By: Mindbody Online  09-12-2011
Keywords: Business

What is a merchant account, and why do I need one?

A MINDBODY merchant account gives businesses the ability to accept credit, debit, or reward cards as a form of payment at the retail point of sale and over the internet. You need a merchant account to use the online store and recurring billing features of the MINDBODY software. Without a merchant account, you have the ability to accept only cash or checks, which will severely limit your ability to run a profitable business. Today, most businesses use a merchant account.

How do I apply for a MINDBODY merchant account?
What will happen during the application process?
How long will it take to get a merchant account set up?

Opening a merchant account can take up to two weeks, so please plan accordingly.

I have poor credit or I am currently in active bankruptcy. Will I be approved for a merchant account?

If you are in active bankruptcy, you will not be approved for a merchant account. If you merely have poor credit, you may be asked to provide additional documentation so that an informed decision can be made regarding approval.

What are MINDBODY Processing's merchant account rates and how do they compare?

MINDBODY Processing uses Interchange Plus pricing, which means we charge a modest, flat, transparent rate over interchange rates, plus a $6 monthly statement fee, to cover our costs of doing business. MINDBODY pricing is typically three-tenths to one full percentage point less than the industry average.

What is an Interchange rate?

Interchange is the standard cost that all businesses incur when they accept credit cards, regardless of which merchant account processor they use. Interchange rates are set by the card issuer (e.g., Visa, MC) and can vary based on type of transaction (e.g., swiped, keyed, rewards cards). With well over 200 credit, reward and debit cards in use, each with their own Interchange rate, it's no wonder that merchants may be confused by processing fees.

What's the different between 3-Tier pricing and Interchange Plus pricing?

It's not a secret that merchant account processors have to make a profit, so they all charge a fee for their processing services that is over and above the standard Interchange rate. This fee is based on either Interchange Plus pricing and 3-Tier pricing. Interchange Plus pricing, which MINDBODY Processing uses, discloses the processing fee, whereas 3-Tiered pricing, or bundled pricing, does not. With an Interchange Plus program, you know what you are paying because it is based on actual cost of the transaction, plus a flat rate, on all card types, no matter what category they fall in. Tiered accounts can have several different fee categories, most of which are hidden in your statement.

(Note: Don't be confused by the similar terminology: Interchange rates are standard rates set by the credit card issuer (e.g., Visa, MC); Interchange Plus pricing represents the total charge, including the base Interchange rate plus the fee that the processor charges over and above the Interchange rate.)

I already have a merchant account processor. Will my current processor work with MINDBODY software?

MINDBODY clients are not required to use a MINBDODY merchant account. However, because other processors don't fully integrate with MINDBODY, you won't be able to use key aspects of the software, for example the online store or recurring billing. On the other hand, a MINDBODY merchant account does integrates directly with the MINDBODY software, so that your transactions and reports all use the same data. And, because MINDBODY Processing rates are so competitive, you're likely to pay less each month when you join with us. The bottom line is we recommend you speak with one of our specialists because they can recommend how to use our software given your current set-up.

What does it mean that MINDBODY is Level I PCI compliant, and why is it important?

Level I Payment Card Industry (PCI) compliance means MINDBODY meets the credit card industry's highest security standard, so you can sleep soundly at night knowing your data is safe. We store and encrypt your clients' credit card numbers and billing information, back it up daily and securely store it offsite. Each year, we must go through a rigorous audit to assure we maintain those high standards.

Is my business PCI compliant because MINDBODY is PCI compliant?

No. There's a distinction between PCI requirements for service providers and those for merchants. MINDBODY is considered a service provider. Businesses that accept credit cards from their customers are considered merchants and must meet their own PCI compliance standards. This is true no matter what processor they use, no matter what point of sale system they use, and no matter where they are located in the world.

Why am I being charged a separate PCI fee?

The Payment Card Industry Data Security Standard (PCI DSS) was created to help organizations that accept, process, transmit or store card payments prevent credit card fraud through increased controls around the data and minimizing its exposure. A PCI Compliance Fee is actually charged to all merchant account processors, such as MINDBODY Processing, who then pass on the fee to the business owner.

What is the amount of the PCI fee?

Since all merchants are required to provide an annual validation of PCI compliance, MINDBODY Processing has partnered with ControlScan, an approved scanning vendor (ASV) of the PCI Council. ControlScan provides the tools necessary to help your business with PCI compliance. A quarterly fee of $28.80 will be reflected on your statement to cover the cost of managing your PCI compliance. Upon completion of your validation from ControlScan, we will reduce the quarterly fee to $18.80 per quarter. The fee reduction will only occur upon completion of the validation process; it is not retroactive and will be reflected in your next quarterly statement.

If you are a MINDBODY client with a merchant account through Capital Payments (formerly AMS), the rate is slightly different. Capital Payments uses Trustwave as its PCI vendor, and their PCI compliance fee is $11.95 a month prior to PCI compliance validation; the rate decreases to $9.95 a month after certification.

Why are Single Service Providers (SSPs) required to open a MINDBODY merchant account?

As the value of our software, and its related technical and business support, has increased over time, MINDBODY was faced with two options: increase the monthly fee for SSPs to $70 to cover our cost of doing business, or limit the monthly increase to $45/month, but require that you open a merchant account through MINDBODY Processing. We believe the second option presents a clear win-win solution for us both. SSPs have 90 days to apply for an open a merchant account through MINDBODY Processing to remain at the $45 a month rate. After the 90-day deadline, the rate is increased to $70 a month.

Thousands of MINDBODY clients already have a merchant account with us, and the results speak for themselves: they have annual sales five percent greater than those who do not. The benefits of a MINDBODY merchant account are many. First and foremost, it gives you the ability to sell your products and services over the Internet, keeping you more competitive and bringing new customers to your door. You'll also be able to take full advantage of MINDBODY Finder, an initiative in which your services can be searched, booked and paid for by consumers through their mobile apps and high traffic web sites. Finally, because our merchant account and software are fully integrated, you'll spend less time on billing and accounts receivable. Our single system serves all your transaction needs, including an online store, swiped and key-entry transactions, and recurring billing.

Who is TransFirst, and how do they differ from MINDBODY Processing?
I already have a MINDBODY merchant account that uses Capital Payments (formerly AMS). Can I switch to the new merchant account with TransFirst?

No. At the time you became a MINDBODY client, we had a contractual commitment to Capital Payments to serve as our exclusive processor. The contract is still in effect.

Do you have any tips for avoiding unnecessary charges on my credit card transactions?

Why yes, we do. The cheapest way to run a card is to swipe it through the terminal. Since MINDBODY has so many awesome features that let a business run transactions automatically using stored credit card information, we wanted to be sure you knew how you can save the most money for non-swiped transactions.

An EIRF (Electronic Interchange Reimbursement Fee) transaction is an interchange rate downgrade which, ironically, means you are paying a higher rate than you should for this type of transaction. (But don't worry, there is something you can do about it!).

Without getting into the long list of variables that constitute an EIRF transaction, the bottom line is that whenever you store a credit card number for a client, you should also store their zip code and their street address. To avoid EIRF rates, make sure you are entering the customer's name as it appears on the credit card and getting the correct billing address, paying particular attention to street number and zip code. If you simply run the transaction with the stored credit card number, but not their matching zip code or street address, this EIRF transaction will cost you at least .5% more than a non-EIRF keyed (or stored) transaction. (Example: You run an auto-pay for $100 and the billing zip code doesn't match up. You are probably paying 50 cents more for that transaction than you should have!)

The information in this article was current at 06 Dec 2011

Keywords: Business

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