the overall credit card processing costs are composed of several charges and all of them should be taken into account, chances are that, if a credit card processing company wants to charge you a minimum fee, they will want to charge you other unnecessary charges and will probably not be your best option to choose.

Address Verification Service (AVS)

The Address Verification Service (AVS) is a risk management tool for merchants accepting credit and debit cards when neither the card nor the cardholder are present, or when the card is present but its magnetic stripe cannot be read by a terminal at the point of sale. Provided by the major card associations, AVS helps reduce the risk of fraudulent transactions by verifying the cardholder’s billing address on file at the card issuer. Merchants submit the AVS request through their credit card merchant processor directly to the specific credit card association for address comparison.

As you see, AVS is benefiting mostly eCommerce merchant account users. It was developed to bridge the security gap that existed between face-to-face and card-not-present credit card payment processing environments. All major credit card processing companies support and encourage using it.

To request address verification in a card-not-present merchant account processing set up, follow these steps:

• Enter the billing address as it appears on the monthly statement.


• Follow your terminal or computer instructions to enter and send this information.


• Research the returned AVS result codes.

Your small business merchant accounts provider will return one of the following result codes:

• Exact Match. Generally speaking, you will want to proceed with transactions for which you have received an authorization approval and an "exact match."


• Partial Match. Street address matches, ZIP code does not, or vice versa. You may want to follow-up before shipping the merchandise or providing the service. Things to look for in these orders: larger than normal orders; orders containing several units of the same item; orders shipped overnight; orders shipped to an address other than the billing address.


• No Match. Neither the street address nor the ZIP code match. Typically a strong indicator of fraud, however the cardholder may have moved recently and not yet notified the issuer or the cardholder may have given you the shipping address instead of the billing address. Actions you should take include: call the customer to verify the phone number, the address and whether the cardholder has recently moved; call the card issuer to determine whether the name, address and telephone number match the information on file; use directory assistance or internet search to contact the individual at the billing address and confirm that he or she initiated the transaction.


• Unavailable. Address information is unavailable for that account number, or the card issuer does not support AVS. Since you now have no way to verify the address, you must decide whether to investigate further, proceed, or cancel the transaction. One solution is to fax a credit card slip to the consumers requesting a signature be faxed-back to actually verify the order.


• Global. Address information not verified for International transaction. Follow suggestions for "Unavailable."


• Retry. Issuer authorization system is unavailable, retry later.

Declines can be handled politely by displaying a message that states "We are unable to process your order at this time, if you wish to continue your purchase, please call our toll-free number..." At that time the merchant may be able to obtain more information from the customer to verify why the address did not match, such as recently moved. Always ask your merchant account processor for assistance when you are not sure how to proceed.

What to Look for in a Merchant Account

All credit card processing companies offer the same service. They provide merchant account services that enable merchants to accept credit cards, debit cards, a variety of other charge cards, electronic checks, etc. The vast majority of US small business merchant accounts providers use a handful of banks to acquire their merchant's transactions. So the major difference between them is to be found in the cost of accepting payments.

A sophisticated merchant needs to be able to look beyond the advertisements, in order to get the whole picture. What you most often see on a credit card merchant processor's website are numbers like 1.59% + $0.20 or something like it, usually embedded into a brilliantly colored button, asking that you click on it and proceed to the application form. Unfortunately, this does not tell you much. The credit card transaction processing cost is comprised of a number of different components and the rate is just one of them. You need to know what all of them are and calculate the total credit card payment processing cost for your business. There are available tools out there which will help you with that but you can also request that every credit card processing provider that you contact gives you a cost estimate, based on the sales volumes and average ticket amount that you expect to have.

Elsewhere in this blog we have written about the various components of the credit card processing account cost and have offered our view on what should be considered as acceptable for each of them.

E-Commerce Payment Gateway Basics

An eCommerce payment gateway is a service that enables PC based credit card processing merchants to securely transmit their payment information to a processor over the internet (see our offering here). It is a part of every eCommerce merchant account and it integrates with the website's shopping cart. Typically, it is a third-party solution but there are credit card processing companies that offer the service directly to their merchants.

An eCommerce gateway will provide a browser-accessible interface that will allow merchants to review batches and manage their small business merchant accounts from anywhere internet connection is available.

It is important to understand that a payment gateway does not support a "card swipe" transaction acceptance method. It is a virtual service and, as such, will accept key-entered transactions, either by a cardholder on the merchant's website or, through a virtual terminal, by the merchant itself. It supports all features found in a physical terminal, including authorization, capture, refunds and voids.

Every major gateway provides fraud protection services, most notably AVS and CVV2 verification services.

It is important to know that internet credit card payment processing services are more expensive than their physical counterparts and one of the reasons is the cost of using a gateway. In addition to the other merchant account service costs, there are gateway transaction and monthly fees. These fees vary by credit card merchant processor but your monthly fee should not exceed $15 and your transaction cost should not be greater than $0.12.