• Consumer goes to merchant's place of business, chooses goods and/or services, and gives the merchant his/her credit card for credit card authorization.
• Merchant swipes the card on the credit card processing terminal and the credit card machine dials the acquiring processor for credit card authentication.
• Acquiring processor sends credit card transaction to card association, which in turn sends the request for credit card authorization to the issuing bank.
• Issuing bank accepts or declines the credit card transaction and sends message to the card association.
• The card association contacts the credit card processor with the credit card authorization, and then the request to deliver goods and services is given to the merchant by way of the POS terminal.
• Merchant sends the credit card processing company fulfillment notification to permit settlement meaning that the goods and services have been delivered or are ready to be shipped.
• The capture takes place when the credit card authorization information is given to the issuing bank and the consumer's credit card is charged for goods and services requested/received.** This entire process takes place in less than ten seconds.
• Finally, when the merchant decides to settle batch, the acquiring processor finalizes the credit card transaction with the issuing bank and they transfer money into the merchant's bank.

• Merchants who accept credit card transactions on the fly at trade shows, conventions, swap meets, anywhere there is wireless coverage.

If the merchant is a mail-order/telephone order company, either scenario can be used for credit card processing. If the merchant uses credit card processing hardware, instead of swiping the credit card through the credit card machine, they can key in the information into the credit card machine. If the merchant prefers to use software for credit card authorization, then this can be done using a virtual terminal. A virtual terminal will allow the merchant to process credit cards over the Internet by logging on to the secure socket of the gateway provider and inputting the credit card processing criteria manually.

• Consumer goes web site, chooses goods and/or services, and fills out the merchant commerce application.
• Consumer enters credit card information into a secured form that is sent over the Internet via Real Time Online Processing software (i.e.Authorize.net), which then sends the encrypted transaction to the acquiring processor for credit card authorization.
• Acquiring processor sends transaction to card association, which in turn sends the request for credit card authorization to the issuing bank.
• Issuing bank accepts or declines the credit card transaction and sends message to the card association.
• The card association contacts the credit card processor with the credit card authorization, and then the request to deliver goods and services is given to the merchant by way of the online credit card processing software.
• Merchant sends the credit card processing company fulfillment notification to permit settlement meaning that the goods and services have been delivered or are ready to be shipped.
• The capture takes place when the credit card authorization information is given to the issuing bank and the consumer's credit card is charged for goods and services requested/received. ** This entire process takes place in less than ten seconds.
• Finally, when the merchant decides to settle batch, the acquiring processor finalizes the credit card transaction with the issuing bank and they transfer money into the merchant's bank.

The credit card authorization happens when the issuing bank approves the credit card transaction. A credit card authorization number is issued to the merchant services account and payment of goods/services is guaranteed as long as:

• A valid card has been used by the authorized cardholder.
• The cardholder has signed the credit card sales draft.
• The credit card transaction is not disputed by the cardholder.

Credit card transactions are collectively stored in batches until the end of the day. Once you settle the batch, the information is sent to the processing bank for deposit. After the credit card authorization and the goods and services are rendered, a credit card deposit goes into the merchant's account and a debit to the cardholder's credit line is applied. With our credit card processing service, this will happen in no more than 72 hours. Usually the authorization and deposit happen at the same time, but if for some reason the goods/services are delivered at a later date then the merchant services account must conduct a separate deposit transaction.

A credit card sales draft must be completed and imprinted for all credit card sales. The credit card sales draft is a legal and binding contract and serves to protect all of the parties involved in the credit card processing system. If your merchant services account swipes the consumer's credit card using a POS credit card terminal then your credit card printer should print out a hard copy of the credit card sales draft. If you are a mail/telephone order or Internet based company your credit card sales draft will be electronically produced.

A manual imprinter should be used if:

• Merchant has to manually punch in the credit card number, expiration date, etc
• Merchant does not have a credit card printer

The following should be on all credit card sales drafts:

• Retail (Storefront name / Name of Business)
• Credit Card Number
• Credit Card Authorization and Reference Number
• Customer Signature
• Expiration Date / Date of Credit Card
• Sale Amount of Credit Card Sale
• Description of Goods and Services

A credit card sales draft must be completed and imprinted for all credit card sales. The credit card sales draft is a legal and binding contract and serves to protect all of the parties involved in the credit card processing system. If your merchant services account swipes the consumer's credit card using a POS terminal then your credit card printer should print out a hard copy of the credit card sales draft. If you are a mail/telephone order or Internet based company your credit card sales draft will be electronically produced.

• The credit card authorization system is a system that is based on trust and is designed to protect everyone involved in a credit card transaction. The system protects:
• The Merchant- By guaranteeing that payment will be received for goods and services delivered to the consumer
• The Issuing Bank- Chargebacks will guarantee that the issuing bank will not lose money if the goods and services are not rendered
• The Cardholder- The cardholder's bank will issue money back from the merchant's bank if the goods and services are never received
• Chargebacks are rare, but they can be damaging to your merchant services account. Because of this we will now go into detail about how a chargeback works and exactly how it can affect your business.

Why was my merchant services account sent a chargeback?

A chargeback is presented to a merchant account by an issuing bank when the cardholder contests a charge made to their account. The cardholder has a right to contest credit card charges if:

• They were not satisfied with the goods or services that were charged to their credit card bill.
• They never received goods or services that they were charged for on a credit card bill.

How does the chargeback process work?

When a customer complaint about a particular credit card transaction is registered, the issuing bank will usually send a Retrieval Request to your credit card processing company. Your credit card processor will then send it on to your merchant services account. There are some cases in which a chargeback is automatically sent before the retrieval request, but again, that is rare. The retrieval request gives the merchant the opportunity, without being charged, to prove that goods and services were delivered. The best way that a merchant can prove that the customer has made a mistake is by presenting a signed credit card sales draft. If the merchant can produce the authorized signature then the complaint is usually dropped.

If the merchant is not able to prove that the credit card transaction is legitimate, then a chargeback is issued. The card association/issuing bank takes the credit card transaction amount out of the merchant's bank and credits the customer's credit card account. All chargebacks are put on record at the merchant's bank. They can severely damage a merchant services account if too many occur.

The only protection that the credit card processing company offers the merchant services account against chargebacks is a notification of suspicious charges to a particular credit card. If the same amount has been charged to one credit card several times in a row, the credit card processor will not go ahead with the credit card authorization. The merchant services account will always be notified of such a situation.

Because of the way in which the credit card processing system is set up, the merchant services account must be committed to doing all that is necessary to prevent questions of trust arising when a credit card transaction has taken place. In other words, it is the merchant's responsibility to protect themselves against chargebacks and/or fraudulent credit card users.

Any fees for credit card processing or charges for supplies for credit card equipment will be debited to the merchant services account. Also, each card association will send out a monthly statement. (Visa, MasterCard, American Express, or Discover)

The discount rate is a percentage of each credit card transaction that is charged to the merchant services account by the credit card processing company. The discount rate varies depending on each merchant services account. Higher risk merchant services accounts have higher discount rates. For example, there are swiped credit card rates and keyed credit card rates. Swipe rates are for storefront merchant accounts that physically handle the customer's credit card, swiping it through the credit card terminal. This form of credit card processing is less susceptible to fraud so it carries the least expensive discount rate. If a merchant account does credit card transactions through the mail, on the telephone, or over the Internet, the risk is higher because:

• Cardholder is not present at the time of the credit card sale

• Credit card could be illegally produced

• Credit card could be stolen

• Unauthorized use of the credit card

Once your merchant services account is approved, your credit card equipment will be programmed and shipped within 24-48 hours. All credit card equipment and software will be shipped by ground unless other arrangements are made by the merchant.

Customer service on credit card processing equipment and credit card processing software is available 24 hours a day, 7 days a week. Your hardware replacement will be dependent upon the manufacturer's warranty. Direct Merchant Accounts stands behind all of its credit card equipment manufacturers by offering free replacement for as long as you process credit cards with Direct Merchant Accounts if there is a defect from manufacturing. Direct Merchant Accounts will overnight replacement equipment and repair and return your credit card equipment.

Supplies needed for credit card equipment, paper, ink ribbons, drafts, etc., are available through U.S. Bankcard Services, Inc.