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Important Credit Card Merchant Services Terms
Credit cards are given out by a bank or financial institution and offer consumers a chance to borrow funds at the POS. However, merchants will charge interest based on the amount of funds that are processed. The interest rate will be based on someone's credit score. In order to track purchases, merchants provide online accounts to consumers. An online account also offers customers a chance to make payments and transfer funds from one location to another. Depending on someone's plan, they may be able to withdraw cash from an ATM machine as well. Below are some terms that will help you understand credit card lingo more.
Annual Percentage Rate (APR)- The APR is the yearly percentage rate that is charged to the card when a balance is present. The rate is applied each month to the card.
Debt Consolidation - When multiple cards have a balance with a high interest rate, the balance may be transferred to a card with a lower one to reduce the payment amount.
Fraud Alert - A fraud alert is when a credit card has been lost or stolen. The merchant will freeze the account and monitor for any activity.
Balance Transfer Fee - A balance transfer fee is when the merchant charges a fee to transfer a balance from one account to another.
Point of Sale (POS) - Anytime a payment is processed, the POS is the establishment where the transaction took place.
Service Charge - A service charge is a fee taken by a merchant for over drafting or withdrawing money from an ATM machine.
Variable Interest Rate - With a variable interest rate, the APR will change depending on the economy.
Credit card merchant services are businesses that authorize and process payments for other businesses that have customers who pay often with a credit card. They provide a number of services, including the machines necessary to accept credit cards, secure online payment processing, as well as handling phone and mail sales. While retail merchants and restaurants are the most common clients, it is becoming more common for service-based businesses to accept credit card payments as an alternative to cash or check. Credit card merchant services can enable you to bill your clients, set up personalized accounts for each client, and accept payments for services through the Internet.
Though it may seem expensive to take on additional fees and surcharges, the rewards tend to outweigh the costs. In today's digital age, having a means to accept credit cards potentially expands the kinds of sales and clientele one can attract. There are still many businesses that prefer not to utilize such services because the terms of opening an account include charging fees for every sale. A common perception is that adding an alternative payment method would be too complicated. However, these providers pride themselves on the ease with which they set up businesses with the ability to authorize credit card payments. The rates they charge are minimal, especially for a business that does high-volume or deals in high-end merchandise or expensive services. The ability to easily handle international transactions and avoid being a victim of fraud are also important reasons to consider hiring a credit card service.